Shares vs Property
- Thread starter Harro
- Start date
Especially when you can borrow at 5.9% fixed for 5 years to buy blue chip shares with a grossed up fully franked yield of around 8%.
That's no money down, cashflow flow positive from day one, high yield with no expenses.
Is that not the holy grail that property investors dream about!
RC
From experience in investing in both asset classes for many years I really do enjoy the benefits of both.
- the equity growth in property over the last 15 years of my investment life has basically made me rich. I only sold one IP in all that time.
- the yields from said properties have been less than stellar but the strategy was buy in great areas and enjoy consistent long term capital growth and very low tenant turn over, and that strategy has suited me well.
- recent property purchases in US (no borrowings) have provided both high cash flow and high capital gain. Love that too.
- experience in shares over last 10 years has been great as well. great capital gains (I fluked an exit before the GFC and bought back in 2009 when they were cheap). No borrowings. 100% mine. Trusted low cost index tracker fund manager (vanguard). And as I said the distributions coming in quarter after quarter without any related expenses or surprises is a beautiful thing.
I'd hate to be all in shares. I'd hate to be all in property. You can live off everything!
- the equity growth in property over the last 15 years of my investment life has basically made me rich. I only sold one IP in all that time.
- the yields from said properties have been less than stellar but the strategy was buy in great areas and enjoy consistent long term capital growth and very low tenant turn over, and that strategy has suited me well.
- recent property purchases in US (no borrowings) have provided both high cash flow and high capital gain. Love that too.
- experience in shares over last 10 years has been great as well. great capital gains (I fluked an exit before the GFC and bought back in 2009 when they were cheap). No borrowings. 100% mine. Trusted low cost index tracker fund manager (vanguard). And as I said the distributions coming in quarter after quarter without any related expenses or surprises is a beautiful thing.
I'd hate to be all in shares. I'd hate to be all in property. You can live off everything!
The day 2.1% p.a profit becomes the holy grail for me is the day I give up this whole money making caper.
Oscar
You have had a dream run, good for you
Off topic a ... just a little, did you buy properties in Ireland, very curious
Hi MTR. I formally submitted my cash offer but unfortunately the receivers did not accept it. It was kind of a blind auction process. My offer was 400k euros in cash which was the highest offer at the time I put in in writing. It was disappointing as the income stream was over 70k per annum.
The investment market in Dublin is starting to heat up.
The investment market in Dublin is starting to heat up.
Shame, keep pushing it something will happen.
Amazing returns, better than US?? can you secure finance.? I think I will contact an Irish agent here in Oz who is looking at doing the same. Looks like cash flow and growth, does not get any better.
MTR
Try looking at the whole picture that I depicted. One point in isolation is meaningless.
Another advantage of shares is that some of the highest yielding stocks are some of the largest blue chip companies on the market.
Compared to property where higher "off the shelf" yield is usually associated with lower growth and higher risk.
RC
Looking at a March 31st 2014 report yield leaders look to be
- Aust Infrastructure Fd
- Hastings High Yld unt
- Biotech Capital
- Agricultural Land unt
- Ausenco
- Forge Grp (s)
- Delta SBD
- PTB Grp
- Crowe Horwath
- IPE
- K2 Asset Mgt
- Codan
- Chorus
- Ethane Pipeline stp
I'm not comparing it to regular buy and hold property either, imo that is often an average investment too.
I just don't think 2.1% is worth the time, effort or risk.
We all have finite capital and using it to get such low returns doesn't seem like a smart move, at least to me
Nice. A few Irish friends have returned to Ireland to settle down in the last 6 months. They say the economy and housing market is very buoyant.
Very few property investors achieve such a net income return on funds borrowed, most are satisfied with 1%, 0% (neutral) or -1% (negatively geared).
Like I said above I'm not comparing to buy and hold property investments, imo they're often but not always a waste of time and capital too
My point exactly.
If we have finite capital why accept such low net returns from res property.
I've been looking for cashflow pos property with good growth potential for 12 months and still haven't found one yet. I can find slums with 8% plus yield in low growth areas and I can find properties in good growth areas which are negatively geared.
So far I am yet to find the combination of both 8%plus yield in a good growth area with a low maintenance property. I'm not saying they dont exist but they aren't easy to find.
I can find that in the sharemarket tommorow.......
The one big advantage of course is the ability to manufacture yield and growth with property.
Personally, I prefer property for this reason but the advantages of shares still cant be ignored.
RC
Amazing returns, better than US?? can you secure finance.? I think I will contact an Irish agent here in Oz who is looking at doing the same. Looks like cash flow and growth, does not get any better.
MTR
I work here so I can get finance if I wanted to. This was looking to be about 15% net return and phenomenal capital gains. It was a receivership situation. The agent is not able to tell me the highest bidder??
The returns are much better than the US and I liken it to the Atlanta situation maybe in 2012. The real gems are getting harder to find but still out there. I also think Dublin is still much higher risk than the Atlanta market. These are multi unit blocks in the non salubrious parts of north inner Dublin. Income taxes are also relatively high in Ireland - so that's something else you need to take into account if you are not borrowing a whole lot.
You said in your initial post: "Have had Investment Properties in the past. Now it is Shares ONLY after bad tenant problems (not paying rent, damage to property) etc.
So your argument about buying properties cheaply when interest rates rise is HYPOCRITICAL!! You said initially you didn't like investment properties after bad tenant problems (not paying rent, damage to property) etc. BUT when Interest rates rise, you'll buy them...mate, make up your mind...sounds like another D & G poster jumping onto SS to ruin everyone else's property mindsets
Australian Super returns over last 3,5 and 10 years
Hi there
I notice that Australian Super earnt 7.64% over last 10 years for income stream/pension accounts with balanced share option (the default option). Last 3 years is 8.79%, last 5 years is 4.2%.
My basic understanding suggests that if you could salary sacrifice into the Super fund accumulation account, and then convert it to an income stream. Fund pays no tax on earning and you pay no tax on income received after aged 60. And no property related complications.
Hi there
I notice that Australian Super earnt 7.64% over last 10 years for income stream/pension accounts with balanced share option (the default option). Last 3 years is 8.79%, last 5 years is 4.2%.
My basic understanding suggests that if you could salary sacrifice into the Super fund accumulation account, and then convert it to an income stream. Fund pays no tax on earning and you pay no tax on income received after aged 60. And no property related complications.
Someone else controls it
Someone else specifies when you can exit the investment
Someone else changes their mind on the above, or how taxable it is.
Poor way to invest. Especially if you're under 50 years old. Invest directly into property, shares or both.
Another benefit to Super at the moment is you can sell off an underperforming IP and drop in large sums up to $150K per year untaxed or $450K once in three years (don't remember what age limit is). That income stream is looking very property-management stress-free. You can do this with a SMSF too. Something for the 50+ year olds.
