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What's A Good Alternative Investment Vehicle To Buying A House?


Saberu
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As per the topic. I know there are a lot of investments where you can make at least 10% ROI.

I would normally assume stocks and shares are very dangerous in our volatile world economy, but surely oil stocks would be very safe and profitable?

Personally I would rather. invest in more 'risky' things like land/ resources in China if I had a lot of money like 300k. But I'm interested to know how many options are out there that could earn at least 10% per year return. It's an interesting milestone because you could make a pretty good living off the interest alone with an investment like 300k. But your 300k capital would be losing value every year if you took all the appreciation/ interest out of it, due to inflation.

However if you only used 5% for your living costs which is still comfortable in most countries of the world that don't have the Western high cost of living then you could keep the other 5% invested to offset inflation.

A lot of people complain about how hard life is, but 300k is not a lot of money yet if invested wisely you would never have to work again.

Anyone with 300k in capital who would rather buy a house than take an early retirement is crazy or just materialistic to need to earn even more, unless they had a specific reason to buy a house like raising children. I wouldn't have children unless I was rich.

It seems to me that if you can find a partner in your 20's and save money together, it would be possible to jointly have 300k by age 35 and essentially retire from the rat race. I see some members on here mention they have saved with a partner and almost paid off the mortgage mid 30's etc.

Yet many more people don't find a partner till their 30's and I get the feeling men tend to save less and spend more to keep their ego up while they are still in the dating phase meaning many reach their 30's without any savings and end up just starting their mortgage or house deposit savings with 5,000 pounds or so.

My generation have it really difficult. I know for me personally I am going to aim to have 200-300k by age 35 if me and my partner are able to work for a few years by then but for many people of my generation even being married by 35, or saving a significant amount by then will seem like a dream.

I know there are a couple of people on this forum living off their investments, but why isn't it much more common? Why spend 300k on a house when the same amount of money could buy your freedom from having to work full-time?

I think the answer to this question is that most people actually wouldn't be satisfied without their full-time job, which is quite a sad indictment of our society considering most people's jobs are very monotonous. People end up becoming boring live-to-workers because they have so little free time that they don't even bother finding enough interesting hobbies to keep them satisfied.

We are being bred as a society who get their identity from their job, not their personal life. People think that your job title and being a home owner are the two most important things in the world. I despise this culture.

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As per the topic. I know there are a lot of investments where you can make at least 10% ROI.

I would normally assume stocks and shares are very dangerous in our volatile world economy, but surely oil stocks would be very safe and profitable?

Personally I would rather. invest in more 'risky' things like land/ resources in China if I had a lot of money like 300k. But I'm interested to know how many options are out there that could earn at least 10% per year return. It's an interesting milestone because you could make a pretty good living off the interest alone with an investment like 300k. But your 300k capital would be losing value every year if you took all the appreciation/ interest out of it, due to inflation.

However if you only used 5% for your living costs which is still comfortable in most countries of the world that don't have the Western high cost of living then you could keep the other 5% invested to offset inflation.

A lot of people complain about how hard life is, but 300k is not a lot of money yet if invested wisely you would never have to work again.

Anyone with 300k in capital who would rather buy a house than take an early retirement is crazy or just materialistic to need to earn even more, unless they had a specific reason to buy a house like raising children. I wouldn't have children unless I was rich.

It seems to me that if you can find a partner in your 20's and save money together, it would be possible to jointly have 300k by age 35 and essentially retire from the rat race. I see some members on here mention they have saved with a partner and almost paid off the mortgage mid 30's etc.

Yet many more people don't find a partner till their 30's and I get the feeling men tend to save less and spend more to keep their ego up while they are still in the dating phase meaning many reach their 30's without any savings and end up just starting their mortgage or house deposit savings with 5,000 pounds or so.

My generation have it really difficult. I know for me personally I am going to aim to have 200-300k by age 35 if me and my partner are able to work for a few years by then but for many people of my generation even being married by 35, or saving a significant amount by then will seem like a dream.

I know there are a couple of people on this forum living off their investments, but why isn't it much more common? Why spend 300k on a house when the same amount of money could buy your freedom from having to work full-time?

I think the answer to this question is that most people actually wouldn't be satisfied without their full-time job, which is quite a sad indictment of our society considering most people's jobs are very monotonous. People end up becoming boring live-to-workers because they have so little free time that they don't even bother finding enough interesting hobbies to keep them satisfied.

We are being bred as a society who get their identity from their job, not their personal life. People think that your job title and being a home owner are the two most important things in the world. I despise this culture.

Retiring on £300K at age 35 is pushing it a bit. Possible, perhaps, if you like beans on toast, but not something I'd like to try.

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OP

Retire on £300k at 35 in the UK, I think you are being over optimistic.

You said that there are many investments which return > 10% ROI.

If there are please tell me where to find them.

It is incredibly difficult to find passive investments yielding > 10% ROI, that don't place your capital at significant risk.

Additionally you need to consider the effect of inflation reducing the value of your capital & income yield.

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OP

Retire on £300k at 35 in the UK, I think you are being over optimistic.

You said that there are many investments which return > 10% ROI.

If there are please tell me where to find them.

It is incredibly difficult to find passive investments yielding > 10% ROI, that don't place your capital at significant risk.

Additionally you need to consider the effect of inflation reducing the value of your capital & income yield.

The OP is being incredibly over optimistic.......I wouldnt even consider 300k sufficient to retire at 60, if thats all that I had, i.e. no additional pension. Wouldn't even consider giving up work (@30ish) unless I had several million, and that is to live a normal life (eqivalent lifestyle to now). You would be surprised how little return you would get and obviously tax at 40%....and then when you are a millionaire there would be temptation to start being more extravagent.....if you had two million you would be lucky to net 40k after tax etc, and thats if you dont touch the captital, and your money is being erroded by inflation too...........

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OP

Retire on £300k at 35 in the UK, I think you are being over optimistic.

You said that there are many investments which return > 10% ROI.

If there are please tell me where to find them.

It is incredibly difficult to find passive investments yielding > 10% ROI, that don't place your capital at significant risk.

Additionally you need to consider the effect of inflation reducing the value of your capital & income yield.

I did consider inflation which is why I said only withdraw 5% and leave 5% to accumulate. As I imagine the 'real' rate of inflation is probably closer to 5% than the rubbish stats the government shows us.

Oil stocks with the right company should be able to yield 10% between stock price rises and dividends. Another option is just to pick a company with a high paying dividend that also looks to be rising in price.

300k at 35 would be optimistic in the UK. But I have an Australian passport and if I went to Australia with a partner/wife and we both worked/ saved hard for 5-10 years in good jobs (over $60k/ year each) then it would be possible. I would only ever consider it a backup option for my own circumstances, as I have something better as my primary goal. But for a lot of people such a scenario would be a good primary objective.

You say > 10% is difficult. Well in the real world of business over 100% growth in income per year is possible. But even a 10% return on investment is better than buying a house or sitting on 300k in cash.

It makes me realize most people just don't have the skills to do business/ invest smartly. If you were smart you would probably be able to turn 10k into 100k. But buying a house instead of investing in a high return investment with a significant amount of money is a pretty dumb decision in my mind, it seems like the kind of decision taken by people who assume it's natural to work 40 hours/ week until they are 50-60 without much time out. Makes me realize how low the intelligence of the average person is.

Hell in countries like China you don't even need a huge amount of money to invest in a brick and mortar/ no knowledge business. With 10-30k you could setup/ run a franchised convenience store and make a modest living off that for the rest of your live if it's in the right place. Yet some Westerners invest 200-300k in businesses over here like pubs and restaurants and still fail.

Edited by Saberu
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OP

Retire on £300k at 35 in the UK, I think you are being over optimistic.

You said that there are many investments which return > 10% ROI.

If there are please tell me where to find them.

It is incredibly difficult to find passive investments yielding > 10% ROI, that don't place your capital at significant risk.

Additionally you need to consider the effect of inflation reducing the value of your capital & income yield.

All the things I was going to say. To demonstrate how unrealistic, take a look at annuity rates. The best RPI linked rate for a 55 year old is around 2.5%, so that 300K would get you an annual income guaranteed to rise with RPI of around 7.5K if you were 55. Being 35 would obviously reduce it some more, although possibly not by as much as you might think. I'm not saying that you should buy an annuity of course, but they're a useful benchmark of what large pooled investment funds are able to generate without being at risk of not being able to pay out. If you think you can do better over a potential 50 year span, then you should set up investment firm rather than retire.

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I reckon you can buy freedom for £300k - provided you're happy to live on beans and blackberries foraged from the hedgerows.

Spend £100k on a flat or small house in a cheapish part of the country. You're not planning to work so no need to be close to employment.

That leaves £200k to invest. Whack in high yield equities to give 4.75% or so. That gives you £9500 pa. Reinvest £1500 (or stash it in some other way) as a safety margin - leaving £8000 pa.

If you're happy to ride a bike, use the library and eat cheaply - that's ample to live off. Or you could keep trudging into the office every day to pay for bling.

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Target a smaller figure.

If you can get 5% return on 100K passive cash flow, then getting out of the rat race is much easier. You can work then less, and in a job you then enjoy. (It then doesn't become a job or feel like a rat race). Imagine having a slave giving you £5K per year.

Millionaires still work - or they end up getting under the feet of the wife, or end up spending money, rather then earning it. You could become a politician :D

Edited by MrTReturns
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£300k could yield 4% per annum i.e. £1k per month in a diversified stock portfolio. There's a good chance in the long term your income will keep pace with inflation, especially if you diversify globally, although there is a risk especially in the short term as there's an argument that shares are overvalued at present.

£1k per month is enough to live off, but it's not exactly something to aspire to for the rest of your life.

I think the trick is to reach the stage where you've got £300k and a house owned outright. Then you're laughing.

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I did consider inflation which is why I said only withdraw 5% and leave 5% to accumulate. As I imagine the 'real' rate of inflation is probably closer to 5% than the rubbish stats the government shows us.

Oil stocks with the right company should be able to yield 10% between stock price rises and dividends. Another option is just to pick a company with a high paying dividend that also looks to be rising in price.

300k at 35 would be optimistic in the UK. But I have an Australian passport and if I went to Australia with a partner/wife and we both worked/ saved hard for 5-10 years in good jobs (over $60k/ year each) then it would be possible. I would only ever consider it a backup option for my own circumstances, as I have something better as my primary goal. But for a lot of people such a scenario would be a good primary objective.

OP,

It is best to plan for the worst & hope for the best, life will only get more expensive.

You never know what is around the corner, a couple of kids or a divorce would put a major hole in your plan.

Regarding investments, which is what you were originally asking about, here are a few things that I am interested in.

CF Ruffer Total return Fund

High Yielding Blue chip stocks, BP, Shell, Aviva, RSA etc.

PIBS

Buy To Let

Structured Products (Invesco)

As with anything in life all of the above carry risk.

Good Luck

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We are in our early 30's and have been mortgage free for around a year.

Our non-mortgage costs living reasonably frugally, but not penny pinching, come to around £1k a month.

This is made up of utilities, council tax, food, running 2x old cars, clothing etc. With a real effort and self denial we could probably trim that to £800 a month but not much less.

If we moved somewhere like Thailand we could obviously live a lot more cheaply and on some level would enjoy it. However I suspect we'd get bored and miss our families/friends.

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Number 1 is : even if you plan to live on beans on toast, you will not be allowed to retire at 30. Or 40 or 50 or 60. If the government found people doing that, they would just increase taxes. So when you sit down to work out how long it will take you to earn enough to retire, the answer always comes back as "Never" if you plug in realistic assumptions, like taking out inflationary increases and making GDP forecasts realistic for example. And the minimum requirement always turns out to be impossibly large (say 1.5 million to get a pre-tax income of 30,000).

So forget about trying to work your way out of slavery. It's slavery for csakes, you're not intended to get out.

ie There is no point in the gerbil running faster on the wheel.

Number 2 is: we're in a bust not a boom. In a boom, when the balloon is expanding, you can buy pretty much anything and it will increase in value. Some may increase more than others, but basically it all goes for more monopoly money than before. Houses grew most, but everything grew.

But now it's a bust, the opposite applies. You can pick any investment vehicle you like, but they're all likely to lose value. In a bust, all investments turn to ashes, the only difference is, how fast they burn.

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Hell in countries like China you don't even need a huge amount of money to invest in a brick and mortar/ no knowledge business. With 10-30k you could setup/ run a franchised convenience store and make a modest living off that for the rest of your live if it's in the right place. Yet some Westerners invest 200-300k in businesses over here like pubs and restaurants and still fail.

Yap, but that is with 84 hours week (12x7) except Chinese New Year. Fine if you are made for it.

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OP

Retire on £300k at 35 in the UK, I think you are being over optimistic.

You said that there are many investments which return > 10% ROI.

If there are please tell me where to find them.

It is incredibly difficult to find passive investments yielding > 10% ROI, that don't place your capital at significant risk.

Additionally you need to consider the effect of inflation reducing the value of your capital & income yield.

Agree, luck and watching the markets is hard work and not gaurenteed. I have always like the Dogs of FTSE strategy and it has done quite well for my SIPP since I pulled 90% of my Pension out of the Co-op and into a SIPP in 2010. However very few FTSE 100 blue chips I hold yeild over 6%.

I have some stocks (FTSE100) yeildiong 9% now and 10%+ in the next few years, that have also risen 40% to 85% since I bought them in Summer 2010. However when I did buy them it was a contrairian purchase as the Markets EU /USA fears caused a big drop in the FTSE100 and I bought them cheap maybe 30% less than they where at the beginning of 2010. It was a fear play and a risk, the Market could have tanked 60% like it did in 2008/09.

BT was one of these, bought summer 2010 during a big drop, which meant yeild rose from 4.5% to 7%. Now yeilding 9% (on purchase price) and will be yeilding 10% next year. BP was another, bought £2k's worth @ 350p during the gulf of mexico leak. Again based on puchase price making a lovely yeild now and a rise in the share price.

But these are rare and based I have found it's better to buy on the DOGs theory each year six months then Hold fore the long term so you keep / increase the yeild % (as divi's are increased) but also benifit from the share price growth too. But by holding you will take losses too.

Bought a three tranches of MAN Group 2010/2011 when the yeilds where around 8% to 16%! total £1.5k purchase price but now dropped 40% in value as the divis have been cut. But...............as i bought in dips when divis where high based on puchase price are still yeilding 4.5% now and forcast to be yeilding 5% next year.

All a guessing game really but just keep reinvesting those divi's every time the rack up to £500 or more and let the power of compunding help you along. Still at least 24 years until I retire.

M

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In China there's little regulation, and taxation. You don't need to fork out for all the insurance, lengthy planning applications, training courses, hygiene certificates etc. Most of the little businesses are cash in hand. Collecting taxes is also not as advanced as the UK.

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But now it's a bust, the opposite applies. You can pick any investment vehicle you like, but they're all likely to lose value. In a bust, all investments turn to ashes, the only difference is, how fast they burn.

Something like UltraShort x 2 ETF ? (not that I am recommending it, of course as this instruments have some technical weakness).

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Anyone with 300k in capital who would rather buy a house than take an early retirement is crazy or just materialistic to need to earn even more, unless they had a specific reason to buy a house like raising children. I wouldn't have children unless I was rich.

Well what does that 300k get you if you buy a house? No more mortgage or rent payments, security of tenure. That is actually worth something. Renting is a pain typically, buying yourself out of constant harassment and uncertainty is understandable.

You need more. If I had 1 million plus I'd be a world traveller into the foreseeable future. I'd stay in hotels/short term rentals, experience different cultures, etc etc, living off the interest. It would end in my buying a property somewhere. It's a sensible thing to do at some point.

Most people are on the treadmill because they have no other option, don't judge so harshly. Some I grant you have fallen for the keeping up with the joneses nonsense, but not as many as you think.

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You may enjoy reading Fastlane Millionaire - crap title but a surprisingly useful book in terms of setting up a business. He has some advice on how to invest if you become reasonably rich and are still young. He set up an online limo booking service in the early days of the net and cashed out in his early 30s. But his advice may be out of date now though since it was written pre-crash. He was also considering much higher figures than £300K though.

But I find it interesting how many entrepreneurs end up going back to running/setting up businesses after a few years off. Filling the void post-work seems to be awfully hard for some. Hobbies are fun - but few want to spend the rest of the life doing them full time. Travel? Even that gets kind of old after a while. A friend of mine planned to retire once he'd got to £300K in the mid 90s. His net worth must be into the millions now but he's still running various businesses. Of course, it doesn't help that he has 2 kids and a divorce behind him.

I think Felix Dennis has it right - even a few million still leaves you in the comfortably poor territory. A few bad years, a few bad investments - and you are back to working for the man. If managing your money becomes a full time job too (because you don't have quite enough to have pay someone to do it for you or you have to budget to make it last) - well that doesn't sound much fun to me either.

Edited by StainlessSteelCat
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Anyone with 300k in capital who would rather buy a house than take an early retirement is crazy or just materialistic to need to earn even more, unless they had a specific reason to buy a house like raising children.

We are in an age of financial repression!

A £300k pot isn't anywhere near enough to retire on in the UK unless you gamble with the pot to chase more yield and win more than what bank interest would earn. At generally available rates £300k in 2007 would have earned £14,400 (6%) after tax now it's only about £6,720 (2.8%) and your pounds now buy less.

You would have to go abroad in search of cheaper living costs. For example I know of a place doing 1 bed apartments near a superb beach in SE Asia for £2.6k a year, rent for 4 years get 1 year free or rent for 7 years get 3 years free. At 10 years it reduces the rent to £1.8k a year and if you like rice it should be manageable.

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In my area of the NE 2 bedroom houses in good working class areas now sell for >£70k, reposessions, forced sales etc.

Normally need a bit of tidying up, which may cost another £5k.

At the peak they were selling for £120k in good condition.

They rent out very quickly for £500pcm.

£300K would buy 4, you could live in one & rent the other 3 out.

£1500 income per month, living in the UK mortgage free.

Obviously there are some costs, hassles etc.

However if all 4 houses are near each other, it is easy to keep an eye on things & it doesn't cost too much for

repairs if you are handy.

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It all depends on your circumstances (kids?) and where you choose to live in the UK but i could easily retire on 300k as long as you're smart enough with your money

Many on here will be stuck in the London rat race so will disagree & forever chase that rainbow , but you could buy a nice enough house for 100k & invest the rest .

Why exactly do you need a few millon ?

200k is plenty to keep the bills & a few luxuries rolling in plus you don't need to live here you could travel & rent abroad or even live on a boat (think outside the box a bit) but enjoy the life you have left :)

I agree that stocks are risky though & anything offering above standard rates refleft the level of risk involved , so tread carefully , invest yourself & wait for dips & troughs in the market .

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