Dear me, what looked like a totally inoccuous letter from Chris became a confusing nonsense.
I quote from the letter: ‘The buy-to-let investment property is no longer such a good investment – there are better alternatives’ and this was swiftly followed by: ‘Good investment decisions should be based on seeing a future trend’.
Can you really tell the future? Please, please, please can I borrow your crystal ball? I’ll only need it for a couple of minutes while I find me six numbers between one and 49.
Chris’ suggestion that investors look for alternative investments was followed that week by a 10 per cent collapse in share prices not property prices.
But there’s more – ‘The second opportunity for investment is the boring old pension plan’ – but a pension plan is not an investment, it is an investment vehicle allowing you to invest in many sectors within a wrapper providing tax incentives.
Get down to the nitty gritty – if you were going to invest money in a pension, which fund would you recommend today? You’ve only mentioned commercial property. Is that the best investment advice you can give at the moment? Sell residential property and buy commercial property?
Sorry, it gets worse. ‘They still need to have a plan for paying off their mortgage by the time they retire’ – give us all strength – that’s not how residential property investments work at all.
Have you been advising people for very long in this area because you appear to have elements of mortgage knowledge missing?
I believe every one of my buy-to-let clients are either looking to sell their properties at some point in the future, which will clear their mortgage, or they are planning to never sell their properties during their lifetime.
Can I pose one question? If the following long-term rates of return were guaranteed – RPI at 3 per cent per annum, residential property at 4 per cent per annum, commercial property at 5 per cent per annum, managed investment bonds at 6 per cent, share or unit trust portfolio at 7 per cent per annum or 10 per cent per annum (gross equivalent) within a pension, if you had one lump-sum of £25,000 to invest over the long-term, where would you decide to invest today and why there? Go on, e-mail me your answer.
Finally, Chris states: ‘It’s time for clients to reapraise the future and for us to move with them’ – that’ll be an interesting scenario, we wait for clients to tell us where we should be investing.
Anyway, my clients aren’t getting out of property at all – they are telling me that they are loving the voliatile property market and are looking to add bargains to their long-term property portfolios.
That’s called pound-cost averaging by the way, but would take another two pages to expand on how that works with property.
Frank Jurga
Swindon Mortgage Services
