Investing in Property vs. Keeping Money in Savings Accounts
Introduction:
When it comes to building wealth, where you invest your money makes all the difference. In a recent YouTube video, Northern Property Partners explored the benefits of investing in property over simply leaving money in a high-interest savings account. If you’re wondering how to grow your £40,000, this breakdown will show you why property could be the smarter choice.
The Savings Account vs. Property Investment Debate
Let’s start by looking at the classic choice—a savings account. If you put your £40,000 into a high-interest account earning 4% per year, you’ll accumulate interest over time. Without touching the money, in 10 years, you’ll end up with around £59,200. That’s an extra £19,000—nice, but is it the best you can do?
Now, let’s compare this to what you could have earned by investing that same £40,000 into property over the same 10-year period.
The Buy-to-Let Investment Strategy
Buy-to-let (BTL) properties are a staple in the portfolio of every successful investor. With your £40,000, you could secure a property worth £125,000 with a buy-to-let mortgage, leveraging the bank’s money for a much higher return. Here’s how it works:
- Your £40,000 covers the deposit and a small refurbishment to get the property ready to rent.
- After management fees and mortgage repayments, the property would generate £410 of net cash flow every month—pure profit.
- That’s £4,920 in cash flow in the first year alone.
In 10 years, assuming rental prices increase by around 5% annually, your rental income will grow to approximately £10,000 per year. Over the decade, you could earn a total of £73,500 in rental income alone—blowing your savings account return out of the water.
Capital Appreciation: The Game-Changer
While the rental income is impressive, the real magic happens with capital appreciation. Property values in the north of England, where we focus our investments, are expected to grow by about 5% per year.
Here’s what that looks like:
- After the first year, your £125,000 property would increase in value to £131,250.
- The value continues to compound each year, and after 10 years, the property could be worth around £203,610.
That’s an increase of £78,610 in property value on top of your rental income.
Total Gains: £152,110 vs. £19,000
When we combine the £73,500 in rental income with the £78,610 in capital appreciation, your total return on investment over 10 years is a staggering £152,110. Compare that to the £19,000 you’d earn in a savings account, and the difference is clear.
Why Property Investment is a No-Brainer
Property not only gives you a monthly cash flow but also grows your wealth through capital appreciation. This dual benefit makes it one of the most powerful wealth-building strategies available.
At Northern Property Partners, we make property investment simple and passive. We handle everything—from sourcing the property to legal matters, refurbishment, and ongoing management—allowing you to reap the benefits without lifting a finger.
Take the Next Step
If you want to stop wasting your money in a low-return savings account and start growing your wealth through smart, calculated investments, property is the way to go. With our expert team by your side, the process couldn’t be easier.
Ready to get started? Book a free consultation today and discover how we can help you build your wealth through property investment.
