Enjoyable read:
I just really like the leverage of property - I'd never be happy to have the same debt level (or even a fraction of the debt level) in shares as I have in property. Someone with more guts than I could achieve exactly the same with shares, but not me.
Fair enough point, but comfort factor does not change the raw numbers.
Comfort factor is, however, one of the most important financial considerations. What's the point of investing if it adversely impacts on your day to day existance?
Great thread enjoyed reading through it. Well when it comes to shares and you have no experience you can get caught.
I went into shares about a year ago and until recently was nearly 50% down on capital has come back a bit now BUT? you still got to pick the right ones.
Question - did you do the same level of DD as you do when buying a property?
Many people don't simply because equities can be bought:
a. in smaller parcels
b. have greater liquidity, so buying is simple
c. have an emotional attachment to the shares which makes it difficult to sell if you don't set an automatic stoploss.
The gearing question is to most interesting. As an investor, you can easily gear 100% into shares, often with capital protection guarantees (ie any loss is covered by the lender). These often attract much higher interest rates than your standard mortgage rate.
Gearing into property is more expensive (once you pay stamp duties, establishment fees, agent fees, deposit etc) however the interest rates are far cheaper. It does, however, have the advantage of a lack of liquidity (no motivation to trade frequently, a major source of capital losses) and a lack of transparacy (imagine if everyone had a giant neon sign on top of their home with the daily price on it. One day up $5k, the next down $6k. Most people would feel as uncomfortable as they do with stocks.)
Property also has the advantage of the ability to "add value", somethign which you cannot do with equities (and no, covered calls don't count, as there are far more effective & lower risk derivative strategies that can be implemented with less capital outlay).
Of course, very few wealthy people I know are totally committed to one vs the other, so the argument in itself may be simply a matter of proportionality rather than the exclusion of one or the other.