Investing

If it were me, I'd stick with property … have a look at the global financial crisis to give you a viewpoint on shares. Of course, picking the right shares and even the right property is a challenge in itself. I'm biased towards property but I also have some shares which I just let 'sit'.

You have equity in your own home to buy an investment property but are limited on time till official retirement age (sorry to remind you!), if you get cracking, put your extra income into an IP (or aim for positively geared) then you'll be on the way to getting your retirement income happening. You may even be able to add another within a few years once you've earned some equity in that property.

If you want financial advice, you need to speak to an advisor who can assess your whole situation and give you some pointers.

Good luck!
Cheers
Michelle

Hey Kerrie,

Firstly, if you go to a property forum and ask whether you should invest in shares or property you will get the same answer every time!!! Property!!! That is what the people in this forum specialise in so they will recommend it everytime. So if you are seriously weighing up shares vs. property don’t ask here.

Property has some advantages to shares. With property you can leverage yourself a lot more. You can borrow 80% and only put down 20% but your get growth on the entire 100% of your property.

If you put $20,000 into shares and they earned you 10% pa. that would be $2,000. Put that $20,000 in to buy a $100,000 property (assuming rent pays for all expenses) and you only get growth of 4% you will still make $4,000 or 20% ROI. So there is a great advantage there.

One of the things I love about property (positive cash flow property in particular) is that rents tend to go up almost every year. Meaning each year your ROI gets better and better and better. Expenses such as electricity, rates etc go up too, but your biggest expense (your mortgage) doesn’t change (unless of course interest rates rise).

This increasing of rents over time means that in 10-20 years (if you buy properly) your passive income will be able to fund your lifestyle.

You can’t increase your wealth exponentially if you aren’t in the game. The more property you buy the more chance you have at growing your wealth.

I specialise in positive cash flow properties. I am NOT a financial advisor. But if you have any questions you want to ask you can contact me at http://cashflowinvestor.com.au/contact

You can borrow in order to invest in shares. But usually the absolute maximum you can borrow is 50%. In property you can borrow up to 95% (you will have to pay lender’s insurance though).

For me, property is much easier to control. With shares there is nothing I can do to increase the value of my shares, I am at the mercy of the market. In property, I can increase the value of my property by doing renovations or developing. You are still at the mercy of the market a bit, but there are things you can do to add value. So the smarter you are the easier it is to make money in property.

Even more with a Guarantee Capital Loan albeit at a slightly higher interest rate.

Sorry Ryan to keep disagree with you

It is NOT difficult to get margin loan 70% LVR on top ASX 50
(i.e. not dogdy company)

Yes.. diversification is ignorance… to whom who does not know the world of investment!!!
Eventough the richest man in the world… Warren Buffet has quite diversified portfolio in his Berkshire Empire.

Sorry to disagree with u again and again. Warren Buffet vs. Steve McKnight

Richard,
Yes.. capital protected loan.. but I think there is a limit in terms of claiming the deductible interest rate(ATO ruling).. correct me if I am wrong

Hi Kerrie C

My advice would be to talk to an appropriately quaified financial planner, with a good reputation. He or she will be able to discuss your financial and other goals and recommend strategies that are suitable for you, in the context of the current economy and 'cycles' for property and shares.

I am guessing that if you are in your late 40's and own your own home outright, that many planners would encourage you to be contributing more to superannuation. Considering super preservation age limits and being late 40's, I would assume you could access your super closer to age 55 than age 60, so you wouldn't necessarily be locking your money away for years and years. They will also probably suggest that you keep some cash aside for a 'rainy day' or unexpected adverse events, like ill health. Different planners would have varying views on what to do with the shed.

Best of luck with whatever way you choose to go.

Cheers
Paul