{"id":3153,"date":"2022-07-29T10:45:28","date_gmt":"2022-07-29T10:45:28","guid":{"rendered":"https:\/\/royabhishek.in\/urbanbuyer\/which-is-a-better-investment\/"},"modified":"2022-07-29T10:45:28","modified_gmt":"2022-07-29T10:45:28","slug":"which-is-a-better-investment","status":"publish","type":"post","link":"https:\/\/royabhishek.in\/urbanbuyer\/which-is-a-better-investment\/","title":{"rendered":"Which Is a Better Investment?"},"content":{"rendered":"

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Are you deciding whether to invest in property or the share market?<\/strong><\/p>\n

While at Metropole<\/strong> we are property specialists, we also advocate for diversification, so a healthy investment portfolio should contain an element of both.<\/p>\n

Most successful investors have multiple income streams and are shown to hold and benefit from both asset classes.<\/p>\n

Therefore, this is not an argument to suggest one will perform better than the other.<\/p>\n

This is about my experience growing<\/strong> an asset base and why I think property (residential in particular) has the edge over shares.<\/p>\n

Performance<\/span><\/h2>\n

\"A1\"<\/p>\n

As the data shows, there is very little difference between both Australian Shares<\/strong> and Residential Property<\/strong> over the longer term.<\/p>\n

It is important to remember we are speaking about averages<\/strong> here.<\/p>\n

I know that with both assets that there will be experts that can study, analyse and outperform these markets, or in some cases underperform!<\/p>\n

But, overall there is very little difference in performance and I would suggest that this will be the same moving forward.<\/p>\n

However, when starting your investment journey, in my experience it is property that leads the way.<\/p>\n

So what gives property the edge?<\/p>\n

Leverage<\/span><\/h2>\n

The first factor is being able to leverage more of your own money into growth assets, by using\u2026.. someone else\u2019s!<\/p>\n

With Residential Property, quite often a standard loan will require a 10% to 20% deposit, in the past, it has been as low as a 5% deposit.<\/p>\n

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What this means is that with $100,000 of your savings, you could find yourself being able to access funds that would allow you to invest anywhere between $500,000 to $1 million.<\/p>\n<\/blockquote>\n

You can then purchase a high-growth asset such as property.<\/p>\n

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Conversely, when investing in shares, you will generally be required to come up with somewhere between a 30% – 50% deposit.<\/p>\n

In this case, your $100,000 will only allow you to invest between $200,000 to a maximum of $330,000.<\/p>\n

Regardless of the performance of the asset over the next 10 \u2013 20 years, with a significantly wider asset base, combined with leverage and compounding, it is property that will allow you to grow your asset base and wealth faster.<\/p>\n

Add Value Potential<\/span><\/h2>\n

The next one is fairly obvious but often overlooked.<\/p>\n

It is pretty much impossible to add value to your share portfolio, so you are relying on the market to do all of the heavy lifting for you.<\/p>\n

\"PropertyWith property, it is different though.<\/p>\n

You can increase the property\u2019s value and boost cash flow by either renovating or developing.<\/p>\n

We have a number of beginning investor clients dip their toe in the water and undertake a small cosmetic renovation to increase their property\u2019s value and close the cash-flow gap.<\/p>\n

Our more sophisticated investors take their portfolios to the next level and undertake a development, something that builds their wealth and cash flow considerably faster.<\/p>\n

It is probably more crucial than ever in a low growth, low inflation economic environment to be able to have a bit of a trick up your sleeve, rather than being left at the whim of the markets.<\/p>\n

So which is better?<\/span><\/h2>\n

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I often enjoy the debate between property and shares and watching many get hot under the collar as they promote their preferences over the other.<\/p>\n

When you look into the detail though, there has been very little between the two in overall performance and I would suggest that this will continue moving forward.<\/p>\n

In my experience though, there are two factors that give property the edge when starting out, which allow you to build wealth faster.<\/p>\n

You can leverage<\/strong> more of your own money into the property than you can with shares.<\/p>\n

This means access to funds to invest into a larger-sized asset and when you include compounding and growth, there is a clear edge.<\/p>\n

Adding value <\/strong>to the asset also gives property the upper hand, particularly in a low growth environment.<\/p>\n