House prices in the 50's

[Chris Bacon]

If you're going off on a "which is the better investment", remember that there are costs for both houses (maintenance, taxes), as well as the obvious stockrelated costs.

[airsmoothed]

This site calculates the 'real term' values quickly & easily:-

grand in 1962 equates to roughly 28 grand now ( well 2004) in terms of the RPI, and around 62 grand based on the average national wage.

[Richard Faulkner]

In message , Doctor Drivel writes

A very valid point. You have to think hard about converting a house into cash, and it takes time. With most other investments, all it takes is a phonecall - very tempting I'm sure.

We also seem to be reluctant to sell houses at a loss, and will generally hang on unless forced to sell.

[The Natural Philosopher]

Parents built theirs for £3000 in 1953 Surrey.

Sold last year for a few quid short of half a million.

[The Natural Philosopher]

About a thousand a year IIRC

[The Natural Philosopher]

You will not get 12% tax free return off the stock market.

I wish....

[Dave Fawthrop]

| Chris Bacon wrote: | | > Doctor Drivel wrote: | > | >> "John Rumm" wrote... | >>

| >>> Doctor Drivel wrote: | >>>

| >>>> So £2000 invested in 1962. What would that be worth now? | >>>

| >>>

| >>> About 15k numerically at 5%/year compound - in real terms far less if | >>> you include the effects of inflation. | >>

| >>

| >> Over 43 years 12% on average would return £281,000. Which about what the | >> stock market would return. So a good spread of unit trusts would be a | >> better bet than property and no hassle. | > | > | > If you're going off on a "which is the better investment", | > remember that there are costs for both houses (maintenance, | > taxes), as well as the obvious stockrelated costs. | | You will not get 12% tax free return off the stock market.

When you are talking about your home, percentage return is only a small part of the equation. IMO the fact that I have a home to live in rent/mortgage free is much more important.

[Doctor Drivel]

A loss? What you mean is what the "value" was six months ago. Or less than what the market is now.

Value is abstract. Cash is reality.

[Doctor Drivel]

Over 43 years you probably will. Some years bad some brilliant. Every time there has been a drop in the market it always recovers to where the graph was climbing.

[Doctor Drivel]

£3,000 in 1953 was hell of lot of money. Then they sent you to a snotty uni too. Surrey? All fits.

[Clive Summerfield]

You'd be surprised.

"An investment in UK equities of GBP100 at the start of 1900 would, with dividends reinvested, have grown to almost GBP1.5million by the end of 2004, a return of 9.6%p.a"

It is safer to view the high growth periods of the 1980s and 1990s as being an abberations rather than the norm. And even then the annual gain was only reaching 12% or so.

Now sure, you can do significantly better than that, but you'll need excellent judgement, a substantial portion of luck and an ability to keep both going for a protracted period of time.

Cheers Clive

[John Rumm]

You would be very unlikely to get anything close to the full 12% with spread of unit trusts. A good portfolio of directly held shares however ought to do it if you are lucky and reinvest all dividend income.

[Roger]

The message from "Doctor Drivel" contains these words:

£16,300?

Oh dear, my spreadsheet thinks it is only £261,460 (approx) so where did I go wrong?

[Roger]

The message from "Doctor Drivel" contains these words:

Except that it hasn't, yet.

[Doctor Drivel]

Roger, you went wrong trying to think. You know it hurts.

[Doctor Drivel]

He is trying to think again. Never works with him.

[John Rumm]

You didn't, drivel's maths is obviously on par with his physics...

[John Rumm]

Your inferiority complex is showing again....

[Richard Faulkner]

In message , Doctor Drivel writes

I meant what I said, although we are also reluctant to sell for less than a recent "value", whatever that was.

[Chris Bacon]

Interesting, did Dr. Drivel use "maths", or cheat and use a "spreadsheet"?