Property vs shares: Which is the better investment?
Property and shares are the two most common ways of gaining wealth in Australia. However, which of these two strategies is more desirable, and which will generate the best returns for your position?
Questioning whether to invest in property or shares is essentially based on multiple factors, including personal preference, risk factors, and return on investment, rather than a question of tax effectiveness (as both can be effective in that sense). Chris Brycki, CEO of Stockspot says there’s no clear way to answer which is best, because it depends which way you look at it. “Over the last decade, the winner would clearly be property, but over a longer period, say 100 years, the result is pretty even between shares and property.”
Similar to other new investment platforms, Stockspot targets millennials, who have chosen to skip home ownership in favour of shares – however funnily enough, 15% of their users are investing in shares as a way to earn money for a house deposit. However, it indicates a trend of choosing shares over property. Is this necessarily the best case scenario for everyone? Let’s take a look at just a few of the differentiating features of the two:
Of course we have a bias towards property here at IPP Australia. Personally, and like many others, we love that property is a physical asset, which you can physically inspect prior to purchase, and if not for an investment, you can live in it. You can’t live in Bitcoin shares (though we can’t speak for the future)
Investing in property is a predictable and solid investment – providing you choose the right property and correct investment process. There’s something to be said about the somewhat blind ‘investment’ which occurred prior to the GFC – but we’re not here to discuss subprime mortgages or housing bubbles. An investment in property requires a solid understanding of your current and future financial situation, and should be an ‘eyes wide open’ process. In addition, a property investment needs to be in the correct area (read our blog for tips about selecting a good investment property). You should invest in an area with a high growth potential, amongst other things, rather than in an area you personally know and love. With the right preparation and property selection, investing in property is a great way to provide financial security for yourself in the future.
If you’d like to get some individual advice about how to choose the right investment property, please get in touch with us at firstname.lastname@example.org, or schedule a call or appointment via our simple booking system.