# Investment in Foreign property



## Culchie (22 Aug 2005)

_I have split this tangential discussion from this thread - ClubMan._



			
				RainyDay said:
			
		

> Are you making the most of any pension opportunities open to you? What's your attitude to risk? Have you considered straight stock market investments? Personally, I think you'd be crazy to rush off the Budapest or elsewhere. Have a good read of the Guide and consider paying for professional investment advice from an Authorised Advisor.


 
Could you please explain why you advise on straight stock market investment rather than overseas property?


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## RainyDay (22 Aug 2005)

Culchie said:
			
		

> Could you please explain why you advise on straight stock market investment rather than overseas property?


I didn't 'advise on straight stock market investment rather than overseas property'. I asked OP if they had considered a straight stock market investment. There's a big difference - no recommendation at all there.


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## Culchie (23 Aug 2005)

LOL, the question will never be answered, I admire your elusiveness.


OK, to put in in plain English.

Could someone from askaboutmoney.com please give their reasons why they seem to prefer investment in stockmarkets rather than property.

Please provide proof of findings  e.g Property indices V's Stock Market indices (or any other objective proof).


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## asdfg (24 Aug 2005)

See the Investors Handbook from First Active Pg 39



I tried entering the details but when I Preview post the information is all over the place 

Long term returns to 31st December 2003 % Annualised Return 
Property returns 13.1 over 30 years 
Irish Equities returns 15.5 over 30 years

Source Datastream IPFPUTMoneymate. 



So 10,000 invested in property 30 years prior to 2003 was worth 402,000 in 2003 and 10,000 invested in equities was worth 754,000 in 2003

or perhaps I'm missing something 

If you need details of other periods I'll post here 

​


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## ubiquitous (24 Aug 2005)

> LOL, the question will never be answered, I admire your elusiveness.
> 
> 
> OK, to put in in plain English.
> ...



DON'T FEED THE TROLLS


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## Culchie (24 Aug 2005)

asdfg said:
			
		

> See the Investors Handbook from First Active Pg 39
> 
> 
> 
> ...




The last 5,10 and 20 years please


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## dam099 (24 Aug 2005)

Culchie said:
			
		

> The last 5,10 and 20 years please


 
Why, not happy with the result of a 30 year time frame? 



I think the point many of the posters here in favour of equities have been trying to make is that over the long term equities have outperformed property (in the past may not hold true in the future of course). If you start taking shorter periods you will of course see property outperform or even significantly outperform equities in some of them due to short term effects (conversely you could also see equities significantly outperform property too depending on how you choose your period)



In fact from a pure statistics point of view you could make a case that if property has outperformed equities for the last 5 or 10 years it is now due a period of underperformance if it is to revert to the long term average.


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## Culchie (25 Aug 2005)

Hi,


No, it not that I am unhappy with your answer, thank you for that.

But why do we pick 30 years as our yardstick, why not 5, 10, 15 or 20 ?

If we go back 30 years from now, will we get the same results in another 30 years?

My 'gripe' is that the fact that property has outperformed shares in say the last 15 years (?) does seem to merit a substantive mention the same way as the repeated advice to invest in stockmarkets.
15 years is hardly 'short term' is it?

If I am a 25 year old, and am in pensionable employment, wouldn't it be reasonable advice to invest in property for a 15 year period until I'm 40 or so?

I'm not advocating or dismissing either investment vehicle, but I am challenging the continous advice given for stockmarket investment, and the, (let's call it) an undertone against overseas property investment, however it appears that no-one wants to take up the point.


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## asdfg (25 Aug 2005)

*Long term returns to 31st December 2003 % Annualised Return* 

*Over 30 Years* Property returns 13.1 Irish Equities returns 15.5 
*Over 25 Years* Property returns 12.8 Irish Equities returns 14.7
*Over 20 Years* Property returns 11.1 Irish Equities returns 15.0 
*Over 15 Years* Property returns 12.9 Irish Equities returns 11.7 
*Over 10 Years* Property returns 14.3 Irish Equities returns 12.4
*Over 5 Years* Property returns 10.3 Irish Equities returns 2.1 

Source Datastream IPFPUTMoneymate. 

Chech out the returns [broken link removed].

Can't get this to work 
Maybe someone can fix it


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## Culchie (25 Aug 2005)

Thanks, certainly makes for interesting reading.

So in 5 or 10 or 15 years time when we look back, equities could very well be lagging behind property investment over those periods (even the 20,25 and 30 year timeframes).

Doesn't this at least challenge the continously advised route of equity investment?

Doesn't it maybe mean that property investment (including overseas) could be a sensible financial strategy as well?


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## ClubMan (25 Aug 2005)

You seem to be suggesting that it's an either or choice. A well balanced portfolio will invest in a wide range of asset classes, risk/reward profiles, geographic regions etc. This would encompass equities *and* property either directly or indirectly. Many people own their own homes so already have a significant investment in property. In many cases they arguably need to balance this with investments in other assets, risk/reward profiles, geographic regions etc. In some cases people whose main existing investment is in their _PPR _are plunging into further (foreign or domestic) property investment without fully considering the implications of such a concentrated investment strategy in a single asset class and (in many cases) geographic region. I think that this is the point that many people, such as _RainyDay _earlier on in the original thread that started this discussion off, are drawing attention to rather than asserting that equities are a better investment than property or vice versa.


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## asdfg (25 Aug 2005)

> So in 5 or 10 or 15 years time when we look back, equities could very well be lagging behind property investment over those periods (even the 20,25 and 30 year timeframes).


 
For the 20 25 and 30 year timeframe equities outperformed property 

For 10,000 invested in property for 30 years would return 401,678 at dec 2003 
For 10,000 invested in equities for 30 years would return 754,153 at dec 2003 

For 10,000 invested in property for 25 years would return 203,108 at dec 2003 
For 10,000 invested in equities for 25 years would return 308,379 at dec 2003 

For 10,000 invested in property for 20 years would return 82,088 at dec 2003 
For 10,000 invested in equities for 20 years would return 163,665 at dec 2003 

For 10,000 invested in property for 15 years would return 61,717 at dec 2003 
For 10,000 invested in equities for 15 years would return 52,577 at dec 2003 

For 10,000 invested in property for 10 years would return 38,059 at dec 2003 
For 10,000 invested in equities for 10 years would return 32,186 at dec 2003 

For 10,000 invested in property for 5 years would return 16,325 at dec 2003 
For 10,000 invested in equities for 5 years would return 11,095 at dec 2003 


The 5, 10& 15 years timeframe property out performed equities 
the 30, 25 & 20 years timeframe equities out performed equities 


I think you should bear in mind 
the figures are till the end dec 2003
Equities have recovered in the last 18 months thereby increasing the figures for all periods 
Increase in property have eased off in the last 18 months thereby decreasing the figures for all preiods 

I think the corresponding figures for 2005 may give a different reading


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## asdfg (25 Aug 2005)

By the way Clubman how did you fix the link. What was I doing wrong


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## ClubMan (25 Aug 2005)

Not sure what you were doing wrong. I simply used the _WYSIWYG _editor (accessible via the _Go Advanced _and _Post Reply _buttons/links) _Insert Link_ toolbar button ("globe with chain" icon) to correct the link.


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## ecstatic (26 Aug 2005)

I think a lot of people are missing the point here.


It is virtually impossible to gear your investments on the stock market whereas it is not on the property market IE: you can gear.

Say im geared times 4x on my property and i put down 100k.

Gearing and purchasing might is now 100k + 400k = 500k

I buy stocks with my 100K and the stock goes up 50% and i come to 150K value.

My house goes up 12% say and its worth 560k.

Note taxes are not included just to show that with the right investment houses can be more profitable then stocks. 

Obviously there is more hassle factor with houses than stocks but the figures above are construed to make equities look more profitable than houses whereas they are not.

The last crash in england if you had held on for 3 years you would have been back in positive territory, same  cannot be said for Japan however the americans bullied them into a floating currency...


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## ClubMan (26 Aug 2005)

ecstatic said:
			
		

> Say im geared times 4x on my property and i put down 100k.
> 
> Gearing and purchasing might is now 100k + 400k = 500k
> 
> ...


Gearing can magnify gains but they can also magnify losses if markets go in the other direction - e.g. the market falls and you carry a loss and still owe the capital borrowed to invest in the first place. With non geared investments you simply carry the loss. Swings and roundabouts...


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## RainyDay (26 Aug 2005)

ecstatic said:
			
		

> It is virtually impossible to gear your investments on the stock market whereas it is not on the property market IE: you can gear.


Rubbish - See Etrade margin investing account


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## Brendan Burgess (26 Aug 2005)

Hi ecstatic

You can also gear up to invest in equities by remortaging your home or other property. 

So it is not virtually impossible - it is more difficult and you don't get the tax relief on the interest paid. 

Brendan


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