Manage episode 253254848 series 1537109
It’s the million-dollar question so many investors ask: what’s a better investment, the stock market shares or property?
Outside superannuation, property and shares are the two most common ways Australians build wealth.
Some find deciding which to invest in is a bit of a hard decision. If someone tells you only shares or only property, run away fast. That probably means they have a vested interest.
You’ll find that in different stages of your life, or different times when you need asset growth and cash flow, different types of investments will be more suitable for you.
In today’s show with our regular guest Pete Wargent, we’ll tell you the pros and cons of both asset classes.
We’re also going to explain when they’re right for you, and when you shouldn’t be investing in a particular asset class.
Property or Shares?
Property and shares are different but complementary asset classes.
While their long-term performances may be similar, they are very, very different as asset classes.
The tax system in Australia tends to favour people investing in property.
- You can leverage against property.
- The extra leverage you can achieve with property magnifies your returns if you’ve got a long enough time horizon
- Property is an imperfect market: in property you can have an edge related to your knowledge, your information, and your contacts.
- The property market isn’t controlled by investors. This gives the market more stability – housing is a fundamental human requirement. As long as you buy in the right location, the value isn’t going to disappear as it can in stocks.
- The government wants us to be property investors. It actually doesn’t want to provide public housing to that 30% of Australians who rent properties.
- In property, you make fewer but bigger decisions, so it’s extra important to make sure those decisions are the right ones.
- The share market is much more liquid so it’s easy to get your money back on short notice.
- The share market is also better for generating income (cash flow.)
- Because you can buy smaller clumps of shares, the entry cost is lower. Property is lumpier.
- The diversification of the stock market is an advantage. You can also diversify over time.
- You can leverage against shares, but not as much as you can with property.
Links and Resources:
Join Michael Yardney and a group of Australia’s leading experts at his annual Property and Economic Market updates – in Sydney, Brisbane, and Melbourne Use the coupon code PODCAST and come as our guest.
Show notes plus more here: Property vs Shares, which is a better investment? With Pete Wargent
Some of our favourite quotes from the show:
“Because property is lumpy, you can’t get it wrong. You’ve got to get good advice.” – Michael Yardney
“The government wants us to be property investors. It actually doesn’t want to provide public housing to that 30% of Australians who rent properties.” – Michael Yardney
“You are not your fears. You create your fears.” – Michael Yardney
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