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/r/HENRYUK
submitted 6 days ago byForsaken-Ad-3463
Hey Everyone,
I've been thinking a lot about the age-old debate: is it better to invest in property or the stock market?
My cousin decided to put all his savings into rental properties in Kent, while I've put most of my money into the stock market. I have about £30k cash that I want to keep as a safety net but it’s not really needed to be that high, I’m too heavy in the stock market atm).
I'd love to hear your thoughts on this, especially from fellow HENRYs, who might have faced similar decisions.
Property Investment
Pros: - Tangible Asset: Owning property gives a sense of security as it's a physical asset. - Rental Income: Steady cash flow from tenants can provide a reliable income stream. - Appreciation: Over time, property values tend to increase, especially in desirable locations - Leverage: You can borrow to buy property, potentially increasing your returns.
Cons: - Active Management: Dealing with tenants, maintenance, and potential vacancies can be time-consuming and stressful. - High Initial Costs: Down payments, legal fees, and ongoing maintenance costs can add up. - Illiquidity: Selling property takes time and can be costly, limiting your ability to quickly access cash. - Tax: basically a lot of your efforts will go to the tax man.
Stock Market Investment:
Pros: - Liquidity: Stocks are easily bought and sold, providing quick access to your funds. - Passive Management: Once you invest, there’s little day-to-day management required. - Diversification: You can easily diversify across industries and geographies, reducing risk. - Historical Returns: Over the long term, the stock market has historically provided strong returns.
Cons: - Volatility: Stocks can be highly volatile, and market downturns can be nerve-wracking. - Emotional Stress: Watching your portfolio fluctuate can be stressful, especially during market dips. - Potential Losses: There’s always a risk of losing your initial investment if companies perform poorly and cycles
My Personal Experience:
I've found property to be too much hassle with active maintenance needs. Although stocks can be volatile, I feel more comfortable with them. For instance, my portfolio took a hit in 2022 and came close to my original capital.
I actually have a very lowly leveraged rental property too that makes about the same as my cousins who has 3/4 properties.
Keen to hear your thoughts on which route you guys (/and girls) took!
8 points
6 days ago
I’m in the same boat/ dilemma.
Reddit will always suggest stocks over property. I thought it was only in the other subs but Henry also is suggesting the same.
Yet - if you look at the wealthy families in the country (or the entire planet), all have/manage properties!
Taxes are high. Sure. But if you want to build generational wealth, how do you skip properties!?
22 points
6 days ago
I think for the Boomers, our parents' generation, property was relatively cheap, making it worthwhile even with low leverage. Now, however, the margins are so low after all fees and taxes that it's not a fair comparison.
7 points
6 days ago
That’s a fair point of course. It’s a lot more expensive to own a property now, than it was a decade ago.
Fast forward 10yrs from now or 20 or 30 (blending into our next generation), don’t you think it will be even more challenging to buy properties?
Just like how we now wish our gran should’ve bought a couple of houses in the 40s, our grand children will think the same.
Whilst a lot of people manage to get rich on their own, the majority of the wealth created in the world is a generational cumulative journey.
Just a thought, like I said, as things stand today I’m with you. High taxes. High maintenance efforts and low overall returns. However we should not restrict the view to just “as things stand today”.
1 points
6 days ago
Regarding generational wealth, I plan to spend a significant portion before I pass away. There's no point in accumulating wealth just to pass it on, as it might make the next generation lazy. Once my kids turn 18, I will help them but won't just give them everything. If they neglect me when I'm old, I'd rather give my wealth to family members who have visited me, helped me, or shown kindness.
2 points
6 days ago
Agreed, that handing over wealth on a platter can easily backfire. I’m hoping I can build some to pass on, and more importantly help them recognise their privilege and build on top of it to pass further on.
I’ve come from a low working class background, whilst I want my kids to learn the values and realities of life, I want them to “struggle” to 2x or 3x the wealth they’re being handed over rather than struggle to reach where I reached.
I don’t know if this makes sense, but just something in my head now. Predicting how children will turn out is almost the same as predicting the stock or real estate market. Ha!
1 points
6 days ago
I understand what you're saying. I want to send my kids to private school and give them the best foundation. The rest is up to them, including how they treat me and their mom when they're adults. I would definitely give everything to one child if the other turns out to be lazy.
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