There's a few threads suggesting that property investment is speculation...
Where does the distinction between investing & speculating ( & gambling) lie ?
Or is the distinction between investment and speculation dependent on the amount of cash put into the deal ? Would it make a difference to the above if the investment was 100% funded by cash or 100% borrowed funds ?
Or is the distinction something more abstract like knowledge (and therefore probability which leads to an expectation of gains) ? eg expert knowledge of the market for search engines, or inside information about a dot com firm, or excellent research & experience of a particular suburb or share market sector ?
If you negatively gear a property you are speculating on future price or rent growth to make a profit in the future
Where does the distinction between investing & speculating ( & gambling) lie ?
- Buying Google shares 10 years ago - they didn't make a profit & paid no dividend, but there was an expectation of a profit in the future
- Buying dot com company shares in 1999 - they didn't make a profit & paid no dividend, but there was an expectation of a profit in the future
- Buying Berkshire Hathaway shares 50 years ago - they never pay a dividend, but have had spectacular capital gains
- Buying a +ve geared property today with the expectation that the income would continue to cover the costs & produce a profit
- Buying -ve geared property today with the expectation that the income would increase over time to cover the costs & eventually produce a profit
- Buying -ve geared shares today with the expectation that the dividend would increase over time to cover the costs & eventually produce a profit
- Buying gold that is guaranteed never to produce an income - the only expectation is for capital appreciation
- Buying a lotto ticket ?
- Buying all the lotto tickets (i.e. buying every single number - this happens when the prize has accumulated to be worth a lot more than the cost of buying all the tickets) ?
- or something else ?
Or is the distinction between investment and speculation dependent on the amount of cash put into the deal ? Would it make a difference to the above if the investment was 100% funded by cash or 100% borrowed funds ?
Or is the distinction something more abstract like knowledge (and therefore probability which leads to an expectation of gains) ? eg expert knowledge of the market for search engines, or inside information about a dot com firm, or excellent research & experience of a particular suburb or share market sector ?