My shares are rising but when will the bubble burst?
Shares in many major economies have been performing impressively over the last twelve months but with the added uncertainty over Brexit and the incoming US President is that all about to come to an end? Knowing when to get out has long since been a problem for investors, jump too soon and you miss out on some of the profits, stay too long and your profits and may be even your capital could be eroded. It is never an easy choice, but avoiding being greedy is always sound advice.
We can’t give any guarantees when or even if the market will drop again but one thing that we do know is that markets move in cycles and continued growth, certainly at the current rate will inevitably come to an end at some stage or another. This doesn’t mean making wholesale changes to your portfolio but it may be advisable to evaluate the differing risk levels associated with your investments.
So, what should we do to relieve some of this risk? Some investments will naturally be higher risk than others, some may be more long-term investments and have penalties associated for early redemption so it may be wise to look at alternatives and sell out of some of your high-risk funds that have no penalties. Once you have done this you then need to look at what your alternatives are. You obviously want a real return but you want to remove yourself, where possible, from the potentially volatility of the stock market. The obvious alternative would be an investment property.
Investment properties have grown in popularity in recent years largely due to the demand for globally rental properties. This has forced rental prices up whilst at the same time reducing the associated risk with such an investment. This means that returns of anywhere between five and ten 10 percent are very achievable in an investment with no direct correlation to stock markets and one that is deemed to be relatively low risk.
Of course, there is an element of risk involved with rental properties but this is more connected to tenants rather than economic conditions. Finding suitable tenants and having your property let out for the majority of the year is essential to making a profit – without it you could be on a hiding to nothing. In an ideal world, you would have tenants guaranteed for upwards of five years, who pay on time and will guarantee you a return of 10% p.a. Sound optimistic?
The New Nordic Group who are based in Pattaya, Thailand are offering a scheme that pretty much meets all this criterion. They will offer you a 10% p.a. rental guarantee for periods of five to twenty years which is paid to you REGARDLESS of if your individual unit rented. This is paid on a monthly basis, in the same manner as your usual rent, into a bank account of your choice leaving you to effectively have no input in the management of your property. You just receive 10% p.a. for basically doing nothing.
Isn’t that a great long-term option to protect yourself from the bubble bursting on the stock market?