Investing for Pension

HandyManny said:
Hi there, what exactly is capital appreciation and how do you work it out? Tks.
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It's the increase in value over price paid for a propertyexpressed either in monetary terms (eg, 40,000) or percentage terms (eg, 15% increase). You can only work it out when you buy and eventually sell. It cannot be predicted (unfortunately). There is also capital depreciation where the price paid is HIGHER than the price sold (-40,000 or -15%!!!!). Be careful.
 
Hi, tks for reply. We had found a property which we thought was suitable for buy to let, previously posted this on site for feedback, and mostly all said keep away from investing at the moment. Advice was welcome as that is why I posted. Broker says to look out for good capital appreciation, but as you say, how can you work it out. Is it not guesswork and crossing of fingers when you are in it for long haul? Tks.
 
HandyManny said:
Is it not guesswork and crossing of fingers when you are in it for long haul? Tks.
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Well, yes, to an extent but you obviously only invest in an area you believe will prosper and be sought after. You would not stick a pin in a map and invest there. It's an educated guess I suppose. HOWEVER! you should never invest in property if your only/main source of return on investment is going to be from capital appreciation! The property should be able to cover its costs for the duration of the investment, and then some, or else you should look elsewhere to invest your hard earned money. It's not for the faint hearted that's for sure and you can always invest in property indirectly through a fund or whatever.

If you are investing directly (ie, buying a property) you MUST be prepared to be in it for the long term as the costs of entry and exit as well as the risks (stamp duty/legal fees/mortgage interest/estate agents/periods of vacancy/tenants not paying etc.) are very high compared to other investments.
 
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