RSS Feed. Alan Donegan. Buy small liabilities and instead invest in assets was the end of my last blog post. This sounds great but how the hell do you actually do that? How do you buy an asset? Are you asking me to go out an buy an investment property now? I don't have the cash! Where do you start? My plan for this article is to break down some different types of investment and then lay out Katie and my strategy so you can see what we do. This is by no means investment advice rather it is an article exploring options and sharing my approach.
There are so many different things you can "invest in". Some of them are actual investments that provide a solid return on investment and some of them are just gambling. How do you know the difference and where should you put your money? The one in that book that he speaks about at length is property. I had a very bad experience with stocks and shares when I was younger with my Dad that had really put me off investing in stocks and shares so my early strategy revolved entirely around property. Let's look at the options and discuss each one a little bit read the disclaimer at the bottom of the article as well.
In the UK there are numerous property TV shows about doing up properties and there is a real buzz around property. On average in the UK property doubles in value every 9.
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A couple of things to think about when buying property: Illiquid versus liquid Property is an illiquid asset. What I mean by that is when you buy an investment property you have a lot of money tied up in the property and if you want to sell it then it is going to take a while to get that money out. The money is not very liquid and easily accessed. Units of 1 Property is very binary if you are individually investing. You have to save and buy in units of 1. This makes it easier to understand the economics of capital appreciation how much the house goes up by and rent each month.
Leverage When you buy a property most people do it with a mortgage. Leverage is a double sided sword. If the property price goes up you see all the profit and if it goes down you see all that downside too! We can explore leverage in another article later Other ways to invest in property Real Estate Investment Trusts REITs is another way to invest in property without investing the whole amount. You buy a share of the REIT with other investors and then you own a small percentage of the properties that the REIT holds and get a return on that percentage.
This is a way to invest without having to build up an entire house deposit to do it yourself. Your own Home In my opinion the home you live in is not an investment because it costs you money every month. I do not see the flat I live in as an investment because it has a lot of my money tied up in it and it is costing me money every month. You can turn the home you live in into an asset by renting out a room, converting the outhouse into an Airbnb and generating an income from it. Passive versus active A lot of people talk about property as a passive income source and I want to suggest that property is not a completely passive investment.
Imagine a scale from passive to full time activity; on the full time activity end of the scale is starting a business, this takes a massive amount of energy and on the other end of the scale is you do nothing but collect the income. Property is not completely passive and takes energy and time.
Last night our tenant messaged us that they are having a problem with their tap and I need to go and fix it this is not completely passive! We manage them ourselves and rent them out. They provide a rent return each month and have been a good investment.
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We are considering selling them though as we are travelling more it becomes more difficult to manage them when you are on the road. We bought both these flats before I understood more about stocks and shares and if we took the money out we would put it into a low cost Vanguard Index Fund That was a lot about Property!
Next up stocks and shares! Way back when I was maybe 19 or 20 my dad was investing some of his money. He got a financial advisor to come round who showed up at our house in his flashy convertible car and persuade my Dad and I to put our savings into a high tech management fund that had been performing with good returns for several years now. I lost nearly all my life savings. I want to swear about it now just thinking about it.
This experience put me off ever investing in stocks and shares again. Until I started to invest in my education. I read many books on investing and many blogs and I have learned a lot. There are basically 3 ways you can invest in stocks and shares: 1. Pick individual stocks and shares This is where you pick a company you like the look of and invest your money solely in that business.
So you might say that you think Apple is going to do well in the future and you invest your money in that business. This is risky as any business might fail and you could loose all your money.
It is also saying that you have a crystal ball and know which businesses are going to do the best. I have realised I am not well enough read and not willing to invest the time to learn which stocks and shares to pick so I don't do this. Actively managed funds. This is where you say I am not clever enough to pick stocks and shares so I am going to hire someone to do it for me.
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So you pick a fund that has a fund manager with a good track record and then he invests the money for you into different stocks and shares. So they get paid even if you lose money. Sounding good? This is the one I picked with my dad. What they sell you on is the fact that they can pick the best stocks and outperform the market. The reality is that there is hardly anyone in the world that can actually outperform the market 3. Buying a flat to live in or to let is different from buying and living in a house.
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For example, apartments are sold leasehold rather than freehold which means buying a length of tenure rather then the property itself. This can have serious implications when the freeholder suddenly hikes up the service charges or lands tenants with a six figure sum for exterior decoration.
http://www.balterrainternacional.com/wp-content/2019-09-01/juegos-de-belleza-de-monster.php Practically written, this book provides guidance and strategies for homeowners to enable them to understand how the tax might affect them and what they can do to minimise liability and reduce stress. It covers a range of issues including: understanding tax loopholes and what they really mean; giving away property while still alive; strategies for married couples, civil marriage partnerships, and joint ownership; trusts and other options and choices.
The Complete Guide to Buying Property Abroad is an authoritative and informative resource for anyone looking to buy property outside their home market - including financial, legal and lifestyle issues. Country coverage includes popular destination markets such as France, Spain, Portugal, Florida and the Caribbean. The Complete Guide to Buying Property Abroad, now in its seventh, fully updated, edition, takes the reader through all the benefits, complexities and potential pitfalls of buying property in dozens of different countries, both in Europe and in more far-flung destinations.