Shares V Property

Hi Barbara,

Hopefully this is a constructive reply:

I believe Robert Kiwosaki answered this question excellently, he was asked so many times for investment advice before he came up with the following “fits all sizes” response:

“If you do not know what to do with your money, put it in a bank, and do not tell anybody that you have money to invest.”

The reason being there are m1llions of people with an opinion on what you should do, and what might be good for one person wouldn’t work for another.

There are key differences between shares and property, the thread “shares v property” has been debated here many times and also at http://www.somersoft.com/forums So reading those threads might be a good place to start.

One advantage of property is that if you can afford 200k of shares (with borrowings) you can afford to buy more than 200k of property due to the higher leverage, but then shares are so much easier and cheaper to turn into cash if you need to and so on and so on for many pages.

In the end It all comes back to your own plans and objectives, once you know these it’s easier to chose an investing vehicle.

Regards,
WaySolid

“Write the wrongs that are done to you in sand, but write the good things that happen to you on marble.” Arab proverb

Why not by shares in a listed property portfolio, then you’ve got both bases covered…

But if that’s not what you want to do, maybe you could lend me the money and I’ll give you a gauranteed return, no risk of 3.5% pa fixed for 10 years. That’s more than the yields on real estate at the moment and share dividends are in the same territory and I’ll gaurantee it. What more could you ask for? [biggrin]

Maybe whacking it in a fixed interest bearing account is the safe harbour of choice for the moment…

Cheers,
Michael.

100% finance on one property will have an interest expense comparable to my 100% gearing on the shares in a very diversified portfolio. I probably should have told you that I can also gear up to $500,000 without any proof of income (higher than this, I need to state an income) at 100% with the shares but there is NO WAY you can do this on property. Also, there is a capital guarantee so I will never have to pay back the cost of the shares. The only risk is that I have to pay the ongoing interest (deductible) which I do not consider expensive after tax.

I am not advising anyone do this by any stetch of the imagination unless they can afford the repayments of the interest at the full amount. However, it can be done and is common.

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The poster formally known as The Mortgage Adviser

Barbara

Don’t know your experience with shares, but you must do a lot of homework if you are picking them yourself. They must be actively managed. Don’t listen to rubbish like “buy and hold for the long term”. If a share turns sour, you need to jettison it from your portfolio. Don’t argue with the market, irrespective of what some “eggspurt” is telling you about a share’s prospects.

So-called blue chips are overrated in my opinion. People think of the likes of Newscorp, the banks, Telstra, etc. Don’t hold your breath waiting for them to perform. Check what they’ve done in the past 4 – 5 years – next to nothing. How long does a man wait? So you need to research better prospects, typically smaller companies that are in a growth phase.

Don’t pick shares by reading the newspaper either.

I prefer shares to property for their versatility, and you don’t need to part with an arm and a leg to buy a reasonable portfolio. Having said that, I’m not against property at all, just that I’m more suited to shares.

Wes.

In my view it’s way too simplistic to say stocks vs. shares, because the investor themeselves determines wether they will get a high return.

As an example US bonds are currently paying 1-3%, yet I know an investor who makes round about 2% per month, so over a year he might make 24% while other investors are only reciving 1-3% per yr.

The asset class (property or shares) dosen’t make it a good or bad investment (both can provide fantastic returns), but rather the investor themeselves will determine if good or bad investment in my opinon.

Rgds.
Lucifer_au