“I am not disputing how good shares investment can be” that’s not my point you stated
“Which one would have turned out to be a set and minimum management” and the statement is wrong it’s nothing to do with which performs better property or shares, it was the statement you made, you assumed your returns where great with little management, but compared to what.
I have no need find the next Westfield and I certainly do not need luck; there are businesses you and I deal with every day those boring ones no one notices with those low returns that sometimes get really cheap, as I only invest in what one highly praised broker on this site calls the moron portfolio.
So let’s pick another company: CBA (one I own)
Can I understand the business will it be here in 40years I think so not flashy but it’ll do me?
4 Scenarios (rough figures)
If as today you are starting out and require 20% deposit for property.
So instead of purchasing a $500,000 home we were to buy CBA shares.
Remember you have to come up with $100,000
Scenario 1
$100000.00 1991 purchased CBA no reinvested dividends
Today:
Capital: $800,000.00
Yearly income: $34,300.00
Scenario 2
$100000.00 1991 purchased CBA just reinvested dividend
Today:
Capital: $2,300,000.00 approx
Yearly income: $99,714.00
Scenario 3
$100000.00 1991 purchased CBA just reinvested dividend and added the 28K repayments per year as if we would have made for property purchase of 500K.
Today
Capital: $8,500,000.00
Yearly income: $365,000.00
Scenario 4
$100000.00 1991 purchased CBA just reinvested dividend and added the 28K repayments we would have made and also added 50% leverage (only once).
Today
Capital: $13,100,000.00 (double that if Leveraged at 50% every year)
Yearly income: $567,000.00 (doubles that if leveraged at 50% every year)
And if we patiently waited to only reinvest when the market was down the returns would be even better.
Now reflecting your statement “set and minimum management”: (Shares)
1. Saved money
2. Open brokage account bought shares
3. Filled DRP forms
4. Saved money yearly
5. Bought more shares when price was low.
6. Waited for cheques
7. Tax actual got a credit off my own tax.
8. Anytime need cash just add to margin or sell a few shares
9. Nothing else to pay
I can see where all this work would get you down, gee this makes me want to jump into property it must be much easier.
Another point one of your points” You need to borrow money to build significant equity” no you don’t.
Everyone needs a roof over their head, difference how you get there.
Yes because you have worked hard and given up extras in life (retained earnings) you have done well by putting your money to good use (deflated debt or smash it in some periods), but sometimes you have got to think outside the square, and don’t believe everything you hear sometimes it needs to be questioned.
Another one of your points “Yes, in hindsight it all looks crystal clear” The hindsight you talk about is in theory where buy and sell out performs and in theory it does also in hindsight.
You are quite prepared to borrow from them (banks) but not invest in them, last year they where nearly paying 10-11% grossed up; this alone puts you 4 to 5 years ahead of rest.
You could have even borrowed against your equity at 6 or 7% and still picked up 3-4%.
Even a heap of S**t like TLS the income would have increased by almost 13% a year with only dividend reinvestment; unfortunately the capital would have got hammered.
What’s those rental increases give you CPI or what 7% per year (which is possible)
And yes I do own shares in CBA and not WDC as it’s now a stapled security and retain little earnings, and also hold property, but the shares have for years out performed the property even during the GFC or any down turn in fact.
Another of your points” Property investing is not about buying any property in any market or writing off the entire property market asset class just because your neighbourhood has overpriced property.”
Let change a few words
Share investing is not about buying any Company in any market or writing off the entire Share market asset class just because other investors have overpriced the Shares.
As with property when shares are low yield there’s a fair chance the bells starting to ring at the top, and when they start paying over 7% yield there also a fair chance the bell starting to ring at near the bottom
There’s more than one book to read, and as usually most people make it far more technically than it really is, there is no secrets it’s just compounding you want to stop listening to the hype and do your own study before you make rash statements.
Honestly check this out and you realise why people lose money, “Shares are fun. Especially small caps if they take off, however, only if your prepared to loose”. You’d think you’re going to the casino.
By the way, I take the slow but definitely sure way to build wealth without leverage or risk.
Anyway remember buy cheap.
Sorry By the way getting back to the original question as we seemed to have got away from the point some what, I’m with you I think property will double over the next 10 years, at least we agree on that point.
cheers
“Which one would have turned out to be a set and minimum management” and the statement is wrong it’s nothing to do with which performs better property or shares, it was the statement you made, you assumed your returns where great with little management, but compared to what.
I have no need find the next Westfield and I certainly do not need luck; there are businesses you and I deal with every day those boring ones no one notices with those low returns that sometimes get really cheap, as I only invest in what one highly praised broker on this site calls the moron portfolio.
So let’s pick another company: CBA (one I own)
Can I understand the business will it be here in 40years I think so not flashy but it’ll do me?
4 Scenarios (rough figures)
If as today you are starting out and require 20% deposit for property.
So instead of purchasing a $500,000 home we were to buy CBA shares.
Remember you have to come up with $100,000
Scenario 1
$100000.00 1991 purchased CBA no reinvested dividends
Today:
Capital: $800,000.00
Yearly income: $34,300.00
Scenario 2
$100000.00 1991 purchased CBA just reinvested dividend
Today:
Capital: $2,300,000.00 approx
Yearly income: $99,714.00
Scenario 3
$100000.00 1991 purchased CBA just reinvested dividend and added the 28K repayments per year as if we would have made for property purchase of 500K.
Today
Capital: $8,500,000.00
Yearly income: $365,000.00
Scenario 4
$100000.00 1991 purchased CBA just reinvested dividend and added the 28K repayments we would have made and also added 50% leverage (only once).
Today
Capital: $13,100,000.00 (double that if Leveraged at 50% every year)
Yearly income: $567,000.00 (doubles that if leveraged at 50% every year)
And if we patiently waited to only reinvest when the market was down the returns would be even better.
Now reflecting your statement “set and minimum management”: (Shares)
1. Saved money
2. Open brokage account bought shares
3. Filled DRP forms
4. Saved money yearly
5. Bought more shares when price was low.
6. Waited for cheques
7. Tax actual got a credit off my own tax.
8. Anytime need cash just add to margin or sell a few shares
9. Nothing else to pay
I can see where all this work would get you down, gee this makes me want to jump into property it must be much easier.
Another point one of your points” You need to borrow money to build significant equity” no you don’t.
Everyone needs a roof over their head, difference how you get there.
Yes because you have worked hard and given up extras in life (retained earnings) you have done well by putting your money to good use (deflated debt or smash it in some periods), but sometimes you have got to think outside the square, and don’t believe everything you hear sometimes it needs to be questioned.
Another one of your points “Yes, in hindsight it all looks crystal clear” The hindsight you talk about is in theory where buy and sell out performs and in theory it does also in hindsight.
You are quite prepared to borrow from them (banks) but not invest in them, last year they where nearly paying 10-11% grossed up; this alone puts you 4 to 5 years ahead of rest.
You could have even borrowed against your equity at 6 or 7% and still picked up 3-4%.
Even a heap of S**t like TLS the income would have increased by almost 13% a year with only dividend reinvestment; unfortunately the capital would have got hammered.
What’s those rental increases give you CPI or what 7% per year (which is possible)
And yes I do own shares in CBA and not WDC as it’s now a stapled security and retain little earnings, and also hold property, but the shares have for years out performed the property even during the GFC or any down turn in fact.
Another of your points” Property investing is not about buying any property in any market or writing off the entire property market asset class just because your neighbourhood has overpriced property.”
Let change a few words
Share investing is not about buying any Company in any market or writing off the entire Share market asset class just because other investors have overpriced the Shares.
As with property when shares are low yield there’s a fair chance the bells starting to ring at the top, and when they start paying over 7% yield there also a fair chance the bell starting to ring at near the bottom
There’s more than one book to read, and as usually most people make it far more technically than it really is, there is no secrets it’s just compounding you want to stop listening to the hype and do your own study before you make rash statements.
Honestly check this out and you realise why people lose money, “Shares are fun. Especially small caps if they take off, however, only if your prepared to loose”. You’d think you’re going to the casino.
By the way, I take the slow but definitely sure way to build wealth without leverage or risk.
Anyway remember buy cheap.
Sorry By the way getting back to the original question as we seemed to have got away from the point some what, I’m with you I think property will double over the next 10 years, at least we agree on that point.
cheers
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