Discussion
DonkeyApple said:
Or store it as cash. If rates are going to rise then cash suddenly becomes valuable again. If rates rise enough to bring down asset values of houses then only those with real cash will be able to take advantage and buy anything. There won't be any other way to buy things than with real cash.
Why not put it into gold? We've just missed the usual Summer dip and it's climbing once again so probably too late this year, but is it not a better bet than cash in times of uncertainty for security and to make some money out of?227bhp said:
Why not put it into gold? We've just missed the usual Summer dip and it's climbing once again so probably too late this year, but is it not a better bet than cash in times of uncertainty for security and to make some money out of?
It's more tricky though. It's priced in USD and at times of rising yield you would expect it to fall in value against any currency with a rising yield anyway. And then there is the slight issue that much of the gold market is unregulated meaning there's a good chance your gold doesn't actually exist. And if you hold it out of storage then the 'clip' is usually quite big.
The trouble with gold ultimately is that you can always find a seller but can't always find a buyer.
Besides, all of that, few purchases can be made with gold direct so you still need to convert it back to cash to do anything.
Generally, if the aim is to hold cash because you believe rates are going to rise and assets fall then I think you should find gold falling as well as its one of those assets that tends to negatively correlate to cash, hence why we saw it rise as USD was devalued. Much of the rise was as much about the USD being worth less as it was about flights to safety etc.
But, I've never been a fan of gold so am certainly bias.
DogRough said:
Such a shame, you missed out on a nice little earner last year then. Still, I'm sure you were too busy drip feeding into the market to notice 
2016? That was Cable shifting, not Gold!!! Or do you mean the last 12 months where Gold has fallen against both USD and GBP?
Please don't start following me around threads. It's the true sign of a dimwit, other than your comprehension of the FX markets.
DonkeyApple said:
It's more tricky though. It's priced in USD and at times of rising yield you would expect it to fall in value against any currency with a rising yield anyway.
And then there is the slight issue that much of the gold market is unregulated meaning there's a good chance your gold doesn't actually exist. And if you hold it out of storage then the 'clip' is usually quite big.
The trouble with gold ultimately is that you can always find a seller but can't always find a buyer.
Besides, all of that, few purchases can be made with gold direct so you still need to convert it back to cash to do anything.
Generally, if the aim is to hold cash because you believe rates are going to rise and assets fall then I think you should find gold falling as well as its one of those assets that tends to negatively correlate to cash, hence why we saw it rise as USD was devalued. Much of the rise was as much about the USD being worth less as it was about flights to safety etc.
But, I've never been a fan of gold so am certainly bias.
There are physically backed gold ETCs that are currency hedged.And then there is the slight issue that much of the gold market is unregulated meaning there's a good chance your gold doesn't actually exist. And if you hold it out of storage then the 'clip' is usually quite big.
The trouble with gold ultimately is that you can always find a seller but can't always find a buyer.
Besides, all of that, few purchases can be made with gold direct so you still need to convert it back to cash to do anything.
Generally, if the aim is to hold cash because you believe rates are going to rise and assets fall then I think you should find gold falling as well as its one of those assets that tends to negatively correlate to cash, hence why we saw it rise as USD was devalued. Much of the rise was as much about the USD being worth less as it was about flights to safety etc.
But, I've never been a fan of gold so am certainly bias.
But, as you know, it's a volatile asset and no proxy for cash.
Bit late as OP has made his mind up already, but I reckon a good rule of thumb now would be for any mortgage you get to be less than the rent on a repayment basis, not interest only.
Idea being when you retire you own the house, not still owe (170k in this case) money on it. You have options then, carry on renting or sell up, not just have to sell up to pay off the mortgage.
Can't rely on prices going up a lot for many years I reckon, until income multiples catch up, or prices drop (or both!). Then prices won't have gone up.
Idea being when you retire you own the house, not still owe (170k in this case) money on it. You have options then, carry on renting or sell up, not just have to sell up to pay off the mortgage.
Can't rely on prices going up a lot for many years I reckon, until income multiples catch up, or prices drop (or both!). Then prices won't have gone up.
Edited by ITP on Sunday 23 July 22:47
DogRough said:
DonkeyApple said:
2016? That was Cable shifting, not Gold!!!
Or do you mean the last 12 months where Gold has fallen against both USD and GBP?
Please don't start following me around threads. It's the true sign of a dimwit, other than your comprehension of the FX markets.
Really? That 48% gain I made on my gold fund last year must have been an illusion then.....Or do you mean the last 12 months where Gold has fallen against both USD and GBP?
Please don't start following me around threads. It's the true sign of a dimwit, other than your comprehension of the FX markets.
And he calls me a dimwit
Jan 4 2016 USD1074.20
Dec 30 2016 USD1151.85
That's not 48% uplift is it?
Where on earth do you think your fund achieved its gains from? Gold or FX?
What happened on June 23 2016?
Please give it a rest.
DogRough said:
DonkeyApple said:
Jesus wept!!!!!!!
Jan 4 2016 USD1074.20
Dec 30 2016 USD1151.85
That's not 48% uplift is it?
Where on earth do you think your fund achieved its gains from? Gold or FX?
What happened on June 23 2016?
Please give it a rest.
Lol, such a shame that your ignorance and bigotry caused you to lose out so badly Jan 4 2016 USD1074.20
Dec 30 2016 USD1151.85
That's not 48% uplift is it?
Where on earth do you think your fund achieved its gains from? Gold or FX?
What happened on June 23 2016?
Please give it a rest.
Investec Global Gold I Acc GBP +84.1 (2016)
https://www.trustnet.com/Factsheets/Factsheet.aspx...
You've proved my point exactly and I bet you don't even understand how.
Please stop. You've just posted GBP data which is exactly what I was trying to explain to you.
If you stopped with the insane insults and following me around threads and just spent 5 minutes thinking it through you'll almost certainly suddenly realise what is being discussed.
You have gotten yourself confused between Gold and Cable.
Quality backtrack. Well done.
But it's good that you've learnt the difference between Gold and Cable today and now seem to understand that.
Even though you have been incredibly aggressive and rude it does highlight that if someone perseveres with their teachings even the most troubled pupils can benefit.
But it's good that you've learnt the difference between Gold and Cable today and now seem to understand that.
Even though you have been incredibly aggressive and rude it does highlight that if someone perseveres with their teachings even the most troubled pupils can benefit.
DogRough said:
Lol, you tell yourself that if it makes you feel better Jackass. Your self esteem must be incredibly poor
In this part of PH we tend to conduct ourselves with a little more grace than you have displayed thus far.DonkeyApple was perfectly correct in pointing out to you that the gains were attributable to FX, leave the insults at the door eh pal.
DonkeyApple said:
Sheepshanks said:
Yet everyone says having cash is stupid as it's eroding in value.
It's been eroding in value since 2009 when its yield was dropped to nothing. Hence the asset rally as the cash is converted into other investments and the speculative rally that has followed as people then borrowed more cash to invest into other assets. But if rates rise then with each rise cash becomes more valuable and non cash assets less so and so people will start swapping non cash assets for cash.
And so those non cash assets will begin to fall in value and at some point that movement will be out of control and prices will fall well below fair value. And it is at that point that people want to buy them again, except only people with real cash can. People won't be able to borrow to buy them. You'll need real money.
So, if we are at the bottom of the rate curve and heading up then it is time to store cash and maybe later it will be time to sell assets to get even more cash. And eventually there will be a time when those who have cash will start buying the assets that those who never got round to selling have had seized by their lenders and dumped onto the market.
So, seeing as rates are rising in the US, the ECB is likely to get a German leader after Draghi and Germany is very keen to raise rates and the BofE is turning hawkish then it is now fair to hold the view that building cash reserves is the prudent action. If all your wealth is locked into an illiquid and devaluing asset such as your home then there isn't much you can do but be a passenger.
227bhp said:
Shame he couldn't conduct himself a bit better, I feel he had a good point to make.
I didn't want to get in the middle of the argument, but on his Gold point, weren't Gold funds on a massive tear right through 1H16? Of course the Brexit vote did give the Sterling ones a bump, but they were already well up (from a very low point towards the end of 2015).It rose quite strongly in the first half of 2016 as we were having a bit of a banking crisis and panic about China's slowing growth and its state intervention in the currency markets. I also suspect that by the end of the 5 year sell off in gold it was probably a bit overdone and was due a bounce. But then it gave pretty much all of it back in the second half as equity markets returned to their rally. As it began to turn we had the Brexit vote that spiked the GBP which is why GBP hedged gold positions had a much more positive second half.
Weirdly, the 2016 point that was put forward does highlight one of my core concerns with using gold as a store of 'cash equivalent' and it's due to having to make two quite complex investment descisions simultaneously: Firstly whether to hold gold over other options and then secondly, which currency to hold over the same period. I might be able to take a macro view on a single market but trying to do two simultaneously and over the ext same period becomes much more akin to having a punt than making a serious investment decision.
Weirdly, the 2016 point that was put forward does highlight one of my core concerns with using gold as a store of 'cash equivalent' and it's due to having to make two quite complex investment descisions simultaneously: Firstly whether to hold gold over other options and then secondly, which currency to hold over the same period. I might be able to take a macro view on a single market but trying to do two simultaneously and over the ext same period becomes much more akin to having a punt than making a serious investment decision.
Edited by DonkeyApple on Tuesday 25th July 08:37
Ignoring the gold bit the thread has given some food for thought as I find myself in a similar position looking at a similar set of options. I have enough cash in the bank to nearly be mortgage free so have considered a BTL option or just plain up sizing but I'm cautious about what I see as a market funded by foreign investment and too over inflated for the normal first rung buyers. Couple that with the potential over supply of new builds in the coming years makes me think its a volatile place to put money at the movement. I think I'd sleep better putting it into investments.
Buzz word said:
Ignoring the gold bit the thread has given some food for thought as I find myself in a similar position looking at a similar set of options. I have enough cash in the bank to nearly be mortgage free so have considered a BTL option or just plain up sizing but I'm cautious about what I see as a market funded by foreign investment and too over inflated for the normal first rung buyers. Couple that with the potential over supply of new builds in the coming years makes me think its a volatile place to put money at the movement. I think I'd sleep better putting it into investments.
This morning I spent a couple of hours with my btl management agency (which I used to own). More and more legislation - currently EPC stuff - is programmed to come on stream soon which is going to create more and more cost headache for the PRS. Nonetheless they were delighted to tell me their roster of property is on the up in terms of numbers under management. OTOH the sales guy says the problem he's finding (in common with all the local agents with whom he shares a good working relationship) is getting stock. Anything that does come on is snapped up right away and if anything prices are rising. Mixture of new in comers to the letting game and portfolio expanders.
BUT: the overarching opinion was that because of the volume and breadth of legislation being applied to the sector they think btl may drift more and more towards institutions-only, with the small guy being squeezed out. Not unlike the death of the one-man-band IFAs of the '90's when a growing volume of administrative compliance requirements meant joining a consortium or going out of business.
Nonetheless I'm selling nothing and am having trouble resisting adding to the portfolio. That's THIS week anyway.
It's definitely the aim of the current government to shift the rental market over to institutions. A defaulting institution is less of a risk to property values as their assets would be sold at discount to another institution en mass. Whereas the assets of a defaulting BTL punter would almost certainly hit the open market where the discount could have a detrimental impact.
All the tax changes favour the corporate investment side and disincentives the private punter, especially if using leverage.
Whether it's a good thing long term is up for debate but given the systemic risk of all the leveraged, small and inefficient BTLs it's no bad thing in the short run.
If rates do pop up you can see a fair number of BTL landlords not only being forced to sell their investment properties but also their homes to pay off the deficits left after the foreclosures. So the Stamp increase to slow up the buying and the offset tax changes to force the most leveraged and high risk out of the market is good for everyone.
But, there will be plenty of little areas where institutions won't be interested in operating and cash buyers can benefit. How many London flats do you think were built in the 30s to 60s on 100 year leases which the owners haven't had the money to extend and lenders won't lend against? I think that is going to be a ripe area for the private investor again like it was in the early 90s. Your type of property might just get difficult as the low sums make them more suitable to the majority of investors if they get over the phycological hurdle of dealing at that end of the market. But then you can just sell them your stock as they drive yields down and move to areas where they aren't.
All the tax changes favour the corporate investment side and disincentives the private punter, especially if using leverage.
Whether it's a good thing long term is up for debate but given the systemic risk of all the leveraged, small and inefficient BTLs it's no bad thing in the short run.
If rates do pop up you can see a fair number of BTL landlords not only being forced to sell their investment properties but also their homes to pay off the deficits left after the foreclosures. So the Stamp increase to slow up the buying and the offset tax changes to force the most leveraged and high risk out of the market is good for everyone.
But, there will be plenty of little areas where institutions won't be interested in operating and cash buyers can benefit. How many London flats do you think were built in the 30s to 60s on 100 year leases which the owners haven't had the money to extend and lenders won't lend against? I think that is going to be a ripe area for the private investor again like it was in the early 90s. Your type of property might just get difficult as the low sums make them more suitable to the majority of investors if they get over the phycological hurdle of dealing at that end of the market. But then you can just sell them your stock as they drive yields down and move to areas where they aren't.
Im considering a short term BTL with the prospect of moving into in the next 2 years. Living with my parents at the moment, but a property has come up at around 11% under market value hence the appeal. The MV is around 295k for the house and I am a FTB and the property isnt on the market (I have spoken directly with the seller)
The rent will cover the mortgage plus around £200ish ontop. Just not sure if the numbers stack up if property prices fall in the SE.
The rent will cover the mortgage plus around £200ish ontop. Just not sure if the numbers stack up if property prices fall in the SE.
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