I often write on Quora.com, where I am the most viewed writer on financial matters, with over 279.2 million views in recent years.
In the answers below I focused on the following topics and issues:
- Is now a good time to invest in UK property? I explore the relative positives and negatives of the current state of the UK housing market.
- Are stocks a good idea for gaining passive income, or should people focus on accumulation?
- Should we worry about whether the social security system will go broke when we are old, considering the ageing population, Covid-19 and other pressures?
- What are the list of assets you can invest in, apart from stocks, bonds and real estate?
- What are some of the best places to live in Thailand as an expat? I look at locations such as Bangkok, Phuket and Pattaya.
- What do investors need to know about treasury bonds, in an era of zero percent interest rates?
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Is now a good time to invest in UK property?
Yes and no.
Firstly, let’s look at three trends. Two are in favour of residential property and one is against it.
The first thing to remember is that the housing market is cyclical.
For example, 1992 until 2008 was a great time for property owners.
2008–2020 wasn’t such a great time. In fact, very few talking heads in the media mention one simple fact.
In real, inflation adjusted term, prices fell in the U.K. as a whole in that period.
Yes, fell, yet the media would always speak about the ‘property ladder’ as though home ownership was getting harder, when wages rose faster than house prices in that period.
At the height of the housing bubble in 2007–2008, the prices of U.K. property was about 183,000 pounds according to the Nationwide survey.
In 2020 it was about 220,000. A real terms fall as 20% in 12–13 years is below the inflation rate.
This factor wasn’t going to last forever. U.K. property was always going to have another golden period and was due an increase.
Another trend in favour of property, believe it or not, is Covid.
Interest rates will stay lower for even longer than expected.
More importantly, more people are working from home, and saving money on the commute.
This means that an increasing number of people are doing two things:
- Buying more space
- Or selling up in expensive places like London and buying in their hometowns now they have worked out that they can work remotely
All of this is good for house prices in the residential sector, especially outside London, and bad for certain kinds of commercial property like office buildings.
However, there is a big trend going against this – government policy.
The U.K. Government could never ban second home ownership.
What they can do, and indeed have been doing, is making it harder for what I will call them DIY investment landlord’ to make it work profitably.
Countless tax changes have been made, and many white papers written.
It is clear that the government wants bigger, more professional, landlords.
This has resulted in even some former property bulls coming out with statements like ‘buy to let is dead’.
I don’t think it is completely dead, but getting good net returns after all the fees and taxes is quite difficult, even if the gross returns are good.
When you consider the other negatives associated with property, like the illiquid nature of the investment which makes it difficult to sell, then I don’t think it is worth it for most people.
That is unless you are a professional real estate investor or just buying it as a home and not an investment.
U.K. residents can invest tax-free in an investment ISA, and many expats living in the country have other options which are tax friendly.
it is very unlikely that a non-professional real estate investor will beat say the s@p500 or MSCI world over a career, adjusted for all these fees and taxes.
That isn’t to mention the hassle of dealing with tenants, getting a mortgage etc.
I know several people who have only received back 6%-8% per year long-term (net), for a lot of hassles:
All the while investments you can buy with a click of the button have beaten them.
What is a list of the best investments one can make?
Firstly, people need to invest in themselves. Investing in oneself improves our income and ability to manage money properly.
In terms of financial investments, you have the following options
For the average person, stock investments through ETFs can be the best option of all.
The reasons are simple. They are liquid investments, can be accessed at a reasonable cost, and can negate some of the biggest risks associated with picking individual stocks.
If they are held long-term, especially in tandem with government bonds, they offer some of the best risk-adjusted returns.
2. Real estate
It is a misconception that “you can’t lose with property” and fewer people than you think beat the stock market with property.
However, you can make decent money in property if you are in any of the following groups:
- You are a professional real estate investor
- The timing is right because prices are battered
- You buy real estate in an indirect way. For example, you purchase a worldwide REITs index.
3. A business
Very few people succeed in business. Most businesses fail. Yet, if you have experience in a domain, you can make a lot of money and more importantly, gain some financial independence.
Comparing running a business to other investments isn’t a good comparison because the risk is usually much higher.
It is a huge mistake, therefore, for business owners to think that “my business is my pension”.
Covid-19 is the latest event to illustrate how risky that kind of thinking is.
This used to be a variable option before 0% interest rates. These days, you can’t make money in cash, unless you are living in some poorer countries.
In which case, the exchange rate fluctuations and other considerations increase the risk.
One day, cash could become a variable alternative to bonds again, but it has never beaten markets long-term.
5. High-net-worth assets
This includes private equity, downside protected asset, hedge funds and so on.
Most people should avoid owning these assets unless they have access to advice.
There are many other options as well, but the above list covers most investors.
What is the best place to live in Thailand?
I have never lived in Thailand, but I have spent a lot of time in the country, and have many friends, associates and clients in the country.
Clearly, it depends on what you want to achieve and your desired lifestyle.
If you want a fast-paced life, or one where you have access to loads of great international restaurants, then Bangkok is the place to be:
If you want something which is big enough to offer entertainment, but cheaper and more laid back, Chiang Mai in the North is a good bet:
It is for this reason that Chiang Mai attracts many nomads and independently wealthy expats, who don’t need to work in Bangkok.
For people who prefer the beach and seaside lifestyle, Phuket, Pattaya , Samui, Krabi and Hua Hin are some top picks.
Hua Hin doesn’t have the same kind of sleazy reputation as Pattaya, but these days Pattaya also attracts many families and retirees.
The same is true in Phuket. Some parts of the island are beautiful, with others being sleazy and run down.
If you want to learn fluent Thai and prefer the quiet life, then there is a simple answer – live in the countryside or a small town.
For me personally, I would start in Bangkok if I needed to live in Thailand.
Use the weekends or your free time to explore other places, and then make a decision.
As a final comment, if you are considering Thailand as a variable place to live, I would also look at Malaysia and even somewhere like Cambodia.
Malaysia in particular has better English, is more developed and is even cheaper for many things.
The following answers featured on adamfayed.com’s Quora space
What are some good passive income ideas for a 17 year old besides stocks?
Assuming that you are a student and don’t need much income, I would play the long game.
I would read a lot about how to do things like affiliate marketing, invest and many other income producing skills.
You are in a unique situation now. If you plan to go to university, you might not need to monetise any ideas for 4–5 years.
That gives you an advantage. The 40-year-old who is struggling and starts a YouTube channel, as one example of many I could have given, has to pay the bills. You can build up an audience and worry about monetising later.
Finally, I would make a distinction between income producing skills, which can give you passive income, and skills which can multiple income and wealth like investing.
It is true that some investments pay out income, but investing works best when you accumulate for decades before getting an income.
Do you worry that there won’t be money left in Social Security when you retire?
I can’t speak from a US perspective, although I think slowly the demographic situation is converging across all of the developed world.
I can speak about the UK, where I am from, which isn’t in an altogether dissimilar situation to the US.
In other words, the population isn’t declining unlike in places like Italy and Japan, mainly due to immigration.
However, I would worry if I was going to rely on the Old Age Pension in the UK, which fortunately I won’t be.
The reason is simple. The government will probably keep pushing back the age in which you can gain access to it, and they might dilute the already small benefit.
Even today, you can’t gain access to it until age 67 and you will be in poverty if you don’t have a second source of income.
It pays less than the minimum age already.
What does an investment newbie need to know about treasury bonds?
The biggest one is that they don’t pay much, but they offer diversification. That means younger investors don’t need to have any allocation to them.
A 10% allocation is enough for the majority of younger investors. However, as people approach retirement, having a bigger allocation can be important.
People never really know how the stock markets will perform in the short-term, even though the long-term has always been good.
Retirees don’t usually have fresh income to invest, unless they have a side income as say a consultant.
All of this increases the need to have some bonds in a portfolio for an older investor.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 279.2 million answers views on Quora.com and a widely sold book on Amazon
In the article below, taken directly from my online Quora answers, I spoke about the following issues and subjects:
- What is the risk of not investing? Too many people worry about the risk associated with investing, but what are the risks of not deploying your money to begin with, in this era of zero percentage interest rates?
- What’s the point in getting a job if you are a millionaire, apart from avoiding boredom?
- Can financial risks be eliminated? If not, how can we limit them in a sensible way?
- What surprised me when I first went to a developing country back in 2007? I look back at my first trip to China in 2007-2008.
To read more click on the link below.