Why Invest In Property

As a Professional Financial Adviser, I advise my clients to diversify their portfolio to spread their risk and achieve good growth over the medium to long term. I tell them ‘diversify your money to lower the risk of your portfolio. So if one sector doesn’t perform well the other areas could be bucking the trend and going up.’

I teach my clients to distribute their money into bonds, stocks and shares, multi manager funds, commodities, emerging markets, as well as spread their exposure throughout the UK, Europe, Latin America, Japan and China etc.

After all the UK makes up only 11% of the Global economy, so it doesn’t make sense to hold your portfolio hostage to it.

One year I made 92% return on an emerging markets fund so I’m aware as to just how well funds can do.

Nevertheless despite years of studying and educating other people to diversify their portfolios, I have to admit in the last few years my own portfolio has become heavily weighted in property. Although this goes against the grain of financial advising, I recently took the time to really question myself ‘Why am I pushing so much money into Property?’

Pound for pound, Stocks and Property perform quite closely. Some say Property will outperform shares hands down and vice versa.  I believe that Property is one of the best vehicles you can earn money through without having to work. What asset class can make you money without you having to do anything? If you invest in stocks and shares you need to have knowledge of the market, be close to a computer and know when to buy and sell.  Invest in property and an agent can take full control allowing you to make money without having to do anything. Property can create the life you want and give you the freedom you deserve.

40% of people on the Times 100 Rich List have earned their fortunes through Property investing. Since records began in the 1950’s Property has doubled in value every 7-10 years on average. Therefore history tells us it’s been an excellent investment. (Although past performance is not a guarantee of how property might perform in the future, it is an indicator of what is likely to happen over a long period of time.) According to the Halifax index, UK Property prices have risen in the last 36 out of 40 years seeing an average annual increase of 10.6%.

Demand is outstripping supply with the shortage of homes in the UK currently at around 120,000 pa. By the end of 2012 the Halifax predicts the shortfall will have reached 400,000 pa. Taking all of the above into account, what a great time to own an investment property?

Demand is outstripping supply pushing rental figures up. One of my properties in South London became vacant a few days ago, I put an ad up on the internet in the hope I’d get a few appointments booked in for the following week, I then sent the decorating team in to freshen it up.  Within a few hours my phone was inundated with calls, I insisted the property wasn’t ready. I then had two individuals offering over the asking price for it although they hadn’t even seen it! This just proves demand is outstripping supply, especially in this climate. Also the fact that rents have doubled every 8-11 years is another positive.

After refreshing myself on the above pros of property investing and reading over the statistics, I have decided I’m happy for my portfolio to remain heavily invested in property.