A Good Look on Investing: Property vs Shares

When it comes to wealth, we often see people arguing whether investing in property is better than investing in shares… In Australia, almost 70 percent of homeowners say that they didn’t have any regret purchasing a house and that they would even choose the same path in the future if given a chance. On the other hand, several shareholders also claim that financing in stocks is their greatest deal so far. Which is best? The answer is relative, as it all boils down to your needs and preferences. Here are some of the factors that might help you come up with the best investment decision.

PROPERTY (Real Estate)

Pros:

Proof of Investment

Property is tangible and there is potential to view what you are purchasing before actually buying it. On top of that, you will be able to physically see it and say that it’s PROOF of your hard work!

Flexibility & Stability

Having a place to live in is a necessity. Be it a house, unit or townhouse, housing will ALWAYS be in demand regardless of time and thus making property more stable than share. Aside from that, you can also renovate and ADD VALUE to your property if you want to increase its value.

Cash Generation

In terms of business, you can also always turn your property into a cash generating one.  For instance, you can invest in a rental house or an apartment building where you can receive monthly payment from the tenants. You can use these payments to also pay your expenses and the rest will definitely be your PROFIT.

Win-Win Investment

Fluctuations or changes in market conditions are inevitable. But with regards to property investment, you will not lose everything in here as compared to stock investment. This is because the physical asset REMAINS on the property despite frequent fluctuations in the market. Other than that, you can also take advantage of your property’s value which will most likely rise after some time.

Cons:

Touch-Move Rule

Buying, selling and investing in property is a huge financial commitment. Once you’ve signed a contract and pay an initial deposit, you will be unable to take it back easily in such cases that you’d have to change your plans. Unless it was subject to specific clauses.

Property Maintenance

Maintaining a property is not a very easy task. You may be spending money for renovation, utilities and overall maintenance as well as taxes and insurance, especially if the property is tenanted. If the property is vacant, then you should at least be prepared to have a monthly income to pay for this vacancy rate…

SHARES (Stocks)

Pros:

Buy & Sell

You don’t need a big amount of money when investing in stock market unlike in real estate. Even if you only have as little as $100 to be shared per month, you can already diversify and even buy a lot of stocks from various companies.

Not only that; selling a stock is also as SIMPLE as buying it. If you feel like you don’t want to be a shareholder anymore, then you can sell your shares or your position in just a matter of seconds.

Regular Flow of Income

A successful company means a regular flow of income. With a decent investment, you can earn large profits while just sitting on your couch watching television every  year. Just leave it to the professional managers at the company and they will be the ones handling the business for you!

Quick Loan

At times where you need to borrow money against your investment, worry not, as your loan will easily be approved by the company. Just fill out a form and you’ll already get an access to cash. Or if not, a debt is then created against your stocks and you have to pay a fairly low interest on it.

Cons:

Uncertainty of Success

Due to the changing market condition, there will be times where the company experience an EXTREME fluctuation in the short-term when it comes to stock prices. When this happens, you CAN’T do anything but wait for the outcome. Remember – the success depends on those who are managing the company.

Capital Gains Tax

Although you can easily buy and sell your “share”, selling it will cost you capital gains tax.

Win-Lose Investment

It has been given that TRUST is the only thing you can hold onto when investing in stocks. Aside from it being an intangible asset, there is also a huge chance where you can lose EVERYTHING if the company goes into liquidation. Take note: you are only buying just a PIECE of the business.

Judging from the given pros and cons, property may well be your best investment decision; especially if you’re residing in Australia. The country has a wealthy real estate market and you just have to be careful in choosing the right local agents to help you with your investment to maximise your experience.

If the benefits that come with the Beyond Compare Model sound like a stress free process for you, get in contact with us at 1300 323 473 or info@reval.com.au so we can send a Reval Estate Agent out to demonstrate in more detail how it works.