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Millionaire Now! by Larry NusbaumThis blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth". |
Stocks Vs. Real Estate: "Yawn" - Part Three
Posted on 05/01/2007 07:24:04 | Link | Post Comment
Stocks vs. Real Estate: "YAWN" (part one)
Stocks vs. Real Estate: "YAWN" - Follow-Up (part two)
Is a property portfolio better value than a retirement fund?
In the UK there is a new breed of property owner planning comfortable life after work. Instead of ploughing cash into a retirement fund every month, they're becoming landlords instead.
The UK buy-to-let (a rental investment) boom of recent years matches rising anxiety about firms closing their final-salary pension schemes (retirement plans), the inadequacy of state pensions, and a longer lived population.
Before the Millennium, buy-to-let (BTL) was a mere dot on the UK property market radar - there were 73,000 BTL mortgages across the whole of the UK in 1999 per mortgage lenders council.
Rental Investment Boom:
By December 2006 that figure had exploded to almost 850,000, of which no fewer than 330,000 had been issued in 2006 alone. A Q’1 06 survey shows that 60 per cent of UK buy-to-let properties are in London and the south-east. There is no way of knowing exactly how many of these properties are bought as a substitute for pensions but there is a clear trend.
Stocks vs. Real Estate: "YAWN" - Follow-Up (part two)
Is a property portfolio better value than a retirement fund?
In the UK there is a new breed of property owner planning comfortable life after work. Instead of ploughing cash into a retirement fund every month, they're becoming landlords instead.
The UK buy-to-let (a rental investment) boom of recent years matches rising anxiety about firms closing their final-salary pension schemes (retirement plans), the inadequacy of state pensions, and a longer lived population.
Before the Millennium, buy-to-let (BTL) was a mere dot on the UK property market radar - there were 73,000 BTL mortgages across the whole of the UK in 1999 per mortgage lenders council.
Rental Investment Boom:
By December 2006 that figure had exploded to almost 850,000, of which no fewer than 330,000 had been issued in 2006 alone. A Q’1 06 survey shows that 60 per cent of UK buy-to-let properties are in London and the south-east. There is no way of knowing exactly how many of these properties are bought as a substitute for pensions but there is a clear trend.
Property profits and losses
Pros
- Strong recent history of capital appreciation
- Easy to understand how to buy and sell
- Plethora of easily-understood market information available
Cons
- Some property pundits say current market is over-valued. Last big UK falls were 17 years ago - time for another?
- You cannot guarantee a home will sell quickly when cash is needed
- Rental agents and possible vacancies lead to high overheads
Pensions profits and losses
Pros
- Spreads investment across range of assets
- Easy to plan as most pension pay-outs are predictable
- State pension (Social Security) is at least a modest safety-net
- Almost all pensions are strictly regulated
- Long term performance of markets and pensions cannot be guaranteed
Cons
- You can't withdraw equity from one pension to fund another, as with rental real estate
- Pensions are usually complicated to understand
- Fees have to be paid when entering, changing or leaving a pension scheme
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NOTE: Please click on the charts below to enlarge them if [read more]
NOTE: Please click on the charts below to enlarge them if [read more]
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NOTE: Please click on the charts below to enlarge them i [read more]
NOTE: Please click on the charts below to enlarge them i [read more]
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Hedge funds have made billions this year shorting the banks, [read more]
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