Property Versus Shares

Investors often face the choice between property and shares when building their portfolio. Let's take a look at some of the advantages and disadvantages of property and share investment options.

Advantages of property investment vs. shares:

  • Property prices are less volatile than shares – house prices are relatively stable over time compared to fluctuations that can be seen with shares on a daily basis.
  • Property has less risk than shares - Property value is less likely to create a loss than shares but then can also lead to a lower return. The quality of the property or share can impact this.
  • Property investment can be leveraged more than shares - you can borrow a greater proportion of your property investment than your share investment.

Disadvantages of property investment vs. shares:

  • With property investment it is difficult to enter the market on a small scale - Unlike shares which can be purchased in units as small as one share, property needs to be purchased as a whole unit which is tens to hundreds of thousands of dollars.
  • Properties have numerous ongoing taxes and expenses - such as land tax, rates, water payments and other ongoing maintenance.
  • Property investment is less liquid than shares – it is a lot more difficult to sell an investment property quickly to satisfy short term cash flow needs.

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