Suits Me Simplified: Banking 101

Stocks and Shares ISAs Emerge as a Better Investment Avenue than Property

There’s nothing as solid as bricks and mortar and since everyone needs a roof over their heads, putting money into property has always been viewed as a wise investment. You may be…

There’s nothing as solid as bricks and mortar and since everyone needs a roof over their heads, putting money into property has always been viewed as a wise investment. You may be at the mercy of a sometimes fluctuating property market, but if you are buying a property to rent it out, you’ll lock in a steady stream of income while securing an asset which will, by and large, hold its value well over the years.

Property Crash

The property crash of the late Noughties does not seem to have deterred many buy-to-let investors with many still reaping the rewards of this avenue of investment. With property prices seeing a steady rise in the last few years, those struggling to get their foot on the first rung of home ownership are increasingly turning to renting, which has invigorated the letting market.

It’s estimated that a buy-to-let property can yield an investor just over 4% on average. That is a pretty decent return and suggests why there is still a steady stream of investors putting their money into property.

Are Stocks and Shares ISAs a Better Investment?

However, there is a growing argument which suggests that shifting focus to a stocks and shares ISA is a better use of your money and time.

A judicious knowledge of the stock market can help, with many funds allow you to choose which stocks you put your money into.

One area where stocks and shares ISAs win out over property is the additional charges and administration involved in buy-to-let. With property, you have to contend with things like stamp duty and other fees when purchasing.

Then you have to add in things such as buildings insurance, landlords insurance and that’s before you even come to the routine maintenance that any property requires.

Returns from stocks and shares ISAs are not taxed while landlord do pay tax on rental income.

ISA document with a piggy bank next to it

Yet, despite all the hoops, one must jump through to purchase a property and maintain it, huge swathes of investors pour their money into it every year.

One of the big reasons is the return they get on their investments. It is difficult for other forms of investment to replicate the yields you get from property, but it’s not impossible.

That’s where stocks and share ISAs come. For a start, you don’t need a huge appoint of capital to get you underway.

There are no estate agents or solicitors to deal with and you’ll not have a list of fees the length of your arm to plow through.

However, if you are seeking to achieve a yield north of 4%, a decent working knowledge of the stock market is essential.

Although there is a higher degree of risk involved in stocks and shares than property, guiding your money through certain avenues can reap big rewards.

High Yield Stocks

Some of the highest yielding stocks at the minute are in the telecommunications and energy sector. With phones constantly evolving and new technology being brought on board seemingly every few months, putting your money into telecommunications may just be as safe as houses.

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