I have been having debate with a friend. He believes investing only stocks. He believes property market will crash or fluctuate, and will not give the same returns in the coming years. Where would you invest your money now?
Do You Rather Invest in Stocks or in Properties Now?
chrismatt on 21/01/2022 - 17:03
Comments
@MrMarket: It is easy peasy for people that DCA.
Load the account with fiat money and set an automatic buy every day/week/month regardless of the price.
Grab a 🍹, 🪑, sit on one's 🙌 and enjoy.
@rektrading: You can DCAs and do whatever with your strategy I am not saying it is bad, it is your strategy, and it best suit you so I can't comment
I just highlight the price you paid and for what asset is very important and that what determined your investment return
@MrMarket: If the interest rate goes up and property prices drops, won't it hurt 20-30% of the market, and could push banks to lose money. Neither the govt nor the banks wants to do that isn't it? They might either stretch the loan tenure or give some holiday to rescue themselves? Just like how they did since the last 2 years, can Govt can print free money and support banks/people?
@chrismatt: Those are just my opinions and highlight the point of being overpaid for any asset
I am not predicting house prices will drop 20-30%, it may or may not, I have no ability to predict what the market will do. I just go with the flow and timeless money principles that have been around since human walks the earth
It isn't necessarily either/or.
You can of course buy Shares in Residential, Commercial, or Industrial Property Trusts, the latter of which usually have quality long-term tenants and solid reliable yields.If you prefer not to then maybe you should even avoid companies that sell Building Materials and Bunnings etc.
Imagine having 0% of the Property upside.
I've been curious about that but it appears Residential trusts are a very small part of the property trusts mix in Aus (as commecial entities can't access the tax treatment of residential properties and are priced out). That's one article I read recently on the topic.
As you point out you can get at it indirectly or go commercial/industrial.
No residential REITS in Oz, and i don't think there should be.
Can you imagine how f****d it would be if billion dollar funds were going around buying up homes?
Commercial and industrial properties fair enough as this is not for living in, alot more expensive and not within the average ma and pa's appetite.
Are you talking about REITs?
Recently sold property to invest in shares. Was paying land tax (in Victoria) which was eating away at the capital growth.
Had that property for 6 years and the land tax alone was about 30% of the properties (estimated) yearly capital growth.
Bought shares when everything was down and already made 40% capital growth vs about 6% on that specific property.
Haven't sold all my properties to invest in shares and likely won't to keep diversity.
This sort of stuff isn't talked about enough in constant media spruiking of property investment. The costs involved are large and yet all you hear about is the buy and sell price.
In my line of work I regularly get to review financial statements of self managed super funds that have borrowed to invest in property. Quite the eye opener when you see all of the costs laid out like that and the actual returns which are often terrible.
Sorry can I ask what you mean? If I buy a property at with $1300 repayments a month but get $1000-$1200 in rent (regional), factor in $1600 rates, $1000 landlord insurance, $1000 (water?), maintenance depending on the house but if it's fairly maintained then there's not much. It seems for the most part, the house is being paid off. I think I know more set and forget investors than not.
In your hypothetical the gross rent doesn't come close to covering the costs. I think to progress the discussion you need to clarify what you are outlining and whether you have consistently listed your costs on a monthly basis or not to match your repayment figure.
There's not many properties around these days where the rent would match the repayments and where they do exist it's usually at the expense of capital growth.
@Brianqpr: A few places in regional Vic are still like that and the capital growth has been insane… I'm also possibly thinking of buying it as my PPOR for the future but I just don't want to live in it yet.
The ones that bother me are the SMSFs buying property interstate in these new townhouse developments -crappy little boxes surrounded by other crappy little boxes that are not going to show any capital appreciation for years. Assuming they can get a tenant (they're competing with 80 - 90 similar units in the new development) rent may just cover repayments but then with rates, body corporate fees etc they're relying on SGC to cover costs. So basically their funds are going backwards each year, unless they're throwing their own funds in, on the hope of a capital gain that may take forever to realise.
Makes absolutely no sense to me.Yes I've seen to much of this and some people lose a lifetime of super savings by doing it.
@Brianqpr: Yep! And they can have ASIC asking questions around their investment decision, when the bulk of the SMSF funds are invested in the one place - how do they justify? I don't get it.
And then you see the ones who start up an SMSF, pull their money out of their industry fund, and then leave $500k+ sitting in an at-call account…. wot.
Was in shares until Xmas. Came out and sitting tight until corrections come through. That and incoming earlier than expected rate rises, I have no real plans to move in the next 6 months.
prolly in a RAT manufacturer
too late now, I suggest in CAT
I wish I had money to invest.
Try Raiz micro-investing.
Don't forget to use referral sign-up
bank is there for you, one way to another
Stocks of course. Chicken/beef stocks specifically. I keep mine in large freezer.
"OzRecipes"
if you're actually 'investing', time horizon 5+ years, either is fine, comes down to personal preference.
If actually speculating, go crypto :D
Properties and Stock Market a bit too hot for me right now, I keep what I have but I got cash in the offset account waiting for a few interest rate hike
to see how the market going before I put more money to it
Looks like it is a crypto buying party about to kick off!
Wall Street is still sleeping after a nice damp. Let's see in a few hours to see if they can pamp the price up to max pain at $43,000.
A bit of nudging, poking, pushing and we'll see some nice cliff diving.
S&P 500 NOTCHES LARGEST WEEKLY PERCENTAGE DECLINE SINCE MARCH 2020
DOW SUFFERS BIGGEST WEEKLY PERCENTAGE DROP SINCE OCTOBER 2020
RUSSELL 2000 WEEKLY PERCENTAGE PLUNGE BIGGEST SINCE JUNE 2020
S&P 500 CLOSES BELOW ITS 200-DAY MOVING AVG FOR FIRST TIME SINCE JUNE 2020
https://twitter.com/DeItaone/status/1484632514618699781?t=3w…
Enjoy come Monday morning.
This sounds like a closing down sale!
It's a 🔥 sale.
Should be cheaper on Monday.
the day after 911 I happened to have an existing appointment with a financial advisor
still shell-shocked, I was stunned when he said 'I hope you bought shares yesterday'
I was horrified - 3000 people killed, and you say I should have bought shares !?!?!?
only in retrospect, after I had calmed down, I realised he was perfectly correct
https://www.forbes.com/2009/02/23/contrarian-markets-boeing-…
https://www.investopedia.com/articles/financial-theory/08/co…still shell-shocked, I was stunned when he said 'I hope you bought shares yesterday'
I was horrified - 3000 people killed, and you say I should have bought shares !?!?!?
This is why emotional traders rekt and stay poor.
There is nothing wrong with feeling sad, angry or scared but do it elsewhere. The best traders are cool blooded mofo that don't mix emotions with trades.
Monday will be a bloodbath on the ASX
Doesn't change the fact that investing in the new renewable economy (mining, batteries, EVs) will get greater returns over 1 to 5 years.
Small cap miners are the most volatile stock you can buy, so bigger market corrections are water off a duck's back to me. The returns are awesome though!!
I've had PLS on my watchlist since 2016. (profanity) kicking myself for not betting on it with a grand or two back in 2016 or 2017.
Are you investing in renewables? What renewable trades are you looking at? I've been looking for a renewables ETF, but alot of them only have less than half the stocks as renewables.
Have you seen CLNE?
Let is bleed some more to rekt the paper hands.
https://finance.yahoo.com/quote/CLNE/
Pick up when they're in max pain for cheap.
No, but I will have a look at it, thank you.
I trade directly.
Buy nickel, copper, cobalt, manganese, lithium, graphite & rare earth small cap miners.
Make sure to thank me later
RNU 👌🏼
Your friend knows what they're talking about. Unlike shares, property prices will fluctuate.
thanx for the snort !
Think of exchanging the uncertainty for more reward. Whenever something is more certain, your return will be more moderated.
But whenever someone tells you they are super confident, I'd take a step back and be extra cautious. The hidden risks are usually more dangerous than the known reward.
Where to invest depends on what your goals are? Time horizon etc.
Property ETF’s could be the best compromise. Also the Japanese market is way undervalued. Warren Buffett has been investing there. There is a way to do this on the ASX with HJPN.ax. It’s an ETF. One of the safer harbours in the share market scene especially long term. There is so much speculation about bubbles and inflation. Taking a cautionary approach is best right now. We are back to where we would have been share’s value-wise since before the Covid crash and we still have covid so expecting things to keep going up in any market is not a good strategy. Having said that there are opportunities there and bullet proof stocks like Apple and Amazon. If you are not versed in the world of investing get some proper advice. And PLEASE keep away from anything crypto related. That is not for the faint hearted.
Interesting info. I'll look into this.
31.2% of the EFT is heavily weighted in Consumer Discretionary. looking at the global economic outlook, discretionary could be effected everywhere.
Crypto moon or bust you cowards!
So bust
Shares, index funds essentially. From this thread I've learned that apparently this was the worst weekly loss on the asx in 14 months. I feel nothing about that. I'm very long term focused. 2020 saw significant value wiped off at certain points and I felt nothing about that. If you can't handle that then shares probably aren't for you (and there's no shame in knowing that and acting in accordance).
Property is an attractive option, particularly given the favourable leveraging conditions and favourable tax treatment. There is a high barrier to entry though which is what keeps me out (beyond the wealth I have invested in property via my PPOR). I'm thinking about it over the next year or two but undecided.
Property ownership has risks as far as cashflow and maintenance costs are concerned. I’d for example you were buying a house and renting it out there are many incidental costs such as rates, insurance as well. It’s not all about capital gain. Commercial property is a better option but again there are pitfalls so ETFs here work out safer.
I think it's only one of those things that a good investment if you have millions lying around.
Residential prop isn't as good as it made out to be, you really only make serious money in an extremely hot market
as the cost of holding and all the tax and insurance and tenants headache negates most modest growth and if it
not growing it like endless money pit of expenses.good to have a PPOR and maybe a properties or two for diversification but return not worth the hassle
Sorry to ask an ignorant question. What is PPOR?
Principal Place of Residence (basically your home), as opposed to Investment Properties
PPOR is also a good investment, it tax-free so if you got the money you can keep upgrading to a better bigger home and better suburbs and all capital gain is tax-free when you sell to downsize and retire.
lot of ways to slice and dice with investment no need to go speculation, you get rich slowly and safely
@MrMarket: Buy a dump, fix it up in your spare time while you live there, sell for a tax free profit and repeat.
@JIMB0: nice, I am not good with DIY but I am good with investing and get good return so I keep upgrading my PPOR and park money there tax free as part of my strategy
I was looking at a property in regional Vic (towards Traralgon) as possibly a PPOR but not living in it for at least 3-5 years. I'm concerned about:
Air quality and new lead smelting factory going in
Powerplant job losses
Buying at the peak, the price has almost doubled in the past 2-3 years…
Heaps of land between Melbourne and that region keeping prices down.
Either cooling down market or just a blipFor:
Being wrong and priced out again lmao
I'd be looking at Traralgon, Churchill, or Morwell.
I grew up down that way.
You're right to be concerned about the workforce being skewed towards coal power stations, most of which will close in the next 15 years and the gov still hasn't put a plan in place to transition workers.
The lead smelter probably won't help the situation. Plus a lot of workers have been exposed to asbestos from the power stations, their homes and other buildings.
We bought regional 5 years ago prior to our bub arriving. I could have bought down in the Valley to be closer to my family, but choose Ballarat instead because the heritage, local economy and proximity to Melbourne.
If you're thinking of buying out that way, you should look a Bunyip, Drouin or Warragul which is closer to the city and further from the power stations. Eventually the city will expand to there.
But in terms of living, Traralgon seems much better in terms of amenities and all the other places are way too expensive.
You could always look a little further afield. Like Sale? It has the RAAF base and longford, plus it's closer to the beach if you're into fishing, etc.
Bitcoin…
Just purchased my first investment property, tenants will cover the entire rent with change left over. Also steadily investing into ETFs.
good stuff and good luck
wait for a few rate hikes, a tenant from hell, stuff breaking, forever rising land tax and insurance and come back and tell the tales :-)
If you don't mind me asking, where is this property that you bought ?
Ingle Farm SA
Meanwhile is the billionares' club: Hey Elon mate I need to offload some doge, can you tweet a one liner about it please?
Elon: No problemo. "Doge sounds like a good investment now"
I've historically done better with stocks, lower entry point and minimal ongoing cost. I own property but wouldn't consider buying right now. Maybe if interest rates go up and the market cools I'll buy another property but abit hot for me.
For how long?
10+ years definitely stocks. They traditionally return 10-12% p.a. Property capital growth is 4-5%.
If you don’t have a mortgage, then get one. If already got one, don’t overextended yourself.
Don’t look at short term fluctuations like this week or the past year. It’s literally just noise.
Property seems to have given exceptional returns since the last few years. It has doubled pretty much. Speculation is that if the interest rate goes up, the govt could bring migrants to prop up the market again. Can it still give the same returns? Some properties in sydney seem to have yielded 30% P.A. Is this just only for the time being?
no. 30% gain every year should be expected in the residential property market
Don't know if sarcasm or serious, lol
The case for property isn't so much about the actual % of capital growth but rather using the expensive cost of housing as a leverage to gain more in absolute term despite a lower %. This works well especially when interest rates are low, allowing rent to cover most or all of the loan interest.
Exactly. Most banks don't bat an eyelid at average Joe borrowing heavily for an investment property. Ask to borrow the same amount for "some shares" and see how far it gets you?
Yes that is true. Hence my second sentence.
If you don’t have a mortgage, then get one. If already got one, don’t overextended yourself
Reserve cash now. Looks like a huge wave of knives falling. Economic outlook does not look very good.
Property is better in the long term given that Australia's fiscal and immigration policies are focused on raising housing prices as much as possible and you can be highly leveraged, but that means you can gain or lose a lot in the short term. If you're expecting a price correction, it would be best to avoid.
Have you guys ever heard of Enef Teas?
If you have the luxury of deciding whether or not to invest in more properties then you can probably afford to ride the waves of volatility
In the long term, the stock market and property are safe bets. Neither are short term plays so what happens to the markets in the near future shouldn't really matter
Web3.0
stonks!!!!!
Stocks fullstop.
I'd rather have the value of my assets constantly evaluated minute by minute by the whole market including financial professionals for free, rather than at cost and once every 10 years by some 20-something year old prick with too much hairgel.
Unfortunately for leverage though… has to be property.
Like game stop shares and the etf bubble we've probably created
Gamestop: That's called gambling, not investing, not relevant
ETF bubble: Just because you join two words together doesn't make it a real thing - there is no evidence of an ETF bubble.
If rates by any decent amount, not saying they will, will make bonds and cash more attractive and quickly pop the etf bubble monetary policy has created.
@lowlifesphere: It's just not that simple - there may be no bubble to pop, depends on what happens with inflation. Also then why would that specifically be an ETF bubble? It would have nothing to do with ETFs specifically?
You're right, it doesn't make it a real thing. But I've always thought investing was about looking at the companies balances and future projections/growth. Yet everyone is just seems to chucking money in blindly.
@bkhm Perhaps, but in a market economy it all evens out in the end. If you want to look at things at the very, very macro level though, consider the last 100 years of innovation. Consider what was not around 20 years ago from today. Think of all the value that has been created. The last 10-20 years of human innovation probably quantitatively outweighs the last 100, easily.
That is what is reflected when you look at a market index graph.
Is it overinflated right now? Who knows, I don't care, I just keep putting money in because over time I believe we will continue to create value at a higher exponential rate.
But I've always thought investing was about looking at the companies balances and future projections/growth
If you are a stock picker/trader it is, but if you just invest in index funds it is basically just asking one question: Do I think our economy will be worth more, in the future? If yes then you chuck money in and it will track the economy.
@Scantu: depends on the etf, if you are focused on value stocks should be fine in high inflationary environment. If your etfs are momentum and growth based might have some trouble for the foreseeable future. It’s more a stock bubble than an etf bubble it’s just that with low rates there has been a big move from personal savings to etfs in the last 2 years which as pumped the market up. If interest rates rise growth based low dividend paying stock prices will fall, look at market reactions in the last week with central banks only talking about tightening, not actually tightening.
@lowlifesphere: I should clarify, when I say ETF I assume we are referring to broad market cap etfs. "Theme" ETFs are memes and I'd never touch them.
look at market reactions in the last week with central banks only talking about tightening, not actually tightening.
Pricing in the movement though no?
You're right, it doesn't make it a real thing. But I've always thought investing was about looking at the companies balances and future projections/growth. Yet everyone is just seems to chucking money in blindly.
Yet everyone is just seems to chucking money in blindly
You can apply that to property as well
@[Deactivated]: That's one way of looking at it. But you never sell your home you live in unless you downgrade. But with stocks you can always sell part of your holdings.
You see retirees living in million dollar homes but live like a pensioner? Or would you rather have a million dollar super fund?
why not both?
This is a silly debate / picking one instead of the other is just handicapping yourself by exposing yourself to the returns of only one market or advantages of only one.
Both are pathways to wealth, and how you balance them should be based on your personal circumstances.
Advise for someone 65 years old with heaps in super is going to be opposite to someone 24 years old with 3 kids working 9 to 5 earning 50k with no savings.
For me 30 years old no kids, average salary, 50% aus property 20% international stocks/bonds 30% cash in an offset, why because I want to leverage from the property market to get more property before focusing more on stocks while building a small business.
If you want maximum expected returns, looking at your own circumstances and designing what works best for you is heaps smarter than just picking one market hoping to get an extra 1% over the other markets or trying to avoid a crash.
Instead expect market crashes, increases interest rates and plan around that by choosing diverse investing paths with safety nets, advantaged to your own personal circumstances.
I keep an IRR spreadsheet of my investments - internal rate of return, based on cash inputs, and expected cash if sold
my property averaged 19%pa over 30 years, 18% over 16 years, 12%pa over 20 years, my home 5%pa over 25 years.
my shares averaged between 1%pa and 15%pa, and some have gone out the back door (sold with capital loss)
ETFs I bought last year after sale of a property grew 33% last year, before dropping 10% this month, still up 23%
Doomsayers predicted eleven on the last three recessions, so I dunno - place your bet, and see which way it goes.
Bullshit walks, and Money talks - some says 'goodbye' - better to find a 'good buy!'
It won't matter. We are on the cusp of something huge. With the widening wealth gap and largening inequality between the social classes we are seeing much social unrest and inevitable revolution on our hands. History has shown society is incapable of tackling many forms of inequality peacefully and the system will be overthrown.
We will see a Marx future where capitalism will inevitably collapse, the workers of the world to unite and seize political power, then forge a stateless, classless society of perfect harmony will be formed. This future is inevitable and coming sooner than most think
@rektrading: easy-peasy buy low sell high right, good in theory in life it a lot more complicated than that
most people don't have endless supplies of money where they can just keep buying
even if they do depending on what they are buying, if it is speculative stuff it could go to zero and you are in a world of hurts
with big purchase, one wrong move can literally takes you backward for decades, the classic example would be properties
if you buying properties at the top, and it drop 20%, 95% of the people don't have the fire power to buy more because they more likely to be in negative
equity position and banks probably want to talk to them rather than lending them more.
I actually know someone who bought properties in mining town during the mining boom at the top
then 18 months after they bought, mining boom over, no one is renting the property, properties was in decline for decades
and it drop up 70-80% at one point and it has not even recovered to that price today
during the boom at peak 2011-2012 average price 700-800 today average is 250-350
10 years later and it still hasn't gone back and it not even at 1/2 price.
Now this case is extreme but does happen to some people so
how much you paid and for what asset is very important.
the current young generation that ride on mem stocks, crypto they have not been test by a prolong market down turn yet
when that time come, asset that generates good free cash flow, earning and what make something an investment
grade will be the envy of many because the market only reward those type of business.