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7 Reasons to Invest in Property Over Shares

So, you’ve got some savings and you’re ready to start building wealth for retirement. Excellent! Now the question is, where do you invest your money?

So, you’ve got some savings and you’re ready to start building wealth for retirement. Excellent! Now the question is, where do you invest your money?

There are quite a few options to choose from, from property and shares to bonds, futures and cryptocurrencies. In Australia, however, some research has shown that property can outperform shares – both with and without leverage.

Along with performance, here’s some more reasons why investors can prefer property over other investment options.

1. Easier to understand

Compared to other asset classes (think futures, bonds and cryptocurrencies), property is well understood by everyday Australians.

Everyone lives in a residential property of some form – be it a house, townhouse or apartment – and so through your own experience, you understand what other people are looking for when renting or buying a home, and what will be valued in that property.

Not only will you have the knowledge to back up your decisions, but you’ll be more confident investing in an asset that you’re familiar with.

2. A stable choice

Property isn’t prone to the fast-paced stock market highs and lows that can occur within minutes and cause investors huge fluctuations in their wealth.

Instead, it’s more stable and predictable, steadied by its high transaction costs and illiquid market status (an illiquid market is where it’s more difficult or takes longer to sell assets because of their cost or the limited number of interested buyers). You can be confident that your property investment won’t suddenly drop in value overnight (phew!), plus it will also be more resistant to the impact of global events.

3. It’s tangible

Property is a tangible asset – you can see it, touch it, walk around in it. So even if the economy and greater property market did suffer a downturn, investors still own the same physical property.

The tangibility of a physical product also means you can closely inspect the quality and performance of the property prior to purchasing – something that just isn’t possible when investing in shares and other asset classes.

4. Greater control

Property also allows an investor greater control of their investment. If you invest in shares or managed funds, for example, you don’t have full control of how the company is run and how it will invest its equity.

Investing in property, on the other hand, allows you to choose the property, choose the tenant and manage how the cash flows are reinvested into your property and/or your portfolio. It’s you who has total control over the process and it’s you who makes all the decisions.

5. Potential for Passive Income

Passive income is money you earn without physically working for it.

Finding the right property and tenant (the person or family who rents your property) has the potential to provide you with regular income that could increase your monthly income.

6. Government Approved Incentives

The reason the government provides these incentives is to increase the housing supply for both homeowners and renters. These incentives include the First Home Buyers Grant, stamp duty exemptions, depreciation tax write offs or shorter term initiatives like the HomeBuilder Scheme.

7. Other People Pay Off Your Investment

Through the rent you receive from your tenant, as well your eligibility for Government Approved Incentives – other people are effectively paying for your investment!

Despite how much I love property, it’s important to recognise property as an asset class has a number of cons as well:

Higher purchase costs
Larger deposits needed to invest
Generally reliant on banks for finance
Liable for insurance and maintenance costs
Risk of the property being untenanted and no rental income
Higher transaction costs when buying and selling

But don’t let these put you off – I’m here to hold your hand through the process as I’ve done with numerous friends, reassuring and supporting them.

How to get started

If you’re ready to start your wealth-building journey through property, you’re in the right place! For more info on how to get started, check out this article: How to Calculate the Value of Assets I Need to Retire.

In Australia, residential property has historically outperformed shares. But along with performance, there are several other reasons why you might prefer to invest in property over shares and other asset classes, from its tangibility to its more predictable nature.

This marketing material and its contents is provided for general information purposes only. No part of this marketing material constitutes any advice (financial, tax or otherwise), recommendation or representation to you as to any decision which you should make. You should not use any part of this marketing material to form the basis of any investment decision made by you. Before making any investment decision, you should take independent advice from a professional adviser which takes into account your individual needs and circumstances. All information, opinions and estimates contained in this marketing material are subject to change without notice. We disclaim to the greatest extent possible all liability whatsoever for any loss howsoever arising directly or indirectly from this marketing material or its contents.


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