Where to invest in 2019 – FTSE 100 or property?
02/11/18 by LIZA SHASHENKOVA
Investing
Why are so many individuals considering investing their savings more than ever before?
This recent shift in mindset comes at a time where a large portion of UK high street banks are offering dismal interest rates of around 0.5% per annum. Further economic instability also means that you could potentially be losing money by not considering the alternative options.
Keeping your money safe should be a priority therefore the real question is where to invest your savings. If you look at the top two categories, FTSE and UK property, the stock market can come across as confusing and volatile, yet property investment is known to be unaffordable. Which one is right for you?
WHERE DO I START?
Before commencing on your investment journey, it always helps to know that investing is a highly personal choice that fundamentally depends on your attitude towards risk. However, there are other factors which play a key role in your decision-making process.
Things like inflation, affordability, liquidity and volatility are necessary to assess when creating a well-balanced, diversified portfolio which serves the best protection against capital loss. Comparing these asset classes in depth is notoriously difficult however below, are some brief introductions to FTSE and UK property.
FTSE 100
FTSE is occasionally referred to something known as a “perfect market” because investors can gain comfort in the fact that the market will adjust itself to reflect the true value of a product at any time. This means that all investors will receive the same information as everyone else and can buy shares at the same price as everyone else. Investing in property as an asset does not present this similar benefit.
Your shares can be sold with a single click of a button, with the cash available for withdrawal within the space of a few minutes. This is ideal in the case of an emergency or when an income top-up is required in the short run.
As fantastic as this financial flexibility sounds, every investor should be prepared to withstand how much the stock market tends to fluctuate and be aware of even the most unexpected of pitfalls. Occasionally the FTSE will see a boost in a specific sector so there is a lot of money to be made but it does not mean it will last, especially when you consider how additional factors including economic and political shifts influence the stock market. Just remind yourself of the Tech sector back in 2002 and how cryptocurrency plummeted at the beginning of 2018.
PROPERTY
Property is appealing yet a more complicated asset to obtain. Unlike the FTSE, investing into property is more of a long-term strategy and does generally require much more capital than your average share in the stock market. In addition, with a looming financial crisis or “no deal” Brexit, selling a property could be tricky with more people adopting a ‘wait and see’ approach. So why do many investors continue pursuing property?
In the past 25 years, property was viewed as a cash cow by property investors. The average house price increased by 295% in the UK, and is the UK’s largest asset class, estimated to be worth over £5.75 trillion (more than the combined total of UK equities and commercial property).
Investing in property is consistent, unlike the volatile stock market, it generally has demonstrated a steady appreciation in capital value, regardless of any major shocks! Take the buy-to-let market; rental payments from a buy-to-let investment can be used to pay for a mortgage, further increasing an investor’s return. Despite the fears surrounding Brexit and the recent regulations imposed on landlords, the UK property market always has windows of opportunity which can generate a healthy return such as in the case of investing in student accommodation. In addition, with the UK’s long history of housing shortages where demand has significantly outweighed supply, experienced investors are looking to find investment opportunities in the housing market after Brexit.
THE ADVANTAGES OF PROPERTY OVER FTSE
The advantages lie in the past statistics; in the years between 2000 and 2016, the value of UK house prices grew significantly faster compared to the FTSE All Share and outpaced the FTSE 100. As mentioned above, house price increase comes from this asset’s more consistent nature in comparison to FTSE. In 2015, property was one of the top-performing asset classes where investors received returns ranging between 13% – 14%.
When you invest in property, you are not only wrapping your cash in an inflation-beating asset, but also avoiding the uncertainty that bonds and equities carry with them. There is relatively more control in owning a property purely because the property market is more predictable. Would it not be better to rely on an asset where a potential decline can be spotted and established earlier than something that has a likelihood of crashing overnight from a social or political shift?
Thinking of where to invest in property but still bothered by the hefty upfront costs and taxes? This does not have to be the case with all property investment in the UK. At Shojin, you can invest from as little as £5K and gain access to a wide range of property investment opportunities, including debt and equity crowdfunding projects. Whether you are looking for monthly passive income or a lump sum payment, we always have something to offer.
Plus, if you are lacking the expert knowledge of the property market, we can help you build a diverse property portfolio. We provide the highest level of due diligence on all projects that we present to our investors, ensuring your money goes towards some of the best property deals available on the market.
Learn more about Shojin Property Partner’s Investment model and the learn about investing in property by watching our video What is property investment crowdfunding? Follow us on social media for the latest property investment news, tips and updates: Facebook, Twitter, YouTube and LinkedIn.
This recent shift in mindset comes at a time where a large portion of UK high street banks are offering dismal interest rates of around 0.5% per annum. Further economic instability also means that you could potentially be losing money by not considering the alternative options.
Keeping your money safe should be a priority therefore the real question is where to invest your savings. If you look at the top two categories, FTSE and UK property, the stock market can come across as confusing and volatile, yet property investment is known to be unaffordable. Which one is right for you?
WHERE DO I START?
Before commencing on your investment journey, it always helps to know that investing is a highly personal choice that fundamentally depends on your attitude towards risk. However, there are other factors which play a key role in your decision-making process.
Things like inflation, affordability, liquidity and volatility are necessary to assess when creating a well-balanced, diversified portfolio which serves the best protection against capital loss. Comparing these asset classes in depth is notoriously difficult however below, are some brief introductions to FTSE and UK property.
FTSE 100
FTSE is occasionally referred to something known as a “perfect market” because investors can gain comfort in the fact that the market will adjust itself to reflect the true value of a product at any time. This means that all investors will receive the same information as everyone else and can buy shares at the same price as everyone else. Investing in property as an asset does not present this similar benefit.
Your shares can be sold with a single click of a button, with the cash available for withdrawal within the space of a few minutes. This is ideal in the case of an emergency or when an income top-up is required in the short run.
As fantastic as this financial flexibility sounds, every investor should be prepared to withstand how much the stock market tends to fluctuate and be aware of even the most unexpected of pitfalls. Occasionally the FTSE will see a boost in a specific sector so there is a lot of money to be made but it does not mean it will last, especially when you consider how additional factors including economic and political shifts influence the stock market. Just remind yourself of the Tech sector back in 2002 and how cryptocurrency plummeted at the beginning of 2018.
PROPERTY
Property is appealing yet a more complicated asset to obtain. Unlike the FTSE, investing into property is more of a long-term strategy and does generally require much more capital than your average share in the stock market. In addition, with a looming financial crisis or “no deal” Brexit, selling a property could be tricky with more people adopting a ‘wait and see’ approach. So why do many investors continue pursuing property?
In the past 25 years, property was viewed as a cash cow by property investors. The average house price increased by 295% in the UK, and is the UK’s largest asset class, estimated to be worth over £5.75 trillion (more than the combined total of UK equities and commercial property).
Investing in property is consistent, unlike the volatile stock market, it generally has demonstrated a steady appreciation in capital value, regardless of any major shocks! Take the buy-to-let market; rental payments from a buy-to-let investment can be used to pay for a mortgage, further increasing an investor’s return. Despite the fears surrounding Brexit and the recent regulations imposed on landlords, the UK property market always has windows of opportunity which can generate a healthy return such as in the case of investing in student accommodation. In addition, with the UK’s long history of housing shortages where demand has significantly outweighed supply, experienced investors are looking to find investment opportunities in the housing market after Brexit.
THE ADVANTAGES OF PROPERTY OVER FTSE
The advantages lie in the past statistics; in the years between 2000 and 2016, the value of UK house prices grew significantly faster compared to the FTSE All Share and outpaced the FTSE 100. As mentioned above, house price increase comes from this asset’s more consistent nature in comparison to FTSE. In 2015, property was one of the top-performing asset classes where investors received returns ranging between 13% – 14%.
When you invest in property, you are not only wrapping your cash in an inflation-beating asset, but also avoiding the uncertainty that bonds and equities carry with them. There is relatively more control in owning a property purely because the property market is more predictable. Would it not be better to rely on an asset where a potential decline can be spotted and established earlier than something that has a likelihood of crashing overnight from a social or political shift?
Thinking of where to invest in property but still bothered by the hefty upfront costs and taxes? This does not have to be the case with all property investment in the UK. At Shojin, you can invest from as little as £5K and gain access to a wide range of property investment opportunities, including debt and equity crowdfunding projects. Whether you are looking for monthly passive income or a lump sum payment, we always have something to offer.
Plus, if you are lacking the expert knowledge of the property market, we can help you build a diverse property portfolio. We provide the highest level of due diligence on all projects that we present to our investors, ensuring your money goes towards some of the best property deals available on the market.
Learn more about Shojin Property Partner’s Investment model and the learn about investing in property by watching our video What is property investment crowdfunding? Follow us on social media for the latest property investment news, tips and updates: Facebook, Twitter, YouTube and LinkedIn.