|You should have some investment
in property. But if you own your own house you already have
Property is an important asset class. It is an ideal investment
in an island country with limited space. It is likely to be a safe
store of value. If you buy to let it will provide some income. It
your risk. Any long-term investment portfolio should include property.
Own house first
Your first property investment should always be your own home. If
you buy your house you can think of it as a buy-to-let investment
(you save the rent you would otherwise have paid) with the following
- no fees to letting agent
- 100% occupancy
- cheap maintenance
- you are your own landlord
But our house is not all
We all have to live somewhere. It would be wrong to regard the whole
value of our house as 'investment' in the sense of being a potential
source of gain. What matters is the difference between the value
of our house and the cost of the smallest house to which we could
bear to trade down. That difference is a cushion that could be made
available if we suffer future bad luck.
Of course when the kids have been booted out
of the family home it might be natural to sell it and move into
something smaller. So our property investment is realised in the
If you chose to invest in property funds, the
usual warnings about costs and fees apply. And remember these funds
usually invest in commercial property. Nothing wrong with that,
but the economic drivers are different from the retail property
market that we think we know something about.
Our view is that the simple investor, and even the
advanced investor, should treat commercial property as just another
business, like banking or oil, to be included in an equity portfolio.
You should have some investment in property, but once you own your
home you've already got it.