Questions And Answers

Az ta,

There are advantages and disadvantages for any route you ultimately choose to take. Buy-to-let is always an option, especially if you are able to buy in city with an established university (rents are generally higher even if you don't rent to students - simple laws of supply & demand etc). However, unless you are prepared to pay a high management fee, you will have all the hassle of managing the property in a very hands-on fashion. It's a nightmare at times - I know - I've been a landlord myself!

You are very accurate in assuming a 5% return as a minimum to avoid capital treading water over time, that's about right in my opinion. However, all you are going to do in 'real terms' is STAND STILL!

I would suggest a multi-asset approach if you have the capital and are prepared to 'gear' your risk by having a mortgage on the investment property. Always a gamble as you are investing borrowed money and this is not for the risk adverse. That said, I know many who have (and continue) to do very well with this strategy despite the negativity surrounding buy-to-let. As always, this type of investment boils down to location, location, location!

As a multi-asset approach you can apportion some of your capital to other advanced investments which afford capital/income guarantees if you are happy to consider offshore regulated/unregulated products. There are numerous avenues to explore, but to give you an idea of something you might be attracted by, I repeat what I mentioned to a previous investor here: -

If you need access to ALL of your capital you have little option but to leave it on deposit and/or cash type ISA investments over time.

If you are comfortable relinquishing access to SOME of your capital for a period of 2-3 years, then you might be attracted by some of the offshore capital/principle protected third-party litigation funding notes? These offer 100% capital protection, 2-3 year term & 12%pa guaranteed income + up to 20% win bonuses on maturity. Many investors like the guarantees and [relatively] short 2-3 year tie-in. Certainly you might wish to consider something along these lines for an element of your capital? Min investment is usually in the region of £20KGBP.

These types of investment where previously only available to VERY high net worth individuals and institutions as the minimum entry requirements where in the £millions. Not so now. They are generally private offerings only available at certain times of the year, but in my experience, investors who take advantage of such products are doing very well indeed. These are not instruments your average UK based adviser is going to talk to you about - fear of the unknown syndrome etc etc..

The above type of approach will avoid your capital being exposed to stock market volatility, but not fluctuations in house prices and/or other factors which contribute to volatility in the housing market. Volatility is present in anything (inflation even erodes the value of cash simply held on deposit). The trick is not to be solely reliant and exposed to just one 'market' be it stock & shares, property, cash, gold, oil, rice...

Diversify and you should be well placed. Drop me a line if you wish to expand on any of the points raised & the very best of luck. TAKE YOUR TIME and don't be too keen on any one solution. No size fits all as they say!

Hi Az

The year 2012 is promising to be one of the most turbulent of our lifetime, ushering in a new era of unprecedented instability and, at the same time, unique opportunities.

The Eurozone crisis, austerity measures in many of the countries in the developed world, and the possibility of a ‘hard’ landing in China, as well as several other developing countries, are likely to present major challenges for investors during 2012.

When shares were crushed in 2008 and early 2009, the huge share price declines lifted dividend yields on high quality dividend paying shares to levels that, in many cases, had not been seen for a long time. Once enough investors realised their “luck”, and, started buying in enough volume, share prices reversed.

The time has never been better to get into high quality dividend paying shares! Dividend paying companies offer the kind of security and income stream that no other investment can.

Dividend-Income-Investor.com is the only share valuation provider in the UK which has developed an investment methodology that provide information on high quality dividend paying companies when they are historically undervalued or overvalued, or, are trading somewhere ‘in-between’.

Steven Dotsch - managing editor Dividend-Income-Investor.com