Invest in property or save with a bank?
If you are looking to save money then organising your finances is essential, knowing your options and placing your money in a place that will give you the best return. Where traditionally we would run to the bank and open up a savings account or ISA, there are now so many wealth management options, with the introduction of technology into the finance industry opening up numerous doors to the individual.
Technology, paired with many people’s disillusion with banks has encouraged many to explore alternative means for saving, with investing in property through a crowd being just one of them. According to the Financial Times crowdfunding as a form of saving has come ‘into existence over the past four years as part of a fast-growing UK alternative finance sector’ (Evans, 20151).
At ShareProperty we aim to open up property investment to the masses through our platform.
‘As an attractive savings option that many are unaware of we want to share some of the potential advantages of purchasing shares in UK property, highlighting tax implications, return on investment and exit strategy options’ states George Grigg; the company’s Co-Founder.
Table 1: Bank of England (http://www.bankofengland.co.uk/boeapps/iadb/index.asp?Travel=NIxIRx&levels=1&XNotes=Y&C=5TU&XNotes2=Y&Nodes=X4051X4052X4053X4058&SectionRequired=I&HideNums=-1&ExtraInfo=true&G0Xtop.x=44&G0Xtop.y=4) /Home Let(http://homelet.co.uk/homelet-rental-index/london) /Land registry((http://landregistry.data.gov.uk/app/hpi)
|Saving with a bank|
|ISA||Instant Saving||Yield from Property Invest|
The current banking scene
In recent months the market consensus illustrated that forecasts for when interest rates will rise has dramatically shifted.
As stated by This is Money:
‘’Inflation expectations have been revised down for 2016 to 0.7 per cent, while Brexit uncertainty and slow global growth are also playing on rate-setters’ minds. Meanwhile, the Government has based its economic forecasts on a cut in interest rates from the record low of 0.5 per cent Budget documents showed’ (Lambert, 20162).
Recent comments from former Bank of England MPC member Danny Blanchflower added to speculation about a potential interest rate cut, telling the BBC that he believed bank rates would remain at rock-bottom levels until 2021, adding that UK growth is still very weak and the global economy ‘feels a little bit like 2008’ (Lambert, 20162).
‘We cut rates in November 2008 by 150 basis points (1.5 per cent). It was clear that we should have cut by more but didn’t because of the panic that it might have caused’ (Lambert, 20162).
The end of the premium bond
Premium bonds were once the most popular form of saving, however, with recent changes to the ways in which the banks work this is no longer the case; being much more of a gamble than ever before.
As a lottery effect saving scheme there is a substantial chance you will win nothing. Although, with savings rates so dismal, if you have average luck, you have a chance of beating standard savings, especially if you’re a higher or additional-rate taxpayer. This week it was announced that the odds on Premium Bonds are to be cut, from 28,000 to one, to 30,000 to one, with the effective “rate” dropping from 1.35pc to 1.25pc (Saxon, 20163)
Table 3: Source: Bank of England(http://www.bankofengland.co.uk/boeapps/iadb/index.asp?Travel=NIxIRx&levels=1&XNotes=Y&C=5TU&XNotes2=Y&Nodes=X4051X4052X4053X4058&SectionRequired=I&HideNums=-1&ExtraInfo=true&G0Xtop.x=44&G0Xtop.y=4) /Home Let(http://homelet.co.uk/homelet-rental-index/london) /Land registry((http://landregistry.data.gov.uk/app/hpi)
|Invest in Bonds|
|10-year Yield Gov. Securities||Strategic Bonds||Yield for Property|
Long and short term goals
Where property investment was once viewed as a slow burner with regards to financial return, today’s truth is somewhat different, with crowdfunding platforms like ShareProperty.co.uk giving you the option to manage a portfolio in real-time, not having to wait for the banks to release your investments.
As stated in our FAQ page you can offer your investment for sale via the ShareProperty platform at any point following a 3 month cooling-off period, choosing the price at which you offer your investment for sale. Your investment is then listed as a “Resale” opportunity to other investors. Giving investors/savers complete control over their finances such wealth management options, can be far more accommodating in meeting saving needs.
Sign up and be the first to receive investment opportunities
If you are interested in alternative savings options then be sure to sign up with ShareProperty. We are constantly updating our project list to provide a wealth of investment options to our users.
**Please note that investing in early stage businesses involves risks, including loss of capital, illiquidity (the inability to sell assets quickly or without substantial loss in value) and lack of dividends and should only be done as part of a diversified portfolio. Your capital is at risk if you invest. Tax treatment depends on the individual circumstances and may be subject to change in the future.
- Evans, J. (2015) ‘Popular capitalism or the madness of crowds’. Available at: http://www.ft.com/cms/s/0/f6f45e0a-c1b8-11e4-8b74-00144feab7de.html#axzz45VYiL4ys
- Lambert, S. (2016) ‘When will UK interest rates rise?’. Available at: http://www.thisismoney.co.uk/money/news/article-1607881/When-UK-rates-rise.htm
- Saxon, H. (2016) ‘Premium Bonds: Are they worth it?’. Available at: http://www.moneysavingexpert.com/savings/premium-bonds