Michael

No. When I looked at fixed income investments, large bank preferred shares seemed right for me. They pay qualified dividends and aren't as sensitive to interest rate movements as bonds and mortgage backed securities. Although they are currently paying about 3.5% above the 30 year treasury, that is not the historical average spread. The historical average spread is about 1.5% above the 30 year treasury so I'm hoping that the historical spread will return. If it does return, the yield on the 30 year treasury can go to about 5% and the preferred shares will not lose market value. Fixed income investments are currently very risky since interest rates are likely to rise normally causing a drop in the market value and I am trying to mitigate my risk since I do want to hold some fixed income securities that pays more than 1%.

I don't buy to let. Home prices go through boom and bust cycles so there could be cash flow problems, buy to let are leveraged and I never leveraged anything other than my personal residence, often there is negative cash flow, tenants may not pay or may ruin the property, it's a lot of work to manage and perform maintenance, costs a lot to hire others to perform maintenance, it costs a lot to hire a management firm, rentals are not very liquid, and the cost of selling is high. Besides that, if a person doesn't pay their rent or you want them out for some reason, in the US the eviction process can be very expensive and time consuming with sometimes taking up to a year to evict them. And then when they are evicted, they take everything with them including the kitchen sink. With very bad tenants, you could possibly own a $200K home that needs $100K of repairs after tenants are evicted and the cheaper the home, the more potential for those problems since you are renting to someone that has very little income or assets so they don't care if you sue them.

The person that I bought my condo from in 2007 called himself a real estate investor. It was his personal residence. During the boom years of the 2000s, he bought a lot of properties living off the appreciation as well as using the equity to pay for the negative cash flow from rents and purchase more homes with liar's loans. He had a Porsche but now he is bankrupt since the housing market crashed and there was no longer any cash flow and all the houses were under water.

In NYC and London, people have a false sense of security that housing prices will continue to rise. However when interest rates rise, mortgage payments at the bottom of the ladder will likely be so high that there will be very few that can afford to buy those homes which will cause those to drop which will cause the homes above those to drop until it goes all the way to the luxury homes. If there aren't people that can get into the entry level homes, others can't move up the housing ladder and that is what causes home prices to drop. It is not if it will happen but when it will happen and how big the drop will be.

Unlike the past, the Federal Reserve and the BOE will likely raise interest rates very slowly since neither wants another big housing crash. If they raise interest rates very slowly, hopefully a large housing crash won't occur but home prices will stabilize or drop maybe only 10%.

Michael

On December 31, the ruble could be stronger than the Euro but when you play short term, you have to know when to hold em and know when to fold em and I don't think anyone is very good at that.

December 31 is an arbitrary date that you assigned but it could be any date in the future. Because the ruble is an emerging market currency, it is more likely that the ruble will move much more significantly than the Euro so on December 31, the ruble should either perform significantly better or significantly worse than the Euro. It's highly unlikely that the race will be won by a nose.

It's sort like investing in the stock market giving an arbitrary date of December 31 and choosing between a blue chip stock and a high risk tech stock. The blue chip stock probably isn't going to move that much but the high risk tech stock will likely have large swings up and down. Therefore the high risk tech stock will likely be significantly higher or significantly lower on December 31.

not2old

Agree.....

I figure a net 10% within six months would be OK - what do you say?

Lets peg it today as a buy - from XE.com at 54:1

Sell somewhere between 48.6 & 45.9

On the reverse - stop loss at 60:1

.

.

Helen1964

"Down here in Dorset, there are a multitude of properties that show a very wonky track record of pricing over the last few years (as per rightmove property history) often with declines from where they were eight years ago. This seems to suggest there is no real sense of urgency in getting onto the property ladder in this area."

Pistolpete,
Thanks very much for your input.
We're not wedded to the Kent idea, and are willing to consider other areas, although would prefer the south of England because of the (supposedly) better weather.
So yes, you're right, that takes some of the urgency out of the process.
Incidentally, how are you finding Weymouth? It's somewhere I've considered. Have you found it a friendly place?
We have no kids and will be starting from scratch (socially) if we come back to the UK.

Pistolpete2

I don't think that anybody would deny that the south of England is warmer than the north and the east is much dryer than the west except right on the western coast such as west of Penzance or near Fishguard (in Little England).

Here in Weymouth it is considerably milder than many spots and not really that wet but the chilly weather that seems to set in around late November seems to go on and on and even now we feel cold - being in Bermuda and then the Caribbean for a total of 38 odd years doesn't help in that regard, I suspect.

Weymouth is friendly enough, with a nice West Country atmosphere, and there are some lovely residential areas. It's a real mixed bag and on the face of it not overall very prosperous because the decent jobs are too far away.

I've not broken into any kind of social 'scene' and I've located somewhere (a small market town) in Somerset which has better all-round public transport connections and apparently a much livelier community in general, plus an opportunity to be right in the town with in and out space seemingly without actually suffering from the noise of it which I have ultimately calculated as being our ideal.

I'm working on buying there at this point because the insecurity of renting is hurting my head and I think we need to put down some roots. It was a bit impulsive but the prospects are very good.

We intend to survive without the need for buying a car - will rent when we really really need to.

I had thought that we would flip-flop between England and somewhere else but I've not been able to conceptualise how this would function in practice if it were six months here and six months there and buying here plays into that probably not being what we will end up doing. We'll likely just bail out of the English winter for a few (plus) weeks if we really have to.

I really like the beautiful country down here in South Dorset and its easy access by bus but after another year or so that will wear a bit thin with nothing else really happening - plus Weymouth is a very busy tourist town from May to October which is slightly off-putting. We'll only be an hour away if we do go ahead with Somerset but then it has its own stock of lovely walks and houses and parks to visit. Will I miss the pull of the sea? I just don't know - again, I've spent the last 38 years within a mile of it.

Helen1964

Do keep us posted on your possible move to Somerset, Pistolpete.

Thanks to everybody for their comments. This discussion has certainly clarified a few things for me.
Firstly, as a couple, we have neither the business acumen nor the level of interest needed to find and manage an investment property. Frankly, anything that seriously diverts time and energy from our beloved mountain biking would probably be deeply resented at this stage.
Secondly, if we're buying something for ourselves to live in, without much thought to the rental potential, then it's far too early. The place itself could change beyond recognition and/or our own needs could evolve (for example, as a couple we're attracted to the idea of a semi-rural location but if I were widowed, I'd probably want to stay in France with my friends, or move to a big city in the UK).
So I think I'll take not2old's advice and just relax and enjoy myself. Which leaves the question of where to spend all those hard-earned euros. Patisserie and French lingerie spring to mind. (Although at the age of 51, the "yield" on that last investment is not what it used to be...)
Many thanks to everybody!

not2old

Yes, we certainly took this thread to another level & the huge clumsy world of investing is not for the faint of heart

Just saying ....

just go with the flow, live life to the fullest one day at a time, because 10- years from now all the fretting was for naught

Just make sure that you maintain the preservation of capital & that some [not so smart] advisor will be recommending where to put all that £300k of life savings only to see it go down the tubes.

Out of interest, as the years progress, please post back on any changes to your plan

.

Pistolpete2

Looks like you've got 'it'. One thing that I should add is that with property values going up so much in recent years the actual yield for landlords investing in property has gone down such that something around 5% gross is the norm. By the time you've knocked off agent's fees, repairs and tax you are often down around 2-3%. These yields are even lower in areas like the West Country and other 'extremities'.

The flip-side of this is that IF (very big if) you want to live in the West Country and have been able to locate a good rental property to live in and are able to secure it on a long lease then far better to rent than to buy and invest the money somewhere else. I've seen decent furnished property being let here at less than a 4% gross return to the landlord with no real chance of significant long term capital gains.

not2old

For further clarity on that last point Pete, specific to the someone in the 55 - 70 age bracket returning ex-pat that have the resources to buy - is it better for them to rent than to buy, on the basis that there is little capital appreciation of the property for the next 20 years?

For that specific age group mentioned, outside of sheltered housing, are long term private landlord properties available & sustainable?

Pistolpete2

Every investment decision is based upon picking what one perceives is the best choice to maximise returns and real estate is no different. If you have the resources to buy a decent property that you could comfortably live in then you would also consider what else you could do with the money and if that other choice was thought to be a better investment then you might have to think long and hard about renting and what that involves.

You could then dismiss renting out of hand in which case you should go ahead and buy no matter what the 'investment' potential is or is not.

For sure, I'm not going to stick my neck out and say that renting will be the best option, in general, over the next 20 years but I do know that UK real estate currently seems over-stimulated, as are pretty-much all asset classes.

In buying there seem to be precious few bargains but in renting there are clearly some out there, particularly if the potential renter is flexible regarding location.

A problem is how long a landlord will allow you to stay and this could be a turn-off, particularly if you have to keep carting your furniture and other belongings around the place.

Another problem is that you might feel that you really need to tweak this and that to your own taste but the landlord is reluctant.

not2old

Pete @ post #55 above ...thanks

from where I sit, my observation for expat's moving back, include in the following, but not limited to - age, are there others to consider including family members, your personal health - needs and requirements, financial resources, will one continue to work or be fully retired. Aside from location, deciding to buy or rent it likely comes down to the money bit.

We are close to 70, fully retired, healthy & in making a decision to relocate when the time comes, we would not be responsible for anyone other than the two of us. Its simply 'what's the best fit for our lifestyle choices' which is what I think the OP was mentioning.

The renting versus the buying is something some folks over 65 have to seriously look at, including the type of accommodation - whether it be an apartment or a house, having a house requires work & maintenance, something that gets harder to do as you get older.

For those with resources that are asset rich with their money tied up in property, some do not have enough money to live on, its bonkers.

Ones that live in rented accommodation, whether it be local housing/council type, sheltered housing or private - its has to be safe, hassle free & affordable.

For older folks the thought of mid to long term renting from a private landlord too me, could be a hassle - I don't don't know?

formula

I was reading the landlords forums recently and those that "invested" in London are worried. They said 40% of people living in London live on Local Housing Allowance (Housing Benefit). The bringing in of the then new LHA about 15 years ago increased the rents and the welfare state then paid that rent and gave a good return to landlords in expensive areas such as London.

This government are using the reverse of that LHA to push rents up, to push rents back down and have now started to implement that. The household benefit cap looks like it is set to be reduced again and will soon be also be applied to those claimants that work and not just those that don't work. The first benefit to be reduced with the household cap is the LHA benefit. Research from a charity showed many families moved to London with large families as the welfare state pays for them.

Plus the 12 billion in welfare cuts to be announced next month as the cut to the welfare state bill to help reduce the national debt; and the new annual welfare cap bill for the UK that became law and has to be kept to, will mean less money for the welfare state to share out and less money for rent for the landlords.


The landlords said with their tenants LHA cut, the lower rents in London will no longer give the good return it has. They will either have to take lower rent or sell up to move to an area that gives better returns, but by too many landlords puting all those house on the market it will cause a mini house price crash in London and give a lower price.

The reduction in the rent they receive is not helped by the fact their own benefits will stop: Child Tax Credits benefit will soon have a 16k cut-off as other income based benefits do and the capital in their let/s will take them over the 16k.

It's all getting quite interesting.

Editha

An alternative to renting when retired would be buying a property and then using equity release. That way you have your cake and eat it; you have the security of home ownership but some capital to fund your lifestyle.

holly_1948

Silver.
Historically over centuries a pound of silver was worth an ounce of gold (16:1).
Nowadays only roughly ten tonnes of silver are mined for every one tonne of gold (10:1).
Today the weight for weight gold to silver spot market value ratio is about 75:1.
A huge correction is overdue.
If you want to speculate, silver will give you a chance of a huge gain with little risk of losing even a third of your money if things go sideways.
If you don't want to speculate then maybe put a tenth of your funds in silver. Just beware of paper silver and get the metal kind.
Banks are no longer safe places to keep money, with bail-ins spreading everywhere. But you have no choice but to use banks modernly either slightly or greatly.

Michael

That was because the US backed it currency with gold in the $30 range from the 1930s to the 1970s holding the price of gold artificially low. There is plenty of silver in the world that can be profitably mined at it's current price. If the price of silver rises, more will be mined and the price will go back down.

Only about 20% of the silver extracted is from silver mines and the remaining 80% is a by-product of other mining operations. It's risky to open new silver mines at the current price since 80% of the silver needed will hit the market because of it being a by-product but at $30-$40, new silver mines might open creating an over supply. Like gold, silver rose during the 2000s and as the price rose, new mines opened which created an oversupply and the price of silver plunged in 2012 at the same time as gold which also had an over production problem. However since silver is not purchased by central banks, the price plunged about 60% from it's highs compared to about 35% for gold due to the over supply.