BTL top asset

Investors who purchased a buy-to-let property with a deposit of £25,000 could expect to see a £39,309 profit (157 per cent) over six years. This was significantly higher than the £415 (2 per cent) achieved by those who invested in the FTSE 1004 over the same period. The disparity between the returns available was due to the consistently strong performance of the housing market, while the stock exchange has suffered some severe set backs.

The second most profitable asset class to invest in was gold, which turned a profit of £22,484, an increase of 90 per cent on their initial stake. Gold appears to be a relatively under-utilised asset class, which, in the recent climate of rising oil prices and a weak performance by the dollar, has provided excellent returns.

Risk adverse investors who placed their capital in a savings account did not enjoy the gains offered by the other asset classes, although with a £7,061 profit, they fared considerable better than those who chose to invest in the stock market.

Lee Grandin, managing director, Landlord Mortgages, commented: “While buy-to-let property requires a relatively large minimum investment, this research shows that you can make considerable gains on capital invested in this asset class. However, this asset class often requires more commitment from investors than other asset classes and should be seen as a business rather than simply an investment. In addition, this sector is not regulated by the Financial Services Authority (FSA) so potential landlords need to make sure they do their research thoroughly and understand the nature of the market.

“Gold – while a relatively under-utilised asset for most consumers – also provided healthy returns and it will be interesting to see if this continues in the long term. Investors who chose to stay close to home by investing in the FTSE 100 appear to have been burnt by the poor performance of the stock market and – in hindsight – might have done better by putting their capital in a savings account.

“Whilst buy-to-let has outperformed the other classes included in the survey, the old adage applies. By avoiding putting all your eggs in one basket you stand a much better chance of long term gain as you are not pinning your hopes on the development of one particular sector.”