6 reasons why investing in property is better than shares
From start-ups and investment bonds to gold and cash investments, when it comes to different types of investment opportunities, we’re not short of choice in Australia!
Depending on what your short and long-term financial aims are, probably two of the most common investment options many of us consider are property and shares.
Yes, we know we’re biased, but we strongly believe property is a better investment option over shares; for starters, everyone needs somewhere to live!
While we can think of lots more reasons why we believe property is a better investment option over shares, here are our top five:
- Easy to understand
Do you know the difference between bull and bear markets? And what’s the difference between and investor and a trader? The world of shares, on-line trading and corporate legalities and structures, is complex.
While there is some terminology to learn in property, generally anyone who has owned a home will find easier to understand the world of property investing than the world of shares.
- A more stable market
While the property market does go up and down, shares are generally more volatile. This is because there are far more external factors which influence the share market than the property market.
This could result in a major capital loss and/or loss of income through dividends if a company you hold shares in enters receivership.
- You can add value
Unless you are running the company, it’s very difficult to add value to your shares in that company. Property however gives you that option; renovating and improving your property can not only increase your rental return, but will also add capital value.
- Leverage for growth
Property comes with the added bonus of being able to borrow against it – potentially up to 80% of its value. Provided you maintain the repayments on the loan, this enables you to free up cash for other uses, whilst still owning your asset. Many investors use leveraging to buy their next property.
The great thing is, ideally the rental income will cover any additional costs on the repayment, so you don’t actually have to dig deep in your pocket.
Compare this to investing with a margin account, ie trading stocks with borrowed funds. If a trade doesn’t go your way, and you suffer losses which will take the account below the broker’s minimum requirement, you may have a margin call. This is when you’re asked to dig into your pocket and deposit more money or stock securities to bring the account back to the broker’s minimum requirement.
- Proven rate of return
Property is a solid investment that has stood the test of time.
Why not look back over ten, twenty, thirty, even fifty years, to get a picture of exactly how strongly property has increased in value over time.
- Tax deductible benefits
From claiming strata fees to maintenance, when you set up your property investment business, there are some very generous tax-deductible benefits to be had.
There are a couple of downsides to property; it is a long-term investment and not a get quick rich scheme, however over time the canny property investor will reap the many benefits.
It’s also good to remember not all properties make good investments – and this is where you ask experts, such as us, to help you make an informed decision.
We’ve helped thousands of people realise their financial dreams through property. We’re local and family run, and we’re committed to making your property management journey as stress free as possible. With over 45 years in the business, we have the experience to help you get the best from your asset. We’re always here for an informal chat to answer questions, so give us a ring on 02 4954 8833, send us an email to mail@apnewcastle.com.au or pop into our Cardiff office.
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