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‘THAT’ Investing Question – Property or Other?

‘THAT’ Investing Question – Property or Other?

With every crisis there comes a wave of ‘opportunity’. Quite what ‘opportunity’ that is best suited for you only time will tell, and it is time and timing, however, that is crucial and non-refundable. Where is this going, you may ask? At the point when stock markets are ‘flying’ and the savings are slowly building in the background, not to mention the pension pot is bubbling away (so to speak) it’s easy to brush off the ‘sensible’ and ‘stable’ investing approach which many perceive as ‘lower risk = lower reward’. Typically, the safer investment asset class is and has historically always been Property. For some, this is the only asset class to generate wealth during the good and the bad times. For others, Property is a mere ‘portfolio addition’ but not as alluring as stocks and shares. For others, well, it can be (and understandably so) cumbersome, headache inducing and quite frankly, time consuming. With that being said, what is ‘sensible’ investing anyway? It is prudent, or savvy rather, to be set up, and with an ever-changing landscape in the investing world, Property Investing isn’t what it used to be.

Right now, the stock markets are diving, there is a worldwide pandemic and political steadiness is wavering on the edge in numerous countries. In the event that you haven’t yet, right now is an ideal opportunity to differentiate your portfolio with an asset class that shows greater steadiness, greater sustainability and surety even in a less favourable economy. 

Investing in a crisis is a question many are posing as coronavirus takes over our lives. Whether there is a crisis or not, we firmly believe investing needs calmness and rationality, but more so now than ever.

The truth is that we still don’t know the extent of the outbreak or the economic disruption it might cause. We do know that it comes at a time when global growth was already quite anaemic so a downturn is possible. Investors will be sure to benefit from holding some recession-friendly assets. Property, as always, may offer some insurance.

But what about Property versus Shares? With the UK population living longer than ever, it’s arguably never been more vital to pick the ‘best’ way to save for the future. Should I invest in a property or shares? It’s the age-old debate.

Sure, we feel comfortable appreciating you may already know that property offers many pros, but to recap on a few: property is a tangible asset, offers tax incentives, is leverageable, can generate income and growth, offers flexibility with the modern business side of things such one month being a home and the next being rented (AirBnB, for example). 

Location, location, location. We must be candid, however, that the potential for a property investment is always highly dependent on its location and therefore comparing the entire house price index against the FTSE was meaningless unless you planned on purchasing a property in every town in the UK. 

But back to the point. If the past few weeks have taught investors anything other than how to self-isolate, it is that diversifying investments is a wise move. The coronavirus pandemic has triggered big stock market falls and has had a serious effect on jobs and the consumer economy, as people are told to stay home. 

Those who rely on investment income have also been hard hit, as share prices have not only dived but many companies have cancelled dividend payments for the foreseeable future. 

This is a timely reminder for all of us why diversifying our investment portfolios gives some financial resilience when circumstances change. 

In the UK, we keen on property and particularly residential property, as the popularity of buy-to let shows, although the barriers to entry for direct investors can be high. Many people own their home, while others have invested in buy-to-let, but buying those properties often involves finding tens of thousands of pounds for a deposit and borrowing much more with a mortgage.

Owning property as an investment in this way comes with its own risk – the lack of diversification being a very obvious one. If something goes wrong with the one property you own, you could have a problem.  However, making sure all your eggs are not in one basket with residential property has traditionally been harder than in other areas. This is why, perhaps, property alternatives are proving to be more appealing. 

Look for genuine safe havens. Supply and demand. Fixed contracts, and buyers in the wings. Successful companies who insulate themselves with a logical and linear approach. 

Security, Demand, Population Growth, Accessibility, Wealth Generation, Tax advantages.

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