My wife and I have had an ongoing debate about the merits of investing in the two markets. She favours property (although the only property investment we have is freehold ownership of the house we occupy) and I favour shares where we presently have a 5-10 year savings plan plus various superannuation plans that provide flexibility in being able to swap to different investment areas.My wife is keen on negative gearing a unit or house, but I would rather stick with the share market.I would welcome comments from your personal experience as to whether, over the recent 5-10 year period, property or shares has provided the greatest return for a private investor.
What you are asking for is investment advice - this is the doyen of investment advisors.Your biggest problem is the you need to disclose to your adviser the income earnt - (relative to tax minimisation plans that you are seeking and serviceability of any loans) - whether PAYE, contractors or self employed (to determine maximum superannuation contributions that are tax deductible) - employer (to gauge wage structure and whether salary packaging relevant) - children (to ascertain future education costs) - cash flow (to ascertain when he can charge his fees).Negative gearing is legal in this country (only country in OPEC nations that it is) however through history one learns that one has to have all other debts paid out first and the structure of the investments (tenants - in - common etal) and borrowings have to be structured to the main income source.Do yourselves a favour and work out your cash flow - assets and liabilities - goals etal first, then visit an investment adviser.
I couldn't agree more with this excellent answer.I also have had similar discussions with my wife recently...and we have gone right off DIRECT property investment in a BIG way...mainly because of several very practical reasons.With computers/internet direct investment in the share market is getting easier and easier (have you read Motley Fool's Investment guide!), where as it seems to me direct property investment is only going to get MORE difficult...consider tenant hastles, oversupply of appartments in the major cities, then you throw in the GST over the top of this, not to mention the recent changes which drop capital gains tax inflation indexation (since when has direct propery investments consistantly risen more than inflation...then you've got the buy/sell costs.. commisions to agents etc which seem to be only going Up(don't forget GST)..whilst share investment costs are going DOWN eg with internet brokers .The biggest factor in our decisions favouring shares though were again practical ones...liquidity and diversification. You pick a bad couple of stocks.. and I've had a few!..what the hell, your only down a few thosand bucks and you can get your money out quickly and move on.. buy the wrong property (discover white ants, tenants from hell, senile body corporates, block of flats goes up next door just after you purchase..etc, etc,) and you've exposed a much larger portion of your total wealth to ONE bad investment decision.Don't forget like me you are probably all ready over exposed to the property market via your home investment.Now I'm no investment advisor, nor share market guru, nor does the stockmarket seem a bargain right now, but to me direct property investment would be potentially a real hastle.If you want to invest in property..have you considered listed property trusts?
I agree. My wife and I tried being landlords a few years ago. Never again. Any investor considering it should have a long talk to an experienced landlord (not a property broker) before committing themselves.
I'll put my two cents in here. My wife and I invest in both property and shares. For the following reasons:1) The two have very different cycles. When shares are in a bear mode the property market takes off (i.e. probably soon). 2) Property and shares over the long term have very similar (average) returns but...2) The real beauty of residential property is that banks (or other lenders) will bend over backwards to lend you money (up to 90%) so the leverage effect is much better.But it is the same old story for both. You have to know what you are buying and continue to learn about the market.There are some hassles with finding a good managing agent but checking out a few agents and keeping a close eye on them we haven't had any problems.Altough the share market is a hell of a lot more interesting!!!Burnso.
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