SPONSORED: The big question: Is property a good investment?

The big question: Is property a good investment?

Tim Collyer, Chartered Financial Planner, writes:

One cold morning, I was setting up the dining room for expected guests when the phone rang. My tenants were on the line, stranded in a cold house with a faulty heating system.

On arrival, I discovered the issue was a simple one involving the heating’s power switch. A quick fix - but it sparked a question: was the hassle of property management truly worth it?

As financial planning advisers that specialise in helping principal dentists, we are often asked this exact question – and often by those who are already dealing with the pressures of both practice ownership and their personal residence.

In answering this question, my own property investment is a useful starting point.

Prompted by the heating incident, I conducted a fresh analysis - and found that after accounting for all costs, my net rental yield had dwindled to a mere 3%. 

Around the same time, I saw an analysis by Forbes that revealed that Donald Trump would have been wealthier if he had simply invested his inheritance in the S&P 500 stock market instead of his hotels and other real estate.

Should I have done the same? Over the last 11 years, returns from the S&P 500 were 162.5% compared to the average house price index at 73%*. The S&P figure includes dividends, and the average house price figure does not include rent – but it’s still a striking gap.

Add to this the evolving regulations, the mounting responsibilities of landlords, and the sheer unpredictability of property management…it was time to reconsider my approach.

Having said all that: everyone’s different! You might have a higher tolerance for the practicalities of property ownership than me. Or you might like the ‘tangible’ nature of it – the fact you can feel the bricks and mortar under your fingers.

The point is: every financial decision is dependent not just on trends or the winds of change – it’s dependent on the individual.

How much do you embrace risk? How much money do you currently have saved away? Is that enough? Are your future plans and dreams something you’ve thought about deeply, and if not – why not?

So, if you’re standing at a crossroads, pondering whether to dive deeper into the property market or to explore the vast ocean of stock investments, let’s have a conversation. Because getting help with your financial planning doesn’t just give you better clarity on what the future looks like – it can actually be the catalyst that makes that future a reality.

And with a new government likely to be arriving soon, it’s crucial to act quickly. Current benefits, like the recent fall in Capital Gains Tax from 28% to 24%, might not hang around forever.

If you think you’re ready to talk, book a chat now via montgomerycharles.co.uk/bookachat or calling 01225 777 999. We look forward to speaking to you!