plonkee money an english-er's thoughts on personal finance

October 31, 2007

an investment property should ‘wash its face’

Filed under: house — plonkee @ 12:00 pm

There are two recurring contradictory pieces of news in the UK about the housing market. The first is that prices are about to crash, and the second is that there isn’t enough supply to meet projected demand. It wouldn’t surprise me if both were true, but over different timescales.

One thing that is agreed upon about the current housing market is the importance of buy to let investors, people who have bought properties as investments.  Although I think that your own house is a poor investment, renting out properties can be.

However, renting out a property you own becomes very risky if the property doesn’t ‘wash its face’, which is to say that the rental income should cover the costs. And for a lot of people who’ve bought recently, it doesn’t. People are paying out every month for the privilege of having someone else live in a house they own.

It’s true that in the UK, the increase in the cost of houses has been running at 2% above inflation since the 1970s. While that’s nothing to be sneezed at, if it would be cheaper to rent then buy, and there’s a glut of rental properties, you can be sure there will be a  correction and it is unlikely to be in your favour.

In short, if you are losing money month on month by renting a property you are likely to be better off putting your excess cash somewhere else, like say, in stocks and shares.

October 30, 2007

fiesta time

Filed under: links — plonkee @ 9:42 pm

Its the Hallowe’en festival of frugality over at being frugal. I particularly liked expense accounts: are you as frugal as normal? @ no paper money. The short answer to this is yes, the long answer includes weighing up the fact that I am not particularly frugal or extravagant in general, I don’t pay too much attention to expenses and I sometimes forget to claim them.

when is a sale not a sale?

Filed under: shopping — plonkee @ 12:00 pm

On my way home from work is a small branch of a very large supermarket chain. I often pop in to pick up things that I need and to see if there are any good reduced items. I was looking at the items that had been marked down for a quick sale, when I noticed a ploughmans sub that had a very prominent reduced sticker – its new price was £1.58.  Can you guess what the full price was?

I’ll put you out of your misery. The original price of the sandwich was £1.60. Yes, that’s right, the mighty supermarket had reduced the price by 2p. As far as I’m concerned that’s not a price reduction to get the stuff off the shelves, it’s purely a marketing ploy.

What is the most ridiculous sale that you’ve seen?

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