Pension or Buy to Let portfolio, which makes more money?
Pension or Buy to Let portfolio, which makes more money?
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Discussion

Ginge R

Original Poster:

4,761 posts

249 months

Sunday 2nd October 2016
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GT03ROB

14,025 posts

251 months

Sunday 2nd October 2016
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Give us a precis ........ its behind a paywall!!

Jamessd

99 posts

158 months

Sunday 2nd October 2016
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Delete your browsing history (in particular cookies) and your weekly allowance of Telegraph articles will be reset.

GT03ROB

14,025 posts

251 months

Sunday 2nd October 2016
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A sensible assessment if you ask me.

Jiebo

1,088 posts

126 months

Sunday 2nd October 2016
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Agreed.

The general public don't understand pensions, however they do understand brick and mortar.

The think only the former keeps going up, but when you compare the returns over the last few decades from the stock market, it's actually higher (ignoring the London bubble that is).

klmhcp

247 posts

122 months

Sunday 2nd October 2016
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No bias from the OP at all!

sidicks

25,218 posts

251 months

Sunday 2nd October 2016
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A pension is an investment wrapper, buy-to-let is an asset class.

Not sure how you'd credibly compare the two...Looks like the article actually compares leverage property investment with tax efficient equity investment!

Edited by sidicks on Sunday 2nd October 19:19

GT03ROB

14,025 posts

251 months

Sunday 2nd October 2016
quotequote all
klmhcp said:
No bias from the OP at all!
Do you disagree with the article? smile

Ginge R

Original Poster:

4,761 posts

249 months

Sunday 2nd October 2016
quotequote all
klmhcp said:
No bias from the OP at all!
From me? Absolutely not. Nothing wrong at all with balance, moderation and sagely diversity.

Simpo Two

92,884 posts

295 months

Sunday 2nd October 2016
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I posted on this a couple of weeks ago.

Frankly this is no more than (another) PR piece and essay follow-up by the forum's resident blogger and self-promoter.

sidicks

25,218 posts

251 months

Sunday 2nd October 2016
quotequote all
Simpo Two said:
I posted on this a couple of weeks ago.

Frankly this is no more than (another) PR piece and essay follow-up by the forum's resident blogger and self-promoter.
As opposed to the forums (very much) non-expert, who appears to feel compelled to respond to almost every Finance thread...?

CrouchingWayne

749 posts

206 months

Sunday 2nd October 2016
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Out of interest, how many BTL's do people take on that are geographically quite far away from their home town? Just curious as if I ever did this I wouldn't feel comfortable with more equity in my local market over the long term.

Ginge R

Original Poster:

4,761 posts

249 months

Sunday 2nd October 2016
quotequote all
CrouchingWayne said:
Out of interest, how many BTL's do people take on that are geographically quite far away from their home town? Just curious as if I ever did this I wouldn't feel comfortable with more equity in my local market over the long term.
I'm looking for one in Swansea or the Gower Peninsula, quite a way away from the East Midlands. But I've spent far too long procrastinating. It's age..

85Carrera

3,503 posts

267 months

Sunday 2nd October 2016
quotequote all
Simpo Two said:
I posted on this a couple of weeks ago.

Frankly this is no more than (another) PR piece and essay follow-up by the forum's resident blogger and self-promoter.
Quite. Would perhaps be better employed filing company accounts.

Ozzie Osmond

21,189 posts

276 months

Sunday 2nd October 2016
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Without engaging in this directly I would simply point out,

  • "Which makes most money" is pretty meaningless unless you also take into account the hassles of property repairs, bad tenants, general management and also the significant illiquidity issue with property.
  • The answer you get will depend on the start date and finishing date of your comparison.
  • The answer will also depend upon whether you are looking at UK only or taking a wider view.
  • The answer will also depend upon what exactly is in the portfolio.
The concept of a well diversified BTL portfolio is not one that I've encountered.

Ginge R

Original Poster:

4,761 posts

249 months

Sunday 2nd October 2016
quotequote all
Not even a blend of different types of commercial, different types of residential, and in different parts of the country?

Behemoth

2,105 posts

161 months

Monday 3rd October 2016
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Ginge R said:
Not even a blend of different types of commercial, different types of residential, and in different parts of the country?
To be properly balanced, you ought to be in different countries, too. I don't think Wales would count in this respect biggrin The main problem with balancing a portfolio like this is that every single asset is relatively huge for most mere mortals. It's easy to balance a few K across unit trusts but you just can't do that with property.

The main aspect which annoys me because it is never added on the cost side for these analyses is the investor's time. Dealing with paperwork, refits, maintenance takes up the hours, even if you subcontract most of it. It's not a proper business analysis until you cost those hours and put them into the mix.

To other's complaints, I don't see why you can't attempt a comparison with equities, though. There may be many variables but to just throw hands up in the air and say they are impossible to compare is cowardly. Instead, why not read the article and apply your own variables / risk approach?

Zigster

2,004 posts

174 months

Monday 3rd October 2016
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sidicks said:
A pension is an investment wrapper, buy-to-let is an asset class.

Not sure how you'd credibly compare the two...Looks like the article actually compares leverage property investment with tax efficient equity investment!
I think this is an important point which no one has picked up on.

Imagine if you borrowed £90k from the bank at 5% pa interest, invested it in a stocks and shares ISA along with £10k of your own money and proceeded to get a 10% pa return. After 25 years you pay back the £90k (the 5% pa interest has been paid each year). How much money have you now got? And how does that compare with taking out a £90k mortgage on similar terms for a BTL?

People looking at BTL investments ignore the huge risk from the leverage involved in a mortgage.


NickCQ

5,392 posts

126 months

Monday 3rd October 2016
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Zigster said:
People looking at BTL investments ignore the huge risk from the leverage involved in a mortgage.
Shares are leveraged as well though! If I remember correctly the capitalisation of the average FTSE 100 company (excluding banks and insurers), it implies that the equity market cap is around 50-60% of the total enterprise value. For banks and insurers that number is going to be more like 5-10% (1% for Deutsche Bank!)

Ozzie Osmond

21,189 posts

276 months

Monday 3rd October 2016
quotequote all
Behemoth said:
To be properly balanced, you ought to be in different countries, too. The main problem with balancing a portfolio like this is that every single asset is relatively huge for most mere mortals. It's easy to balance a few £k across unit trusts but you just can't do that with property.
Yes, that's the way I see "balance". Balanced both geographically and by asset class.