Before everyone jumps out of their seats thinking this is another better then the other thread, its not. Just want to talk some theory.
At the end of the day, property or shares is same same. Lets look at my reasoning why.
Lets say I have 50k to invest.
I get a home loan to purchase a 200k apartment. I'm only putting in 25% of the cost of the investment. Say it grows 8% that year and I get 2% from rent, I'm now up 10% on my 200k. If i sell it after 12 months I only pay tax on half of the profit. (theres other benefits to owning a house but i'm leaving them out for simplicity here)
I take my 50k and get a loan to buy 200k worth of shares, shares go up say 9% and get 1% from dividends. I can claim the payments on the loan just like negative gearing on the house etc... bla bla bla
I'm sure your seeing my point here.
At the end of the day shares and property is the same, its just another commodity, the tax benefits are the same. So one should always be in the market that is giving best returns, if property is going no where and shares are up, move money into shares and vice versa.
(Am I on the right track here?)
But the question about all this I have is, aren't home loans normally at a lower rate then margin loans? So in the above scenario, having all the profits equal, wouldn't the property come out on top because of the lower costs to service the loan?