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Shares or Property?

Discussion in 'Stock Market Nuts and Bolts' started by shezian, Jul 8, 2014.

  1. InvestSuccess

    InvestSuccess

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    A lot of the times you are not in control of company's policies, therefore dividends. For instance, if CEO decided to allocate all income to research and development and do not withdraw dividends - most of the times small shareholders can do nothing about it and have to get over it.

    Here is more on why property investment is better https://propertyupdate.com.au/8-reasons-why-property-is-a-better-investment-than-shares/

    So property is for sure the better choice for small investors who don't have the squad of lawyers by their side.
     
  2. Value Collector

    Value Collector Have courage, and be kind.

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    Berkshire Hathaway hasn’t paid a dividend since the 1960’s, does that make it a bad investment?

    Is there any property that has come close to matching the returns of Berkshire Hathaway?

    I think basing your decisions on whether a dividend gets paid or not is a little short sighted.

    I would rather construct a portfolio with a range of assets, with good possibilities for grow and income, rather than arbitrarily stick to one asset class.

    ———
    I own property and shares.
     
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  3. qldfrog

    qldfrog

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    Tell that to Japanese investors
     
  4. qldfrog

    qldfrog

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    Real estate is a ponzi scheme based on population growth
    Do not fool yourself
    I own both RE and shares
     
  5. Zaxon

    Zaxon The voice of reason

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    That is so true. If the only return ever was from rents, and you knew property values would never increase, I wonder how many people would own property.
     
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  6. InsvestoBoy

    InsvestoBoy

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    9.3% CAGR.
     
  7. Triple B

    Triple B

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    [​IMG]


    A recent paper dubbed “the rate of return on everything” by The Federal Reserve Bank of San Francisco found anyone investing in Australian shares between 1980 and 2015 would have accrued annual returns of 8.7 per cent, compared with just over 7 per cent for housing.

    Some stuff I copied ^
     
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  8. Smurf1976

    Smurf1976

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    That is true but with real estate you are also not in real control of tenants and not in any control of councils or state governments.

    For every person who correctly picked 50 years ago that the Gold Coast would end up as what it is today or that anyone would actually want to live near the Sydney CBD there will be countless others who got it wrong. Their upcoming boom area is still mostly farmland or the suburb ended up being famous for all the wrong reasons.

    There's a place for both in my view but property isn't a one way bet as many seem to think it is.
     
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  9. tech/a

    tech/a No Ordinary Duck

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    Smurf
    It’s the only one I know that has endless success stories

    how often do you bump into people who have made a true fortune from shares
    Only shares
    I know of one and he was a Director of Hospitals in the US and was paid within
    His packages with Shares lots of them back 30 years ago
    In his short 22 year career he raised from the dead 4 hospitals during his last residency his shares started to go nuts .

    I know plenty who have made a good quid but many more who have changed their lives and their families and their families families for a very long time through Property.

    Lenders like property.
    Property is a great hedge
    Few declines in property last for ever.
    More people buy property than shares ( super accepted )

    The lure of shares to most is the PERCEPTION of quick easy money
    And that 1000% gain on 10k in my opinion.

    Don’t get me wrong once you have wealth shares can be great.
    In many ways.
    But the set up lives! Rare.
     
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  10. qldfrog

    qldfrog

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    Tech/a
    A lot of the past may nor reoccur, just one point:
    CGT
    We can all agree that the yield on re is pathetic once all side costs are taken into account
    So you win is on capital gain on resale but now, a new entrant will see his wins taxed at cgt rules
    Which do not take into account inflation...and that is before a Labour win
    A 100k property in 1990 worth 400k now is not a great win you will agree but on resale you will pay 75k to the ato so real resale price 325k after 30y and inflation..bonds would be better...and i do not factor thefact that a30y old buildig is probably ina pitiful state unless more money was put in
    Past is not duplicated especially when rules change
    I try to divest 2 properties
    One ppor will probably take 1 year i guess, second is industrial and has been on the market for nearly 2 years...
    I can sell my shares etc in 3 days
    Thanks God i do not need the money quick
     
  11. Austwide

    Austwide

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    I have mainly invested in property and believe it to be better than shares. (MY opinion)
    I am not sure where the 7% housing return was based on, maybe every property in Australia averaged? Figures can mean whatever you want them to depending on ones methods.

    In 1983 l brought my 1st home.
    Cost was $56,000.
    If I compound that at 7% for 35 years as above, it comes to about $598,000.
    Over those years I have sub\divided that block and sold half. Not counting that money but the reduced land size, in todays low market, its value is about $750,000.
    It also gave me somewhere to live for over 15 years and then earn over $200,000 in rent.

    I don't know how to calculate that return, but over $1,000,000 return for $56,000 or is it based on the $10,000 I actually put in? Somehow factor in residence, security for other purchases and sub/div profit.

    I don't know if that's repeatable in the future but these figures are in line with other property that I own.

    There are 2 drawbacks with property for me.
    1 Repairs - not the fix the tap or fence or between tenants type but the odd urgent one, like the switchboard for a block of 7 units blows up at 5PM on a Sat night of a 4 day weekend.

    2 Land Tax (Victoria anyway) - $900 3 years ago, $12,000 2 yrs ago, $27,000 last year, this year?

    For this reason, I am seriously looking at getting out of property (keep home and maybe Block of units) and putting the proceeds into shares.

    My problems with shares was losing over $150,000 in 3 days around year 2000 when the tech bubble burst. I have never quite been comfortable in the market since though I did do a ;ot of things wrong.

    So property has been the best by far for me, but new tenant laws, increased taxes, higher entry costs are starting to remove the shine.
     
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  12. Smurf1976

    Smurf1976

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    I don't disagree with what you're saying.:)

    The only real point I'd make though is that skill and luck come into it in both cases.

    If someone piled into shares at the bottom following a major correction or they bought inner city properties when they were regarded as undesirable then they'll have done far better than someone who bought technology shares in early March 2000 just in time for the crash or who has a highly leveraged investment in multiple generic apartments in a poorly constructed building clad with rocket fuel.

    If for example someone knows a lot about mining and understands drilling reports, geological surveys and so on but knows essentially nothing about property then logically they'd have an advantage investing in mining shares rather than apartments.

    If someone has no real knowledge or interest then property should be an easier thing for the average person to get their mind around since the concepts are inherently far more familiar. :2twocents
     
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  13. Zaxon

    Zaxon The voice of reason

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    Personally, I don't bump into many rich people in general. So my answer is neither property nor shares. Most wealthy people I know have done it with high paying salaries.

    If we broaden out the question further, well a huge perentage of the world's richest people have gotten there through share ownership, not property. Think Warren Buffett. Think Jeff Bezos. OK, so Jeff started a company, but he's probably got the bulk of his wealth through Amazon share price increases, rather than his actual wage - I don't think his CEO's sallary is in the billions.
    I'd agree that the average, random person on the street is likely more comfortable buying property than shares. I think that's likely to change with newer, tech savy generations. Share investing for them is just a fintech app on their phone.

    I disagree with the premise that property is inherently a better investment than shares. For individual people with specific biases and beliefs, property may well be a better investment for them, personally.
     
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  14. tech/a

    tech/a No Ordinary Duck

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    Lets get REAL

    Let me explain and expand a little.

    This is the way I put it in long form to Friends/My Kids and anyone else that is interested.

    MONEY MAKES MONEY

    Your not going to go into a bank and get a loan for $500k
    to buy a share or Shares---wont happen

    SO.


    You need somewhere to live.

    You can leverage your borrowings on a house 5:1 from most lenders.

    While over the last 20 yrs there have been 100's % growth a conservative
    amount is 3% a year so lets take $500K and you put down your $100K deposit.
    and in 10 years your Home is now worth $650K and you can get 80% on your
    Equity. (Better if more growth!) So off you go with your first investment property.

    AND

    That's without paying down anything off your mortgage. Son has done exactly that
    his maths over 8 years is $50K down Cost $410K now worth $580K Payed Double
    mortgage payments equity now $250K. He can now buy 2 more. (Looking he's 36).

    Rinse and repeat.

    Now depending on Growth you could have 3-15% in any one or so years in a twenty year period.
    This is where real ACHIEVABLE riches can be found.

    The earlier you start here the better---like anything that compounds and leverages.


    Sure you can attempt to emulate Buffett if you have enough cash to buy the Company
    or buy and build a company as he did---not so many do.

    If you believe in Flying pink pigs then go chase them and in 20 years you'll still be doing the

    "Same thing day in and day out EXPECTING a different result!"

    Be REAL and get REAL results.

    People keep bringing up Buffett.
    Your NOT Buffett and you never will be so be YOU and do something
    YOU can do.
     
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  15. tech/a

    tech/a No Ordinary Duck

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    Lets go a little further

    Then you have say $500K/and 2 X $450K
    Thats now $1.4 mill using 3% thats $42K year
    or if your very carefully chosen suburb rises 8%
    $112K so every 5 Years rinse and repeat.

    Buy the time your my age you sell off a heap and freehold
    as many as you can your home FIRST!

    NOW YOUR TALKING.

    Cant be done--dreaming--I didn't pass leaving and
    a dumb ass like me did it!

    in 21 years!
     
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  16. Skate

    Skate

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    Disclaimer
    I hold Shares & Investment properties (Commercial & Residential)

    Bowl of fruit
    Most argue that comparing investment vehicles (shares verses real estate) is like comparing Apples & Oranges but to me it more like having a bowl of fruit. Yes, I do have favourites when it comes to fruit & investment vehicles. So why do people think that property investments are better than shares?

    Why?
    Because they don’t see the volatility of property prices on a daily basis.

    Houses & Commercial real estate are illiquid
    Real estate has two price points - the purchase price & the sale price. Most times the sale is at a higher price than what they paid for it some years earlier so they are fooled into believing that property has high returns and very little volatility. The major hurdle is that you can’t just sell a bedroom if you need a few dollars or sell whenever prices decline. This is an "all or nothing type of investment".

    Stocks are liquid
    Unlike the stock market, people are forced to hold on to their investment for many years. It's a pity because share traders are normally emotionally driven & they tend to buy & sell at the worst time thus believing the returns of their property investments to be higher than returns from the market.

    Suite of investments
    I think investing in property might not be the worst idea for many investors, even though the actual returns of properties are lower than we might think as the cost of ownership has ongoing costs that has already been discussed.

    So what is the decider between property or shares?
    Your risk profile is normally the deciding factor selecting one investment over the other - just lets say, your risk profile certainly matters when it comes to investing.

    Skate.
     
  17. tech/a

    tech/a No Ordinary Duck

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    Ok So lets dig a bit deeper.

    $100K down on $500K property---Property Rises 3% thats $15000--or 15% on our investment.
    Lets say it Raises 8% thats $40,000 or 40% on our investment.
    You have been really astute and gain 20% thats $100,000 or 100% on our investment.

    All of these and perhaps a few less% in a year and often over 20% if held 10 or more
    years or you get lucky.

    If we had $1,400,000 in our example with 3 properties at say age 38
    Now do the figures!

    That's a lot of capital to continue to be your banks best friend.

    Money DOES make money.
    Don't underestimate this you always have tangible asset which lenders love!
    The bank doesn't want the capital appreciation on their asset--you get it--how goods that!
     
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