List Why Property Beats Shares

As Dolf says:

1. You can buy property well below market value by researching and putting in plenty of offers. With shares you buy At Market Rate.

2. There are a hundred things you can do to massively increase the value of your property once you have bought it. (renovate, add A/C, add bedroom, landscape etc etc). With shares there is NOTHING you can do to increase the value.

Just a couple of his excellent points…

Cheers,

Battz

1) Shares are more risky because they can go down to almost nothing.
2) Shares have no ‘use’ if you can’t sell them. Houses have an intrinsic function. Like if global ecomony crashes, a house is still a house worth living in.
3) Shares fluctuate wildly compared to property the spikes are fast and sharp. Property has more gentle lines and has trended upwards for 100 years. Western world’s average growth 7 percent per year, including the depression !
4) Shares are boor-r-r-rrrr-innnnggg and you have to keep an eye on the market at all times and maintain an encyclopaedic knowledge of the market at all times.
5) Share trading is stressful and traders have a high burnout not to mention suicide rate
6) you can’t ‘set and forget’ like you can with properties. OK if you can (dividend shares) you won’t get the returns.
7)The bank loves lending money to you secured against properties to buy more properties. They don’t have the same feelings about lending you money to buy shares.
8)Your ‘shares’ are really just a ‘virtual’ ledger entry somewhere, as is a so-called ‘cash deposit’ in a bank. Computers can be wiped, destroyed, alterered, hacked..a house cannot.
9)You can insure houses against things happening – right down to the tenant not paying.
10)There are more millionaires from real estate than there are from any other form of investment.
11)You can unlock the equity in your house if it goes up in capital gain without selling it.
12) capital growth is compounding, so it’s actually a lot faster than the annual figure – and gets faster and faster the longer you hold onto it (in terms of ‘how much your property went up’ in a year)

Hi Wayne!!
i look forward to ‘being addressed’!!!!

when you’re ready!!!

cheers-
Mini

Firstly, I am all for property investment, so in picking you up on these points I am not bagging property ok! But obviously I like shares, I make a living from them, so i will address the points one at a time:

1) Shares are more risky because they can go down to almost nothing.

One company may go broke but ever heard of diversification? Imagine if your house was destoyed and the insurance company reneged. Same scenario. You can also insure(via hedging) your portfolio. Shares even have a huge advantage in this regard. If the company is on the slippery slope towards bankrupcy you can short sell that sucker and make a killing while the share price is going down

2) Shares have no ‘use’ if you can’t sell them. Houses have an intrinsic function. Like if global ecomony crashes, a house is still a house worth living in.

Companies provide infrastucture for the houses. Ever heard of Telstra or AGL? If global economy crashes, buy gold shares

3) Shares fluctuate wildly compared to property the spikes are fast and sharp. Property has more gentle lines and has trended upwards for 100 years. Western world’s average growth 7 percent per year, including the depression !

Shares on an unleveraged basis has outperformed property in the same period. Pull up a 100 year chart of the Dow Jones and you’ll see a fairly smooth uptrend also.

4) Shares are boor-r-r-rrrr-innnnggg and you have to keep an eye on the market at all times and maintain an encyclopaedic knowledge of the market at all times.

Shares are anything but boring to those interested in them. I’m sure property is as boring as hell to those not interested.

5) Share trading is stressful and traders have a high burnout not to mention suicide rate

Well I don’t know the figures so can’t argue. But if someone finds it stressful then it is not for them.

6) you can’t ‘set and forget’ like you can with properties. OK if you can (dividend shares) you won’t get the returns.

Huh? Again pull up a long term chart of some dividend stocks, you will see this is not true. Dividend share can have excellent growth, same as houses. Which houses or which shares make the difference. You can’t really set and forget any investment, but part of my portfolio I call my set and forget portfolio. The scrip is in the bottom drawer never to be sold….unless I decide to sell[]

7)The bank loves lending money to you secured against properties to buy more properties. They don’t have the same feelings about lending you money to buy shares.

Rubbish! Ever heard of margin lending? You can borrow on your shares up to a LVR of 75% And guess what? You don’t even need to qualify; no financials or proof of income required… as long as you got shares to lend against.

8)Your ‘shares’ are really just a ‘virtual’ ledger entry somewhere, as is a so-called ‘cash deposit’ in a bank. Computers can be wiped, destroyed, alterered, hacked..a house cannot.

You are part owner in a company. When you buy shares you are supplied hard copy evedence of your purchase and holdings.

9)You can insure houses against things happening – right down to the tenant not paying.

You can insure your portfolio with put options or index futures. And there is no danger of your claim being refused.

10)There are more millionaires from real estate than there are from any other form of investment.

Dolf’s favourite assertion, I personally would like to see proof of that cause if you remove the value of your PPOR. I don’t believe it.

11)You can unlock the equity in your house if it goes up in capital gain without selling it.

Same with shares through margin lending. Exactly the same! Except the process is one hell of a lot easier with shares.

12) capital growth is compounding, so it’s actually a lot faster than the annual figure – and gets faster and faster the longer you hold onto it (in terms of ‘how much your property went up’ in a year)

(sigh) Same with shares if you are leveraged with margin lending.

Also with shares your transaction costs are miniscule compared to property, as little as 0.11% in and out. Liquidity is far superior. I can decide to sell mt NAB shares right now and by 10:10 AM monday morning they will be sold, with the proceeds banked on wednesday.

I suspect most of these erroneous assertions come from somebodies property investing course; like dolf de roos; but as you can see most of it is simply rubbish

I have no problem with people not wanting to invest in the share market. It’s horses for courses. But lets just get the facts straight eh!

Cheers
Wayne

http://netvantage.netfirms.com

I agree with Tamara, variety is the key. I know you asked for reasons why to go into property, but let me express a few flip sides;[]

One good thing about shares, you can enter the market with much less opening capital. For example a managed fund, some start with as little as $100. Try to buy real estate with that little capital.

Or buying a few shares online with a fee of about $15. Plus of course the cost of the shares themseleves. This is @#$% loads cheaper than Stamp Duty, legals, bank fees etc.

Shares don’t have any on going expenses (maintenance, management fees) well at least not that I have encountered. But they do have highly tax effective dividends.

The biggy that most people have mentioned already, is the ability for a home owner to put in a bit of elbow grease and increase the value of her investment. And with imagination, this becomes a really fun challenge.

As I said, if you have variety in your portfolio you will increase your chances of doing well. Not just shares and property, but cash, managed investments, super, etc.

Victoria
[email protected]

Reason can answer questions, but imagination has to ask them. — Ralph Gerard

Hiya,

First thought that comes to mind, being a family man is :

You cannot stick a sibling in a share when they have come of age and need a start, but you can fit them comfortably in a house.

To handle yourself, use your head. To handle others, use your heart.

Michael
just be

[]

A lot of people bagging out what they don’t understand.

1. Shares are not more volatile than property. This is a myth. If properties were revalued every day instead of once a quarter you would see massive volatility. Volatility breeds OPPORTUNITY. Try making money from property in a flat market and see how far you get.

2. Shares have greater liquidity. You can sell a few or all of your shares in minutes, and wont have to suffer a loss on a desperate sale. With property you cant sell off a bedroom when you are desperate for money, if you are desperate, you have to sell the whole house, which costs many thousands of dollars and may force you to sell very cheaply.

3. Leverage. Shares can be leveraged MORE than property. The highest LVR on shares is 99%, in property it is 95%.

4. Rental income suffers from erosion due to maintenance, depreciation, management costs, insurance, advertising, vacancy periods, rates et al. Shares have no such costs.

5. Franking credits. Dividends are a tax-paid investment (assuming average wage). Rental income is taxed.

6. There are at least 45 seperate things you can do to improve the return from shares. How much return you get is entirely dependant on your financial education and effort. Visit my website http://www.posigear.8k.com where you will find a course on how to do it.

7. History shows shares return 13% while property returns 9%. Compound that!

8. Share trading is NOT share investing. I believe share trading is a mugs game, like property trading is. I dont teach share trading, in fact I actively discourage it because 95% of traders go broke. There are better returns to be made by “selling shovels in a gold rush” or positively gearing shares.

9. Shares CAN be bought for less than market price, IF you know how. I have an example on my site.

10. You can unlock the equity in shares in real-time, you dont need to ask the bank manager for permission to borrow more money.

Hi Wayne,

look you obviously know a lot about property AND shares.
More than I know about the latter, or care to.!!

And I am not doubting that you could make great returns – better returns – on your shares than on your property. I also believe that I am going to make better returns on my property. I don’t just think so, I know so.

A freehold house returning 20 percent PA (after costs!) and growing in capital gain at 5 percent makes 25 percent a year. Freehold. Let’s mortgage that at 8 percent. My cash on cash return has now gone up to – oh man!! I would need to put some actual figures through a calaculator and i can’t be bothered! but going on previous houses I’ve done numbers on, it shoots into the stratospheres fairly quickly – like you get instant over 100 percent returns, which become 600 percent returns over a few years!! it’s almost unbelievable until you do the numbers yourself.

And we have all known loads of people who have been burned on the stockmarket. But hardly any burned in real estate – why? because it’s so much more forgiving of mistakes.
waybne – “1) Shares are more risky because they can go down to almost nothing.
One company may go broke but ever heard of diversification? “

yeah – Robert Kiyosaki calls it ‘de-worsification’. If you have bad investments that lose you money, or that could (like shares) of course you need de-worsification!!!

“Imagine if your house was destoyed and the insurance company reneged. “

Is that a real issue? I have never heard of it. Is it a real reason why I should not invest in property? what are the chances of that happening to me???

>You can also insure(via hedging) your portfolio. Shares even >have a huge advantage in this regard. If the company is on >the slippery slope towards bankrupcy you can short sell that >sucker and make a killing while the share price is going down

you’ll have to explain hedging to me, because i don’t really get it. If hedging with shares is the same as insurance with houses, then i geddit. You have different hedging policies available at different prices? kinda???

“Companies provide infrastucture for the houses. Ever heard of Telstra or AGL? If global economy crashes, buy gold shares”

Yep, I have heard of thos companies – Telstra does those telephone thingies and AGL is the gas, right?Yup yup. Look, I am not doubting the blue chip-ness of these shares etc but if they were so foolproof, then why would you be then saying in the same sentence “If global economy crashes, buy gold shares”?? Do you buy after a crash? With what do you buy? (if your blue chip shares crashed – and if your paper assets are worthless?

“Shares on an unleveraged basis has outperformed property in the same period. “

That might be true, because most of the property market is owner-occupiers, not investors. But it won’t be true for my investments!

you disagreed that “Shares are boor-r-r-rrrr-innnnggg”

OK do an experiment. not that scientific, but do it anyway!
when asked ‘whay do you do?’ at a dinner party, speak about shares. and at another dinner party speak about property investing. for shares I bet at least half – to all – the people will switch off!!! the other one, you’ll have a captive audience!!!!

“Dividend share can have excellent growth”
really? Let’s say I want dividend shares for cashflow, cause now I am retired. How much do I need to invest to get, say 1000 bucks a week? Will I hedge them or what? Could you do me a sample thingie based on what’s for sale today so I can see how it works?

“Ever heard of margin lending?”
Yes, I have.
but then ez said “Margin loans are dangerous and I do not use them.”

This is the over-riding sense that I get, – that being mortgaged to the hilt with property is quite normal, but being margined to the hilt with shares could go horribly wrong.

“You can insure your portfolio with put options or index futures. And there is no danger of your claim being refused.”

Is this what share trading? That’s all that stuff you have to do which involves watching the investments lik a hawk. SOOOo time consuming. I just have better things to do with my time. that stuff is not FUN to me.!!!

“10)There are more millionaires from real estate than there are from any other form of investment.
Dolf’s favourite assertion, I personally would like to see proof of that cause if you remove the value of your PPOR. I don’t believe it.”

Why would I do that? PPOR is real estate so therefore it counts. BTW did you know that only 1 percent of Australians are millionaires? 5 percent of yanks are, though….

“11)You can unlock the equity in your house if it goes up in capital gain without selling it.
Same with shares through margin lending. Exactly the same! Except the process is one hell of a lot easier with shares.”

that margin lending thing again *eek*
oh – BTW capital gains tax – there’s gonna be none if I sell my properties
There is so much depreciation and so on I can do with the income on my houses, too, that my tax situation will be much minimised too. So you have to take that into account too when comparing both investment types

“12) capital growth is compounding, so it’s actually a lot faster than the annual figure – and gets faster and faster the longer you hold onto it (in terms of ‘how much your property went up’ in a year)
(sigh) Same with shares if you are leveraged with margin lending.”

that blasted margin thing again. Can we have a discussion on the merits of that? Basically a lot your arguments as to why shares are as good as property hinge on margin thingies being the duck’s nuts. But others say *eek*. Why????

Transaction costs – the whole point to me is that shares is buying and selling all the time. So you’d WANT low transaction costs. Property is more long-term, so I hope i won’t have to be selling every five minutes as you would with shares if say your margin just got called and you don’t have the money….
No stamp duty or CGT where I buy.

“I suspect most of these erroneous assertions come from somebodies property investing course; like dolf de roos; but as you can see most of it is simply rubbish”

Well where SHOULD I be getting my information? Where does anybody get their information? Who do you trust? Real Estate Seminars do tend to start with ‘why property investing is such a good investment’ and I am sure that I have heard some of these points before. Complete with matching slides with the statistics on them. but i can’t remember exactly who said what. However a lot of it is in Dolf’s book, on his CDs, and in Steve’s notes, as well as on the richmastery videos. They’re all (all the gurus) saying the same thing. it makes perfect sense to me.

if what they are saying *doesn’t* make perfect sense to you, then challenge it by all means. But I think it is bad form to say that “most of it is simply rubbish”. Those dudes and dudesses could be going out saying rubbish, their reputations are on the line.

“The only thing you have to do with shares is learn how to value them and buy a stock while its down.”
This is what I have heard about fundamental analysis, which I think is the buffet way, the ‘good’ way, the not risky way to buy shares. (rather than riding the spikes in the $5000 US software.) This is what I mean about having to have a comprehensive knowlege of the economy etc etc which is really time consuming and for most people – pretty bloody boring .

write soon everyone

cheers-
mini

G’day Crashy,

It appears you have a wealth of Knowledge on the Share Market, and I must admit my knowledge base is very limited and I’d been keen to do a course to give me a better unerstanding of the market.

I visited your website, but was surprised by the highly critical views you have of property and those whom conduct seminars to pass on their knowledge….

” These people have no formal qualifications, and usually everything they say is a lie.”

Pretty harsh words, do you have any evidene to support this claim? If so I’d be interested to hear it, as I certainly dont want to waste my $1000 – $2500 to attend a property course if its full of lies.

and secondly…

” I could market positive geared strategies for property, it would be a lot easier to sell. If I did that though, I could guarantee that all of my students would either lose money or not be able to use the knowledge.”

You believe that all your students would actually lose money on property investments??

How can so many property investors be getting it wrong?

Just a thought……

Cheers,

Battz

Hi battz

“Pretty harsh words, do you have any evidene to support this claim? If so I’d be interested to hear it, as I certainly dont want to waste my $1000 – $2500 to attend a property course if its full of lies.”

Steve is a CPA and IS qualified to give advice. The comment was not directed at him. If you can list any of the other promoters out there and their relevant qualifications I will be happy to stand corrected.

“You believe that all your students would actually lose money on property investments?”

In generel, yes. There are bugger all positive geared properties left. This means students would either have to buy nothing or negative gear. Will they lose money doing that? I believe they will. Just my opinion.