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Two Sides of Portugal

I dont know what to say about Portugal. There is such a disjunct between what I see out my window and what I know is happening under the hood.

Outside, the summer has arrived, and we are back in shorts and T-shirts. Lunch by the beach is once again the norm. Sitting in the shade is now back in fashion. It's nice. Who would want to be anywhere else?

But what is happening under the hood? The so-called Troika, the bailout police, are back in Lisbon. The bailout deal is verging on collapse; the country is sliding further and further into ever more debt; businesses are collapsing in all directions, and the country looks as if it is about to slide back into ruin and despair. It's all very sad.

The government will not help small businesses, or business start-ups, and without that incentive, they simply wont start up, and the dole queues will lengthen, services will get sparser and sparser, and the populace will sink back into the state they were in thirty years ago.

I have taken my own advice and gone over to renting. I have just taken on a rather nice two bed apartment at the end of a country lane, but only two miles from the nearest town. 100 metres away is a river-side cafe, and there is a pleasant small stream running down to the river. I have plenty of room, a large garden, peace and quiet, and a lovely view from my balcony, and I am paying €380 a month. There is also a studio flat for rent at €230. Let me know if you are interested in that and I'll give you my landlady's telephone number. She speaks excellent English.

As I have repeatedly said, buying a holiday home makes zero sense. I reckon it used to cost me €50 a month for my internet service, another €50 for my electricity, (all of which comes free with the rental). If I owned a home I would be paying €500 a year and rising in rates, and at least €1000 a year in repairs and maintenance. That all comes to roughly €2,500 a year just in service charges, or just over €200 a month. I dont have to pay any of that, so the net rent if you like is about €175 a month.

If I bought the apartment at the current market price (which will continue to drop, so you'd be buying a depreciating asset) that would tie up about €65,000. That represents a lot more than €175 a month in lost income from that sum even at a crummy 5% p.a. Not that subscribers to The Big Pension, my monthly magazine, are receiving such paltry sums. The simplest and safest of my investments which is guaranteed by the US Government, and can be bought online in a matter of minutes, is paying 11.25% as of yesterday. That would bring you in nearly €145 a week if you invested €65,000. Let me know if you want to subscribe. You'd get your subscription costs back after one week's investment.

As I keep saying, if you are buying a retirement home then the rationale might be different, but as I get older, I dont want the worry and the work. I'm certainly richer for renting. And If I want to move, I just give a month's notice and go, either into town, or somewhere totally different. I feel free again.

john

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