Why Property is Better Than Shares

From memory they had quite a number of managed funds and different products that tracked different indexs. I don't think the term etf was invented at that stage. Could be wrong though. I'm also not sure but I think when they folded, all of their managed products also folded, that is investors couldn't redeem their investments.

 

What type of account do you open with a corporate trustee family trust to access these rates, an investor account or small business?

 

You could use ETFs as a base (eg 50 % of your total stock allocation, and then have the other 50 % as seperate stock picks), or whatever mix you like.

 

I would recommend you give them a call and ask all your questions, that way you will know best what suits you and what doesn't. I opened small business account.

 

Interesting to note, as of this morning:

Why Property is Better Than Shares has 2632 views

Why Shares are Better Than Property has 1865 views

 

Of course you'll get I had to borrow the money.
if you change yours to initial invest of $2.5K
add $5.2K per annum ($100 a week first year)
increase the add by roughly inflation 3.5% annually
In use a 25% Margin loan (I haven't ducted margin interest, but the fact the share price only goes up would counter that)
quite a different outcome

 

And I didn't notice they are two separate threads

 

But it is a property forum so I think that's logical?

 

ah, the age ol' question.

simple answer: one is not better than the other.

one might be better for certain individuals than the other though.

both have advantages. both have disadvantages.

it does not need to be a binary decision. i.e., you don't have to choose one OR the other. you can invest in different asset classes, heck, its advisable to do so!

discussion over.

 

The keithj Interview

 

Posted July 2007.....those were the days.

 

Well, not really discussion over. The two threads were created to explore the advantages and disadvantages of two asset classes: property and shares.

The reason the threads have been created is an increasing number of people, who thought they were going to retire on rent, have realised that actually, the amount of property that needs to be held to generate a reasonable income from rent is prohibitively high. I was always thought I was going to retire on rent. I will give you an example.

I bought a development site in Perth for $465,000 in 2011. At the time I purchased it was rented for $320 but was basically uninhabitable. Based on comparable, but renovated, properties I figured it should rent out for $400pw. I also figured I could build a townhouse out the back for around $300k which (at the time) would have rented for $640pw. So from one property I would have $54,080 per annum rent (before expenses), well on the way to my $100k target.

In 2017, the renovated front house is rented out for $280 pw and the townhouse I am building will rent out for $460 pw if I am lucky. My $54k has dropped to $38k, before expenses. Not ideal.

The other issue is expenses: land tax, council rates, water and sewer, landlords insurance, building insurance, PM fees, repairs and maintenance, etc can eat up 30% to 40% of rent. That dream of living off rent seems a very long way away. Besides that, I don't really want to deal with maintenance requests if I am travelling overseas. I would prefer something more passive later in life.

I am thinking that ETFs could provide reliable dividends with a lower risk than direct shares (IMO).

The main take outs from these threads has been:
- it is easier to buy property with leverage
- capital growth in property can be strong if you buy at the right time in the cycle
- with property you can add equity through renovating and/or building

So build up a solid property holding first, then borrow against the property to buy listed securities such as ETFs.

 

I must say I have largely been converted to shareism. But I think property still has its place - mainly as a main residence and a future main residence.

You need 2 because you can sell the temporary main residence CGT free and then move into the other.

 

Direct shares, ETFs or LICs? Or a combo of all 3?

 

Oh yes, never any direct shares. I have been investing in ETFs, may consider LICs in the future though.

 

I must say, i've enjoyed these 2 threads... in the thread espousing the benefits of shares you see people defending property as an investment. In the thread for property you get people pointing out the benefits of shares.

Great food for thought in both threads, all conducted in a respectful, polite manner too.

Great work PC'ers.

 

For those of us on lower incomes, who are prepared to renovate and develop, property can be a good way to build up capital to invest in shares. That's what I am working on anyway.

 

fair enough. I must admit, I didn't see the 2nd thread before I posted. apologies.

 

You can't value add to a share, but you can do a lot with property.

 

It's a work in progress! The next thread will be: why property and shares id better than property or shares. In my mind I have a vague idea how it will work but need to do some modelling. Also, I have no idea how the property vs stock market cycles vs counter cycles work.

For example, I am working on holding an unencumbered IP in Perth worth maybe $600k by 2018. Lets say Perth booms in 2020 for a couple of years. That's a good boost to my property value.

What would happen if I borrowed $400k against the IP and bought (for arguments sake) VAS. The dividends would cover interest payments so all good from that point of view. What I am wondering is if I can expect good capital gains? There is no point investing at that stage of the cycle if all I buy is a lost decade of growth. I would be better off buying more property in Perth because the market has started moving. Obviously no one has a crystal ball but this is what I am grappling with right now.