When it comes to the choosing which one is best for you, both have benefits and like all investments, carry an element of risk.
If you have been considering these assets and are looking to select the option that’s the best option for you, let’s examine the pros and cons of each investment. *Keeping in mind before making any investment decisions to perform your own due diligence and consult your advisor.
Investing in property
Becoming a residential landlord is great way to diversify your portfolio. Property is also a tangible investment.
However, a level of effort is involved when owning property such as maintenance, upgrade and repairs as the property gets older. As a landlord you will need to make arrangements for the collection of rent, cover mortgage payments when vacant and purchasing a property will require some upfront deposit.
People we always need somewhere to live, so property will always be a necessity, with low mortgage rates borrowing to purchase your B2L property has never been cheaper so there is a current opportunity to borrow money at a very low cost to fund 70% of your investment.
• Tangible asset
• Geared investment – you only pay 30% whilst the rental income pays for the remaining 70% over time
• Longer term tax benefits
• High cash flow
• Long-term returns
• Not a fluid asset
• Can be a costly investment
• Level of maintenance/time required
Cryptocurrency, the most popular of which is bitcoin, is one of the newest investment options available. These digital currencies act as a medium of exchange globally as an alternative to money. They are technological currency backed by blockchain technology.
One big benefit of bitcoin investment is the currency can never be inflated, since there will always be a limited number of bitcoins to go around. There’s also not much involved in purchasing the currency. You obtain your cryptocurrency wallet and purchase your bitcoin. The currency is global and can be sold easily on a cryptocurrency exchange.
Since this asset is so new, there’s not enough data to really calculate its value. Thus, the market is volatile. You could easily lose everything you invest, so the decision of whether or not to get involved with bitcoin really comes down to how much you are willing to risk.
• No inflation
• Easy to trade
• Long-term potential for growth
• No maintenance
• Bubble — you could loose everything (or close to it)
• Not a tangible asset
• Security issues
• Little/no government involvement
• High risk
Which investment is best for you?
As you create your investment portfolio, your best investments really depends on your personal financial background, your familiarity with the asset and how much you are willing to risk. Purchasing bitcoin is low-maintenance and high-risk with the potential for high reward, whist property remains a stable, long-term investment that will provide a steady long term future income.
In this weeks investor session we talk about all investment classes and how these stack up against property, Prosperity’s CEO Joe Billingham discusses making your investment work – planning for the long term, with Jason Howard, Director at Insight Financial
Register now for your free 6-week download, covering everything from legals, tax, mortgaging, lettings and management and secure financial planning, the course offers up to date, factual advice and information answering all your property investment questions.