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COMPARISONS OF PROPERTY AND INVESTMENT IN STOCK MARKETS
In the UK housing is often seen as the best long-term investment in terms of total return.
At the same time the stock market is seen as very risky.
The long-term related perspective
rewards are easier explained by financial ethics than by reality. I
the principle of rediscovery (discovery) states that ideas are strongly influenced by 'knowledge'
that is easily remembered.
It is possible that the media often reports stock market crashes
easier than rising, while they often report rising housing market prices.
Vision
housing as a profitable and secure investment, more than an investment in the stock market, is evident
if formed.
It is instructive to look at the latest UK history. For example, £ 100,000 spent on the UK average
accommodation in early 1988 would grow to about £ 288,000 at the end
2003 (based on the Halifax Property Index) and £ 100,000 is invested in the stock portfolio
indicating the FTSE All-Share Index would have grown to £ 503,000 over the same period. So in terms of return on investment, investment in the stock market has seemed high.
However it seems that investing in the stock market poses an additional risk.
The figures shows that both investments were subject to a significant amount of risk. Statistics
show a return on each year during that period.
The stock market was very volatile. It
it also showed significant losses over the years, while the housing market produced losses
they were very modest.
The stock market in addition to compensation for years of its losses in
to provide great benefits over many years.
However the concept of ethical finance repeats itself
which is useful here.
According to theory, people measure the pain of losing more than twice as much
much like the joy from the benefits.
This is known as hating loss and can create huge stocks
market losses, such as those of 2001 and 2002, are very painful for many investors.
The next two years in 2003 saw an overflow of activity in the stock market. In the year 2004
The FTSE All-Share Index index showed a return of 31.9% compared to the rise in the price of Halifax UK House
17.9% index.
In 2005 the FTSE All-Share Index showed a yield of 15% compared to 9.6%
Halifax House Price Index (Financial Management, April 2006).
McRae (1995) pointed out that in fact (after adjusting for inflation) inflation
housing prices in the UK are estimated at less than 2% p.a. from 1945 to 1993.
Statistics on rising house prices are not the full story of investing in a residential area.
The property also provides accommodation if the owner lives, or the rental fee if it is a purchase
allow property.
The cost of accommodation or rent must be added to the proceeds of the proceeds
the price goes up when checking the amount of return from the houses.
Against these things must be set
certain costs such as maintenance, insurance, and property taxes (council tax).
It can be seen in Table above that stock prices and housing prices generally go in the opposite direction.
This suggests that a combination of stocks and assets is appropriate for portfolio diversity.
Poor
the performance of one may be determined by the efficiency of the other, hence the investment portfolio
the content of both will be relatively stable.
