Shares vs Property

[Harro]

How am I missing the point. Shares do and will continue to outperform property.
I was hoping to be enlightened from this thread as to how property investors make the same gains as can be achieved from the Stock Market. But, all I have read to date is about people who don't own anything except debt. Owning property in my view is when you have the Title Deeds not the lender!

 

[turk]

As outlined before if correct analysis is done of the Share Market and the correct strategies are put in place you can limit any losses.
As for leveraging, any losses are magnified, to the extent that at times people not only lose their capital but have a debt to service as well. Fortunately, WHEN interest rates rise I will be able to snap up property cheaply from those who can't service their loans, from money I have made from the Share Market. I am old enough to know that rates have risen in the past and CERTAINLY will again.

Your opening post was that you got out of property after having a bad tenant,

Now it is Shares ONLY after bad tenant problems (not paying rent, damage to property) etc.

Correct analysis.
Correct strategies.
Buying cheaply.
Advantages of leveraging.
Disadvantages of leveraging.

Application of the above apply to both property and shares.

Property can actually boom during interest rate increases, suggest you do a lot more research.

 

[turk]

How am I missing the point. Shares do and will continue to outperform property.
I was hoping to be enlightened from this thread as to how property investors make the same gains as can be achieved from the Stock Market. But, all I have read to date is about people who don't own anything except debt. Owning property in my view is when you have the Title Deeds not the lender!

Holding .00000000001% of shares in BHP is not owning the Company.

 

[pieman]

How am I missing the point. Shares do and will continue to outperform property.
I was hoping to be enlightened from this thread as to how property investors make the same gains as can be achieved from the Stock Market. But, all I have read to date is about people who don't own anything except debt. Owning property in my view is when you have the Title Deeds not the lender!

Keep reading the forum bud

 

[perthguy]

Leveraging for shares is very, very risky! What's wrong with using your own capital to buy in the first place? If you realise Shares outperform Property then why invest in property?

How am I missing the point. Shares do and will continue to outperform property.

You are missing the point because you don't advocate leveraging for shares but insist that shares outperform property.

Starting with $100k, I can borrow $300k to buy a $400k property. At 3% capital growth, after 10 years my property would be worth $537k, an increase of $137k.

I use my capital to buy $100k of shares instead. At 4% capital growth, after 10 years my shares are worth $148k, an increase of $48k.

So in property I am making $137k and in shares I am making $48k.

IMO you can't compare a leveraging strategy with a non-leveraging strategy. It doesn't work.

 

[datto]

Shares vs Property

Invest in both - have a finger in each pie!

 

[topcropper]

Leveraging for shares is very, very risky! What's wrong with using your own capital to buy in the first place? If you realise Shares outperform Property then why invest in property?

So it's too risky to leverage into shares? OK. I've done it, but very very conservatively.

You are missing the point because you don't advocate leveraging for shares but insist that shares outperform property.

Starting with $100k, I can borrow $300k to buy a $400k property. At 3% capital growth, after 10 years my property would be worth $537k, an increase of $137k.

I use my capital to buy $100k of shares instead. At 4% capital growth, after 10 years my shares are worth $148k, an increase of $48k.

So in property I am making $137k and in shares I am making $48k.

IMO you can't compare a leveraging strategy with a non-leveraging strategy. It doesn't work.

Yep. Great stuff.

I've actually leveraged into rural farm land, but same story.

As outlined before if correct analysis is done of the Share Market and the correct strategies are put in place you can limit any losses.
Fortunately, WHEN interest rates rise I will be able to snap up property cheaply from those who can't service their loans, from money I have made from the Share Market. I am old enough to know that rates have risen in the past and CERTAINLY will again.

When people start making statements like this, it's probably telling me the sharemarket is reaching a high point. So I've taken note.


See ya's.

 

[perthguy]

Shares vs Property

Invest in both - have a finger in each pie!

Exactly. I have both. And cash. The only thing I am missing is a commercial property. It's still too early for me but investing in commercial is part of my strategy also. I would never have all my funds tied up in one investment class. Never have, never will. Too risky.

 

[datto]

Smart man

Exactly. I have both. And cash. The only thing I am missing is a commercial property. It's still too early for me but investing in commercial is part of my strategy also. I would never have all my funds tied up in one investment class. Never have, never will. Too risky.

Yep, as the saying goes - don't keep all your eggs in the one basket.

 

[perthguy]

Something else to consider is that I can improve the value (and rent potential) of my properties by working on them - renovating. I just increased the rent of one from $330 pw to $440 pw with under $5k in materials. I wish I could renovate my shares to increase their value. They could do with it!

 

[D.T.]

Something else to consider is that I can improve the value (and rent potential) of my properties by working on them - renovating. I just increased the rent of one from $330 pw to $440 pw with under $5k in materials. I wish I could renovate my shares to increase their value. They could do with it!

You could by writing a call on them out of market range?

 

[Intrigued again]

You are missing the point because you don't advocate leveraging for shares but insist that shares outperform property.

Starting with $100k, I can borrow $300k to buy a $400k property. At 3% capital growth, after 10 years my property would be worth $537k, an increase of $137k.

I use my capital to buy $100k of shares instead. At 4% capital growth, after 10 years my shares are worth $148k, an increase of $48k.

So in property I am making $137k and in shares I am making $48k.

IMO you can't compare a leveraging strategy with a non-leveraging strategy. It doesn't work.

I understand your point but there are quite a few exceptions

It really does come down to the shares (company) selected CBA for instants
1991 $100K invested
2001 $819K

Total income today would be around $190K

2004 $100K invested
2014 $418K

Total income today would be around $21K

 

[Harro]

Referring back to your example Perthguy, if I invested 400k in an online savings account for 10 years, I would have the same if not better profit margin than 137k, and that is without risk, or maintenance. Thankfully, I am getting way more than the 4 per cent profit you suggested on my share portfolio. Renovating property is like dividend reinvestment except it doesn't come out of my pocket!

 

[D.T.]

Referring back to your example Perthguy, if I invested 400k in an online savings account for 10 years, I would have the same if not better profit margin than 137k, and that is without risk, or maintenance. Thankfully, I am getting way more than the 4 per cent profit you suggested on my share portfolio. Renovating property is like dividend reinvestment except it doesn't come out of my pocket!

400K at 4% savings account is 16,000 per year, so maybe 160K after 10 or 200k ish to account for compounding, makes 600K.

If you only had 600k after 10 years in either shares or property, you should take up something pathetic like knitting or tennis.

 

[perthguy]

Referring back to your example Perthguy, if I invested 400k in an online savings account for 10 years, I would have the same if not better profit margin than 137k, and that is without risk, or maintenance. Thankfully, I am getting way more than the 4 per cent profit you suggested on my share portfolio.

It's called an example. If that's all you took out of my example, I wasted a post.

Show me how 400k capital non-leveraged in shares outperforms 400k capital leveraged in property to 80% LVR over 10 years.

 

[perthguy]

I understand your point but there are quite a few exceptions

It really does come down to the shares (company) selected CBA for instants
1991 $100K invested
2001 $819K

Total income today would be around $190K

2004 $100K invested
2014 $418K

Total income today would be around $21K

The OP is claiming that capital invested in shares (non-leveraged) will outperform the same amount of capital leveraged in property.

Using your second example, in 2004, I invest $100k (leveraged to 80% LVR) in Cloverdale. The house now rents for $430 pw, or $22,360 and is worth over $500k for a non-development site or around $750k for a development site.

 

[jerrybee]

You can potentially leverage much more using ETO's and CFD's.

The Y-man

Is there a (relatively) cheap way to leverage for shares without the risks of ETO's or CFD's? I've got most of my portfolio in property, with only about 50k in shares. I'd like to buy more but I can't figure out the best way to do that.

 

[jerrybee]

Referring back to your example Perthguy, if I invested 400k in an online savings account for 10 years, I would have the same if not better profit margin than 137k, and that is without risk, or maintenance.

I might have missed something, but in Perthguy's example you don't have 400k. You have 100k. 100k in an online savings account for 10 years won't net you 137k.

 

[D.T.]

Is there a (relatively) cheap way to leverage for shares without the risks of ETO's or CFD's? I've got most of my portfolio in property, with only about 50k in shares. I'd like to buy more but I can't figure out the best way to do that.

Margin loan is safer and cheaper than those. Generally 1-2 percent above homeloans and can go 0-70 lvr

 

[jerrybee]

Margin loan is safer and cheaper than those. Generally 1-2 percent above homeloans and can go 0-70 lvr

Do banks get competitive on ML's? Like if you shopped around would you be able to get within range? Or is it pretty standard across the board to be x% higher than a home loan and therefore there's no point shopping around...just pick any (for the most part)?