TIPS FOR INVESTING IN PROPERTY BONDS

Property bonds are quickly becoming a good alternative investment opportunity for short-term investment growth. Here are some tips on how to go about catching the latest investment wave.

 

Research thoroughly first

Like any investment, property bonds do carry certain risks and research, together with professional financial advice is essential before making a purchase. For example, look for property bonds that offer fixed returns on investment and are FCA approved. Bonds that are asset-backed can also add extra security.

 

View the market as a whole

You can make more informed investment decisions when you’re well-informed on the market you’re considering putting your money into. In the UK, there is a multi-billion pound fund that will be administered through the HCA, enabling developers across the country to build many more new homes. This knowledge could be useful for those looking to make a profitable, secure investment in property, but always take expert advice before you commit.

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Be prepared to quit while you’re ahead

Property bonds can be a much more effective acquisition that actually purchasing a house. One reason for this is that you’re not as physically attached to a bond as you are to a property and it’s much easier to cash-in your investment while you’re making a nice profit if you want to. In addition, there are no maintenance costs or troublesome tenants to worry about!

 

Plan your exit strategy

Although the markets fluctuate and investments can typically fall, as well as rise fixed term bonds offer capital growth possibilities and are often one of the more secure investment opportunities on offer.

With a fixed term bond you are also given an exit date, and you will also have more of an idea of the returns you’re likely to get enabling you to plan ahead for what you’ll do next with your money. You could continue with property bonds if the prevailing market conditions are appealing, or you could diversify your portfolio and move your money elsewhere.

 

In conclusion

Rather than investing in bricks and mortar, fixed term property bonds give speculators the opportunity to place their money in a secure, relatively predictable investment vehicle. Always discuss any investment opportunity with an experienced financial advisor, before making a commitment.

WHY A PROPERTY PORTFOLIO CAN BE A WORTHWHILE FIXED ASSET INVESTMENT

In the wake of Brexit and the political uncertainty in the world right now, stock markets are likely to be quite volatile. The prices of stocks and shares can fluctuate wildly in a matter of hours and days, so if you are thinking about investing, you may need to look further afield, for example, at fixed asset investments.

What are fixed asset investments?

Fixed assets are assets which are unlikely to be changed into cash in the short term. This covers things like gold, plus other areas for investment such as commercial and residential property markets.

Gold is quite a stable asset and one which many people decide to move into, investment wise, when markets go into turmoil. On the other hand, while the price of gold is quite stable, investments in a carefully designed property portfolio can represent a better return on your money.

 

Investing in the property market

In its most basic form, investing in the property market can be as simple as buying a holiday home either here in the UK, or somewhere abroad. Another basic property investment tactic is ‘buy to let’, where you purchase a property with the intent of letting it out.

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These sorts of investments are usually quite safe, but buying property abroad can still pose a big risk. A good example of this is the Spanish property market, which saw significant market growth between 1985 and 2007. Prices rose substantially, attracting more builders into the market and more foreign buyers. But then came the world financial crisis of 2007/8.

The crisis caused the Spanish property market to implode. Property prices today are still as much as 50% lower than they were in 2007. It is a sobering warning, and one of the pitfalls of investing in property abroad.

 

Diversifying your fixed asset investments

There are more options open to you in terms of fixed asset investments – for example, looking for government-backed projects is many investors’ favourites.

Investments in general, whether in property or some other commodity, are always made safer by diversification. Spreading your investments across different projects and different geographic regions tends to make financial investments safer.

 

People feel comfortable investing in bricks and mortar

Of course, as with any investments, there are no guarantees. Prices can go down as well as up, whatever the country. However, fixed asset investments in property are generally thought to be safer than stocks and shares, and can offer good long-term prospects for investors.

One thing you should always bear in mind is that, unless you are a financial professional, making investments of any nature is something that you should consider getting professional help with. If you are thinking of taking up fixed asset investments, talk to us here at Stable Rise.

SHOULD YOU INVEST IN PROPERTIES OUTSIDE OF LONDON?

London is, naturally, the UK’s investment hotspot for those looking to invest in property in the country. This is due primarily to the fact that it is an affluent part of the country and often considered to be a global financial hub. It also boasts a beneficial regulatory framework and tax regime to overseas investors, and its demographics are diverse and has a relatively high-quality of life.

However, as the threat of Brexit looms over the UK and its investment prospects, investing in London property may have started to look less appealing or even risky to those hoping to make the most of the city. Indeed, property in the city is by no means cheap, and with the numbers of people leaving London starting to outnumber those deciding to move there, investors have started to look to some of the UK’s other major cities for investment purposes.

Despite concerns over the UK’s decision to leave the European Union, it remains true that the UK’s property market is an attractive option for investors due to its regulatory framework and the fact that no barriers to real estate ownership exist, with investors able to transfer funds in and out of the country at will.

In this way, investing in properties in major cities such as Manchester, Birmingham or Liverpool may actually prove more lucrative than a more expensive option further south. This is because, while properties in these areas are considerably cheaper, the prices renters expect to pay to live in these properties is not proportional to the prices renters expect to pay in London. Although rent in the capital is naturally higher than in other cities, the price they pay proportionate to the actual price of the property is often lower. Property owners in Manchester, for example, may be making a smart move investing right now.

Castlefield - an inner city conservation area of Manchester

Castlefield – an inner city conservation area of Manchester

Although London is of course still the most affluent area in the country, the influx of people moving to the UK’s other major hubs should not be underestimated, particularly as graduates and young professionals continue to be priced out of the city.

ARE ANNUITIES THE PERFECT RETIREMENT INVESTMENT?

In the light of recent announcements by the government regarding proposed increases to the retirement age in the UK, frustrated workers with capital behind them are investigating annuities as a potential means of enabling them to retire earlier.

What is an annuity?

An annuity is a financial policy which facilitates the conversion of pension savings into a regular lifelong income. Rates are given in percentage form and to work out your annual income you will need to multiply your savings by the rate you have been quoted. This means that if your pension pot totals £100,000 and you’re offered an annuity rate of 6%, your annual income will be £6,000.

Different types of annuity

There are quite a wide range of annuities to choose from so you will be able to select the one that suits your needs best.

  • Single life: all income is paid to you
  • Joint life: in the event of your death, all or part of the income is paid to your partner
  • Escalating: income rises annually as influenced by the rate of inflation
  • Enhanced: these policies pay more if you have a medical condition
  • Investment: the money is held as an investment so as to earn you a higher income
  • Flexible: complex products that pay a guaranteed income whilst keeping part of your pot invested to allow your money to grow
  • Fixed-term: after a fixed period these policies pay out a lump sum

Who can buy an annuity?

In order to buy an annuity you must have a contributory workplace pension or a personal pension. Defined benefit or final salary pensions will automatically pay you an income and you will therefore not need to purchase an annuity.

Why buy an annuity?

The main benefit of an annuity is that your income is guaranteed and that regular, fixed payment will continue until you die. Unlike some other pension schemes, your income will not be influenced by fluctuations in the stock market.

Disadvantages of annuities

The main disadvantage of purchasing an annuity is that you can’t change your mind and switch insurers to look for a better deal if you don’t get it right first time.

WHAT IS AN ETHICAL INVESTMENT?

Have you ever wished that you could make a difference at the same time as making money on your investments?

Is that even possible?

If building your finances around ethical principles is important to you, then there are increasing opportunities to put money into sustainable and socially responsible investment projects. These are sometimes referred to as high-impact investments or even high-road investments.

These can be selected according to the priorities, preferences and beliefs you have, such as focusing on environmental, social or corporate governance factors.

Clearly, this is not the same as donating money to good causes. Ethical investment should balance your desire to invest in ethically based opportunities with achieving a substantial return on your investment.

Can you really make a difference with an ethical investment?

Apart from choosing funds that have clear ethical aims – and offer a good return for investors – there is something else you need to keep in mind.

Ethical investments are sometimes a strong option because of what they DON’T do.

Think about it. Many traditional fixed asset investments and other forms of savings through third parties are not always transparent.

Without thoroughly vetting the credentials of your investments, you may be unwittingly funding overseas organisations linked to human rights abuses or environmental damage. Or closer to home, tax evasive companies you would prefer not to support.