Property Investing vs Stock Market Investing UK: Who Wins?
Hey I’m Ben from Motivation2Invest our mission is to help motivate you to invest for your financial freedom, whether that means escaping the 9-5 drudgery or just improving your life.
I’m here to help you by providing you with valuable investing tips & strategies.
The has been an Argument raging for decades between investors, which is a better to grow your wealth Stock Market investing or Property?
In this video I’m going to compare & contrast these two types of investment so you can decide which is best for you!
LETS DIVE IN!
1. Upfront Capital
Point 1.
Property requires a much higher amount of upfront capital to get started investing.
As you will require a 10-25% deposit for a mortgage. This will likely be at least £30k minimum for the cheaper houses in the U.K.
Whereas if you invest in stocks you can get started from just £1 and gradually increase your investments over time!
That’s 1 point for stock market investing!
2. Liquidity
Property is also not very liquid which means it cannot be easily bought or sold.
So if you need fast money, it can be difficult to achieve this.
You can put the property into an auction but this is still not as fast as the stock market.
When you wish to buy a property it also can take a long time to find the right deal.
–Whereas with the stock market you can buy & sell shares instantly! If your looking for a liquid asset then that is Another point for the stock market!
3. Leverage
When purchasing a property you can use the magic of Leverage to enhance your return on investment & allow you to purchase a much more expensive asset than you can actually afford.
Despite borrowing up to 75% of the properties value the properties entire returns are yours to keep! That includes rental profits & capital appreciation.
4. Return on Investment
This is a tricky one as your return on investment is highly dependent upon which property or stock you purchase & when!
The stock market has historically offered an average return of 7-8% after inflation.
Whereas with property you can achieve a return of 6-10%+ just from the rental income & another 10% from capital appreciation. This is approximately a 20% ROI.
Well it’s true that investing into individual stocks can offer even greater returns the added risk is much greater than property.
For example, If you invested £1,000 in 2009 in Amazon it would be worth Nearly £14,000 in 2019, this is a total return of around 1,232%,
However, if you invested in Toys R US, you would be left with nothing as it collapsed!
On balance I will call this one a draw!
5. Adding Value
Property gives you the incredible ability to add value. You can refurb the interior, create a loft conversion or even add an extension.
This amazing ability means two houses in the same street can fetch very different prices.
Whereas, two stocks of the same company will be worth the same value & there is nothing you can do about it!
Another point for property!
6. Fees & Taxes.
Purchasing a property requires you to pay a large amount of fees from Solicitor fees to Estate agents & management companies.
You also must pay stamp duty on property purchases are your 2nd home. This can range from 2-5% and can really make an impact on the sale, as you can’t borrow from the bank to pay this.
Property is also less tax efficient with the U.K seemingly hellbent on destroying landlords! They even brought in a rule called section 24 which requires landlords to pay tax on turnover not profit which defies the laws of business.
Whereas Stock Market investing can be very tax efficient. U.K residents can invest using an ISA account in which they can be protected from Capital Gains tax & you have a dividend allowance of £2000 per year.
There are also various government backed pensions & schemes such as the lifetime ISA in which the government will give you a 25% bonus on your investment. However, you can’t access this money till your 50.
7. Security
As the old saying goes “there is nothing safer than bricks & mortar” and if you have home insurance then this definitely is true.
Property provides a safe haven for your cash and still provides you with a steady rental income even during a recession.
Another point for property!
8. Diversification
With Index funds such as the Vanguard S&P 500 or the Vanguard world ETF you can diversify your investment internationally & across many industries from Oil, to tech and even property with REITs.
Property just does not allow this type of diversification to be achieved practically.
That’s another point for stock market investing!
9. Short Selling Stocks
Short selling allows you to bet against a stock or index and actually make money if the price falls! A unique point for stock market investing.
10. Cash Flow
The Incredible Rental income achieved by properties can help you to sustain a true financially free lifestyle!
That’s double points for property!
Final Thoughts:
Both Property & stock market investing are great places to invest. If your serious about growing your wealth & becoming financially free I would suggest you have some exposure to both asset classes.
If you don’t have much capital to start then starting with stocks is great. Then As you achieve a large pot of wealth you can start house hunting for buy to let investments!
To get started investing today be sure to check out the free trading apps such as Free share & Trading 212. I did a video comparing these and if you use the link below you will get a free share worth up to £100 when you sign up! WINNER! 😊
Which investment you think is better? property or stocks. Comment your thoughts below!
If you found this video inspiring or informative go ahead smash that like button & definitely subscribe!
Hey I’m Ben from Motivation2Invest our mission is to help motivate you to invest for your financial freedom, whether that means escaping the 9-5 drudgery or just improving your life.
I’m here to help you by providing you with valuable investing tips & strategies.
If you watched my previous video on 5 reasons to invest into a small business such as local shop, gym or restaurant you will know that an investment into a high quality business of this type can offer MUCH GREAT returns than the average 8-10% achieved by the stock market!
Small businesses seem like the perfect investment, high returns, passive income and much more fun!
But one of the major challenges is just finding great small businesses to invest in at a fair price.
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So in this video I’m going to take you over my shoulder and show you 3 ways to find small business investments!
LETS DIVE IN 😊
Let’s get into it!
Method 1. Online Brokers
There are a variety of online brokers in the U.K which offer small businesses up for sale. These act as a middle man and many vet the business accounts prior to investment.
They in turn take a commission from the seller if the business sells.
A popular broker in the U.K is blacks.
As you can see it offers a variety of businesses for sale from corner shops to bars, restaurants, hairdressers and even humble fish & chip shops.
The majority have their turnover show and other relevant figures about the business.
(I was shocked to see some humble corner shops with revenue upwards of £900k! )
A purchase of the business usually just gives you rights to the lease, trading name and all equipment/stock the business owns.
Some have staff which will happily stay on while many one man band businesses will require you to hire a new team or manage the business yourself.
Before investing be sure to ask this crucial question.
“Why is the business owner selling?”
This is key, as if they are selling because there business is failing then that is not a good sign for you, unless you spot a part of business where you can add value.
For example, if a corner shop is failing because a Tesco Express has opened up opposite you will find this very hard to compete thus it would be best to steer clear.
However, if the business is failing because they just need some cosmetic work or minor renovations then this could be a potential opportunity.
The ideal reason for someone selling is those who are just retiring or moving away. They would love to continue running a profitable business but now wish to pass on the batten.
Method 2: Facebook Groups
There are various small business Facebook groups where you can buy & sell businesses. Like previously be sure to ask the same questions, have the accounts vetted & fully understand the business before investing, including what may be required of you & lease commitments which can be 5 years +.
It’s also a good idea to negotiate a handover period where the existing owners will stay on & run the business for a short time to inform you of how it’s run & communicate the transition to it’s existing customers.
Method 3: Word of Mouth
Word of Mouth or networking is the best way to find great small business investments.
Hearing it through the grape vine can often give you a head start on any negotiations before these businesses are put up for sale with a broker.
Final Thoughts:
Small Business investments can create incredible returns, passive income & are great fun to be a part off.
However, you must be aware of the risks, your commitments & fully understand the business.
For example, An investment opportunity which I nearly invested in was a stylish barbershop of which the owner was moving to Australia.
The shop had great design, great revenue & a loyal customer base.
However, because the barbershop was in a small town & run by a one man band. I knew any transition period would be difficult.
People are loyal to their barber so me just hiring someone new & changing the shop name would have been a huge risk.
Especially, due to the fact that I’m not a barber so if the person I’ve hired was ill or wished to go on holiday, the shop would have to be closed.
In addition, the barbershops location was in a different city than I lived. On balance I decided to decline the offer.
They say the best investments are the ones you walk away from.
However, If you can secure a high quality small business investment which ticks all the boxes then you will most likely be in for fantastic returns & can even franchise the business out & scale to the moon!
Be sure to check out my other videos on the free trading investment apps, which give you easy access to the stock market instantly!
If you enjoyed this video, Smash that like button, comment your thoughts below & definitely subscribe!
Is it better to Day Trade or Invest for the long term?
Hey I’m Ben from Motivation2Invest our mission is to help motivate you to invest for your financial freedom, whether that means escaping the 9-5 drudgery or just improving your life.
I’m here to help you by providing you with valuable investing tips & strategies.
In this video I’m going to talk about the differences between Day Trading such as Forex & long term investing.
I’m also going to compare & contrast Which is a better strategy to grow your wealth.
Lets Dive in 😊
What is Day Trading?
Day Traders buy & sell securities in short time windows such as one day or one week.
They usually leverage a large amount of capital via a broker to take advantage of very small price fluctuations.
Forex is a common market where day traders operate.
For example, A day trader can take advantage of a very small price fluctuation between British pounds & US Dollars.
For instance, If the GBP/USD exchange rate is 1.313
And a trader invests £1000 at this rate.
Then throughout the day it’s price fluctuates to 1.314
Then if the trader sold he would make just $1 profit.
However, Traders use risky “Leverage” via a broker service to enhance the trade.
For example, using a 1:100 leverage ratio. The trader would be able to Purchase £100,000 worth of currency on that trade.
Then when the rate moves up by a very small amount to 1.3140. Then the trader would make $100!
However, the Use of leverage not only increases your reward but also magnifies your RISK!!!
The can also fees for using the broker services.
How does a trader know if the price will increase?
Traders attempt to predict if the price will increase or decrease by using software & mathematical graphs which show what’s called a divergence.
Can you Make money with Day Trading?
Yes but with large risk and a massive time commitment to learn the skills & become a “forex pro”.
I know a few extremely skilled day traders, with expensive software who make $1000 a day spending approximately 5 hours trading each day.
Now this may sound great. However, Trading is for most people is usually not a successful pursuit, If you subscribe to the theory that time is money.
Many people I know who have tried day trading, find themselves up by $100 one day, down by $80 the next day and then only end up making a $50 profit over a few days & many rigorous hours of trading.
If you compare this to a normal job then you would likely earn more & not have to risk any capital.
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Usually the training to learn how to be a successful Day trader is also very expensive, with many online courses showcasing a glamourous lifestyle which has been paid for by their trading. (Lambo images)
However, as the old saying goes “If you can’t do, teach” and I suspect many of the people running these day trading courses have made millions from their academies as opposed to the actual trading.
What about Long term Investing?
Long term investing is not as fun or exciting as day trading but its less stress & has been historically proven to work! With minimal time commitment required it’s often extremely passive with no Risky leverage required.
As Billionaire investor Warren Buffet says “Leverage is where you go to die”
Whereas, if you Invest into a passive index fund such as the Vanguard S&P 500, this is likely to give you an average return of 8-10% per year.
This includes some years when your investment may grow by as much as 40% and others where it may decrease by 10%.
Index Investing is a fantastic way to make your money grow passively. As your pot grows through the magic of compound investing you can also receive dividend payments which can provide you with passive income.
For even greater rewards but slightly more risk you can also invest into individual company stocks.
For example: A £1,000 investment in 2009 would be worth more than £13,300 as of Dec 2019, this is an incredible return of around 1,232%,
Which are the best stocks to invest in?
For more on how I used Warren buffets method to evaluate which are the best small businesses to invest in. Check out my previously video on the link below.
Despite me being a long term investor I still made a profit of £1000 with 7 days. During the latest stock market crash.
Also be sure to check out revolutionary the FREE Trading apps such as Free Trade & Trading 212.
Using the links below you will get a Free share worth up to £100 when you sign up & deposit!
I would love to know your thoughts on Day Trading & if you have tried it! So comment below.
Also smash that like button if you enjoyed this video & definitely subscribe!
Hey I’m Ben from Motivation2Invest our mission is to help motivate you to invest for your financial freedom, whether that means escaping the 9-5 drudgery or just improving your life.
I’m here to help you by providing you with valuable investing tips & strategies.
We’ve all heard the phrase “elephants don’t gallop” and while stock market investing can offer great returns, investing into smaller businesses can offer more lucrative rewards!
So in this video I’m going to outline 5 reasons you should look for a small business to invest in TODAY!
—————-Intro animation.
1. More Control
Investing into a small business can offer you a lot more control of the business & thus your investment & subsequent destiny!!
For example, If I invested £20,000 into Google or Facebook they would not even notice & my investment would be just a drop in the ocean!!
Even multi millionaire pound investors are unlikely to get a chance to influence any of the companies policy.
Whereas, investing £20,000 into a smaller business could give you 20%, 50% or even majority ownership over the business..
This will allow you to exercise control over the operations, hire management teams, change up staff and turn the business around if possible.
2. Increased Return
Investing into a small business can give you a massive increase in investment return as you are the firs choice for any profit allocations & dividend payments.
For example, If you invested £10k into a small business which earn’t £100k per year profit. As a 10% owner you would see a return on your investment in 1 year, double in 2 and triple in 3.
3. Special Relationship
If you have developed a special relationship with the small business through the bad times & the good then you will be likely offered more stock options & your passive dividend payments will be very regular & consistent.
It’s also a lot more fun to be part of a young enterprise & help it grow!
4. Close the beating heart
Should the business run into any problems or financial troubles you will be the first to know, so you can anticipate & react.
This contrasted massively will larger stock market companies in which you will just see the bad news on the daily paper!!
Finding out late you’ve lost thousands in capital!
5. Tax Efficient
Investing in a small business is tax efficient as you can take salary & tax efficient dividend payments. In addition, to claiming back sums via the company expenses!
So investing into a small business seems like a great idea!
Great returns, consistent passive income, more control & it’s a lot for FUN!!
However it does have it’s challenges.
3 downsides to investing in small businesses?
1. More Risky
Approximately 20% of small businesses fail in there first year & a further 50% fail in there 5th year!
Thus it’s best to look for businesses with a long track record of trading well before you invest & ensure your investment is going in the right places to help the company grow.
You also need to be doing business with trustworthy people & have legal contracts in place to ensure there is no underhand dealings.
2. More Work?
Small businesses can be more work & potentially even more stress! Even as a passive investor you will need to be aware if there are problems with the business.
For example, if you have invested into a small business such as a restaurant with just 2 staff, the waitress & chef. If the chef is ill or injured you will need to find a replacement asap!!
Or you may even have to put the chefs hat on yourself!
This requires you to be extremely flexible & fast acting should an issue occur.
If you don’t solve the issues you could lose thousands in revenue & also lose the trust of customers which have pre booked at your venue.
Whereas a passive stock market investment into a company like Amazon would never have them calling me because a manager is ill or has left.
You just need to keep an eye on the forecasted profits & share value.
(For more on this check out my previous video on Free Stock Marketing investing using the Warren buffet method.
3. Hard to find the opportunities
The most difficult challenge is It’s not easy to find high quality small business investing opportunities. There are many crowd funding & angel investing sites which make it easy to invest in extremely risky start up businesses.
However, to find reliable & established small businesses which just need a cash injection is not easy!
Shares in these businesses are not liquid like the stock market, so you can’t easily buy & sell the shares.
However, you know what the say the best opportunities are captured by the few! If gold was everywhere it would be worthless!
In my next video I’m going to detail how to find small business investing opportunities!
Check out my other videos on FREE TRADE investing apps & a beginners guide to stock market investing.
If you found this video inspiring & informative, feel free to like, comment & definitely subscribe!
See you next time!
DISCLAIMER: We are not financial advisors. Our videos are for educational purposes only and merely cite our own personal opinions. In order to make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a licensed financial advisor if necessary. Know that all investments involve some form of risk and there is no guarantee that you will be successful in making, saving, or investing money; nor is there any guarantee that you won’t experience any loss when investing. Always remember to make smart decisions and do your own research!
5 Businesses which profit during the Corona Virus epidemic?
FULL YOUTUBE VIDEO BELOW!
The world is in the mist of a global epidemic, the complete shutdown of all bars, restaurants, gyms and the lockdown of the entire planet has caused people to adopt some unique spending habits.
People have been buying everything from Face masks to Hand Santiser & even Toilet roll!
So in this video I’m going to outline 5 Businesses which are profiting from this global crisis.
5. Home office equipment suppliers
With the employees all encouraged to work from home, many companies have had to accelerate there ability to work remotely rapidly!
Home office equipment such as Desks, ergonomic chairs, monitors & keyboards, have all seen there price inflate massively as stores sell out online!
4. Video Conferencing Software!
In the similar area is remote working software for businesses which continue to work.
Zoom video conferencing is one company which has seen it’s share price skyrocket!
3. Home Gym Sellers
With the government closure of all gyms, Fitness fanatics flocked to the online stores & cleared the shelves.
Many Items in major stores are sold out & even some prices are inflated.
I managed to source a pull up bar before the rush, but I’m still looking for a reasonably priced weight bar!
2. The MEDIA
The Media is a sinister one & is an industry we need to all be aware off. There job is not just to inform the people but to entertain, make us tune in & spread fear.
As two things motivate people, fear & desire!
Major outlet Media companies play on this fear to keep you constantly watching.
I noticed many major newspapers & TV networks even running advertising before the government daily Corona Virus update. On Youtube & their channels.
The daily corona virus updates attract millions of viewers so I would hope they are donating this advertising revenue to charity.
1. Hand Sanitiser solution
Hand Sanitiser is perhaps the most booming industry during this corona virus epidemic. With an international shortage even the raw ingredients such as Isopropyl alcohol have skyrocketed in value.
I saw online many people on ebay making up to £10,000 per day!
As a Youtube experiment for you guys I manage to purchase some bulk supply of the raw ingredients from a factory in china and took the challenge to flip it.
I also donated a portion to charity, for the full video & details of the £10k a day challenge check out the link below!
Final Thoughts?
No matter what situation there is happening in the world there will always be someone profiting. The real moral question is Are these people just using their initiative to provide for their families? Or are they taking advantage of the situation? Should governments step in?
I would love to know your thoughts so comment below.
If you found this video inspiring & informative feel free to like, comment & definitely subscribe to our youtube!
Investing in stocks & funds is one of the greatest ways to put your money to work and take advantage of the big gains offered by the stock market.
Previously many large investing firms charged very high fees to invest stocks & funds. For example, Hargreaves Lansdown charges £12 a trade which can significantly add up if you’re a frequent investor.
The high fees & complexity of use, put off many people from even attempting to invest.
But now things have changed!
We are now in a new age of FREE TRADING INVESTING APP’s such as Free Trade & trading 212. These are easy to use, versatile and offer you instant access to the worlds markets.
In this video I’m going to review two of my favorites FREE Trade & Trading 212.
————————————————-Lets Dive in! (Intro
Is Free Trade really FREE?
Well yes mostly! There are no trading fees & no minimum deposit for Freetrade, which means that you can buy stocks from as little as £1.
However,
if you trade in stocks from other countries. There’s a 0.45% fee that applies here.
How Does Freetrade Make Money?
Freetrade makes money, simply, by charging for premium perks. One of the most interesting sides to Freetrade is its stocks and shares ISA which can protect your cash from tax but costs £3 per month.
They also charge a fee if you wish to take your money from the app quickly.
The standard bank transfers can take time to process, so if you would like a same day transaction that will cost you £5.
Whereas Trading charges ZERO platform FEES and you can open an ISA for FREE!!
They likely make there money through the CFD part of there platform and other advanced parts. This is the classic fermium business model.
Which Taxes do you have to pay?
You must pay a 0.5% stamp duty cost on any individual stock purchased through the apps. If you’re a long term investor & not a regular trader then this isn’t an issue.
You also would have to pay Capital gains tax on any stock profits you made over a period of time. However, if you invest via an ISA account then your profits are protected from this tax!!
Is your money Protected??
They are also registered with the FSCS which offers compensation up to £85,000 should the company go bust. However, they won’t protect you from bad investment decisions that risk is yours. But the rewards are also yours!
Both Apps also offer ISA account options which allow you investments to be protected from Tax up to £20,000.
Each person can only open one ISA account per tax year so just be aware of that if investing large sums.
Freetrade Pros and Cons
Freetrade is, for the most part, absolutely free. Therefore, you can start depositing and trading from at least £1.
However
The app itself is really easy to get into and use. Therefore, it is likely to appeal to people who may not know how to get their heads around basic investing and trading.
Freetrade offers a nice stocks and shares ISA option, which is only really going to be worthwhile if you know what you’re doing, and if you’re willing to pay £3 per month for the privilege.
NEGATIVES of the Free Trade App?
Free Trade offers a more limited amount of international stocks compared to Trading 212. For example, they did not have access to any of the latest US Airline stocks such as delta airlines which I invested in during this latest crash.
You can request these missing stocks on the forum, but dates for the introduction are ongoing.
you will expect to pay an FX percentage on anything you trade in outside the UK.
While you can trade for free through Freetrade, it may not be the best at delivering the stats and reports you’re looking for.
No Desktop PC version. They have a mobile app version only.
As a long term investor I prefer investing via my PC. However, it’s clear that free trade is a mobile app only version to increase trading volumes, as the power is always in your hand.
We have all heard of drunk text messages, but what about drunk investing if someone has been to the pub. Gets there phone out and could invest thousands in a fret of emotion.
Registration can take slightly longer on Free trade.
On apps such as Trading 212 or the Vanguard platform they use your national insurance number for near instant verification. Whereas with free trade you must submit your Identification documents & wait. This can be a little annoying if you have seen a rare opportunity where you need to act fast.
However, if you set your account up before then this should be no problem. ]
Deposits into Free trade can take a few hours to show up whereas trading 212 is instant.
Trading 212 Pros and Cons
Trading 212 offers a larger set of international investing stocks & funds. A much more diverse selection. For example, I invested in Delta & southwest airlines on this app as it wasn’t available on Free trade.
Trading 212 also has a Desktop & mobile app. So people can choose how they wish to invest. This is a lot safer for the reasons mentioned previously.
Trading 212 is very flexible and is also really easy to set up and start with. There are a few specialist platforms on board, all of which have their positives.
Trading 212 is, in the long run, going to appeal to more experienced traders. It’s a little more complex to digest.
Trading 212 offers the ability to deposit instantly whereas on free trade it takes a few hours for your money to appear.
Negatives of Trading 212:
Trading 212 doesn’t seem to offer a nice clean overall summary of your investments which is a plus of free trade.
Conclusion:
Both Trading 212 & Free trade are both great free trading apps. I would recommended Free Trade for beginner investors who wish to invest in a smaller set of UK stocks & big name international brands.
Whereas Trading 212 is better for the more advanced user, who wishes for greater selection of assets to invest in & the desktop version which gives peace of mind for some.
To get started on either platform, use the link below & you will get a FREE share up to £100 upon sign up once you deposit.
If you found this video, inspiring & informative feel free to like comment & definitely subscribe.
