Why Shares are Better Than Property

I live the whole share vs property debates that take place.

Personally I think you can’t say one is better than the other. All investments come down to the individuals circumstances, risk tolerance, financial position, time-frame, goals, how active they want to be as an investor, knowledge, income, expenses and the list goes on.

Someone who wants to build wealth as fast as possible without taking huge or speculative risks and has no PPOR may prefer to use property due to the ability to leverage. But if this person purchases the wrong properties in the wrong market they won’t see the capital growth required to buy more properties.

Someone who owns their own home outright and wants a more passive approach might invest in shares/index funds/lic’s Etc. and would be in a very healthy financial position within ten years based on the average income and a moderate lifestyle.

It’s all very subjective and that is why it’s important to seek advice, research and have a strategy to implement.

 

Another reason for shares

With property, you can feel like you are getting nowhere as even after 10 or more years the income is generally very low or even negative still.
Yet with share investing, even if you borrow against property to buy, you will soon see income coming in which exceed expenses.

 

and that $70k is from equity loan. you never used your money and still made 4 times.

 

One more reason for shares is that you can't get sued for owning them
Legal Tip 218: Are Shareholders Liable for the Debt of a Company? Legal Tip 218: Are Shareholders Liable for the Debt of a Company?

With property investment you have to worry about tenants suing which is what happened to a poor landlord of a residential property in:
Lloyd v Thornbury [2019] NSWCA 154
Lloyd v Thornbury [2019] NSWCA 154

 

What's wrong with using rental income to purchase shares? Best of both worlds.
Quite simply one is not better than the other, but coupled they can lead to real wealth.

 

Or dividend income to purchase property!

 

Benefits of depreciation used be a benefit of investing in property - non-cash deductions, but the effect of these have been reduced.

Also these areas are pretty complex - shares are much more simple

Tax Tip 251: CGT and Building Depreciation Tax Tip 251: CGT and Building Depreciation
Tax Tip 252: CGT and Depreciation of Plant and Equipment Tax Tip 252: CGT and Depreciation of Plant and Equipment

 

It seems tax rates are heading down too and these will affect deprecation.
A corporate of 25% may also have some effect.
And the political landscape doesn't look like it will be supportive of the current high levels of depreciation in the future.

 

Almost all these negatives disappear if you buy a lessors interest in NZ from a real estate agent agent.

 

With property there is a risk of tenants using it as a methlab, costing the landlord a fortune.
No such issues with shares.

 

What about OneTel, wasn't this a blue chip stock? Would need to check history on delisted stocks in AUS. Like in property too YI think there would be people buying speculative stocks too?

 

Except its unlikely a share investor has a seven figure (leverged) portfolio of only 4 or 5 different companies.

A pro for property might be that you can make a complete balls up of your investment and live in denial for 10 or 20 years until you actually sell.
With shares you are going to be reminded of your mistakes in real time between 10am and 4pm every trading day.

 

Property gives you more diversification that is the whole point of it, it secures your capital gives another income stream and avenue for growth , while allowing equity to be used to buy shares and give income while also reducing tax.

 

No you couldnt be more wrong. You are the company, you have understand the people running it and their comprtency, shares are more fickle dont invest in a company unless you understand the dangers and potential, you cant build a portfolio with out some understanding. Not much to understand about buying property takes a quick few seconds calculation in your head if it will make money, then buy and forget until finance is required but that is a brokers job to understand how to do that with assistance from your accountant.