What has been the best investment in the past ten years?

Fri 23 Sep 2016

Is there ever a good place to invest your money? A question on many people’s minds with the ongoing economic uncertainty.

To help you decide, sister companies Romans and Leaders have compared four popular investment options (gold, property, FTSE 100 and savings accounts) and taken a closer look at how much money you’d make if you invested £50,000 in 2006.

Property vs FTSE 100, gold and savings accounts

Property is the stand out winner by some margin with an impressive return on investment of over 175% or just under £140,000! This is based on an initial investment of £50,000 plus the year on year house price increase for a property in the south east. You would have made a profit of approximately £50,000 if you’d invested in gold, only £3,000 in FTSE 100, and about £15,000 if you’d left your money in a savings account.

Investment comparisons

“Buy-to-let performs significantly better than other investments in terms of an overall return” comments Michael Cook, Letting Managing Director at Romans. “Although property investment can be more time-consuming and hands on, with such incredible results at the end it’s certainly worth looking in to if you’re exploring your options. Plus, on top of the capital growth you could earn hundreds more each month in rental income.”

A closer look at property as an investment

Allison Thompson, Managing Director at Leaders, often gets asked about what the property market is doing and whether it’s a good time to invest; her response is: “If you’re prepared to take the rough with the smooth investing in property is a very profitable long-term investment!”

Over the last ten years we have seen a recession, fluctuations in house prices, stamp duty levies and concessions change, rates of capital gains tax change and more recently changes to offsetting interest on buy-to-let mortgages, yet property investment is still the clear winner…

“If you are a landlord or looking to invest in property, sometimes these changes work to your advantage and sometimes to your disadvantage” adds Allison. “If you take a medium to long term view on buy-to-let, which most landlords do, you can make a substantial return on your investment.

“Understandably, a lot of investors want to get the timing right when purchasing a property, but inevitably if you’re in it for the medium to long term, just learn to accept these fluctuations as any short term gains or losses. Second guessing and predicting the market will more than likely pale into insignificance in comparison to your overall return after ten years.”

Extra benefits of property investment

On top of capital growth you also benefit from rental income when you invest in property. This is different for each landlord, but using a typical two bed terrace in Reading as an example, currently valued at £282,797 on average, you can expect to make at least an extra £350 a month, when you deduct your mortgage repayments, management fees and maintenance costs.

These figures are just for illustrative purposes and assume you have a mortgage; many people become ‘accidental landlords’ as they inherit property or move in with a partner and decide to rent out their property rather than sell it. The letting agent fees are based on a Fully Managed service, which covers everything from the initial marketing of the property to the tenant checks, inspections, and maintenance and repairs. Plus, depending on your buy-to-let property you could have no maintenance costs for months. Bearing this in mind, your monthly profit could be significantly more, depending on your circumstances.

Michael comments: “If you’re worried about the hands on element of owning and renting out a property then put that job in the hands of an expert. Combined, Romans and Leaders manage over 55,000 properties across the UK on behalf of landlords, many of whom simply don’t have the time or inclination to deal with tenant enquiries or keep up to date with legislation changes. With the returns from buy-to-let so good they can usually afford to not have to!

“Our investment teams are also here to help you source the best buy-to-let property for your circumstances. Their extensive knowledge of the market means they can advise on the most popular property types and locations based on tenant demand and predicted capital growth.”

To learn more about purchasing and managing a buy-to-let property talk to the experienced team of letting agents at your local Romans or Leaders branch, or visit romans.co.uk or leaders.co.uk.