For full-time parents hoping to build a pot of money for their child’s future, property crowdfunding might be one of the simplest options. Here’s why.
Real assets are investments which you can touch and use - they have what is called “intrinsic value.” Houses, precious metals and commodities are all examples of real assets. You can live in a house, you can wear precious metals and you can consume commodities like wheat. Nominal assets, on the other hand, lack this intrinsic value. Take a fixed-income bond, for example, its only physical value is the paper that it’s printed on.
Nominal assets run the risk of deteriorating under periods of inflation. Cash, for example, loses purchasing power. Say, for example, you locked £1,000 in a safe in 1995 to give to your child on their 18th birthday, and in 2013, you hand over the £1,000. Despite still amounting to £1,000, the money isn’t really worth that anymore. Due to inflation, the £1,000 in 2013 would only buy the same as £693.01 could in 1995. * Even if your investments are kept in a cash-based savings account, if the interest rate is below the average rate of inflation, you might be losing out.
Real assets, on the other hand, actually have the potential to yield more value under periods of inflation. With property, in particular, this stems from both rental income and capital growth. Firstly, landlords have the power to increase the cost of renting, and often, because salaries are adjusted accordingly, tenants can afford to pay slightly more. As a result, any monthly rental income you manage to generate from your property investment has the potential to keep pace with rising prices across the economy. Secondly, when inflation pushes prices up, the resale value of your property is likely to rise too. If we head back to our previous example, let’s assume you invested the £1,000 into property instead of locking it away in a safe. Between Q1 1995 and Q1 2013, house prices rose by 219.19%. In theory, a £1,000 investment in property could be worth £2,191.9.
Property Moose Perk: One of the main issues associated with real assets is their lack of liquidity. However, on our exclusive secondary marketplace, you can buy and sell your property shares in real time, provided you find a willing buyer.
In an ideal world, property investment would produce a stream of passive income - regardless of how much (or little) work you devoted to it. Though, chances are, that’s far from reality. One of the biggest downfalls of property investment might be the associated mountain of hassle. A fraction of the day-to-day headache might involve home improvements, tenancy sourcing, tenancy management and staying on top of landlord tax changes.
For full-time parents, in particular, the extra hassle of maintaining and managing a property might be far too time-consuming. But that’s where we come in. If passive income is money you can earn in your sleep regardless of how much or how little work you put into it, then property crowdfunding on our platform might be able to do just that.
Here at Property Moose, we’re on a mission to simplify property investment. We will handpick properties which we believe will work, source tenants, complete repairs and deal with the general headache. You can wave goodbye to all the hassle, sit back and let your money work for you. Once you have invested in our opportunities, you don’t have to worry about the upkeep - that’s our job. And yet, you’ll have full voting rights when it comes to approving tenants or deciding on an exit plan (but you won’t have to do anything beyond submitting your vote).
With the average cost of raising a child sitting around £231,843, it might be impossible to part ways with large chunks of money every month. However, small, regular amounts can go a long way. Recent data shows that on average, “parents in the UK are putting aside £42.45 a month for each child.”
On our platform, our minimum investment is just £10, which means you really don’t have to scrape together a huge sum of money to build a pot of wealth for you child - your efforts still stand a chance of stacking up. By investing (however much or little), you’ll be giving your money the chance to grow. In fact, based on the above research, investing just £40 a month in our opportunities could give your child £14,026.28 in 18 years, assuming you reinvested your monthly returns and received a net interest rate of 5% p.a. We’ve also tried to make it really quick and simple to reinvest your returns, as any income you earn will be placed into your Property Moose e-wallet, so pumping it back into your property portfolio will only be a couple of clicks away.
* http://www.whatsthecost.com/cpi.aspx
Written by Jenna Kamal
Disclaimer and Legals
Property Moose does not provide any advice in relation to investments and you must rely on your own due diligence before investing. Please remember that property prices can go down as well as up and that all figures, rates and yields are projections only and should not be relied on. If in doubt, please seek the advice of a financial adviser. Your capital is at risk if you invest. This post has been approved as a financial promotion by Resolution Compliance Limited.
Property Moose is a trading name of Crowd Fin Limited which is an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (no: 574048).
