Let’s put this US stock market drop that the main stream media loves talking about into perspective through property investor logic.
Let’s say, for the sake of this example that you purchased an investment property in 2009 for the princely sum of £845,000. It’s a lovely property, so lovely in fact that you decide to live in it rather than rent it out. We don’t blame you for not investing with DevDosh Ltd, it wasn’t around in 2009.
The property is in a lovely area but there can be a few issues. The council can be slow at maintaining roads and amenities, the utility companies can be slow at repairs and on occasion the odd problem neighbour can play up. But overall it’s a solid house and the neighbourhood is great.
So you are happily enjoying the property with your family and the value is slowly creeping up as it should and as we all expect it to.
By 2011 your property had increased in value by around 60% and now it’s worth about £1.35m. Not a bad capital value gain in 2 years. Unfortunately there was a local issue and all the local property value dropped by about 14% but you were still well up on your original investment so it didn’t really bother you; and the property went back to doing what property does which is increase in value as an asset.
From March 2015-2016 the house market (in this town) was a bit up and down but by the time you saw the year out your house price was right back where it should have been and still going up in value.
Fast forward to 2018. You’ve got a dog, the kids are in senior school and your property is now worth a whopping £2.8m. You haven’t even gone to the trouble of putting an extension on it or re-wall papering the lounge. The place has literally been maintenance free since the day you moved in. Unfortunately, there was a bit of trouble with the council not mending some local amenities and it made the whole area drop in value by 16% almost overnight.
Last week your property was worth a whopping £3.39m, it had gone up in value by 300% in the last 11 years; and wouldn’t you believe it, now one of the local amenities is reducing a service in the area and prices are being hit again. All property values dropped by about 13% last week.
As that property owner are you really worried? Your property is up 300%. If you sold it, even at a 13% discount is it really that big a catastrophe?
Please bear in mind this is a commentary on the US S&P 500/stock market and not opinions about Corona or the suffering it is causing around the world. Obviously, all those people have our love and prayers.
However, as far a stock market plunge and investors losing their shirts is concerned, this is a very manageable situation for the banking fraternity and investors alike. In the big picture a 13% drop on a 300% profit is not a collapse. It’s a bump in the road to continued success.
Of course, and as my blog’s always end, if all this financial mumbo jumbo and brain work is just not on your life agenda then contact DevDosh Ltd today. We will put you into out fixed interest investment product which is the safest 10% pa yield in the current market.