Much has been said about the end of property as a way to make money and secure your future. At Property Insider we don’t necessarily agree with that.
But supposing, just supposing, property investing was no longer viable as a way to make money what other ways (legal ways we mean) are there that could make you a return on your money that is equal to, or better than, property?
Let’s look at a few alternatives to property investing which you might want to consider:
Gambling. Seriously now, the number of people who gamble as a money making venture, or at least aim to, has risen over recent years. It’s no longer thought of as a ‘bit of fun’, there are now professional gamblers who regard it as a serious money making enterprise. The rise of online betting exchanges – such as Betfair – which allow customers to set their own odds is probably partly responsible for this. As is the possibility of betting on a wide range of outcomes, not just the horses and not even just sport.
It probably depends on whether gambling is for you, of course, added to the fact that (unlike property) it can be highly addictive. However by and large professional gamblers who do return a profit in the long term will tell you that they operate by making small, regular returns from their betting.
Stock market investing. This isn’t new of course. And let’s be honest …. this is what a lot of investors did with their money before property investing became easier and potentially more rewarding.
If anything, stocks and shares probably come a close second to property if you are looking for a kind of investment that can produce both an income and a capital gain for the future.
Unless, however, you’re willing to entrust your money to some kind of fund stock market investing calls for a lot of regular time commitment, and skill, if you’re to play the markets successfully …. at the end of the day probably much more than a buy to let investment.
Plus, low interest rates are at least partly responsible for boosting stock market returns in recent years. As interest rates rise this could change.
Spread betting is another alternative you might consider, and is something else that has risen in popularity in recent years.
Spread betting is a derivatives product that allows you to speculate on the movement of the financial markets, and one which offers returns in both bad times for those markets, as well as good. It’s probably best thought of as something that combines the ‘thrills and spills’ of both gambling and the stock market – but alongside the undoubted potential for high thrills is also the potential for very serious spills.
Peer to peer lending. This is another investment possibility, which has grown fast since the financial crisis and in the current era of low interest rates. Peer to peer lending allows you to lend money directly to borrowers, both individual borrowers and companies – normally through a peer to peer lending platform, and receive a higher rate of return than standard savings accounts.
Currently returns of anywhere between 3% to 11% are offered by peer to peer lenders.
There is a price to pay though: There’s a risk of borrower default. Deposits aren’t covered by the FSCS. However, possible returns at the upper end of the scale (say 8%+) are in excess of what some buy to let investments currently offer …. and for much less time and effort.
Unlike most property alternatives, however, this method is only really an option if you have cash available to lend. Unlike property you can’t leverage your position using mortgage finance.
Starting a business. If you’re looking to make a regular income and, potentially, a good capital return in the long term then you probably shouldn’t rule out starting some kind of business.
Running a business can offer a yield that is comparable if not better than a buy to let property – with the scope to leverage your return with loans which other property alternatives do not offer. Plus there could be the added advantage of tax advantages and allowances which, apparently, property investors and landlords aren’t deserving of anymore.
The main question with starting a business is, of course…. what business could you start? Like property it’s likely to be a long term proposition too, and is also likely to take more time and commitment than a relatively hands off buy to let.
So, if you’re inclined towards the opinion that it’s over and out for property. If you feel that you shouldn’t be investing in property now, or perhaps that you should be divesting yourself of your property investments then it could be worth giving the alternatives some thought. Although there are certainly alternatives out there for making a good return on your property and they do have their advantages they have lots of disadvantages too.
Even today, with the extra stamp duty, reduced tax allowances, and additional rules and regulations to deal with we think you’ll agree that property still stacks up very well as a place for your money.
Property Insider Editorial by Mark Hempshell, Editor in Chief