Would you invest in the stock market or property?

Caporegime
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So if I suddenly decide that I'm the next Warren Buffett, I can get >20 times my capital to hurl at whichever stocks I like?

in some cases yeah... but it probably isn't a good idea to use that sort of leverage - you'll tend to get the much higher levels of leverage via a CFD or spread bet

for cash equities you're looking at more like 25% margin... so the OP's scenario of having 100k and wanting a 350k position is still feasible
 
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Permabanned
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I think buying property is a good investment it just the tax situation in the UK disincentives buy to let and the banks do as well to some extent. If you already own a home and live in it then i would spend as little as you can in deposit in buying a house and then try rent it out. Keep the rest in high interest accounts for the large part. I would probably invest some of it in stocks as well. What to invest in is debatable depending on the amount of time you want to spend on it and how much return you are expecting. Once you have a positive cash flow coming in and you have savings you will always be in a more comfortable position than just having savings. Once you have income generating assets like a rental property or a stake in a business then putting some of your money in to gold or silver is a good option.
 
Associate
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BTL is a lot more costly going forward with the changes to tax relief on mortgage interest relief between 2017 and 2020. From 2020 most accountants agree that to break even on a typical BTL you must have no more than 60% debt. And that is the BREAK EVEN. Debt free landlords, or low debt landlords are the only ones who will likely successfully operate a profit after 2020.

Of course, capital gains is influenced by the market too, and how will the changes effect the market by then.....

However the key to a successful BTL is simple. Buy at the right price.

I would also say that you should have a clear aim. Is you aim capital growth, or yield? It is rare to be able to max both. You can get a balance of both, or focus on one or the other, but rare to find a way to max both.

Martin
 
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Why would you loose your capital with stocks?:confused:

Seriously?

Stock prices can go down as well as up. And companies can go bankrupt entirely. Put £100k into 'safe' bank stocks like Lloyds or RBS just before the 2007/8 collapse and then compare to their value a month later, or now. And if you bought Lehmans instead?
 
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...

Also, you seem to have a pretty low view of your fellow forum users; there are probably plenty of people here who could advise appropriately.
There probably are plenty who "could". But I'd sure hope any who could actually advise, rather than just comment on a hypothetical forum question, "wouldn't" without knowing a lot more about the OPs full situation, including how risk-averse they are.

Personally, I wouldn't dream of taking investment advice from anyone without knowing how well qualified they were to offer it, and I would advise others not to either. There may well be plenty here who "could" advise competently, but we have no way of knowing who they are.
 
Soldato
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So can house prices :confused:

I don't think a house can go bankrupt though ;)

While I agree there could be a "correction" I think current supply/demand will keep house pricing high, also the fact it a good investment vehicle.

The chance of you losing all of your capital investment in a house would be very low, I guess something that insurance wouldn't cover war/act of god etc. is conceivable
 
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Caporegime
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Er stock prices go down, have you not read the news recently? If you invest in oil or Quindell (A forum fav) you would off lost lots of money.

House prices also go down, ever watched the news and heard of the record number of foreclosures after the recession?

What matters is the long term average gain, the stock market does far better than property.
 
Caporegime
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I don't think a house can go bankrupt though ;)

While I agree there could be a "correction" I think current supply/demand will keep house pricing high, also the fact it a good investment vehicle.

The chance of you losing all of your capital investment in a house would be very low, I guess something that insurance wouldn't cover war/act of god etc. is conceivable


Someone else who obviously didn't watch the news.

It's very easy to loose your house and your entire life savings. Fail to keep up with those mortgage payments and prettry soon the bank is selling of your house o the cheap with no guarantee you will get any of your capital back.
 
Man of Honour
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House prices also go down, ever watched the news and heard of the record number of foreclosures after the recession?

Foreclosures really did hit hard in your American market and much more so then repossessions here in the UK. Don't you lose everything over there?
 
Caporegime
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Foreclosures really did hit hard in your American market and much more so then repossessions here in the UK. Don't you lose everything over there?

Yes, the bank repossesses, kicks you out and will sell the house as quickly as possible. Foreclosed houses go for 20-25% less than market rate, and the market rate had dropped 10-15%. Many families themselves in negative equity, the putstansing mortgage worth more than the house. Once sold by the bank the didn't get a dim back, all their life savings lost forever and possible bankruptcy filings.
If you put money on the stock market, somerhing like a FTSE tracker you just waited a few years and found yourself with far more money than before the recession.it never take that long for the stockmarket to recover and surpass the previous peak.
 
Soldato
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BTL is a lot more costly going forward with the changes to tax relief on mortgage interest relief between 2017 and 2020. From 2020 most accountants agree that to break even on a typical BTL you must have no more than 60% debt. And that is the BREAK EVEN. Debt free landlords, or low debt landlords are the only ones who will likely successfully operate a profit after 2020.

Of course, capital gains is influenced by the market too, and how will the changes effect the market by then.....

However the key to a successful BTL is simple. Buy at the right price.

I would also say that you should have a clear aim. Is you aim capital growth, or yield? It is rare to be able to max both. You can get a balance of both, or focus on one or the other, but rare to find a way to max both.

Martin

Isn't the change just a flat rate 20pc claim on mortgage interest?

I must be missing something because as far as I can tell it's really only 40pc tax payers that would be affected.

And isn't it more to do with mortgage payments Vs rental income rather than equity stake in a property?

The changes can't be that much of a put off considering the amount of BTLs going through now to avoid the introduction of 3% stamp duty.
 
Caporegime
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Only if you have a mortgage, what about if I just buy the house outright, I could buy a small 2 bed for £100K (as per OP).

House prices can still go down, and you can still experience significant costs reducing your capital. Just general wear and tear might mean you will have to pay 30k for a new roof, or subsidence might mean expensive foundation reinforcement, windows need replacing, damp problems.

A house next to my aunts was left unoccupied for several years while it was thought over in an inherited case. Before the it was settled the house had become a ruin amd was eventually just knocked to the ground and the land repurposed. Property requires constant maintainaince and repair. You have to fa tor those costs in.

Property has a cost and a risk with typically lower gains. Which is why investors don't all buy a load of property and instead buy stock for the most part. If property was always the better outcome then that's where investors would.focus, but they dont.
 
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