As an investor, there are multiple opportunities for you to consider investing your money into. High growth SMEs. Shares in established companies. Investment syndicates. Bonds. Irrelevant of your investment needs, there are numerous opportunities open to you.
But to look through all of these and really make a decision on which to invest in is tough. It’s why so many people use Independent Financial Advisors (IFAs) or Wealth Managers. These people research and advise on the best investment options for your needs.
And this is always a positive recommendation. We advise our investors take independent advice before parting with their money, be it £100 or £100,000. It’s the sensible route to take.
Whilst we don’t offer advice ourselves, we do provide regular information on a variety of investment opportunities, explaining their often considerable benefits alongside potential risks. And one of the asset classes we’ve done this a lot with lately is property.
For many investors, property is their favourite investment choice. In fact, it’s the UK’s most popular form of asset for investors, and this is with good reason. With various points that make property a favourable investment choice, I believe there are four key reasons why as an investor, you should consider investing in property.
We hear all the time in the news about the fluctuation in the housing market; how ‘house prices have fallen’ and then the prices rise again. But if you look at the market over an extended period of time, house prices have only increased, rising at a stable rate.
Even during the last recession, the most they dropped was in fact only an average of 16% across the country - and they then went on to recover pretty swiftly. Generally speaking, such stability isn’t seen in other investment asset classes, at least not those where the level of return is similar to that of property.
It does seem as though property keeps getting more valuable, but that’s understandable when you think of it on the highest of levels - not only is there obviously a limited amount of land available, but combined with the world's population continually increasing, there's only limited space for us to build more homes.
We’ve seen huge advancements in technology across most industries over the past couple of years. Particularly prominent in financial services with fintech, one of the key outcomes of this has been the increase in investment platforms. It’s now never been easier to invest in a vast array of assets, including property.
Residential property development projects. Property bonds. REITs. Property company shares. It’s all entirely possible - and for the most part, particularly easy, simple and straightforward. This simply wasn't the case even just a few years ago. In many ways the whole investment process has been completely turned on its head.
Importantly, this doesn’t take away from the fact you need to do your due diligence and take as much advice as you can, but investing has never been more accessible than it is today.
3. Less Risk
With any type of investment there’s a level of risk involved. This varies - often hugely so - within both asset classes and specific investment opportunities, and you therefore need to ensure you only invest what you can afford to lose.
I fully appreciate this is a strong statement, but we’re so focused on being open and clear that it’s important this is fully understood.
And whilst property without doubt has a level of risk involved, the asset has built up a very strong reputation for, generally speaking, being lower risk than other forms of investment.
On a really high level, buying a house and holding it over time will result in said property having increased in value, producing what could be a sizeable profit if held for a sufficient period of time, should you sell it.
This is a really high level example, but by comparison, investments in high growth SMEs, whilst they can produce greater returns, also have greater risks. Early stage companies are very much higher risk as they don’t have the security of their more established counterparts.
Now tax reliefs are available to help mitigate the risk, and they can be particularly generous, but it doesn’t get away from the fact making investments into higher growth companies is a riskier investment strategy.
What’s more, as property is a physical asset built on land - which is a limited natural resource - that land isn’t going to go anywhere and will still be there for years to come. The same simply cannot be said for most other forms of investment.
If you are already an investor and typically invest in other asset classes - high growth companies, for example - property can be a brilliant way to diversify your investment portfolio. There are various reasons why this can be the case, but one of the most notable is while investments into high growth SMEs can fluctuate, the stability of property can make it a great way to balance out your portfolio and provide it with a stable cornerstone.
As I mentioned above, property does bring with it a level of risk, but the lower levels often seen with property can definitely add a beneficial balance to your portfolio.
Similarly, depending on what your goals are for your investment portfolio - thinking along the lines of growth or income - property has the ability to deliver each, providing you with a stable income regularly or a fixed return at the exit of your investment. Or in some cases, both.
Investing in property
Property provides so much potential to investors that it’s no real surprise it has long been the favourite asset for investors across the UK.
Every investor will have different requirements for their portfolio. Traditionally this was often limited by your associations and relationships with people or companies in the respective asset's sectors.
But with technology developing it's meant investing has never been more accessible both in general and on specific levels - and when it comes to property, almost regardless of your requirements, investing today has never been more accessible.