Peter Whittle, an antiques dealer, says he is looking to invest for the longer term. “As I run my own businesses, my income can fluctuate, and I don’t have a pension to fall back on, so I try to ensure I lock some money away each month for the future.”
At the moment these savings are being invested into the property market. However, as he is in his late 20s, Whittle says he does not have the capital, nor the inclination, to take out a second mortgage on a buy-to-let property.
Instead, he’s chosen to invest smaller sums through a number of crowdfunding sites, where they are invested directly into bricks and mortar.
He explains: “I have invested in a couple of projects through The House Crowd. The minimum investment is £1,000. The money raised is used to buy, improve, then rent a property - of which you then own a share.
You have to lock your money away for a minimum of three of five years - depending on the project. The shareholders then vote on whether to sell the asset or to continue renting it.”
Near Double Digit Returns
Whittle says he first invested a couple of years ago - and to date he’s made between 8 and 9% on these investments. “Many of these projects are regenerating properties in deprived areas to ensure they are fit to rent. I think this is a good use of my surplus savings, and hopefully it will also make a decent return for me.”
He adds that investing in separate projects allows him to diversify. “I don’t have all my money tied up in one property. I also get some exposure to rising house prices without the direct hassle of being a landlord. For example, I’m not going to get calls at 2am because the boiler has broken down.”
He says he remains confident that property is a good long term investment - despite recent Government moves to dampen investors’ enthusiasm for buy-to-let. Stamp duty will be soon increased on second home purchases, and landlords will only be able to claim basic-rate tax relief against mortgage interest.
“We just have to see what effect these changes will have on the property market,” he said.
Investing in Start-up Businesses
As well as investing in property through this and other crowdfunding sites, he has also invested with Funding Circle, which raises money from many smaller investors to invest in start-up businesses.
He says: “I run my own antiques business Whittle & Ward so I know it can be difficult getting a venture off the ground. Hopefully the money I’ve invested will help other businesses to grow, which will benefit everyone.”
He says there may be more risk in these crowdfunding sites, his money for example is not protected by the Financial Services Compensation Scheme, but he is hopeful there will be decent rewards too, particularly if he diversifies his holdings.
Shares Passed Down the Generations
Whittle also holds a small share portfolio, most of which he inherited from his mother. He says these holdings are primarily in large blue-chips.
He has shareholdings in Scottish & Southern (SSE), Lloyds Banking Group (LLOY), BT (BT.A) and Tesco (TSCO).
Scottish & Southern, one of the big five energy companies in the UK, has a four-star rating from Morningstar. This means it has currently considered undervalued by Morningstar equity analysts. It is also a steady dividend payer.
BT has been another solid performer in recent years. The share price is up 24% over the last five years. It has two stars from Morningstar equity analysts, meaning that it is currently trading at more than its fair value.
Supermarket and Banking Stocks that Disappointed
Whittle has had more of a more bumpy ride with both Tesco and Lloyds.
Tesco, like other large supermarkets, has seen profits fall, thanks in part to discount retailers Lidl and Aldi. As a result its share price has fallen by 33% in the last year, and it has seen an 11% decline over the last five years.
The picture is more mixed at Lloyds. Share prices at all the major banks plummeted in the wake of the financial crisis. Since then it has been a slow and at times painful recovery for the financial sector. Over the last three years the value of these shareholdings have risen by 6%, but over the past year they have slipped by 14%, and the share price of one of the UK’s flagship banks is still 8% down on where it was a decade ago.
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