Hi All,
Everyone has probably done the pros and cons but I could never work out how shares compete on this front: An IP will usually have a tenant that is helping you pay the loan. Besides dividends I can't see how shares compete. Can anyone shed some light on this aspect? For example, if I borrow $500k for an IP, the tenants will pay a good portion of that for me where as with shares I pay! Comments welcome…Besides dividends? Dividends are important.
That is like claiming that, besides rent, how does an IP help you?
Don't dismiss dividends. Some shares pay more than the rent on a Sydney property. Dividends can be fully franked to which makes the value jump.
Some managed funds paid in excess of 50% in distributions last year alone!
Besides – shares don't have additional costs and the buying and selling costs are much lower. Much more liquid too.
So using your example – a $500K house will probably get you 4% before management fees, insurance, rates, repairs, vacancies etc.
$500K worth of a stock yielding 4% will see more in your pocket plus the franking saves you considerable tax.
Do you have any more specific questions?
Thanks Simon – like houses I suppose you can go for yield v growth? Just tossing up as I work out my investing strategy.
lilyhutch wrote:Thanks Simon – like houses I suppose you can go for yield v growth? Just tossing up as I work out my investing strategy.Yep – exactly.
lilyhutch wrote:Thanks Simon – like houses I suppose you can go for yield v growth?.Be very careful not to oversimplify this point. Lower yield does not imply higher future growth. Likewise, higher yield does not imply low future growth.
Often you'll find lower yield represents nothing more than excessive growth in the recent past .Shares and property alike.
Cheers, F. [cowboy2]
shares are a piece of a business. to say that the majority of businesses are less attractive than owning an IP is illogical and baseless. many shares wipe the floor with property…..
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