In the latest AFR Smart Investor there is an article that talks about transaction costs. According to that article the average cost (across Australia) of purchasing a $400,000 property is around about $27,000. This includes stamp duty and all the other BS charges. This is staggering!
If I were to purchase $400,000 worth of shares through my online broker it would cost me less than $500. Worth thinking about.
The difference in transactional costs between shares and property is ludicrous. Property buyers are being milked. Unfortunately the Government take is so high. There is no stamp duty on share transactions.
Wes.
I would say the average is about $20,000 and less a few grand in most 400k cases.
Also I would not pay more then $15 for the transaction to purchase $400,000 worth of shares. Therefor another $15 to sell them.
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Interested in Joint Venture Reno ProjectsI don’t believe you can buy and sell shares that cheaply. Are you sure you’ve got that right? Generally the cost is around 0.1% for large transactions. However, if you’ve got it right please let me know your broker so I can sign up.
Online brokers charge about $15, but I think there are limits to amounts you can buy for this. Larger share prices go on a percentage still – I think.
I agree it is ridiculous with the stamp duty issues. Makes you want to abondon property and invest in shares!
Terryw
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Well on my calculation wezwaz is closer to the mark…..
if you bought a $400k property in victoria on 40k deposit,
you would pay
Stamp duty on transfer of land $19,660
Stamp duty on mortgage: $1,404
Registration of transfer of land: $1,074
Registration of mortgage: $59
Title search: $13
Registration of mortgage: $59
Loan application fee / package fee: $600
Mortgage insurance: $4,320
House insurance: $600
Solicitor/Conveyancing fees: $500
Building inspection: $500
Other costs including connecting utilities: $100
and whatever else i’ve missed…..
that all adds up to………………. $28,889Had you taken that $40k and bought HZN shares 58 days ago when they where just 23 cents……
you could have sold them today. for…46 cents
making a cool 100% gain in 58 days
and only cost $29.95 to buy
$29.95 to sellsounds so much easier…….
your right Terry
I agree it is ridiculous with the stamp duty issues. Makes you want to abondon property and invest in shares!i have and loving it
harry
I would also like to know who you are using jaffasoft??? I think $30.00 is a bit closer well thats what Comsec charges anyway and they sure beat paying a broker by about $70.00. Either way its all better than paying $25 000 to the goverment!!!!
Originally posted by hb:your right Terry
I agree it is ridiculous with the stamp duty issues. Makes you want to abondon property and invest in shares!i have and loving it
harry
So you’re comfortable with this week’s developments in Aus & international sharemarkets then Harry?[blink][biggrin]
I’d be surprised if the movements I foresee between now and, say October (?), don’t make a lot of people want to abandon shares…
F.[cowboy2]OK guys, I indicated share transactions are cheap, but I defy anyone to purchase $400k of shares for less than $30. Up to a certain value you can do it (typically $10k), but then it usually works out around 0.1% for laaaaaaaaaarge transactions.
Harry, I’d advise caution if you think buying resource shares with nothing in the bank is all you need to know to make money in the share market. Maybe you are getting a little carried away with the current bubble building in resources. All sorts of rubbish are on the rise – even energy shares that can only smell a bit of oil. Remember the tech bubble?
Just trying to keep people grounded.
Wes.
Originally posted by hb:Well on my calculation wezwaz is closer to the mark…..
if you bought a $400k property in victoria on 40k deposit,
you would pay
Stamp duty on transfer of land $19,660
Stamp duty on mortgage: $1,404
Registration of transfer of land: $1,074
Registration of mortgage: $59
Title search: $13
Registration of mortgage: $59
Loan application fee / package fee: $600
Mortgage insurance: $4,320
House insurance: $600
Solicitor/Conveyancing fees: $500
Building inspection: $500
Other costs including connecting utilities: $100
and whatever else i’ve missed…..
that all adds up to………………. $28,889Had you taken that $40k and bought HZN shares 58 days ago when they where just 23 cents……
you could have sold them today. for…46 cents
making a cool 100% gain in 58 days
and only cost $29.95 to buy
$29.95 to sellsounds so much easier…….
your right Terry
I agree it is ridiculous with the stamp duty issues. Makes you want to abondon property and invest in shares!i have and loving it
harry
Harry
That is a pretty selective example. Higher rewards like that play equates to higher risk. So to compare residential property with the risky end of the sharemarket is flawed at the least.
A better comparison might be a blue chip stock. I know I would have rather owned RIN shares over the last year than my properties, however the banks have taken a bit of a hit lately.
Shares are a great investment no doubt and form part of any balanced portfolio.
One advanage of the higher entry and exit costs of property makes it less liquid – meaning most folks keep for the long term making it such a stable market.
Imagine the result if you could trade a property for $30 ….
Stamp Duty is a great tax for any govt. No tax rises as it grows along with the housing market [grrr]
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks simon
Diversification is definitely the game
Sadly, it’s taken me 30 years to work that out.
I’ve only ever invested in property, within a SMSF.
12 years ago having 300K to spend….
An investment in a penthouse in Noosa sounded far more appealing than buying shares.
From recession to boom times the investment definitely create a Capital Gain…..
Over ½ a million dollars……
But had I invested in “blue chip shares†say CBA…..safe as houses……
The same amount would have returned $1.5 million over the same period (not including dividends)
My brother in law, (exec in a bank) has accumulated over $3mil in blue chip shares over same period….wouldn’t touch property.
So you’re right…..diversification
I still have property,
and now, I have blue chips
But I love the frill of those spec….some up 100% …others down
even after this weeks crash my best one still returning 91% after 52 days….i just wish i had a extra “0” at the end of ithappy investing
hb
I’d agree with HB……Diversification
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorSorry to indicate that it is $15 for 400k shares. I made two mistakes.
One – I assumed it was $15 for any transaction and was not aware of the percentage rise for higher transactions because i had only traded in $15 trades and smaller amounts.
Second mistake – Only was stating the Stamp Duty and not including the other BS. So Yes 27k is probably around the ballpark.
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Interested in Joint Venture Reno Projects
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