It has become common knowledge that many people in today’s world see property as a safer investment than cash. With the continuing problems with some of the financial institutions many people are looking at alternative options than having their savings tied up in banks. Is this really a wise move or are people hanging on to the fact that the property markets have been booming for a number of years.
Investing in Property ISA’s
Many people will see property as a long term investment and view bricks and mortar as a good option for your savings. There are pitfalls with property however and the markets recently have become a little more unstable, this though should not concern many as it is widely predicted that house prices will not fall considerably in 2008. Property investment can come in many guises, it is not necessary to buy property in order to make money in the property markets. Many people look to put their money into property funds, the property fund market has gone through the roof recently. It is possible for an investor to put up to seven thousand pounds into a tax free investment ISA each year. Over the last few years many people have experienced high returns when investing in commercial property funds and these still offer a good investment opportunity today.
Stock market bearish
Many people though will still be looking at the residential property markets as the high earner, especially with the high returns on the rental yields and the gains in property prices. There are two types of fund that the investor could put their money into when looking at an investment ISA. These are ones that invest directly in bricks and mortar or alternatively those that invest in the shares of the companies which build and run property. The breakdown of the two investment ISAs can be assumed as aggressive for the shares option and defensive for the property option. Over the last few years the stock markets have been on the rise and good returns could be made with stock and shares, however the defensive investment is the purchase of actual property funds; these will out perform an investment ISA when the stock markets are bearish. Financial advisors will often quote that between five and fifteen percent of any investments an individual makes should be in property.
For the astute investor it appears that the days of high interest bank accounts no longer have the appeal and people are looking to increase their capital gains quicker and in more lucrative options. There are risks associated with these forms of investment; however with recent events in the banking world are the risks any higher than having your money held in high interest savings accounts?