# Property Investment Decision



## jim (27 Mar 2019)

Hi all,

I am looking for some advice re decision on whether or not to sell investment property.

Profit on a sale would be approximately €80k if sold today, based on est value of property, o/s mortgage and cost of sale including CGT.

Net annual rental income is approximately €6k, after mortgage, income tax and estimate of costs.

So €80k profit if sold versus annual net income of €6k.

We are hoping to buy our future home in the next year or 2 and so will likely need to sell the investment property to fund this. We have another property that we live in that we intend to hold on to as an investment property after we move to our future home.

Value of PPR is approx. 280k and o/s mortgage is €177k. I know this would be factored into affordability by the Bank when getting mortgage for future home.

We will have combined savings in 1 yr of approx. €75k. Combined salary is €145k.

Budget for future home would be €500k approx.

If we can avoid selling the investment property we will as its generating a good annual return.

Does it look like it would be possible to buy future home without having to sell investment property?

Let me know if any questions/further info needed.

Thanks


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## jim (29 Mar 2019)

Any thoughts or advice from anyone?

Tks


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## RedOnion (29 Mar 2019)

You haven't given any of the information that's actually needed to give you any advice.

You're confusing 'net cashflow' with profit in opening post.

What are your ages, and do you have any dependents?

For each property:
Value
Outstanding mortgage
Rent (per month) - estimate for current PPR
Interest rate
Term remaining
Monthly repayment


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## jim (29 Mar 2019)

Apologies RedOnion, here is some more info. Let me know if more is needed.

Ages: 39 & 34
Dependents: 2

Property 1 (Invest Property):
Value = €265k
O/s mortgage = €170k approx
Monthly mortgage = €773
mortgage rate = 2.9%
Term 26 yrs
Monthly gross rent = €1650pm
Net rent per annum after income tax and approx costs = €6k

Property 2 (PPR):
Value = €280k
O/s mortgage = €177k approx
Monthly mortgage = €790
mortgage rate = 3.1%
Term 31 yrs (maybe 30..)
Est rent per month = €1500pm

By my calculation if I were to sell Proprty 1 I would have a profit of approx €80k after costs and CGT. This is a rough enough calc though.

My annual net income from this property is about €6k.

So I am trying to assess whether I should sell property 1 given that, on 1 hand,  I am very happy with its annual return, but on the other hand, we prob need to sell to help fund our future home. If, based on the above info, there was a possibility to not sell property 1 and still manage to fund a new home worth around €500k I would want to go that way.

Thanks.


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## galway_blow_in (29 Mar 2019)

I'd sell, you have a high combined income so 6k per year rental income won't make much difference


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## jim (29 Mar 2019)

Thanks Galway.

€6k does make a decent difference for us, Its an extra 10% approx on our net pay. And we have a good asset/investment. 

Question i suppose is do we need to sell to fund new home purchase of around €500k or are we ok given salary (and therefore mortg amount that could be approved) plus forecast savings of about 70k....having the two mortgages obv impacts this but then again so does having rental income.


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## RedOnion (29 Mar 2019)

There's 2 separate questions you could ask:
1. Can you keep them both, and
2. Should you.

You only asked the first, so that's what I'll look at.

Unfortunately, you'll only know when you talk to a bank. 

You need a 20% deposit, which you're not going to have, so you'll need an exemption. Now, exemptions on LTV are a but easier to get than LTI, but banks can choose who to give them to.

On the income side, the net after tax rent easily covers the mortgages, even with interest rates stressed at 7%. So it shouldn't weigh heavily on your affordability test.
As a rule of thumb, once 75% of the rent after tax can cover the mortgage, you'll be fine.

So, if you can get the exemption (or come up with 20% deposit) you should be fine.


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## Sarenco (29 Mar 2019)

RedOnion said:


> You need a 20% deposit, which you're not going to have, so you'll need an exemption


The OP has ~€100k equity in their PPR - that would suffice for the deposit on the new PPR (and they would still have ~€75k in cash savings).

On the face of it, the rental property looks like a sound investment.


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## RedOnion (29 Mar 2019)

Sarenco said:


> The OP has ~€100k equity in their PPR - that would suffice for the deposit on the new PPR (and they would still have ~€75k in cash savings).


My post was based on if they don't sell.

In OP he wants to retain BOTH existing properties (it's in there, I just had to read it a few times)



jim said:


> We have another property that we live in that we intend to hold on to as an investment property after we move to our future home.


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## Sarenco (29 Mar 2019)

Sorry Red, I missed that nuance.


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## joe sod (30 Mar 2019)

Just to look at things differently, you have 2 houses with approx 170k debt still on them and you will be buying a house worth 500k.

So in total you will have debt of circa  (840k)
But you have approx 80k equity in both rental houses and 75k savings, so you have a net worth of circa 240k,

So if you hold on to both rentals and buy the new house you will be worth 240k - 840k so you will have a net worth of (600k) in the negative.

if you sell one rental you will be worth (240 + 170) - 840 so you will have a net worth of (430k) in the negative.

if you sell both rentals you will be worth (240 + 170 + 177) - 840 so you will have a net worth of (253K) in the negative.

Obviously you are well able to service debt with your high incomes of 140k, (but you are young with both high incomes, is this sustainable?)  but still even by selling both rentals and doing well out of the property market compared to most people over the last decade you will still have a negative net worth of (253k). That would be the most sensible and low risk option.

Dont forget the mistake made by many irish people a decade ago having rental properties, high paying jobs, and thinking they were doing well, by doing this you will have a negative net worth of (600k)!!


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## Gordon Gekko (30 Mar 2019)

Hi joe sod,

Someone with an asset worth €1m and debt of €800k has a net worth of €200k.

Not -€600k as you seem to be suggesting!

Gordon


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## jim (30 Mar 2019)

Hi Joe,

Just to clarify..

Id have debt of 170 + 170 +400 as id be hoping to cover 100 with cash in theory. So id have total debt of 740.

Id have an assets theoretically worth 500 + 280 +265.

So net position woukd be +305

Servicing debt on all 3 properties woukd be very dooable with salaries as well as rental income from both properties.

Question is can i afford to buy 3rd house without having to sell property 1 so basically off the back of salsry level and savings. Its touch and go id say


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## MrEarl (30 Mar 2019)

Hello,

This is fairly simple imho .. sell the investment property.

You'll be taking on significant debt when you buy your new home, and intend to retain your current residence as a property investment, so that will generate future rent from that property (assuming all goes according to plan).

Why risk carrying more debt than you need post acquisition of your new home ?  If things continue to go well with regards to future income then great it will help you reduce your debt quickly, or increase your savings and investments, but if something goes wrong (demand for rentals won't always be the same as it is now, one of you might lose your jobs or be forced to take a salary reduction) you'll have a little less debt to manage.

There's also the question about how best to create further wealth into the future.  Can you do better by investing in a pension, keeping in mind the immediate tax break when you make contributions ?  Is the residential investment property market likely to continue to rise, stabilize, or perhaps fall in the years to come (and will the government impose further taxes or levies on landlords, put more caps on rent increases etc. ?) ?  Personally, I'm not convinced that the next 5-8 years are going to be good for residential investment property owners.


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## jim (30 Mar 2019)

Hi MrEarl, thanks for your response.

"Why risk carrying more debt than you need post acquisition of your new home ?"

Because the risk as i see it is mitigated by the return, both currently and what i forecast.

Just to be clear as well, i do want to keep both properties taking account of my view of the relevant risk (that of property investment) and my forecast return. Its not a question, for me, of whether i want the debt. Im confortable with the debt.

Taking opinion out of it re property investment and debt, i think its more a matematical question on whether i can afford to keep both investments or am i obliged to sell at least 1 to fund property 3. This is what i am hoping for advice on if possible!

I have my view on property risk, carrying debt and im ok with all of that side of it.


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## luckystar (30 Mar 2019)

Income x 3.5 times is €507k. 
Can't see how a bank could let you keep both properties and borrow €400k on top


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## RedOnion (30 Mar 2019)

luckystar said:


> Income x 3.5 times is €507k.
> Can't see how a bank could let you keep both properties and borrow €400k on top


The Investment properties are assessed based on rental income primarily. 
3.5 x income only applies to PPR.


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## joe sod (30 Mar 2019)

Gordon Gekko said:


> Hi joe sod,
> 
> Someone with an asset worth €1m and debt of €800k has a net worth of €200k.
> 
> ...



correct, was including the 500k house as a debt but forgetting that it was also an asset, a bit silly of me.


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## MrEarl (30 Mar 2019)

jim said:


> ....
> 
> "Why risk carrying more debt than you need post acquisition of your new home ?"
> 
> Because the risk as i see it is mitigated by the return, both currently and what i forecast.....



Fair enough, but I think you should take a look at those who put themselves in a similar situation to the one you are proposing to put yourself in, say 12-15 years ago, and see how they subsequently got on.  I hope it goes well for you if you take on the risk, and perhaps your incomes are safer than many others, or you have particularly good residential properties etc.

I expect you'll be cutting it close with a homeloan provider in terms of whether you will be able to retain the current arrangements or not, but you may well scrape through it with current interest rates so low (and even allowing for some stress testing of debt servicing ability etc.)


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## cremeegg (31 Mar 2019)

MrEarl said:


> take a look at those who put themselves in a similar situation to the one you are proposing to put yourself in, say 12-15 years ago, and see how they subsequently got on.



We got on really well thanks.

*Our income dipped over that time before recovering well recently. *

Rents fell from a level of 100 in 2007 to a trough of just less than 80 in 2012. See here https://onestopshop.rtb.ie/images/uploads/general/prtb-rent-index-report-2007-2012.pdf

*However our costs fell through the floor.* 

Interest expense has fallen by over 95% since 2007. See here https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html

Due the the availability of tracker mortgages many of us were able to avail of this decrease rather than having the banks eat it.

It is a much under appreciated fact just how profitable residential property investment has been over the last decade. Having said that, as a landlord, i would gladly sacrifice part of the profit for some regulatory certainty.


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## Sarenco (31 Mar 2019)

cremeegg said:


> It is a much under appreciated fact just how profitable residential property investment has been over the last decade.


On a total return basis, I would suggest that residential rental property investments have been distinctly underwhelming over the last decade.  

To what extent would net rental income over the last 10 years have made up for the fall in capital values?  I suspect many investments have barely broken even over the last decade.


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## cremeegg (31 Mar 2019)

Sarenco said:


> On a total return basis, I would suggest that residential rental property investments have been distinctly underwhelming over the last decade.
> 
> To what extent would net rental income over the last 10 years have made up for the fall in capital values?  I suspect many investments have barely broken even over the last decade.



Residential property investment is not, or at least should not, be seen as a short term thing.

To talk of total return over a fixed time period is not helpful. An investor who keeps control of the cashflow has freedom to sell whenever suits. This is a very powerful aspect of sensible property investment.

Marking the value to market every year is meaningless if you do not intend to sell, and if you cannot be forced to sell.

The property I bought in 2012 shows a return of 500%. That, if I sold now, would be €100k profit on a €20k leveraged investment. The property I bought in 2006 is still under water and the total return over 10 years is indeed probably negative. Each statement is true and each is meaningless. I have sold neither and do not intend to sell in the next 10 years.


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## joe sod (31 Mar 2019)

cremeegg said:


> The property I bought in 2012 shows a return of 500%. That, if I sold now, would be €100k profit on a €20k leveraged investment. The property I bought in 2006 is still under water and the total return over 10 years is indeed probably negative. Each statement is true and each is meaningless. I have sold neither and do not intend to sell in the next 10 years.



in that statement you have grabbed the reason why most people make money from buying a house and also why the financial crash was so devastating for property investors, namely leverage. You are buying an investment with borrowed money something you cannot do in the stock market. Therefore if i have 50k i can get a mortgage of 150k to buy an asset for 200k today. If i invest in the stock market all i can buy is 50K of stocks and shares. It also explains why the total amount of money invested in global stock markets has remained static over the last 20 years, whereas the total money invested in the global property and debt markets has exploded.


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## cremeegg (31 Mar 2019)

joe sod said:


> the financial crash was so devastating for property investors, namely leverage.



The property crash was not devastating for me, nor for any other residential property investor, who was in control of their cashflow.

In fact being leveraged made things more profitable during the crash due to the decrease in interest rates.


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## jim (31 Mar 2019)

There often seems to be a doom and gloom view of property investment on this forum. I get that people were affected by the downturn but not everyone was. my investment property is the best investment iv ever made and continues to be a strong investment. Its not luck either - i bought a certain property in a certain place at a certain time. Surely it boils down to the investment itself - some are good, some are not so good.

I can only recommend property investment to friends and family based on my experience, my strategy and indeed my outlook. But each to their own.


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## Sarenco (31 Mar 2019)

cremeegg said:


> Residential property investment is not, or at least should not, be seen as a short term thing.


Agreed.

I was simply responding to your statement that it is under appreciated just how profitable property investment has been over the last decade.  That statement is only true if you ignore the capital position, which seems odd to me.


cremeegg said:


> The property I bought in 2006 is still under water and the total return over 10 years is indeed probably negative.


So you would hardly say that investment has been very profitable over the last decade.  Maybe it will prove to be very profitable over a 20-year period.  Maybe not.

For comparison purposes, the S&P500 has quadrupled in value since the financial crisis.


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## Sarenco (31 Mar 2019)

joe sod said:


> You are buying an investment with borrowed money something you cannot do in the stock market.


Sure you can.

Anybody that invests in stocks through a pension vehicle while carrying a mortgage on their PPR is effectively buying stocks with borrowed money.


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## joe sod (1 Apr 2019)

Sarenco said:


> For comparison purposes, the S&P500 has quadrupled in value since the financial crisis.



I think we had a discussion about that statistic on another thread, and I pointed out that it is only 40% higher than year 2000, in fact the irish property market has outperformed the S&P 500 from year 2000.



cremeegg said:


> The property I bought in 2012 shows a return of 500%. That, if I sold now, would be €100k profit on a €20k leveraged investment.



its also the case that buying depressed assets like irish property in 2012, or S&P500 in 2009 is going to give outstanding returns with a bit of luck. Yes its true that S&P 500 has been in a bull market since the crash but so too has irish property. Another big factor of course for the outstanding returns of property since 2012 is the high octane of leverage, something not available to S&P500 investors


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## Sarenco (1 Apr 2019)

joe sod said:


> I think we had a discussion about that statistic on another thread, and I pointed out that it is only 40% higher than year 2000, in fact the irish property market has outperformed the S&P 500 from year 2000.


Two things:-

The total return of the S&P500, with all dividends reinvested, since the start of 2000 was 182% - not 40%; and
Cremeegg was talking about the return on Irish property over the last 10 years - not the return on Irish residential property since 2000.  



joe sod said:


> Another big factor of course for the outstanding returns of property since 2012 is the high octane of leverage, something not available to S&P500 investors


Why do you think it's not possible to invest in stocks on a leveraged basis?


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## galway_blow_in (2 Apr 2019)

joe sod said:


> in that statement you have grabbed the reason why most people make money from buying a house and also why the financial crash was so devastating for property investors, namely leverage. You are buying an investment with borrowed money something you cannot do in the stock market. Therefore if i have 50k i can get a mortgage of 150k to buy an asset for 200k today. If i invest in the stock market all i can buy is 50K of stocks and shares. It also explains why the total amount of money invested in global stock markets has remained static over the last 20 years, whereas the total money invested in the global property and debt markets has exploded.



Indeed, point to any real estate market in most Western countries since 1999 and the increase in the value of their property market dwarfs the local stock market, provided you bought in Dublin prior to 2006, you are up


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## galway_blow_in (2 Apr 2019)

jim said:


> There often seems to be a doom and gloom view of property investment on this forum. I get that people were affected by the downturn but not everyone was. my investment property is the best investment iv ever made and continues to be a strong investment. Its not luck either - i bought a certain property in a certain place at a certain time. Surely it boils down to the investment itself - some are good, some are not so good.
> 
> I can only recommend property investment to friends and family based on my experience, my strategy and indeed my outlook. But each to their own.



Lack of diversity is seen as a negative regarding property investment, thinking is quite orthodox.


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## galway_blow_in (2 Apr 2019)

Sarenco said:


> Agreed.
> 
> I was simply responding to your statement that it is under appreciated just how profitable property investment has been over the last decade.  That statement is only true if you ignore the capital position, which seems odd to me.
> 
> ...



The American Market is the outlier, property in every European capital has more than doubled in value since 1999 where as bar Germany, majority of local stock markets are flat for twenty years


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## galway_blow_in (2 Apr 2019)

Sarenco said:


> Sure you can.
> 
> Anybody that invests in stocks through a pension vehicle while carrying a mortgage on their PPR is effectively buying stocks with borrowed money.



So if I have no mortgage or loans, can I buy 150 k worth of stocks with 50 k cash ?

Didn't think so.

You might as well say if someone has a mortgage, they are then borrowing money for everything else from a cup of coffee to a pair of new shoes


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## Zenith63 (2 Apr 2019)

galway_blow_in said:


> So if I have no mortgage or loans, can I buy 150 k worth of stocks with 50 k cash ?
> 
> Didn't think so.


You absolutely can, either directly or via derivatives.  You may be able to get a loan from a bank to make up the €100k gap.  You can setup an account with any of the CFD/spreadbetting companies and buy significantly more than €150k with €50k margin, many would give you exposure to €1m in indices for €50k margin.  You could buy a bunch of options/futures which could give you exposure to well over €150k.  Not suggesting you SHOULD do it, but it is certainly possible and with a lot less effort and paperwork than a property mortgage.


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## galway_blow_in (2 Apr 2019)

Zenith63 said:


> You absolutely can, either directly or via derivatives.  You may be able to get a loan from a bank to make up the €100k gap.  You can setup an account with any of the CFD/spreadbetting companies and buy significantly more than €150k with €50k margin, many would give you exposure to €1m in indices for €50k margin.  You could buy a bunch of options/futures which could give you exposure to well over €150k.  Not suggesting you SHOULD do it, but it is certainly possible and with a lot less effort and paperwork than a property mortgage.



And infinitely more risky, CFD, s are a way to the poor house for anyone but professional traders who are OK with thee odd margin call


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## Sarenco (2 Apr 2019)

galway_blow_in said:


> The American Market is the outlier, property in every European capital has more than doubled in value since 1999 where as bar Germany, majority of local stock markets are flat for twenty years


That's simply untrue.


galway_blow_in said:


> So if I have no mortgage or loans, can I buy 150 k worth of stocks with 50 k cash ?


Of course you can!  There are any number of ways of buying shares on a leveraged basis - you could buy a tripled-leveraged ETF, for example.


galway_blow_in said:


> And infinitely more risky


Of course.  Investing in anything on a leveraged basis always increases risk.


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## Zenith63 (2 Apr 2019)

galway_blow_in said:


> And infinitely more risky, CFD, s are a way to the poor house for anyone but professional traders who are OK with thee odd margin call


Definitely.  Just making the point that it's actually easier to get margin to buy in the stockmarket than buying property, rather than it not being possible...


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## galway_blow_in (2 Apr 2019)

Sarenco said:


> That's simply untrue.
> 
> Of course you can!  There are any number of ways of buying shares on a leveraged basis - you could buy a tripled-leveraged ETF, for example.
> 
> Of course.  Investing in anything on a leveraged basis always increases risk.



The interest rates you pay for the privelage of investing in CFDs are multiples of a btl mortgage, you can only own them for a short term if you want to make money, they are for trading and as for x long or short instruments, those should not be touched by the vast majority of people as lack of liquidity alone will kill you

Your the fellow who heaps scorn on someone for paying  sub 7% on bread and butter purchases like motoring loans while now espousing complicated financial instruments as an alternative to property investing

You also referred to reinvested dividends in the S+P earlier, Irish investors cannot gain from that as U. S ETFS bought here pay out dividends in cash and the seven year rule kills the idea with acc funds so there goes the near 200% gain since 2000


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## galway_blow_in (2 Apr 2019)

Zenith63 said:


> Definitely.  Just making the point that it's actually easier to get margin to buy in the stockmarket than buying property, rather than it not being possible...



The point is purely academic, no practical value in it


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## Zenith63 (2 Apr 2019)

galway_blow_in said:


> The interest rates you pay for the privelage of investing in CFDs are multiples of a btl mortgage, you can only own them for a short term if you want to make money, they are for trading and as for x long or short instruments, those should not be touched by the vast majority of people as lack of liquidity alone will kill you


You'll pay about 4% on borrowed money to spreadbet, about the same as a BTL if not slightly cheaper.  You can hold for as long as you want.  But I'd agree fully with you that they should not be touched by the vast majority of people.



galway_blow_in said:


> The point is purely academic, no practical value in it


Personally I think correcting false statements about financial matters, in a financial discussion/advice forum, is a little more than just academic.


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## Sarenco (2 Apr 2019)

galway_blow_in said:


> Your the fellow who heaps scorn on someone for paying sub 7% on bread and butter purchases like motoring loans while now espousing complicated financial instruments as an alternative to property investing


Where is this coming from? 

I haven't heaped scorn on anybody and I certainly haven't recommended any complicated financial instruments.  I've simply corrected your false statements.

But, yes, I often recommend paying down expensive debt ahead of investing outside a pension vehicle.  I happen to think that's sound advice for most folk.


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## galway_blow_in (2 Apr 2019)

Sarenco said:


> Where is this coming from?
> 
> I haven't heaped scorn on anybody and I certainly haven't recommended any complicated financial instruments.  I've simply corrected your false statements.
> 
> But, yes, I often recommend paying down expensive debt ahead of investing outside a pension vehicle.  I happen to think that's sound advice for most folk.



Which statements were " false" ?


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## Sarenco (2 Apr 2019)

galway_blow_in said:


> Which statements were " false" ?



That the return on stocks in most markets has been flat over the last 20 years; and
That it is not possible to invest in stocks on a leveraged basis if you don't have any loans outstanding.


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## Sarenco (2 Apr 2019)

galway_blow_in said:


> You might as well say if someone has a mortgage, they are then borrowing money for everything else from a cup of coffee to a pair of new shoes


Yup, that's exactly the financial position.

A borrower has a choice what to do with every euro that comes in their hands - pay down their debt or buy something else.  If they choose to invest that euro, they are doing so on a leveraged basis.

Incidentally, in many circumstances I think it makes a lot of sense to invest in stocks through a pension ahead of paying down a mortgage ahead of schedule.  So I've no principled objection to investing on a leveraged basis.


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## galway_blow_in (2 Apr 2019)

Sarenco said:


> Yup, that's exactly the financial position.
> 
> A borrower has a choice what to do with every euro that comes in their hands - pay down their debt or buy something else.  If they choose to invest that euro, they are doing so on a leveraged basis.
> 
> Incidentally, in many circumstances I think it makes a lot of sense to invest in stocks through a pension ahead of paying down a mortgage ahead of schedule.  So I've no principled objection to investing on a leveraged basis.



Do you think most people ( who have a mortgage) view a purchase of filling up the car with petrol each week as a " leveraged" purchase ?

Or other mundane regular expenditure


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## Sarenco (2 Apr 2019)

galway_blow_in said:


> Do you think most people ( who have a mortgage) view a purchase of filling up the car with petrol each week as a " leveraged" purchase ?


Why would it matter?

Do you really think that investing while holding debt is any different to taking out a new loan in the same amount to make an investment?  The balance sheet effect is identical and that's all that matters.


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## galway_blow_in (2 Apr 2019)

Sarenco said:


> Why would it matter?
> 
> Do you really think that investing while holding debt is any different to taking out a new loan in the same amount to make an investment?  The balance sheet effect is identical and that's all that matters.



It's a simple yes or no question


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## EmmDee (2 Apr 2019)

galway_blow_in said:


> It's a simple yes or no question



"Most people" don't have a very intuitive view of money - certainly in terms of asset/liabilities and cash flow. It's not a "bad" choice to have a cup of coffee - it's just not divorced from a decision to invest or not. Most companies fail due to insolvency rather than lack of assets or business and most people get into difficulty for a similar reason. Applying a similar sense of financial analysis to one's personal life is a good thing


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## galway_blow_in (2 Apr 2019)

EmmDee said:


> "Most people" don't have a very intuitive view of money - certainly in terms of asset/liabilities and cash flow. It's not a "bad" choice to have a cup of coffee - it's just not divorced from a decision to invest or not. Most companies fail due to insolvency rather than lack of assets or business and most people get into difficulty for a similar reason. Applying a similar sense of financial analysis to one's personal life is a good thing



Appreciate your answer but I feel this discussion has become more about philosophy than anything meaningful in a practical reality way 

Such philosophy means nothing to most


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## Gordon Gekko (2 Apr 2019)

galway_blow_in said:


> Do you think most people ( who have a mortgage) view a purchase of filling up the car with petrol each week as a " leveraged" purchase ?
> 
> Or other mundane regular expenditure



Purchases/Expenditure and Investments are not the same.

It’s possible to borrow to invest; spreadbets, CFDs, ETFs with leverage under the bonnet, Investment Trusts, etc.


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## galway_blow_in (2 Apr 2019)

Gordon Gekko said:


> Purchases/Expenditure and Investments are not the same.
> 
> It’s possible to borrow to invest; spreadbets, CFDs, ETFs with leverage under the bonnet, Investment Trusts, etc.



I didn't say they were the same


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## Sarenco (2 Apr 2019)

galway_blow_in said:


> I didn't say they were the same


You mentioned buying a pair of shoes or a cup of coffee in the context of a discussion on leveraged investing.

But perhaps you were just being philosophical!


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## Mez! (2 Apr 2019)

Sure who needs facts when you have supposition?


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## Gordon Gekko (2 Apr 2019)

galway_blow_in said:


> I didn't say they were the same



Eh, you did.

Someone (Sarenco I believe) talked about investing whilst having a mortgage and you started comparing it to buying shoes or coffee.


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## galway_blow_in (2 Apr 2019)

Gordon Gekko said:


> Eh, you did.
> 
> Someone (Sarenco I believe) talked about investing whilst having a mortgage and you started comparing it to buying shoes or coffee.



Sarenco said if you have debt, anything else you buy is a leveraged purchase, I then posed the question if  " buying coffee or shoes" if you have a mortgage was thus a leveraged purchase.

I didn't say investments and purchases were the same, you just chose to interprete my post that way


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## galway_blow_in (2 Apr 2019)

Sarenco said:


> You mentioned buying a pair of shoes or a cup of coffee in the context of a discussion on leveraged investing.
> 
> But perhaps you were just being philosophical!



Indeed I did and you confirmed to me ( few posts above) when I asked for clarity as to whether spending money on coffee or shoes was a leveraged purchase if holding debt


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## Sarenco (2 Apr 2019)

galway_blow_in said:


> Sarenco said if you have debt, anything else you buy is a leveraged purchase


No GBI, I didn't.

I don't even know what the phrase "a leveraged purchase" means.


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## Sarenco (2 Apr 2019)

galway_blow_in said:


> Indeed I did and you confirmed to me ( few posts above) when I asked for clarity as to whether spending money on coffee or shoes was a leveraged purchase if holding debt


No GBI, I didn't.

Please re-read what I actually said in response to your post.


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## Gordon Gekko (2 Apr 2019)

galway_blow_in said:


> Sarenco said if you have debt, anything else you buy is a leveraged purchase, I then posed the question if  " buying coffee or shoes" if you have a mortgage was thus a leveraged purchase.
> 
> I didn't say investments and purchases were the same, you just chose to interprete my post that way



No, you said:

“You might as well say if someone has a mortgage, they are then borrowing money for everything else from a cup of coffee to a pair of new shoes”

Sarenco spoke only of investing.

The only person who has conflated investments and purchases is you.


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## galway_blow_in (2 Apr 2019)

Sarenco said:


> No GBI, I didn't.
> 
> I don't even know what the phrase "a leveraged purchase" means.



I know you love pedantry but even you can't wriggle out of this one 

You said people were buying coffee or shoes with borrowed money if they held debt


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## galway_blow_in (2 Apr 2019)

Gordon Gekko said:


> No, you said:
> 
> “You might as well say if someone has a mortgage, they are then borrowing money for everything else from a cup of coffee to a pair of new shoes”
> 
> ...



Read page three again, Sarenco agrees with my earlier post about buying coffee with borrowed money

His post starts with

"yup that's exactly the financial position"

Don't be wilfully blind


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## Sarenco (2 Apr 2019)

galway_blow_in said:


> You said people were buying coffee or shoes with borrowed money if they held debt


Yes, that's pretty self-evidently the case.

Nothing to do with "leveraged purchases" (whatever that means).

It certainly has nothing to do with leveraged investing.


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## Gordon Gekko (2 Apr 2019)

If this thread was a WhatsApp group, I’d leave!


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## galway_blow_in (2 Apr 2019)

Gordon Gekko said:


> If this thread was a WhatsApp group, I’d leave!



Read the above post from Sarenco and then apologise for your mistake before you depart


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## galway_blow_in (2 Apr 2019)

Sarenco said:


> Yes, that's pretty self-evidently the case.
> 
> Nothing to do with "leveraged purchases" (whatever that means).
> 
> It certainly has nothing to do with leveraged investing.



That's twice you have confirmed what I thought, hopefully Mr Gekko will now manage to see it


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## Sarenco (2 Apr 2019)

@galway_blow_in 

Will you please pause for a second and actually read what other posters are saying?

Let's say I owe you €100.  I paint a wall for Gordon and he pays me €100.  I now have a choice - I can pay you back or I can spend the money on a night out with my pals.

Wouldn't you agree that I would be paying for that night out with borrowed money?

Now, let's say that instead of paying you back or going on a night out, I bought widgets with the €100 in the expectation that I could sell them in the future at a profit.

Wouldn't you agree that's a leveraged investment?

Surely you can see the differences between these scenarios?


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## Mez! (3 Apr 2019)

It’s a pity that this thread has been high jacked. Yet another debate has to descend into debunking nothing more than ill-conceived notions and highlighting fudge’s.


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## jim (3 Apr 2019)

So should i sell the gaf or not?


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## RedOnion (3 Apr 2019)

jim said:


> So should i sell the gaf or not?


It depends. Do you currently buy coffee with borrowed money?


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