FAQ 95 Should I buy a PPR or rent instead?
This question crops up often when a PPR has just been sold and the investor wants to know whether to buy a replacement PPR or to use the released funds to kick start their investment portfolio.
The answer will depend on quite a few factors. The purchase of a PPR uses very different criteria to those used to select an investment. The two purchases are entirely separate except that the purchase of a PPR affects personal finances which in turn affect the capacity to invest.
We would say that ia vital first step is to have a clear picture of personal finances by seeking a Finance & Strategy Review. Please read FAQ 8 for more details.
The investor would need a full understanding of what is required as an outcome from their investing. Here is where long term goals come into play. If the goal period is aggressive then there will be a need to get investing underway without too much delay. The use of equity for the purchase of a PPR may delay investment progress.
The clear way around this is to have a written investment plan which incorporates the acquisition of a PPR. By having a plan the effect of the PPR purchase can be anticipated. If the purchase allows for investing using the remainder of one\’s finances and fits in with achieving long term goals then at least this will be fully understood.
The following may assist in making the decision:-
Responses