Property Investment
In recent years the public has warmed to the idea of personal financial independence through proper Financial Planning. One of simplest ways in which this can be accomplished is in the property investment market.
Property Sectors and Stock Markets
For example, in countries such as the United Kingdom, annual returns of over 10 percent have been commonplace over the last decade. While retail and industrial sectors can provide good return for personal investment, commercial property returns may be erratic due to fluctuating rent costs and increasing vacancies in some areas. In some countries while the overall property index looks promising in this bear market, it has been out performed by equities in most years.
Investment Portfolio and Diversification
When planning for your financial future, it becomes evident that vital to the health of your portfolio is diversification and the selection of attractive and sound property investments. On the one hand, funds which invest in property companies rather than investing directly in properties showed a higher return. This is due to the international diversity of these key funds. However, any advisor would be remiss in not mentioning that while shares in property companies have risen they are subject to the ebb and flow of the market while property values have continued on a slower more consistent rise.
When these factors are weighed against each other it becomes apparent that the deciding factor in your investment purchase is whether or not to diversify by purchasing property or buying into a fund that provides capital for a property management company.
Being able to incorporate diversification into your investment portfolio is at its worst a sound step in expanding your personal investments. One caveat to potential investors however, do not over-concentrate your investment to one place. In order to effectively spread your risk it would be prudent to investigate funds which diversify its investment. You should consult with your personal financial adviser or financial planner.
Commercial Property
Over the last decades commercial property has become an increasingly attractive item to add to your investment portfolio. This fact alone has had much to do with the influx of investors who are quite excited about the returns on commercial property investment.
REITs
Along comes REITs (real estate investment trusts) which are investmen funds that concentrate on real estate. The popularity of these real estate investment funds was helped by the advent of laws which allow capital gains made on commercial investment properties as tax-free, provided the REIT distributes a percentage of the income to investors. This tax break provides a major incentive to hotel groups, retailers and pub companies which are now considering utilizing this tax advantage by converting their properties to a REIT.
^This article does not constitute financial or other advice and is intended to provide only general discussion and should never be used in place of professional advice. We accept no responsibility for any loss arising from any action taken or not taken by anyone using this material or in reliance thereof.