This month I want to talk about property.
Much like that wonderful word ‘bonds’, property can have a number of different meanings in our world and an equal number of uses for clients.
Firstly, they can invest in it through a property fund.
Of course, that is commercial property, not houses, although I wonder how many clients actually know that. Even then, is it a direct property fund or one that holds shares in property companies; is it UK, European or global?
Personally I have been around long enough to see direct property funds be suspended more than once so I no longer hold them for clients.
I am also wary of the future for commercial property in general as people move out of offices to work from home and the global lockdown has accelerated the shift to online shopping so retail space will also fall empty.
Then we have our own home. How often have we all heard ‘my property is my pension’ when talking to clients?
Well apart from the well-worn argument that you have to live somewhere and even if you downsize you probably will not release as much cash as you think, we also know that many people actually never move and downsize.
For those, though there is equity release to consider.
Again, I remember the equity release scandals for 20 or more years ago and some of the promotion of equity release now really worries me.
But your house should never been seen as investment. It is somewhere you live, potentially for a very long time.
Somewhere to see your family grow, to create memories, good times and bad, with friends and loved ones.
I will leave you with the client I spoke to this morning: He is going to help his son buy a house and we discussed how to raise the money, only for him to call me back and say forget it, the price has gone too high.
Now he can still afford it; it is the perfect home for his son and family and it will be their forever home. In that context what does the price they pay now really matter, as long as it is not stupid? This opportunity likely will not come again.
Darren Cooke is a chartered financial planner at Red Circle Financial Planning