NRL vs AFL. Neighbours vs Home & Away. Gas vs charcoal grill. We Aussies are no strangers to a heated debate. And that extends to the property vs shares discussion.
You’ve probably seen it unfold at the family BBQ before.
Uncle Mick will swear black and blue that property is the only way to go, as he bought his $1 million beachside shack for just $20,000 thirty years ago.
He’s immediately countered by your know-it-all second cousin James. His hand-picked share portfolio has outperformed the property market five years running, he claims, as he casually reels off lingo such as “bullish” and “bearish”.
But as with most things in life, the best option depends on your individual situation, so let’s run through the major advantages of each option.
- Many investors like the tangibility of having a property and/or a stable place to live.
- You can use borrowed funds to invest and leverage returns, which is handy during periods of low interest rates.
- You’re able to renovate to add value to your asset.
- There’s the potential for negative gearing.
- Lack of correlation with other asset classes.
- Regular income from dividends, which tend to grow with CPI, and can pay 6%-7%.
- Easily bought and sold on the market for a low cost.
- Easy to diversify portfolio, providing exposure to many different companies.
- Little hassle after initial investment, which can be as little as $500.
- No leverage means you can’t lose more than you invested.
As you can see, what might be an appealing factor to your uncle (such as having a stable place to live), might not be so high on your second cousin’s priority list (who may want to travel more before settling down).
So rather than getting drawn into a pointless debate and being forced to pick a side, come in and chat to us for unbiased advice on whether you’re a good fit to jump into the property market in 2018.
Besides, someone’s got to keep an eye on those lamb snags (which are clearly superior to beef snags).
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