What to invest in?!?

Question

If i had £400,000 cash to invest and wanted good return after 3yrs to invest elsewhere, would either of these seem like a good, short term, large gain option?
To invest in some flats worth 650,000 and pay off the 250,000 mortgage within 3 years to avoid paying lots of interest - then hopefully own outright some flats worth about 750,000
Or put the money in an account and just add the £90+ a year i would be using to pay off the mortgage
Option two there is no rental income (approx. £40,000 pa) but you avoid having to pay a high rate of interest on a mortgage but with option one there is the interest rate you will be receiving combined with the absence of any interest being paid on a mortgage + less hassle! - but then you will not benefit from the potential rise in value that the flats could see over the three years + rental income
Very unsure and any other ideas or helpful advice would be much appreciated
Many thanks

Answer 1

property, property, property, property, property, property, property, property, property , property, property, propert - get the point

Answer 2

I would invest the money in broad-based index funds in a mix of stocks and bonds. (Check out the index funds at Vanguard and Fidelity.) You get guaranteed market returns, low expense ratios, and best of all, maintaining them is very low effort. Maintaining rental property can be like a second job, with all the repairs, dealing with current tenants, and finding & screening new tenants for vacancies. I did it for two years and I'm not planning to ever do it again.

Historically, appreciation in housing value has not been a good long-term investment. Prices generally keep up with inflation but not much more, so it's only worth it if the rent money is good. At least that's true in the US, not sure about the UK.

You can also invest in real estate through mutual funds. Vanguard has an index fund based on REITs, which are mostly commercial and some residential real estate.

Answer 3

ETFs are cheaper than mutual funds. ETFs have very low annual expenses, nearly 20 basis points or 0.2% less. As against this, actively managed mutual funds show average expenses exceeding 135 basis points (1.35%). This does not include the extra 2% - 5% as loads, 12(b)-1 marketing fees, transactions costs, and soft dollar expenses mutual funds, passed on to you but never informed, except in very fine print that nobody cares to read.

ETFs have a lower turnover than most mutual funds. As ETFs do not require active management and hold nearly a steady stream of stocks, there is hardly any portfolio turnover. On the other hand, many actively managed mutual funds churn their portfolio many times throughout the year, leading to recurring transaction fees on every purchase and sale.
http://debts-to-wealth.com/category/Why-Invest-in-Exchange-Traded-Funds.html

Answer 4

I have had the same experiences as rainfingers above.
I have made a 24% annual rate of return since 2001 buying Gold and holding on to it, at this URL.

http://www.goldmoney.com/

They also now offer interest bearing savings accounts in Pounds, Euros, & U.S & Canadian dollars.

I also am looking for feedback from others who might be using this service. Please see the question on Goldmoney in investing @ Yahoo answers.