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If you’re thinking about using property to fund your retirement—or you’re already heavily invested in property—this video is for you. I’m Manish Kataria, an ex-J.P. Morgan investment manager, and I want to share why property may not be the reliable pension plan it once was. I’ll walk you through the latest tax changes, regulations, and market realities, and show you how I build a world-class, diversified, and passive investment portfolio that delivers real results.

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IMPORTANT: Your Capital is at Risk. Investments may not be covered by the FSCS. This is NOT investment advice - for information purposes only. Please seek advice from a regulated advisor before investing. The value of investments can fall as well as rise - don't rely on past performance.

Welcome to the Invest Like a Pro podcast, teaching you diversified,

investing with a simple set and forget approach to stocks and options, build

inflation, beating wealth for your future and recurring income For today.

And now your host, former JP Morgan, investment manager, Manish Kataria.

many people believe property is a safe and profitable way

to a comfortable retirement.

But things have changed a lot, and the evidence I reveal in this video

might surprise you and it's why property won't be enough to fund

your retirement or your pension.

And finally, I'll show you how to create a better, a world class

portfolio, one that returns six times as much and is totally passive.

It used to be the case that property was seen as your pension, but property isn't

the same asset class as it once was.

And nowadays, you know, people are increasingly coming to me asking for

my advice on how property fits into a property diversified portfolio.

And what's concerning is that a lot of people still are very

heavily weighted in property within their pensions, within their overall portfolio.

And that's a very risky strategy.

So.

There have been a few changes that have shifted people's minds of late.

Number one, tax changes.

So now as a property investor, as an individual property investor, you pay

taxes on your rents, not your profits.

Okay?

And that was a big change.

Uh, big negative change for landlords that came about.

Uh, it's called Section 24, so that was a big thing.

The other thing that has been ongoing for a few years now is increased

regulations, and that's making life more and more difficult for landlords.

And we've got the big one coming up, uh, very, very soon, which is the renter's

right bill, which is gonna shift a lot of the power from landlords to tenants

and a lot of my investors, are very, very frustrated, very concerned, very anxious

about what that's gonna bring about.

I also as a property landlord, am concerned about what that's going to do.

Higher interest rates.

So.

Over the last two or three years, uh, you remember the inflation

shock and the interest rate shock we had three years ago.

It's been a case of higher for longer interest rates haven't come back

down to, you know, 1% 2% levels.

In fact, there's a lot of people out there who expect interest rates

will be higher for longer because inflation is gonna be stickier

than they had originally expected.

Okay, and higher interest rates creates higher mortgage rates

and that creates lower cash flows and lower profits for landlords.

Okay?

So that's a big concern as well.

And tenants, toilets and boilers.

You know, management burdens, right?

We all know what it feels like dealing with tenants and toilets and boilers.

Even if your portfolios are managed by an agent, you are still gonna be dealing with

some of these issues on an ongoing basis.

And that management burden is something a lot of my investors are

increasingly frustrated with, especially as they get older and as they want

to enjoy more of their own time.

So that leads us onto, you know, whether property is an

ideal vehicle for your pension.

And you know, for most people your pension is your largest asset.

Okay?

It's there to support your retirement.

And, and it used to be the case, as I mentioned earlier, that property

was accepted as your pension.

But all of these changes have really disrupted and

shifted the viability of this.

And remember, these changes have only just emerged in the last few years, so

things can change very, very quickly.

Okay.

And the direction of travel you might expect will be one way.

You know, landlords are an easy target.

There's a black hole in the finances, they have to be filled somewhere.

And you know, landlords are an easy target for higher taxation.

Which is why I think if you've got property as your pension, which

is why I think it's a very risky strategy to have all your wealth.

All your pension dominated by one large asset class, and we need to

be better diversified all round.

So how do you decide for what makes a good investment for inclusion

in your pension or your portfolio?

There are two essential factors that your investments must tick

those boxes if that investment is to be part of your portfolio.

Number one, very, very important is growth, and not just ordinary growth.

It has to be inflation beating growth.

Why is that important?

It's important because you are investing not just for today, you are investing

for your future financial security.

Okay?

And your portfolio needs to last you for decades.

So if your, if your assets are not growing, inflation is

just going to erode it away.

And be careful here, you know, the inflation rate, we are being told

the official inflation rate, you know, whether it's three or 4%,

is nowhere near the reality rate.

Okay, the reality rate is, you know, add another three or 4% because nobody really

believes that the inflation rate, the official inflation rate reflects reality.

So be very careful on that.

The second box your investment needs to tick is income.

Your investments need to be capable of creating income, even

if you don't need income today.

When it comes to retirement, your portfolio needs to be generating income

to fund your future living expenses.

These are two very important essential factors that your investments

must tick both of these boxes.

So let's take a look to see how property stacks up with both of these factors.

So, number one, income.

Okay.

Very, very important.

Uh, a lot of property investors get into property because they're

attracted to the income and the cash flow that property generates.

Let's say you are gonna be buying a property for a

hundred thousand pounds, okay?

If you buy with a mortgage, the cash required is going to be 25,000

pounds because you'll get a mortgage for 75% of LTV loan to value.

Okay?

You'd be paying stamp duty of 5% on that, so 5,000 pounds.

You'd be paying legals for the conveying, say, 2000 pounds, and then you'll get a

mortgage, 75% loan to value 75,000 pounds.

Okay.

How does the cash flow stack up.

Okay, so let's say you get a rental yield of 6%.

Actually the UK average rental yield is about five and a half percent,

but let's just round that up to 6%.

So your rental and annual rental will be 6,000 pounds.

Remember, your mortgage interest, let's call it four and a half percent

will equate to about 3,200 pounds.

On an annual basis, you'll be paying management for the rental.

Okay?

So, uh, 480 pounds maintenance, and we've been a little bit conservative here.

Let's call it a thousand pounds per annum insurance.

You'll need to ensure your buildings.

So buildings, insurance, 500 pounds, and then you're left with a profit figure.

This is pre-tax profit of 820 pounds per annum.

And remember, we've been a little bit conservative here.

We haven't accounted for void periods.

We haven't accounted for any initial refurb costs when you buy the property.

We haven't even accounted for fees if you hold this in your limited company.

We haven't accounted for any limited company fees like accountancy

fees or anything like that.

Okay?

So we've been a little bit conservative.

So where does that leave us?

Remember, you invested 32,000 pounds to buy this property, 25,000 pounds

in as deposit, 5,000 pounds your stamp duty, and 2000 pounds legals.

So your cash invested was 32,000 pounds.

Your net, um, profit right before tax.

Was 820 pounds, so that equates to an annual return of 2.6%.

Now, I don't know about you, but I'm not excited by 2.6% per annum.

Okay?

That is, uh, certainly nowhere near inflation.

It's nowhere near the reality rate of inflation either.

Okay?

So that's a pretty poor return.

That's a regular vanilla buy-to-let residential investment.

Okay?

So.

That does not tick my income box.

What about capital growth?

Well, I went back to 1975 and I looked for how house prices have

grown in the last 50 years or so.

This is the long-term price chart, the long-term percentage chart over the years.

The first thing you can see is the average rate of growth per annum

has been on a declining trend, okay?

Back in the seventies, eighties.

You can see we were growing on average around 12%.

Okay.

For a period of time.

And then in the two thousands.

We had a slight decline, but we were still, you know, relatively

healthy at 10% per annum.

And then we had the financial crisis in 2007.

Okay.

And that was a real game changer.

Everything changed after that.

So fast forward to the 2010's.

We began a new normal of around 5% annual growth rate.

Okay?

And then we had a slight blip up, um, post COVID.

Now we've settled at a sort of new lower average of around two and a

half percent annual growth rate.

Where we're at now is well below the inflation rate and it's, well, well below

the reality rate of, of inflation as well.

So you can see we've had a declining rate of growth, in UK house prices.

So the growth box isn't being ticked either for UK housing.

But it gets even worse.

Okay, so let's have a look at the inflation adjusted real house prices.

So the blue line is the nominal prices.

This is what we, um, get told each month what the average UK house price is.

And it looks like we are approaching, uh, we're at or, or near record highs, right?

Which is true in nominal terms.

But what's important is real terms.

The real prices are inflation adjusted.

That's the red line.

Okay?

And you can see here we peaked in October, 2007, real house prices.

Inflation adjusted house prices have been declining since October, 2007.

So that certainly doesn't make for a viable investment or

an asset class for a pension.

So what looks better?

Let's do a side-by-side comparison of property and stocks.

These two asset classes are the two mainstream asset classes that people

might consider as part of their overall portfolio as part of their pension.

Okay, so let's firstly look at returns.

So over a 10 year period, property has returned 39%.

Stocks have returned 242% on an annualized basis, that equates to

3.4% for property and 13.1% for stocks over the last 10 years.

Let's look at income.

So income, as we saw earlier, the net yield is currently, uh.

Two odd percent.

Um, let's say two to 5% as a range, because more experienced investors

might uncover better cash flowing deals.

Stocks give you average annual dividend yields of, you know, between one to 5%.

If you are investing only in the US then you're gonna get low end of that range.

If you're investing in uk, in the uk, Europe, global markets you're gonna get

in the mid or upper levels of that range.

Okay?

So these are dividend yields, passive dividend yields, volatility.

What does that mean?

That means how choppy are the returns.

It doesn't mean how risky they are.

We must always separate volatility.

Versus risk.

But in terms of volatility, how choppy are the returns?

This is the big, concern that some people will have with stocks.

Stocks are more volatile.

That's a fact.

That's just reality.

Volatility is always an opportunity to be investing when stocks are

on sale, and it goes hand in hand, you accept the volatility, but you

get the better opportunities as you can see from those returns.

And by the way, those returns that I've talked about, they include all the ups

and downs, they include the volatility that you see and all of my investors, you

know, as I mentioned, embrace volatility because they are investing using, a

technique called pound cost averaging.

That's drip feeding their money into markets on a gradual basis.

And that takes advantage and capitalizes on the volatility so they

can buy stocks when they are on sale.

Is it passive?

Well, property isn't passive.

Stocks are passive.

You can manage your stocks from anywhere in the world.

You have the flexibility of time and the flexibility of geography.

Okay.

Are they inflation beating?

We've just seen property isn't inflation beating.

The growth isn't, the income isn't.

Stocks have grown far in excess of the reality rate of inflation.

Is it tax efficient?

Property isn't very tax efficient, right?

You pay stamp duty, you, pay tax on your profits or your revenues.

When it comes to extracting the money from your limited company into your

personal names, you are paying tax there.

So there are multiple layers of tax to be paid on residential property.

The stocks are very tax efficient.

You can own stocks in your ISIS, in your pensions.

You know all your gains and all of your income and all of your dividends are

completely free of tax when you hold them in these tax efficient vehicles.

Are they Liquid property is not liquid.

You can't sell property today and get your money out tomorrow.

Stocks are very liquid.

You can sell stocks today and have your money in your bank account

in the next couple of days, so they're very, very liquid.

And finally, diversification property is not very diversified 'cause it's

one asset class at the end of the day.

Stocks are diversified.

You can own different markets, different countries, different sectors.

The really interesting thing is I call this category stocks, but really

it's financial assets because what we own as a diversified in balanced

portfolios, not just stocks, we own gold.

We own bonds, we own REITs, we own high dividend stocks, we own

money market funds, we own options.

Okay.

So that creates a highly diversified and highly balanced portfolio,

which you can customize depending on your personal risk profile.

So what are your key takeaways?

Number one, you must make sure your investments tick the growth

or the income boxes, ideally both.

When we own a diversified portfolio, you can tick both of those boxes.

Be passive.

Your job is to reduce ongoing management.

You don't want to create a job out of your investments.

You want your investments to work for you, not the other way around.

Okay?

Especially when you are getting older when you want more time, when

you want more flexibility, when you want the flexibility of being able

to work from wherever you want to be.

Okay.

Geographically, you want to be passive.

It's really important to be more passive as you get older.

Okay?

And number three, you want to achieve a better, more effective way.

Of diversifying and balancing your portfolio.

And so the best way I know how to do that is to have all of those

stocks in a tax efficient way.

Again, stocks, gold bonds, REITs, dividend stocks, uh, options, money

market funds, and it's super simple to combine them in one portfolio.

You know, we have a system, and the system we use is called GPI Growth.

Protection and income.

And when you combine those three elements in your portfolio, it

ticks all three of those boxes.

You achieve growth, income, and protection, and that creates

a very nicely balanced and a highly diversified portfolio.

So I talked about the GPI portfolio and one of the really interesting elements

within our income portfolio is options.

Myself and my community of investors, we achieve between one

to 3% per month using options.

And interestingly, options are a super safe way of investing in the markets.

Much safer interestingly than investing in stocks in the usual way.

And if you want to learn how.

That is the case.

Download our step-by-step options explainer.

The link will be in the description below.

Download your copy there and if you want to watch a video on how options

can be a, a really interesting way of generating income, one to 3% per month,

and be a safer way of investing compared to buying stocks in the usual way.

Go to the video that should be showing it somewhere on the screen right

now, and you'll learn much more about this really interesting asset class.