Tuesday, September 4, 2007

1 in 5 say a collapse in house prices is biggest threat to their retirement fund

Pension gamblers

Brits are gambling with their futures by betting on the lottery and at the bookies, rather than saving for retirement....But, while some are hoping their numbers come up, others are betting on property to provide their retirement income. Not clear whether all these are BTL or whether some hope to either downsize or release cash from own home in some other way.

Posted by su @ 06:57 AM (1052 views)
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9 thoughts on “1 in 5 say a collapse in house prices is biggest threat to their retirement fund

  • japanese uncle says:

    And they would say in the event they lose their gamble, that the authorities must do something about it as they did not read the ‘small letters’.
    Gambling involves the possible (or probable, unless you are well-informed) loss of your whole captal, period. Everyone must know this golden rule. Having said that, some of the big financial boys are immune to this golden rule, and take the winning when they win, while airlifted to safety when they lose.

    By the way I like the Scottish Hydro’s (which happens to be my provider) advert featuring bumble bees.

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  • Good article. I particularly like how investment in property is likened to less “noble” types of gambling practices.
    In the past few years we have been told that property is the only type of gambling where you just can’t lose… How things change.

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  • tyrellcorporation says:

    I’ve lost count of the number of BTL people I’ve spoken to who say ‘well it’s my pension int it’. I think the raid of the UKs private pensions by Goordon Broone has been significant in the flight into bricks ‘n’ mortar.

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  • Absolutely, Absolutely. The poor performance of pensions is a major contributor to this asset boom. What really irks me is that the city boys earn lots of commission on trading shares but dont properly diversify pensions plans. Pensions should be holding all asset classes from bonds/property, gold,shares etc. Whilst returns might be not quite as stellar sometimes but they are less risky. The dotcom bubble is another major factor. Lots of young professionals bought share isas only to see the values fall dramatically. A few years on they have more money and dont want to buy shares anymore.

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  • dohousescrashinthewoods says:

    This is very impressive.

    Even more impressive if it gets ordinary people to move their pensions out of property whilst still in profit.
    On the plus side, if people move out of property-as-pension, prices will return to non-speculative “homebuying” levels.
    However, someone is going to be left holding the baby, whether it’s the current owner or the next one, someone will be facing a tragedy.

    Sure, you can hold on to it for the long term, but, even on a pension timescale, 20 years to break even may be pushing it.

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  • Ihopeitgoeswithabang says:

    Can’t see how anyone getting a BTL now thinks they are on a winner. But there are plenty of them out there.
    Brown should never have taxed Pensions.
    What he should have done is Tax BTL’s.
    But that would have put the foot in the door of his economic miracle.

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  • I’ve been looking to buy for almost 4 years now, but all I keep hearing is ‘hold back, theres a crash on the way’ or ‘The prices will steady and or even fall’. But nothing as changed, its still the same. Things have begun to slow down, but how long will I have to wait before houses become AFFORDABLE again?? another 5 years….10…..15…..20!!!! Do I just buy I hope that things continue to slow and stagnate or still continue to pay ‘dead money’ in rent????

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  • Still-waiting says:

    I’ve been waiting for house prices to crash for years so I can buy a house but it never seems to happen.

    A while ago I figured out how much extra per month I’d have to pay to buy the place I’m renting, and started putting that amount in an ISA. I should probably be investing this more wisely i.e. in my pension or something else.

    I think the main reason people buy houses is because they don’t have a problem with economising to pay the mortgage. But ask them to save some money in a bank account, or put it in a pension, and they’ll tell you they don’t have the spare cash. It’s psychological. They also never consider the expense (and time/stress) required to maintain a property.

    However, many people tell me that the repayments on their mortgage are the same as they would be paying in rent. So surely it’s better to have a mortgage and be contributing towards one day owning the place? And repayments tend to decrease in the latter stages of the mortgage, so as long as you can survive any storms in the form of interest rate rises you’ll be ok and life will become easier after 10 years or so.

    Plus, if you own a building outright, you at least have a roof over your head. If you have a pension, then some fatcat politician or businessman will probably plunder it, leaving you with nothing…

    Am I being stupid in holding out and not buying? Or should I stick to my guns?

    Comments please!

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  • Still-waiting says:

    It’s all gambling. Buying a place, not buying a place. It’s just a gamble on whether you are buying when prices are peaking or not…

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