Fear vs Greed?
It is generally accepted that there are essentially only two sources of motivation; negative and positive. In 
investment terms, these are manifested by fear (negative) and greed (positive). In order to illustrate which one is more powerful, imagine you are either running a race for a £1M prize versus running to escape a rampaging elephant, in which scenario would you run faster?
For the majority of people, fear is a far greater motivator of activity than anything else. Actually, only a relatively small percentage of the population is significantly motivated by money/greed, at least to the point where they will take significant action to get it. In other words, the price of success is too high for most people.
So, with fear as its core motivation, the prevailing financial advice to all of us, in light of the current economic mess we find ourselves in, is to reduce our borrowings, spend less, save more and whatever else you do, avoid buying property. Is the last piece of advice about property good advice? We do not think so, and hope to counter the fear which is stopping people from buying property at below market value at the best time in a generation with an argument which might scare you even more if you do not buy property.
A sound economic policy?
We now have the Bank of England using the last resort of ‘Quantitative Easing’ – a tsimple echnical term for printing money. If this printing money strategy has the usual effect of producing (hyper)inflation down the line, the real value of all our savings would be wiped out. It’s not all bad though, because the real value of all our debts would be wiped out as well. So it does not take a genius to conclude that in these circumstances the right thing to do is borrow as much as you can and buy high yield (high rent) property.
So, assuming you are still in the game and want to achieve some kind of financial security, what do you do? We know we always say ‘property’, but are there any alternatives to property? Gold, of course, is always a favourite and has done well in similar circumstances in the past. The trouble is it is not an easy asset to invest into in a sensible way. Gold is primarily a “haven” investment and is used mainly to protect, rather than increase wealth. You can invest in shares, but given the FTSE’s performance in recent months it is a very risky and uncertain investment.
So what you need to do is weigh up what you have to gain and what you have to lose and act accordingly. If, like most of us, that means you do not have enough current assets to retire comfortably, then now is the time to start buying high yield property. Why now? Well because if the next stage of the slow motion car wreck which we call the economy overtakes you, then it will be too late because your deposit will be worthless and mortgages will be even harder to come by than now.
Of course there is the chance that the final meltdown won’t happen and, like the Japanese before us, our economy simply becomes becalmed indefinitely. In this case, you still win because interest rates will stay low and you will have the high rental income to live on. Then there is the best case scenario to think about as well, that is where the economy recovers and property prices start to increase, if you have your high yield property in place you will then be in a position to have achieved capital growth as well as having secured a high income for retirement.
