09 Sep Thanks for almost telling all the story..
Post this morning from the Editor of City AM.
http://www.cityam.com/news-and-analysis/allister-heath/why-buying-property-no-panacea
Actually reveals some interesting data over extended period of time. Having said that sources showing how equities have outperformed other indices always tend to be Fund Mangers or the like.
The author does eventually mention the power of leverage in property – but moves on too swiftly without explaining. So here we go. Let’s use the figures from the article. Stock market 6.9% pa, property 2.4%pa.
You have £25,000 to invest. You invest in the stock market. It rises by 6.90%. In 5 years you have £34,900.
Or you buy a property, you put down £25,000 deposit and borrow £225,000. The property rises by 2.40% pa for 5 years. It is now worth £281,473. (at this stage you have incurred all sorts of costs, stamp duty, solicitors and so forth).
Stock market £25,000 after 5 years £34,900
Property £25,000 after 5 years £56,473. (with lots of additional costs – not denied but get a tenant to pay them plus more)
Lastly – which one feels riskier to you?
Disclaimers – Property prices fluctuate up and down. The figures used here are examples and not guaranteed. Just Us Mortgages is NOT authorised to give investment advice. You actually do have to pay your mortgage otherwise a lender will be very unhappy and re-posses the property. And so on..
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