Shares or Property ? Where to Invest ?
Shares or Property ? Where to Invest your Money…
Marcus Padley – a nationally recognised stock broker and financial commentator – writing in The West Australian recently, suggested property may actually be the better path to wealth creation for most Australians.
- Banks more readily lend
- Borrowing rates are lower
- Higher LVR (loan to valuation ratio) than shares.
“The key advantage of property is that you can put up $100,000, borrow $900,000 and when the property market goes up 10 per cent you double your money,” Marcus says.
Negative gearing has been one of the most lucrative bonus schemes in Australian history. It essentially advantages the property investor or property developer over the rest of Australia’s taxpayers.
No Capital Gains
Your principle home in Australia is capital gains free – unlike many other nations in the world, Australians take for granted that this is a tax-free break on sale. A huge advantage on share investments.
The government will force the banks of Australia to protect investors and owners, property is a core function of the Australian economy. The government will do whatever it take to preserve the property centric economy, no matter which political party is in power.
Property is tangible. You cant live in a share portfolio.
People are driven to be disciplined with gearing. Forcing financial responsibility.
You can always add value to to property, with upgrades to kitchens, adding new floors or rooms. You cant add value and take control of your shares.
As a property investor, you’re likely to experience long-term growth in most scenarios.
1) Supply in the Australian property market is heavily restricted. A mix of red tape, the high cost of developing new.
2) Political policies that keep supply restricted to keep prices high at all levels of government.
3) Our population growth – Australia has to keep immigration high to keep economic growth high.
These factors guarantee (almost) that property prices will always increase over time.
But what about shares?
Despite all the advantages of property, Marcus is still a big fan of the stock market, the risks can be high, but the returns can be very lucrative -“No one can burn your shares down.. It’s also what I do and we should all stick to what we do best(?),” he says.