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Well if you are thinking of reentering the property market within five years you probably have little choice but to keep it safe in cash at 1% and lose money.

I'd look at the Stock Market if you have a longer timeframe for some of your fund  but it has gone up 20% in the last 12 months. Could easily correct. Pound cost averaging ( drip feeding in) might be wise if you were tempted.

Edited by crashmonitor

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I've rented to rent to buy :) I would say house fund needs to be in liquid assets and not subject to major fluctuations. So savings accounts all the way even if low interest.

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Same here with me but I've got a big detached house for very little rent so no real incentive to buy at current loony prices.

Hopefully some day cash will be king and inflation will go negative (HPC).

 

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Just a thought on a middle road between Equity and Cash would be to choose some relatively price stable high yield investment fund stocks from the FTSE 250. GCP infrastucture, Greencoat Wind (actually not a fund, but acts like one) and The Renewables Group. Yield on all 5-6%. But again some price fluctuation to be expected, wouldn't risk much of your fund and if you can't take a hit to capital.....don't do it !  These will still follow the Market down in a panic scenario.

Edited by crashmonitor

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Unfortunately agree. Liquid savings accounts (keeping within the 85K guarantee each one), premium bonds, regardless of how aggravating to see pathetic 1% returns. Especially if (as is likely if one is STRing) you are no spring chicken.

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53 minutes ago, Funn3r said:

Unfortunately agree. Liquid savings accounts (keeping within the 85K guarantee each one), premium bonds, regardless of how aggravating to see pathetic 1% returns. Especially if (as is likely if one is STRing) you are no spring chicken.

Totally agree - STR'd and stuck equity in the Icelandic savings banks 2007-2009 and we all know what happened in 2008

stick it in uber safe accounts low interest or not

 

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Brown bailed out savers who had money in Icelandic banks, interest and all, but worse was to come.

FLS was the game changer.

Before FLS it was possible to get double the money needed to pay the rent from a capital sum equal to the market price of the rented house. Now you'd be lucky to cover half the rent with a similar sum.

FLS, HTB and all the other props. Cameron and Osborne on TV every day wearing high viz jackets and hard hats..... I won't be voting Conservative again!

Blair and Brown disastrous, Cameron and Osborne even worse.

 

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Our funds will be from my other half's parents' mortgage free BTL. Currently yielding 4% in rent. Will be frustrating to see it sitting there picking up a measly rate of interest - it puts the pressure on to spend it on property (especially with her parents watching like hawks...)

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Never owned, but I have a healthy chunk of cash and the rest invested in global index funds and one investment trust. I think this is less risky than having everything in cash (guaranteed to depreciate) and everything in sterling (devaluing the currency is how the slow bleed of housing wealth will play out, in my opinion). Also some small side-bets on crypto-currency and equity crowdfunding. Crypto has been wildly profitable but still wouldn't talk about it in public. We'll see about the crowdfunding in five years time.  

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6 hours ago, keeprenting said:

Our funds will be from my other half's parents' mortgage free BTL. Currently yielding 4% in rent. Will be frustrating to see it sitting there picking up a measly rate of interest - it puts the pressure on to spend it on property (especially with her parents watching like hawks...)

So you and your partner's house deposit is a BTL property? I.e. One that needs to be sold to free up the cash?

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This is a real issue and because I sell rather than keep/rent my developments (apologies...mostly)  I have cash at the moment. 

I would not buy 'investment' property again....but the interest rates make it too tempting for many. I can't believe granny bonds are withdrawn, a property yield of 4% is considered ok and cash is earning almost nothing...it is driving all sorts of behaviours that would be irrational if rates where even 'just' increased to a very low 3%.

So my wealthier associates are buying 'stuff' rather than holding cash. Maybe a Submariner or Daytona vintages Rolex or a Omega/Breitling..the Patik Phillippe the ultimate watch but a 'very rich' investment. Always automatics and Swiss. My concern with these are they need a £500 service every 5 years....and but really not an investment market although they do keep proving me wrong?.

So I imagine others will be investing in other collectables requiring less maintainance eg antiques. But vintage prices for 'stuff' is escalating 

Some have bought silver/gold at weight cost price (not jewellery or funds but actual solid silver). I think of them as hoarding pirates but they seem to have done well. 

Those that have gone in the stock market have done well. My worry is with all these 'investments', is that like housing, these are just a bubble and once you can get 3 or 4% on your cash that these things will fall back to where they belong. When that will happen though is a completely different matter. 

My strategy (which over the last year has spectacularly failed v's the stock exchange) has been premium bonds, 3 Santandar and Lloyds Club current accounts, loyalty ISAs (1.4%) and the like. I have bought shares in a FTSE 100 and sell whenever I make 5%. But that is incredibly frustrating because they consistently do better once I sell and worse once I buy. Also the relative amount just isn't worth the hassle.

'I wish I could afford one' has a well published strategy for investments which works for him but DYOR and it is personal for his circumstances.

Every now and then I keep thinking 0.25% rates, inflation at way above that, stock market booming - this could be a golden opportunity to take advantage of something for a year or so. Just, like you, I am not sure what...and I guess that is why so many muddle their way into BTL because it's in front of them. 

I keep watching - good thread?

Edited by Phil321
Typo

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1 hour ago, Phil321 said:

I have bought shares in a FTSE 100 and sell whenever I make 5%. But that is incredibly frustrating because they consistently do better once I sell and worse once I buy. Also the relative amount just isn't worth the hassle.

Sell the losers and keep the winners. I think you're getting nailed by something which catches a lot of people.

I wouldn't worry too much about what returns other people are making on their investments. They are relying on timing their selling perfectly, which they may... or may not.

Some oligarch ate a 50%+ loss on some artwork they liquidated recently. Investment grade assets are only worth what people will pay for them. Once the selling begins, their "investment grade" status loses its lustre.

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2 hours ago, Phil321 said:

My strategy (which over the last year has spectacularly failed v's the stock exchange) has been premium bonds, 3 Santandar and Lloyds Club current accounts, loyalty ISAs (1.4%) and the like. I have bought shares in a FTSE 100 and sell whenever I make 5%. But that is incredibly frustrating because they consistently do better once I sell and worse once I buy. Also the relative amount just isn't worth the hassle.

If I may, you should hold the ones increasing and sell the ones that lose 5%. Cut your losses and not your gains. 

Alternatively, your preferred holding period should be forever. 

IMHO the simplest, cheapest and most efficient investment is a global equities tracker. These are very low cost, highly diverse and will capture global growth rates which tend to be higher than the UK, over the medium to longer term. 

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7 minutes ago, Sajid the Taxmeister said:

I STR'ed in 2008.  25% originally Shares, rest stayed in cash at very poor IR.  Over time used CGT allowance to convert shares to cash.  "Tin foil" moment is cash in any account does not exceed £50k - Do you trust them?

I trust they want to do away with cash.....low cost tracking use ISA allowence, drip feed.....risk, but benefits from the market as a whole ........ It is the fees that compound and easily make big holes in any potential gains.... diversity is the hedge......I am not a financial adviser.;)

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3 hours ago, Phil321 said:

This is a real issue and because I sell rather than keep/rent my developments (apologies...mostly)  I have cash at the moment. 

I would not buy 'investment' property again....but the interest rates make it too tempting for many. I can't believe granny bonds are withdrawn, a property yield of 4% is considered ok and cash is earning almost nothing...it is driving all sorts of behaviours that would be irrational if rates where even 'just' increased to a very low 3%.

So my wealthier associates are buying 'stuff' rather than holding cash. Maybe a Submariner or Daytona vintages Rolex or a Omega/Breitling..the Patik Phillippe the ultimate watch but a 'very rich' investment. Always automatics and Swiss. My concern with these are they need a £500 service every 5 years....and but really not an investment market although they do keep proving me wrong?.

So I imagine others will be investing in other collectables requiring less maintainance eg antiques. But vintage prices for 'stuff' is escalating 

Some have bought silver/gold at weight cost price (not jewellery or funds but actual solid silver). I think of them as hoarding pirates but they seem to have done well. 

Those that have gone in the stock market have done well. My worry is with all these 'investments', is that like housing, these are just a bubble and once you can get 3 or 4% on your cash that these things will fall back to where they belong. When that will happen though is a completely different matter. 

My strategy (which over the last year has spectacularly failed v's the stock exchange) has been premium bonds, 3 Santandar and Lloyds Club current accounts, loyalty ISAs (1.4%) and the like. I have bought shares in a FTSE 100 and sell whenever I make 5%. But that is incredibly frustrating because they consistently do better once I sell and worse once I buy. Also the relative amount just isn't worth the hassle.

'I wish I could afford one' has a well published strategy for investments which works for him but DYOR and it is personal for his circumstances.

Every now and then I keep thinking 0.25% rates, inflation at way above that, stock market booming - this could be a golden opportunity to take advantage of something for a year or so. Just, like you, I am not sure what...and I guess that is why so many muddle their way into BTL because it's in front of them. 

I keep watching - good thread?

Buying collectables is a great way to lose money

 Only the very best cars and paintings in the millions will have done anything. Especially with antiques the Market has crashed as we have become minimalistic. Good Georgian furniture is worth less than 40 years ago.

Also there is a big difference between the retail price of a collectable like a car and what you could realistically get selling privately.

Edited by crashmonitor

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18 hours ago, keeprenting said:

What should people who STR do with the money? Does anyone have ideas/ what have people actually done with it?

split the money into several tranches to avoid loss of value. 

10% in a foreign currency cash or leveraged. (find something that's undervalued today, like euro)

30% in equities in slightly undervalued companies (power utilities and miners are two groups which come to mind)

10% in "raw material" e.g. futures / options with long strike dates. 

40% in a savings account /  guaranteed bonds in pounds.

10% in "hot equities" - e.g. tech and some non UK/US equities like Brazilian, Indian etc...

 

that's what I do anyway.

Edited by hayder

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6 hours ago, Phil321 said:

Some have bought silver/gold at weight cost price (not jewellery or funds but actual solid silver). I think of them as hoarding pirates but they seem to have done well. 

Those that have gone in the stock market have done well. My worry is with all these 'investments', is that like housing, these are just a bubble and once you can get 3 or 4% on your cash that these things will fall back to where they belong. When that will happen though is a completely different matter. 

It's true that the US market is historically very expensive at the moment and, because this index dominates global market cap, it tends to dominate sentiment, but other markets are on much more reasonable valuations at the moment - including, as you might expect, the UK. There's a good dashboard page here that tracks all indices over a variety of metrics. A global tracker will tend to overweight the overpriced indices but it's still the least worst option for most people (including me).

Precious metals are another decent asset to hold as part of a portfolio of assets. The idea is to find assets that are uncorrelated so that if one is in a bubble and pops, then the others make up the difference. If everything is in a bubble and it pops then we're all screwed anyway and our 'safe' cash will probably take a haircut.

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10 hours ago, Grab_Some_Popcorn said:

So you and your partner's house deposit is a BTL property? I.e. One that needs to be sold to free up the cash?

BTL plus cash sitting in the bank account earning measly interest.

The BTL will sell - already had two offers on it. 

No appetite for going into the stock market when it's at historic highs or spending time making a portfolio of investments (and probably getting it wrong).

I think this means we just have to accept 0.0001% interest rate and suck it up. Which will put the pressure on to spend the money by the end of the year.

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5 hours ago, adarmo said:

If I may, you should hold the ones increasing and sell the ones that lose 5%. Cut your losses and not your gains. 

Alternatively, your preferred holding period should be forever. 

IMHO the simplest, cheapest and most efficient investment is a global equities tracker. These are very low cost, highly diverse and will capture global growth rates which tend to be higher than the UK, over the medium to longer term. 

You may. And as you tell me this I know it to be true. But my execution when dealing with shares is awful and I never learn and it's a real weakness of mine. Perhaps I notice the under achievement more...but it never seems a satisfying result even if I make a little profit. I have just put some money in a share ISA (in cash at moment) and will look for something longer term. 

The comments from others around collectables 'as sure fire way to lose money'....again I don't disagree. Recent experience of watching others has differed but my 'research' and 'experience' is incredibly narrow...and I would bow to others with more experience on such things. My friends may have been (as I suspect) rather lucky. 

So my comments don't really add much as I am currently in cash also stratching my head at the moment....sharing what I have seen other do....as I do little or nothing. 

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3 hours ago, Phil321 said:

You may. And as you tell me this I know it to be true. But my execution when dealing with shares is awful and I never learn and it's a real weakness of mine. Perhaps I notice the under achievement more...but it never seems a satisfying result even if I make a little profit. I have just put some money in a share ISA (in cash at moment) and will look for something longer term. 

The comments from others around collectables 'as sure fire way to lose money'....again I don't disagree. Recent experience of watching others has differed but my 'research' and 'experience' is incredibly narrow...and I would bow to others with more experience on such things. My friends may have been (as I suspect) rather lucky. 

So my comments don't really add much as I am currently in cash also stratching my head at the moment....sharing what I have seen other do....as I do little or nothing. 

You may be more on track than you realise with your contrarian philiosophy. Studies show most people stick with winners and sell losers and lose against the index. You probably are just cashing out too soon on the winners.

But medium term winners become losers and losers become winners. That's why Recovery funds tend to outperfom. 

Edited by crashmonitor

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4 hours ago, Phil321 said:

You may. And as you tell me this I know it to be true. But my execution when dealing with shares is awful and I never learn and it's a real weakness of mine. Perhaps I notice the under achievement more...but it never seems a satisfying result even if I make a little profit. I have just put some money in a share ISA (in cash at moment) and will look for something longer term. 

The comments from others around collectables 'as sure fire way to lose money'....again I don't disagree. Recent experience of watching others has differed but my 'research' and 'experience' is incredibly narrow...and I would bow to others with more experience on such things. My friends may have been (as I suspect) rather lucky. 

So my comments don't really add much as I am currently in cash also stratching my head at the moment....sharing what I have seen other do....as I do little or nothing. 

The core principles of investing I use are (and everyone feel free to give me a kick if you disagree):

1. Pound cost averaging (investing a sum at regular intervals to avoid timing the market - nobody can time the market)

2. Diversification and asset allocation (ensure you portfolio holds a broad range of interests, and depending on your risk appetite, investment objectives and time horizon spread this across the asset classes to suit you)

3. Minimise costs (tax wrappers, SIPPS and ISAs, tax efficient investing (VCTs but beware), transaction costs and if using funds ignore the AMC and look at the TER = Total Expense Ratio). Managed funds will need to beat the index by at least their TER to even be worthy. In the longer term virtually none do, and it's far easier (and more certain) to minimise costs than pick an Alpha adding fund manager.

4. Re-invest all incomes (snowball that nest egg)

5. Avoid structured products (not always, but generally they don't perform well and if they do the bank is taking half of it)

 

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