The last Shares vs Property thread

ASX has just released a report on the relative merits of investing in local & OS shares, residential IP, LPTs, fixed interest & cash, both geared & ungeared.

You can find it here

The bottom line is that Shares & Property performed similarly over 10 & 20 yr periods. So there is absolutely no need for any debate over which is better.

Does that take gearing into account, and price volatility?

... and transaction costs... and taxes...

In short, this sort of comparison is WAY too simplistic.

The last Shares vs Property thread ??!!!!

You've got to be joking

See Change

So if you buy and hold property in an average suburb and don't improve it in any way you'd do just as well as if you bought an average share and didn't trade in any way.

Where's the fun in either of these?

It does get to the root issue with comparing investments.

A serious investor actively improves their investments over time - spending time researching to select the best options (suburb/company) and trading shares or developing property ('developing' including renovating/refreshing/subdividing/rebuilding/etc).

When you compare whether a person buys A versus B investment and do nothing with them for 10 years or 20 years it kind of misses the point.

Cheers,

Aceyducey

On reading the article, it seems tax, holding costs, and gearing are indeed included. Volatility is not discussed.

Yes, it is simplistic.

It does show however that there are good gains to be made in most asset classes over the long term. Note that cash does not perform well.

It would seem that its worth at least thinking of diversification into different asset classes. This should not be a big surprise to most people.

TheBacon

TheBacon said:

On reading the article, it seems tax, holding costs, and gearing are indeed included. Volatility is not discussed.http://www.somersoft.com/forums/images/icons/icon10.gif
Talking

Yes, it is simplistic.

It does show however that there are good gains to be made in most asset classes over the long term. Note that cash does not perform well.

It would seem that its worth at least thinking of diversification into different asset classes. This should not be a big surprise to most people.

TheBacon

Click to expand...

The report is inaccurate as it uses an LVR of 50% when trying to calculate gearing. The majority of investment property owners have a higher ratio. Thus better leverage .

Those who have property will be far more likely/ able to borrow funds than those who hold shares.
The reality is for the average person , which is what the report talks about, property would be a better investment.
Obtaining funds for a 300,000 property is far easier than for shares. If I am wrong please direct me to all sites where I can get such a loan without a bricks and mortar collatoral. Perhaps there are a few but compare that with the hundreds available for housing


I suspect the Property trust Accumulation Index by which property values were measured would perform less well than the residential investor would have.Some , not all property investors add value to the existing property, ie renovate, and then make a killing. These investors would be far better off than the typical Property Trust investment.

some people even buy property in Sydney where people have been killed!!!!!!!!

At the end of the day, is the ASX the best source of independent analysis of whether shares are better than property?

Cheers,

Aceyducey

The comments here are pretty much spot on.

While I'm currently in the pro shares camp, especially now after this last 10/15% drop on the all ords, I think the average investor will do better from property due to the higher level of gearing allowed, and the lower volatility, that allows an investor to sleep better without the worry of a market slump. Someone who was unfortunate enough to pile into shares 2 months ago would think the sharemarket was a nightmare. While I will gear into shares, especially when they are super cheap like 2 years ago, I would never be game to do it in a big way like you would with property. Therefore, property is the winner.

Having said that, shares are now in the historically good value range, and residential property is still expensive despite the current small drops. The All Ords should fly today, hopefully.

My long term plan is with property, as it's always been, just not right now.

See ya's.

I think the main problem is that the stats compare market returns. i.e. the return of the entire share index and the entire property market. Obviously markets aren't totally even: some shares will do better and worse than others, likewise property.

For serious investors in either camp, you want to beat the average anyway, right?

and some shares will do well while the rest go down

See Change

It may be an even race, but with property I can actually change the outcome ( price ) by doing a reno..... You can't do much to a share price......

Just a thought.......

I've done the whole shares thing...... I lost 50k in a matter of 3 days in 2000.... lucky for me that was just profits.... and not my capital....... have not managed to do the same with a property in 3 days......

Freeatlast said:

It may be an even race, but with property I can actually change the outcome ( price ) by doing a reno..... You can't do much to a share price......

Just a thought.......

I've done the whole shares thing...... I lost 50k in a matter of 3 days in 2000.... lucky for me that was just profits.... and not my capital....... have not managed to do the same with a property in 3 days......

Click to expand...

Sounds like you did the share equivalent of buying OTP units . I know several people who have gone bankrupt from property , but am yet to meet one who's done that with shares.

Leverage can be a double edge sword.

See Change

Yet on the ASX site the 2003 Perrin Reports actually says that residential investment property outperformed all other asset classes over the last 10 years....


Perrin Report

Tim say's......

"Yet on the ASX site the 2003 Perrin Reports actually says that residential investment property outperformed all other asset classes over the last 10 years...."


Well, that's not surprising.

Since the March 2003 low, the stockmarket went up by 60% to March 2005. add dividends, and it would be nearly 70%. Take off 10% for the last 2 months, and it's still a big result.

Property has done what in the same time? Up, down, flat, depending where. So shares are now back in front. It's neck and neck.

See ya's.

As singlies in the services we had interminable arguments.
Aussie rules V League
Peanut paste V Peanut butter
Port V suitcase
Mercifully I have forgotten most.

You may be surprised to hear that no side ever "won" these arguments. They are probably still debated today. Equally surprising is the fact that neither side will "win" the shares V property debate. Frankly I suggest the blonde V brunette argument is eminantly more solvable. LOL

So let's just discuss "investment" without putting fences or pre-conditions on it. OK I know it says "Somersoft; Property Investment Forum" at the top of the page.

Thommo

Actually we did have a shares versus property debate at the last CRIN meeting in Canberra.

And the majority of a room full of property investors voted for - you guessed it - SHARES.



Cheers,

Aceyducey

Aceyducey said:

Actually we did have a shares versus property debate at the last CRIN meeting in Canberra.

And the majority of a room full of property investors voted for - you guessed it - SHARES.

Click to expand...

Probably due to the quality of the speakers presenting the case for shares

(Note to non- Canberrans- that was Acey)

Who cares if property is better than shares or visa versa. If you can make a good return in one or the other or both then yippeeeee....

I admit I don’t know a great deal about shares at this stage but regardless other people make good consistent returns from the share market as do people from property. I think the more asset classes the better.

I like property as I can have a direct impact on its value above and beyond what the market dictates (too some extent). I am interested in shares as there are techniques to generate cash flow as well as the potential for good/great capital gains and within a reasonable risk profile.

I think underlying the argument of shares vs property exists fear. When I first thought about buying a property all I could see was a huge loan and that was scary to me. However, once I started to get more educated I realised that those fears and the risk could be minimised to a large extent. It’s the same with shares in my opinion.

Remove the fear and only the facts remain. And in my opinion the facts are that some people can make good money from the stock market, above and beyond what is displayed in the various reports (that means its possible). So then the question is one better than the other (in a generic sense) is pointless. Its like saying is coke better than pepsi.


We all know coke is better


Better to ask will investing in shares or property get me to my goals quicker?

What ever achieves the goal I reckon? The goal is GOD!!

Cheers,
Panda