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Keep your shirt on!

Some times as a landlord and particularly at times like these when house prices are no longer booming and we are no longer seeing the value of our portfolio going through the roof. You start asking yourselves the question. Should I sell? I could put my money in gold or shares or even a toy car collection. Every asset, including collections of antique gnomes seems to be out performing residential property.

However, the events of the last few days reminds me of why I still have a significant part of my portfolio invested in property. As share markets around the world continue to fall and values in a single stock can collapse by 10,20,30% in one day. Even the broader indices that measure the leading 250 shares contained in the FTSE 250 are down over 10% in a week.

What property has over these other assets is stability. Whilst prices at the moment may edge up or down by half a percent or 1 percent per month this lack of volatility is reassuring at times of massive falls in other financial markets. The latest Halifax survey released at the start of the month showed that in fact average house prices were up 2% during April and 4% since the start of the year. Whilst not earth shattering; compared to the turbulence on the equity markets, still very reassuring.

I myself have a significant holding in equities. When times are good as they have been over the last 6 months, it’s easy to forget just how quickly paper profits can disappear together with substantial chunks of your initial investment capital. I think that it brings home one of the central tenants of successful investing. Don’t put all your eggs in one basket. Spread the risk. If you have substantial holdings in property but no investments else where, then this in itself is a big risk. If you think you are over exposed to one type of investment or you think that the latest falls may represent a buying opportunity then have a look at the Financial Advice and Funds sections in our Recommended Links. One thing that I am reassured about with all this financial instability, that at least being a landlord the shirt on my back is safe.

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