Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Help - What do I do? Shares / Property

Investment discussion for beginners. Why you should invest your money, get help getting started
JonB
Posts: 3
Joined: November 16th, 2017, 2:55 am
Has thanked: 4 times

Help - What do I do? Shares / Property

#96091

Postby JonB » November 16th, 2017, 3:40 am

Hi Guys

New to the forum and need some advice / opinions please. I am from the UK, single, currently reside abroad (Australia, permanent resident) am 36 years old and earn (the equivalent) of £35k per year. I have just move to the area I live in and am in a new job i.e. finance not an immediate option but will be soon.

I have significant savings in the UK (circa £400k) and around $100k in Australia. All of this is currently in the bank sitting earning minimal interest (UK 0.75%, AUS 2.8%, some in Peer 2 Peer at 4%). This has been my position for the last year and is frustrating - lots of cash, but doing not very much and not providing me with any cashflow to prop up my low earnings. I am hesitant to bring that money to Australia due the attrocious exchange rates since Brexit and i've basically been sitting on it waiting to see what would happen.

In order to do something with the UK cash I was considering buying a property outright in my hometown (all UK funds). Growth has been very strong there over the years and it seemed like a good bet that would initially provide me with cash flow (circa 3%) from the rent, with the option to mortgage further down the line if I wanted to free up cash (although AUS / UK mortgages not supposedly easy to arrange). It also gives me the option to return home if I ever want to and keep a strong family connection over there. I was then looking to use that cashflow to supplement my income in a property purchase over here, where I would look to pay the mortgage down fast.

I have instructed on a property and will be due to exchange soon, however I have a major case of cold feet. The property market has ground to a halt and I can see a huge possibility that prices will drop. If they do things will also be very slow to recover with Brexit etc in the background. Not exactly the time to be all in on property. Saying that growth might just be next to nothing for the next couple of years and then start to slowly recover so...

If i don't continue with the purchase, what else could i do? UK / US shares at an all time high doesn't exactly seem like a very safe bet either and I have little experience when it comes to investing.

My goals are to achieve cash flow initially, combined with growth in a relatively safe environment. I am pretty young so I am prepared to take risk to grow the money.

It seems my options are

1. Buy house all in, benefit from the cash flow, take risk in volatile market, possibly see not much growth / a loss over short term
2. Pull out, loose circa £2k and look at a simple(ish) plan to invest i.e.something like Vanguard Life Strategy 60:40 or possibly 80:20
3. Keep all £ in cash at 0.75% and wait and see what happens (budget end of Nov + Brexit / government in Jan)
4. Wear bad exchange rate (1.72), bring money to Aus (economy arguable more stable, housing market doing better) and either buy home plus some shares or a couple of rental properties (can get finance easier here)

I know this is very much a case of 'first world problem' but it is doing my nut in and I could do with some outside opinions / ideas. Any opinions or advice is much appreciated.

Thanks in advance

Jon

Itsallaguess
Lemon Half
Posts: 9129
Joined: November 4th, 2016, 1:16 pm
Has thanked: 4140 times
Been thanked: 10023 times

Re: Help - What do I do? Shares / Property

#96094

Postby Itsallaguess » November 16th, 2017, 5:10 am

Don't underestimate the non-financial benefits of owning your own home and not having a huge mortgage.....

Cheers,

Itsallaguess

TUK020
Lemon Quarter
Posts: 2039
Joined: November 5th, 2016, 7:41 am
Has thanked: 762 times
Been thanked: 1175 times

Re: Help - What do I do? Shares / Property

#96098

Postby TUK020 » November 16th, 2017, 7:05 am

Decide where you think you want to live longer term, and buy a house there. Then start thinking about building an investment portfolio in that currency. Don't need to rush it, but if you are going to stay in Australia, there is little point in buying a house in the UK

richfool
Lemon Quarter
Posts: 3492
Joined: November 19th, 2016, 2:02 pm
Has thanked: 1194 times
Been thanked: 1280 times

Re: Help - What do I do? Shares / Property

#96130

Postby richfool » November 16th, 2017, 9:35 am

Don't under-estimate the practical problems and hassles of maintaining and letting out a property that is at a great distance from where you are, even with agents. Be aware of the tax implications and changes affecting properties held in the UK by those who are "Non-UK Resident for tax purposes", e.g. CGT.

If your objective is exposure to UK property, you could invest in a property fund or trust -e.g a REIT., though noted you can't move back to the UK and live in one.

You could maintain your "liquidity" longer and wait and see how your future pans out, - e.g. if you decide to stay in Australia.

tjh290633
Lemon Half
Posts: 8208
Joined: November 4th, 2016, 11:20 am
Has thanked: 913 times
Been thanked: 4096 times

Re: Help - What do I do? Shares / Property

#96138

Postby tjh290633 » November 16th, 2017, 10:36 am

My thoughts are dependent on whether you ever intend to move back to the UK.

Residential property is going to be subject to CGT as long as you do not reside in it. Rental income is going to be subject to basic rate tax, if you count as an overseas landlord, as I understand it. You need to look at Double Taxation arrangements.

My choice would be to invest in some of the global ITs (F&C, Alliance, Witan for example) and maybe a couple of REITs (I have BLND and SGRO). The same taxation arguments apply, but you don't have the costs of management and repairs to contend with.

Alternatively transfer the money to Australia and buy yourself somewhere to live.

Then start to build an investment portfolio towards retirement income.

TJH

JonB
Posts: 3
Joined: November 16th, 2017, 2:55 am
Has thanked: 4 times

Re: Help - What do I do? Shares / Property

#96241

Postby JonB » November 16th, 2017, 4:06 pm

richfool wrote:Don't under-estimate the practical problems and hassles of maintaining and letting out a property that is at a great distance from where you are, even with agents. Be aware of the tax implications and changes affecting properties held in the UK by those who are "Non-UK Resident for tax purposes", e.g. CGT.

If your objective is exposure to UK property, you could invest in a property fund or trust -e.g a REIT., though noted you can't move back to the UK and live in one.

You could maintain your "liquidity" longer and wait and see how your future pans out, - e.g. if you decide to stay in Australia.


Yes, the more I speak to agents / look at the costs, the more I realise what a pain in the backside a lot of it will be. I think it's more the idea / security aspect of having a place in my hometown that 'seems' appealing...could equally turn out to be a costly exercise that I never end up stepping foot in.

Thanks again

JonB
Posts: 3
Joined: November 16th, 2017, 2:55 am
Has thanked: 4 times

Re: Help - What do I do? Shares / Property

#96244

Postby JonB » November 16th, 2017, 4:11 pm

tjh290633 wrote:My thoughts are dependent on whether you ever intend to move back to the UK.

Residential property is going to be subject to CGT as long as you do not reside in it. Rental income is going to be subject to basic rate tax, if you count as an overseas landlord, as I understand it. You need to look at Double Taxation arrangements.

My choice would be to invest in some of the global ITs (F&C, Alliance, Witan for example) and maybe a couple of REITs (I have BLND and SGRO). The same taxation arguments apply, but you don't have the costs of management and repairs to contend with.

Alternatively transfer the money to Australia and buy yourself somewhere to live.

Then start to build an investment portfolio towards retirement income.

TJH


Thanks TJH...(I'll check those trusts out) I suppose that approach would be along the Vanguard lines and may well be a sensible option for the short term while I see what happens with the exchange rate. It has been slowly recovering but I couldn't stomach moving the money after nearly a quarter of its value had been wiped off. Thats a fair few years of good growth there that might well repair itself by natural order in a few years...that doesn't give me a house to live in in the meantime though!

richfool
Lemon Quarter
Posts: 3492
Joined: November 19th, 2016, 2:02 pm
Has thanked: 1194 times
Been thanked: 1280 times

Re: Help - What do I do? Shares / Property

#96304

Postby richfool » November 16th, 2017, 7:44 pm

JonB wrote:Yes, the more I speak to agents / look at the costs, the more I realise what a pain in the backside a lot of it will be. I think it's more the idea / security aspect of having a place in my hometown that 'seems' appealing...could equally turn out to be a costly exercise that I never end up stepping foot in.

My brother has rental properties in another town in the UK and even though he has an agent, he is frequently having to go there to see the agent, resolve something that has gone wrong, review things, meet tradesmen etc. The properties also require various annual safety inspections. Sometimes there is a delay in finding a new tenant. And yes, there will be financial accounting and tax to deal with! Me I just sit at home and buy and sell stocks. ( Yes, I too hold Witan, along with Standard Life Property Income and several Global G&I Investment Trusts - MYI, HINT, IVPG.)

Even if you retain a property as a base to return to, you can't really keep any of your personal effects there.

I did live overseas for a while, during that time I kept funds in an investment portfolio (UK based) and then drew on that when I decided to move back to the UK.

Currency exchange rates will ebb & flow. If you are concerned about that, some countries/banks or foreign exchange dealers will allow you to hold accounts in other currencies.

Good luck with your decision. (I hope it's somewhere warm in Australia).

Howard
Lemon Quarter
Posts: 2178
Joined: November 4th, 2016, 8:26 pm
Has thanked: 885 times
Been thanked: 1017 times

Re: Help - What do I do? Shares / Property

#97498

Postby Howard » November 21st, 2017, 12:02 pm

I'm approximately twice your age and looking back I have never regretted investing in a share portfolio rather than properties.

As others have advised, friends with properties seem to spend a lot of time on maintenance etc. Those who say they have done well have committed a lot of their spare time to doing things I'd hate, like negotiating with builders, utility suppliers and tenants etc.

A well-diversified portfolio of Investment Trusts with global reach and left alone to accumulate would seem a good idea to me. Any adjustments can be done from afar with ease.

When I want to realise some cash by selling shares, it takes three days or less to get the proceeds in the bank account.

Obviously you need to look at tax implications but I'd be surprised if property was a better bet in your situation.

Good luck in whatever you choose!


Return to “How Do I Invest”

Who is online

Users browsing this forum: No registered users and 14 guests