16 Mar WHAT IS A SOUND INVESTMENT IN THESE CHALLENGING TIMES?
These are particularly challenging times, with unprecedented pressures on the economy, brought about by the fear of the Covid-19 virus, ramped up by some unthinking politicians and commentators, speculating on the worst case scenarios and doom day conclusions. This is being fed and given life blood by the more sensationalist media, made up of some of the press and irresponsible comments by self-styled ‘experts’ who are of course not experts. The only sound advice is that provided by the real medical experts, men and women of science, unaffected by attention seeking headlines and other pressures.
As a result of this pandemic panic, stock markets have fallen markedly and this has been made worse by Investors, originally moderate, but who now find themselves caught up in the trend and not able to risk waiting out a recovery.
So where to put your money? You can keep this in cash, which despite some deflation in the value of the pound, is still quite sound. Another option is gold, but that is not in sufficient supply to meet the needs of world, or there is a third option, which is property.
Homes have a basic value that does not diminish with time or circumstance. They are always needed, either to rent or buy, and for some years to come, there will not be enough to meet the rise in demand.
The only reasons for property values to dip, which is invariably on a temporary basis, is a reduction in demand. As confidence returns to the economy, personal property is restored as a first choice of investment. The need for property continues for numerous reasons, including the need for more space, down-sizing for personal needs or financial reasons, retirement to Nursing Homes, change of mobility reasons, such as needing to move to single storey accommodation, job moves and other relocations, partnership break-ups (selling one property to buy two, of course), and regrettably people passing away. With the exception of Estate Duty and Capital Gains Tax on the sale of second properties, owner occupation does not attract significant tax on realisation, the exception being a little Stamp Duty.
Residential property is such a wonderful investment because apart from being a safe place to invest your capital, it provides all the pleasure and security afforded by your own home. Further improvements, not only give added pleasure, but will increase the value of the investment, so it is a rare win/win situation.
The volatility and uncertainty of the Shares market illustrates the value of the home as a safe deposit for your assets, even more than Pensions that reflect stock market performance.
Consider these points, when it is an appropriate time to realise investments from elsewhere and take the benefit of professional advice.