# Invest equities long term



## moneymakeover (6 Oct 2021)

I have been considering how to allocate
 my pension , what risk to take

One rationale regarding investing in equities is: we can depend on one thing: currency devaluing.

Every time there is a crisis governments across the world will respond by printing money.

The value of the sp500 (say 4400) market cap is around $38 trillion.

Economic activity has been reduced if anything during the pandemic and yet it has doubled over past 5 years.

Further money printing, in the next crisis will see the markets go even higher.

I say all this by way of explanation as to why it makes sense to remain invested in equities long term in a pension portfolio.

To illustrate,








						Money Supply: A Good Predictor For S&P 500 Index
					

The relation between the stock market and money supply is examined at different lags to formulate a predictive model for the stock market.




					seekingalpha.com


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## Steven Barrett (7 Oct 2021)

moneymakeover said:


> Further money printing, in the next crisis will see the markets go even higher.



But isn't there a major correction on the way? I know because loads of people have told me so. Although none were able to tell me when or why, just we are due one. 

I 100% agree with your approach.


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## joe sod (7 Oct 2021)

moneymakeover said:


> Economic activity has been reduced if anything during the pandemic and yet it has doubled over past 5 years.
> 
> Further money printing, in the next crisis will see the markets go even higher.


But the S&P 500 is tech heavy and has done extraordinary well because of the money printing and ultra low interest rates. Now the environment is changing and inflation is rearing its head, not necessarily good for the S&P 500 but good for energy , commodities and that most hated sector the banks.
Basically the sectors that have done terrible since the financial crash now look to outperform, return to the mean. Tech could get hit heavily now with the likelihood of "big government" coming after "big tech", it's already happening


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## time to plan (7 Oct 2021)

Steven Barrett said:


> But isn't there a major correction on the way? I know because loads of people have told me so. Although none were able to tell me when or why, just we are due one.
> 
> I 100% agree with your approach.


I've successfully called 10 out of the last 2 corrections.


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## moneymakeover (7 Oct 2021)

Steven Barrett said:


> But isn't there a major correction on the way? I know because loads of people have told me so. Although none were able to tell me when or why, just we are due one.
> 
> I 100% agree with your approach.


Exactly

I get a regular email giving me financial tips in particular in relation to pension planning.
And one week ago I got my regular bulletin but this time was telling me to prepare for the crash.

It made me very nervous. 

It said if you are within 10 years of retirement and I'm 10 years from retirement and was very nervous thinking something was going to happen. That day the markets dropped.

But I think there are people who regularly "nay say" the market, just so afterwards they can say "told you so". Just have to recognise that. And I suppose in this particular case it's too soon to say they are wrong, with their particular crystal ball. Wherever they're getting their information.


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## Sarenco (7 Oct 2021)

_“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.”  _Peter Lynch.

"_The stock market is a device for transferring money from the impatient to the patient"_  Warren Buffett. 

Just stick to your guns and tune out the noise.


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## noproblem (7 Oct 2021)

time to plan said:


> I've successfully called 10 out of the last 2 corrections.


All I can say is, well done you


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## noproblem (7 Oct 2021)

moneymakeover said:


> Exactly
> 
> I get a regular email giving me financial tips in particular in relation to pension planning.
> And one week ago I got my regular bulletin but this time was telling me to prepare for the crash.
> ...


Well, I'm retired and nearer to 7 decades than 6. In the last couple of weeks i've noticed that funds i'm invested in have taken a bit of a slackening off, some might say a hammering. I'm in the 65% equity managed fund category, with others in an 65% aggressive fund category. Am I worried? Not really, even though age is not on my side, i'm still quite happy to leave them there because over the last 7/10 years they've done quite well considering the times we're all living in, and we don't need them for anything right now. Standard life and Zurich are the companies i'm with and  intend living for a couple more decades. In any case I don't need the money at the moment,  I'm guessing it might make its way to the next generation at this stage. Guess there's some people in a fortunate position, others not so much so and others who couldn't care less.


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## moneymakeover (7 Oct 2021)

The net effect past 8 days or so, it's only down 2%

If bonds make little sense in rising interest rate environment then that leaves... cash and property? Commodities?

Does it make sense from pension perspective to say, "my goal is s&p500 reaching 5000. When that happens I'll put 30% into cash for safety". 

Does that seem reasonable?


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## Sarenco (7 Oct 2021)

moneymakeover said:


> Does it make sense from pension perspective to say, "my goal is s&p500 reaching 5000. When that happens I'll put 30% into cash for safety".
> 
> Does that seem reasonable?


Not really, no.

You should determine your asset allocation in advance by balancing your need/desire for return against your tolerance for the risk required to achieve that return.

Only you can make that decision. 

However, as a crude default position you might consider holding your age minus 20 in a Eurozone government bond fund, with the balance in a global equity fund.  So, if you are 50 you would hold 30% of you portfolio in bonds, with the balance in equities.

The important thing is to determine your asset allocation in advance and then stick with it regardless of the news flow, rebalancing as necessary. It's also important to take all your assets - not just your pension fund - into account in determining your asset allocation.


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## noproblem (7 Oct 2021)

Sarenco said:


> However, as a crude default position you might consider holding your age minus 20 in a Eurozone government bond fund, with the balance in a global equity fund. So, if you are 50 you would hold 30% of you portfolio in bonds, with the balance in equities.


Holding 30% in bonds would more than likely leave you in negative territory I would have thought. The idea of doing it at 50 is the wrong mindset too. In my opinion.


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## Sarenco (7 Oct 2021)

noproblem said:


> The idea of doing it at 50 is the wrong mindset too.


Well, you obviously have a high tolerance for risk if you are investing for the next generation.  

Most of us won't have that luxury - we will need our retirement portfolio to fund our expenses.

There is no "right" asset allocation - it all depends on an individual's circumstances and goals.


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## noproblem (7 Oct 2021)

Sarenco said:


> Well, you obviously have a high tolerance for risk if you are investing for the next generation.


Serenco,
Don't get me wrong, I do understand where you're coming from and i'm not looking for confrontation or argument. For too long, supposedly older investors are told that they need to pull back when they get to 50/60 yrs old, and i'm of a mind that this is wrong. In todays world, a 50/60 yr old dearie will on average live for at least another20 to 30 years, with good health and pretty active as well. An awful lot of them have a few bob, won't in many cases need as much as when they worked, are smarter with what they have and know what a bargain is. On top of that there's free travel,  and lots of other perks to make life easier. I just made a point that I will most likely have enough when i'm gone, to see that the next generation will more than likely inherit "my good fortune". I have no intention to go out of my way to make sure that this happens, but neither have I lost the appetite in taking pleasure out of watching some investments grow. Putting my money, or a good part of it into govt bonds, etc, is like telling me I need to go into a home where i'll be safer and good care would be taken of me. Life is for living, money's made to go around, you win some, you lose some. Like I said, I don't need as much as I used to, but a safety net just because i'm seen by some as old and might lose it all is all well and good, but the ould wans today are cuter than you might like to believe. I always like to tell the whizz kids today that we never had the internet, etc, when we were young. That's why we invented it for them.


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## DK123 (7 Oct 2021)

Great post no problem  and if an investor panics in a correction and sells  what do they do  well of course they only turn a temporary loss into a permanent loss unless it is the end of the world. you gotta look long term in my humble opinion and ignore the corrections which are going to happen anyway[took me along time to learn this] but i think it is important for us older people with much wisdom and experience after working hard all our life to gather up a few bob not to invest in anything remotely risky  which will sometimes be forced upon us by so called professional advisers so they can earn fees [ e g risky  shares etc]why  for the simple reason that we my not have enough time to get it back if it all goes badly wrong,


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## Steven Barrett (8 Oct 2021)

moneymakeover said:


> Exactly
> 
> I get a regular email giving me financial tips in particular in relation to pension planning.
> *And one week ago I got my regular bulletin but this time was telling me to prepare for the crash.*
> ...



We we look at long term projections for an investor, we typically use annualised returns of 6%. Investors tend to be happy with that level of return over the long term. 

Over the last 10 years, the MSCI World Index has returned 14.08% and the S&P 500 17.77%. To get anywhere near our 6% return, there will have to be a major crash (we seem to have completely discounted the -33% fall in one month when Covid struck  and the world's economy shut down)
Now, that is not to say that crashes aren't unpleasant and no one likes seeing the value of their money fall like a stone. But it is part of investing and it is factored into your long term returns. People tend to think of returns like a straight line, 6% every year for 20 years will get me €x at the end. But it doesn't work like that, some years are great, some are terrible. But if you stick it out, your average return ends up at 6% per annum. 

For example, I did a review recently for a client who made a single premium contribution in 1995. That money has seen the dotcom crash, the credit crunch as well as the Covid crash. It has also experienced the upsides too. The annualised rate of return over the 25.5 years the money was invested? 6.2% per annum. 


Steven
www.bluewaterfp.ie


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## NoRegretsCoyote (8 Oct 2021)

Steven Barrett said:


> The annualised rate of return over the 25.5 years the money was invested? 6.2% per annum.


Out of curiosity, was this before or after fees?


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## Steven Barrett (8 Oct 2021)

NoRegretsCoyote said:


> Out of curiosity, was this before or after fees?


After fees. 100% equity fund


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## NoRegretsCoyote (8 Oct 2021)

moneymakeover said:


> One rationale regarding investing in equities is: we can depend on one thing: currency devaluing.



Interest rates have been very loose globally since 2008. Pretty much everywhere at or near zero. Far lower than anyone (c 2005) thought they could be sustained at without stimulting inflation.

What has happened globally to inflation? It is has fallen, fallen, fallen. Not just in rich countries. Global inflation was just 2% last year. Probably the lowest since fiat currencies were introduced.

There are many reasons why this is the case, many of them speculative. But what it tells me is that the world economy seems able to tolerate "loose" monetary policy without runaway inflation anymore.


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## DK123 (8 Oct 2021)

NoRegretsCoyote said:


> Out of curiosity, was this before or after fees?


And also out of curiosity are these  are these returns per annum quoted in real terms i e after being adjusted for inflation. Im sure everybody would be very interested in having this clarified.Thanks p s lets use the average inflation over say the last 50 years  inflation may be low now but sooner or later it will rear its ugly head again as it always has.Sorry this question is for Steven.


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## NoRegretsCoyote (8 Oct 2021)

DK123 said:


> And also out of curiosity are these are these returns per annum quoted in real terms i e after being adjusted for inflation.


Inflation in Ireland is about 2% over the last 25 years. So a real return of 4%.

I would take a 4% real return over 25 years if you offered me.


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## noproblem (8 Oct 2021)

NoRegretsCoyote said:


> Inflation in Ireland is about 2% over the last 25 years. So a real return of 4%.
> 
> I would take a 4% real return over 25 years if you offered me.


The thing is, no one will offer you that return and if they do, they won't guarantee it. In other words, in hindsight you'll get it and that sounds real good to some


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## joe sod (8 Oct 2021)

I


NoRegretsCoyote said:


> There are many reasons why this is the case, many of them speculative. But what it tells me is that the world economy seems able to tolerate "loose" monetary policy without runaway inflation anymore.


It will be interesting to see whether that still holds in the next few years. I think we are definitely heading back to much higher inflation rates, once the inflation genie is out of the bottle it is very difficult to put him back in , the 70s proved that, once again the primary mover in this is energy but also the curve ball thrown into the mix by the covid lockdowns. It hasn't gone away you know, it just had a very long sleep.


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## Steven Barrett (8 Oct 2021)

DK123 said:


> And also out of curiosity are these  are these returns per annum quoted in real terms i e after being adjusted for inflation. Im sure everybody would be very interested in having this clarified.Thanks p s lets use the average inflation over say the last 50 years  inflation may be low now but sooner or later it will rear its ugly head again as it always has.Sorry this question is for Steven.


Of course it is in real terms. Dealing with actual policies will always be in real terms. It is an easy calculation to make, time, present value (contribution), future value (current value) and you get the rate. 6.2% per annum


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## moneymakeover (9 Oct 2021)

NoRegretsCoyote said:


> Interest rates have been very loose globally since 2008. Pretty much everywhere at or near zero. Far lower than anyone (c 2005) thought they could be sustained at without stimulting inflation.
> 
> What has happened globally to inflation? It is has fallen, fallen, fallen. Not just in rich countries. Global inflation was just 2% last year. Probably the lowest since fiat currencies were introduced.
> 
> There are many reasons why this is the case, many of them speculative. But what it tells me is that the world economy seems able to tolerate "loose" monetary policy without runaway inflation anymore.


The concern about markets crashing which is popular these days, I believe, is based on higher inflation and interest rates.

As you say, for years now interest rates are rock bottom and money supply keeps increasing. 

What is the reason for the years of low inflation?

Economic shocks: great recession followed by pandemic triggered huge money printing.

And bond purchasing/quantitative easing seems even more deflationary than money printing sad evidenced by Japan in 90s

Also globalisation.

Tech disruption: Uber, Amazon, grand scale websites pushing down unit costs.

Chinese manufacturing. Inexpensive, high quality goods.

Each country wants to encourage exports by devaluing currency via low interest rates.

Cheap labour supply due to migration from poorer countries to more well off countries.

There's probably other reasons I have missed.

US 10 year bond yields have risen recently to 1.6% 
Much higher than say Germany or Japan. Higher than uk.

Is it high enough for stock markets to sell off?
Is it rising quickly enough to be concerned?


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## noproblem (9 Oct 2021)

Sad state of affairs when  a few (wealthy ones) people can make that decision.


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## DK123 (10 Oct 2021)

Steven Barrett said:


> Of course it is in real terms. Dealing with actual policies will always be in real terms. It is an easy calculation to make, time, present value (contribution), future value (current value) and you get the rate. 6.2% per annum


Hi Steven. Sorry i am still a bit confused here.Lets keep this simple for us laymen.My question concerns inflation.Can you please clarify if  it is 6.2 percent minus 2 or 3 percent likely inflation so would equal 4.2 or 3.2 percent in real terms after i it is adjusted for inflation at the end of the term or is it not. Thanks.


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## moneymakeover (20 Oct 2021)

When I started this thread I was worried after pension adviser warned me a crash was on the way

Apparently the idea is there is a crash every 10 years and we're overdue.

Pasting history below from




__





						S&P 500 Total Returns by Year Since 1926
					





					www.slickcharts.com
				




S&P 500 Total Returns by Year​
YearTotal Return202121.70202018.40201931.492018-4.38201721.83201611.9620151.38201413.69201332.39201216.0020112.11201015.06200926.462008-37.0020075.49200615.7920054.91200410.88200328.682002-22.102001-11.892000-9.10199921.04199828.58199733.36199622.96199537.5819941.32199310.0819927.62199130.471990-3.10198931.69198816.6119875.25198618.67198531.7319846.27198322.56198221.551981-4.91198032.42197918.4419786.561977-7.18197623.84197537.201974-26.471973-14.66197218.98197114.3119704.011969-8.50196811.06196723.981966-10.06196512.45196416.48196322.801962-8.73196126.8919600.47195911.96195843.361957-10.7819566.56195531.56195452.621953-0.99195218.37195124.02195031.71194918.7919485.5019475.711946-8.07194536.44194419.75194325.90194220.341941-11.591940-9.781939-0.41193831.121937-35.03193633.92193547.671934-1.44193353.991932-8.191931-43.341930-24.901929-8.42192843.61192737.49192611.62


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## moneymakeover (28 Dec 2021)

DK123 said:


> Hi Steven. Sorry i am still a bit confused here.Lets keep this simple for us laymen.My question concerns inflation.Can you please clarify if  it is 6.2 percent minus 2 or 3 percent likely inflation so would equal 4.2 or 3.2 percent in real terms after i it is adjusted for inflation at the end of the term or is it not. Thanks.


I realise this a few months old but I was reading back

And @DK123 the answer to your question is yes you are correct
6.2 minus inflation which is small eg 2 or 3
Therefore as you say 4.2 or 3.2 after inflation


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## moneymakeover (28 Dec 2021)

Sp500 close to 4800
Amazing continued growth
29% in 2021 to date


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## cremeegg (28 Dec 2021)

Steven Barrett said:


> For example, I did a review recently for a client who made a single premium contribution in 1995. That money has seen the dotcom crash, the credit crunch as well as the Covid crash. It has also experienced the upsides too. The annualised rate of return over the 25.5 years the money was invested? 6.2% per annum.


The problem with this is that you think it is a good return.

I invested €12,000 in an investment property in 1999 (10% deposit). I have collected over €300k rent in that time. Profit after interest and capital repayment approx €150k. While there was no guarantee with that investment, none of those numbers are in any way exceptional.

That is an annual return of 68% if my maths is correct. Before looking at any capital appreciation.


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## moneymakeover (28 Dec 2021)

Well done @cremeegg
Great to hear a positive property story.
I think property and equities correlate to some extent.

Both are hedges against inflation.

I guess with 150k capital repayment you must be almost mortgage free?

And then the rent will add to your monthly income


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## Brendan Burgess (28 Dec 2021)

cremeegg said:


> That is an annual return of 68% if my maths is correct. Before looking at any capital appreciation.



Hi cremeegg

You are comparing a passive investment in a fund with a business of property investing.  Did you make a deduction for paying yourself for the time you put into it? 

And the risk was huge. Look at all the people who bought investment properties and lost them due to the bust.  Many still are paying off the debt although they have lost their property. 

If I borrow €200k from the bank and buy a property for €200k then I could get an infinitesimal return.

Brendan


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## moneymakeover (28 Dec 2021)

Brendan, do you mean infinite?

infinitesimal
adjective
extremely small.


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## DK123 (28 Dec 2021)

Brendan Burgess said:


> Hi cremeegg
> 
> You are comparing a passive investment in a fund with a business of property investing.  Did you make a deduction for paying yourself for the time you put into it?
> 
> ...


Hi Brendan.I am a senior citizen with an investment property/house paid for after a 20 year morgage paid off.I dont think i needed to get paid for time as the time was minimal with long term tenents.For me it was just a hobby.I never considered it a risk and slept soundly.My figures are similiar to Cremeegg.Ithink that the magic bullet was gearing up ,[10 per cent deposit and 90 percent morgage] and i would never take a huge risk like this in shares although i have a few long term shares as well but without the gearing the amounts and gains are smaller.I now have the option of selling the house and spending the money to avoid IHT or investing the gains  or keeping the property and renting it out as usual.[The gearing factor makes me tend to favour property over equities]Just my humble view.


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## noproblem (28 Dec 2021)

DK123 said:


> Hi Brendan.I am a senior citizen with an investment property/house paid for after a 20 year morgage paid off.I dont think i needed to get paid for time as the time was minimal with long term tenents.For me it was just a hobby.I never considered it a risk and slept soundly.My figures are similiar to Cremeegg.Ithink that the magic bullet was gearing up ,[10 per cent deposit and 90 percent morgage] and i would never take a huge risk like this in shares although i have a few long term shares as well but without the gearing the amounts and gains are smaller.I now have the option of selling the house and spending the money to avoid IHT or investing the gains  or keeping the property and renting it out as usual.[The gearing factor makes me tend to favour property over equities]Just my humble view.


You got lucky Bud, count your blessings.


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## Brendan Burgess (28 Dec 2021)

moneymakeover said:


> Brendan, do you mean infinite?



Well spotted. Yes. Infinitely large return.

Brendan


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## Brendan Burgess (28 Dec 2021)

DK123 said:


> I never considered it a risk and slept soundly.



A lot of people who slept soundly got a rude awakening.

The fact that people don't appreciate risk, doesn't mean that they are not taking risk. 

The timing worked out well for you. For many others, the timing was bad, and their lives have been ruined.

Brendan


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## SPC100 (28 Dec 2021)

cremeegg said:


> The problem with this is that you think it is a good return.
> 
> I invested €12,000 in an investment property in 1999 (10% deposit). I have collected over €300k rent in that time. Profit after interest and capital repayment approx €150k. While there was no guarantee with that investment, none of those numbers are in any way exceptional.
> 
> That is an annual return of 68% if my maths is correct. Before looking at any capital appreciation.


If you could get the mortgage and put the 120k in shares back then I wonder how it would compare. Leverage is powerful.

I also think you are underselling your return. You should imo include the after tax euros you would have if you sold it (and cleared any mortgage).


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## cremeegg (28 Dec 2021)

Brendan Burgess said:


> Hi cremeegg
> 
> You are comparing a passive investment in a fund with a business of property investing.  Did you make a deduction for paying yourself for the time you put into it?
> 
> ...


You are correct in saying that there was time and effort on my part, but I met lots of diverse and interesting people along the way, and I have no interest in watching football or playing golf. But that is a small matter.

The big matter is the risk. I never owed more than €800 on the mortgage.

The risk of having a property in a reasonable letting location unrented is small. Of course there may be a few weeks of voids but over any reasonable period for a property investment the risk is negligible.

The risk of having a tenant stop paying rent and refusing to move out was small then though it is more of a concern recently.


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## cremeegg (28 Dec 2021)

Brendan Burgess said:


> A lot of people who slept soundly got a rude awakening.
> 
> The fact that people don't appreciate risk, doesn't mean that they are not taking risk.
> 
> ...


I don't accept that this ever happened, can you outline an example. An example where a property in a reasonable location, purchased at a reasonable rental yield, and not promoted by some dodgy developer or investment manager, worked out badly.


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## cremeegg (28 Dec 2021)

SPC100 said:


> If you could get the mortgage and put the 120k in shares back then I wonder how it would compare. Leverage is powerful.


I don't believe that you could ever get a 25 year loan to purchase shares secured on the shares alone.


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## cremeegg (28 Dec 2021)

Steven Barrett said:


> We we look at long term projections for an investor, we typically use annualised returns of 6%. Investors tend to be happy with that level of return over the long term.
> 
> Over the last 10 years, the MSCI World Index has returned 14.08% and the S&P 500 17.77%. To get anywhere near our 6% return, there will have to be a major crash (we seem to have completely discounted the -33% fall in one month when Covid struck  and the world's economy shut down)
> Now, that is not to say that crashes aren't unpleasant and no one likes seeing the value of their money fall like a stone. But it is part of investing and it is factored into your long term returns. People tend to think of returns like a straight line, 6% every year for 20 years will get me €x at the end. But it doesn't work like that, some years are great, some are terrible. But if you stick it out, your average return ends up at 6% per annum.
> ...


The Economist, not known for being down on capitalism, suggests that future returns may reflect a different paradigm.









						Young people stand to make dismal returns on their investments
					

All the more reason for Generation Z to invest wisely, argue the authors of a new report




					www.economist.com


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## Brendan Burgess (28 Dec 2021)

cremeegg said:


> An example where a property in a reasonable location, purchased at a reasonable rental yield, and not promoted by some dodgy developer or investment manager, worked out badly.



That is a ridiculous specification.  You are asking me to specify a successful investment which was not successful.

I might as well ask for someone to identify a share which was bought in a good company which was not overleveraged which had a good future and which was reasonably priced which then went bankrupt. 

Brendan


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## cremeegg (28 Dec 2021)

Brendan Burgess said:


> That is a ridiculous specification.  You are asking me to specify a successful investment which was not successful.
> 
> I might as well ask for someone to identify a share which was bought in a good company which was not overleveraged which had a good future and which was reasonably priced which then went bankrupt.
> 
> Brendan


I didn't intend it to be a ridiculous specification. I am simply saying that property investment sensibly done even using significant leverage is not risky. 

That the nature of a mortgage means that the risk usually associated with leverage is largely mitigated.


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## AJAM (30 Dec 2021)

cremeegg said:


> I didn't intend it to be a ridiculous specification. I am simply saying that property investment sensibly done even using significant leverage is not risky.
> 
> That the nature of a mortgage means that the risk usually associated with leverage is largely mitigated.


Not sure that was the general sentiment between 2009 and 2013


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## Jim2007 (1 Jan 2022)

cremeegg said:


> The problem with this is that you think it is a good return.
> 
> I invested €12,000 in an investment property in 1999 (10% deposit). I have collected over €300k rent in that time. Profit after interest and capital repayment approx €150k. While there was no guarantee with that investment, none of those numbers are in any way exceptional.
> 
> That is an annual return of 68% if my maths is correct. Before looking at any capital appreciation.



But you are not talking about investing in property in this case.  You are taking about being in the property business and that is not the same thing, just like buying shares in a company is not the same as setting up and running the company.  In both cases you are providing more than just the capital and you should expect the returns to be higher.

The literature, and there is plenty of it, rightly classifies property as a high risk, low return asset class in the context of investing not in the context of running a property business.


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## NoRegretsCoyote (1 Jan 2022)

cremeegg said:


> That the nature of a mortgage means that the risk usually associated with leverage is largely mitigated


Sure a mortgage schedule is reasonably predictable.

But on the income side private rents fell 25% 2008-12, voids increased a lot too.

The rental business with high leverage is high risk. A lot of people who bought in 2006 are getting out now with a sigh of relief. A capital loss after a decade and a half and only breaking even in cash terms is nothing to write home about.


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## Baby boomer (1 Jan 2022)

Use


NoRegretsCoyote said:


> Sure a mortgage schedule is reasonably predictable.
> 
> But on the income side private rents fell 25% 2008-12, voids increased a lot too.


That's true but running the numbers initially you should account for this.




NoRegretsCoyote said:


> The rental business with high leverage is high risk. A lot of people who bought in 2006 are getting out now with a sigh of relief. A capital loss after a decade and a half and only breaking even in cash terms is nothing to write home about.


I bought a BTL in 2005 (agreement signed in 2004 so not _quite_ at peak price.) Interest only tracker at ECB + 1%.  It only came out of negative equity in 2020 but it has been a superbly profitable investment for me.  And (nearly) all with the bank's money, not mine.


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## NoRegretsCoyote (1 Jan 2022)

Baby boomer said:


> but it has been a superbly profitable investment for me.


Was it superbly profitable in 2007 when ECB rates +1pp were 4% and gross yields about the same? After tax?

So a negative equity BTL for a decade and a half wasn't a drag on your life choices or borrowing ability. But that wouldn't be the case for many people, and rarely clear ex ante.


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## DK123 (1 Jan 2022)

AJAM said:


> Not sure that was the general sentiment between 2009 and 2013
> View attachment 5990


I would like to see this graph extended from say 1995 to 2022 and also an equities graph from 1995 to 2022 and compare both to see the big picture because i think that 8 years is a bit short for long term investors and also this graph relates to the years wnen people went crazy about buying and flipping property etc. and then there was a catistropic crash in both property and equities.


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## moneymakeover (1 Jan 2022)

Property index since 1970

Fred








						Residential Property Prices for Ireland
					

Graph and download economic data for Residential Property Prices for Ireland (QIEN628BIS) from Q1 1970 to Q1 2022 about Ireland, residential, HPI, housing, price index, price, and indexes.



					fred.stlouisfed.org


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