Pensions/Investment

[Iron]

Fair comment - I stand corrected.

Jeff

Bonds I said (i.e. corporate debt), not shares.

[superfrank]

John Lewis recently offered an investment bond directly to it's staff and customers (at 4.5%pa plus an extra 2% in JL gift vouchers!), otherwise I think you'd buy into a corporate bonds fund.

Tesco for example, and loads of other big companies, have debts running into billions and have to finance it and bonds are cheaper for them than banks.

[freddy]

it sounds like you're looking for a decent return with low risk so why not consider investing in something like corporate bonds in blue-chip companies. decent yields and much less hassle/risk than BTL (and you'd be helping UK Plc and not following the sheep into property).

Yes but I think id want to take on a little more risk than that though. BTL is a different kettle of fish when you have little or no mortage. You can make your 5%+ comfortably and then long term cash in in the property. Worst case scenario House price fall by 25% in the next 10 years (which is just not going to happen), but even if it did it's not exactly a disater if youve made the rental income for 5-10 years, it would be hard to lose any of the 250K capital thats for sure.

[Iron]

That's a dangerous assumption to make.

Since 2001, the price of houses has risen by way more than 25% (even taking into account inflation) - see http://www.google.co.uk/url?sa=t&source ... ZFW2LZ6WOQ

What makes you so sure that prices won't drop by more than 25% in real terms over the next 10 years?

Jeff

Worst case scenario House price fall by 25% in the next 10 years (which is just not going to happen)

[freddy]

I like investmetns that have a protentailly high upside and a low downside.

My point was that i could afford to lose 25% of the house value over 10 the years.
iF the property has been generating income for me during that time.
Dont get me wrong Your not going to be happy with that, but it's not a disaster either.

[Iron]

I like investmetns that have a protentailly high upside and a low downside.

Then you should consider a trend following hedge fund.

My point was that i could afford to lose 25% of the house value over 10 the years.

But could you afford to lose 50% of the value of the house?

Once the bubble bursts, it's anyone's guess where things will end up.

And if things do go seriously south with the housing market, you might not be able to cut your losses quickly without taking a huge hit...

Jeff

[freddy]

It could happen Yes Jeff , but also the world could end tommorow,

It's just not very likely is it
those are just the risk's you take.

[Iron]

I'm sure a lot of people thought like that when they put their life savings into dot com stocks in the 90s.

I mean, the Internet's the future, so it wasn't like the bubble was going to burst!

Jeff

It could happen Yes Jeff , but also the world could end tommorow,

It's just not very likely is it
those are just the risk's you take.

[hgodden]

Houses wont half in price, people still need somewhere to live, the population is going up and rents are getting more expensive.

[Iron]

With respect, you don't know that. Nobody can predict where the market will go.

Have a look at this chart: http://www.housepricecrash.co.uk/indice ... lation.php

Why is it inconceivable that houses will return in real terms to their 1993 levels?

Jeff

Houses wont half in price, people still need somewhere to live, the population is going up and rents are getting more expensive.

[superfrank]

My point was that i could afford to lose 25% of the house value over 10 the years.
iF the property has been generating income for me during that time.

But you can invest the money in other ways and get a similar yield with lower risk to the original capital.

[Euler]

Marovitz sort of had the answer when you are uncertain on asset classes.

http://en.wikipedia.org/wiki/Efficient_Frontier

[freddy]

My point was that i could afford to lose 25% of the house value over 10 the years.
iF the property has been generating income for me during that time.

But you can invest the money in other ways and get a similar yield with lower risk to the original capital.

Yes you could and if the property had lost 25% in value i would have been better off doing that,
But i don't think that scenario is very likely myself.

It just risk vs reward and what your confortable with at the end of the day.

[Iron]

Fair enough, but I just don't see how you can be so confident that property won't return in real terms to 2002 levels.

What goes up can (and usually does) come down...

Jeff

Yes you could and if the property had lost 25% in value i would have been better off doing that,
But i don't think that scenario is very likely myself.

It just risk vs reward and what your confortable with at the end of the day.

[Euler]

This is where the nature of investing and speculation are very different. Investing returns are accretive and log normally distributed, it's much harder for an investment to fall in value than it is to rise, especially over the long term. With speculation, especially very short term speculation, returns are normal distributed so the potential for profit or loss is much more even.