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
Australians don't have any guns.
We have more guns currently than before the 1996 buy back.
Didn't Australia destroy 100,000s of guns? Are you saying they bought more after going to all that trouble?
@rektrading: Yes, that's exactly what @Optomist Prime is saying.
The radicalization of guns is, sadly, not exclusive to America. We also have a "Shooters and Fishers" party on the Federal ballot for a reason.
I would hazard a guess and say they're mostly in FNQ and NT but, that doesn't mean it wont affect the average citizen in Melbourne or Sydney etc.
@Carmen Sandiego: So the North can protect themselves while city slickers are screwed when war breaks out.
@rektrading: That's basically it.
I enjoy reading the updates on the TVTropes Australia page.
As a related side note, hardly any country wants to actively start a war with Australia since we are one of the few countries who can make devastating weapons in less than 6 months if we truly wanted to.
What are you talking about? History has shown that inequality persists through time and that classless society is impossible.
Yes, but how many politicians do you think actually read anything history beyond year 9 in high school?
We are doomed to repeat the past because the people in charge refuse to open a freaking high school text book, and instead, go flaunting their ego.
Property
Currently invested in both. I don't think I'd look at another property at present, but am planning on picking up some more shares in the defensive category in the next week or so. Just waiting a bit to see how far the prices drop. I took advantage of the drop in April 2020 to top up my holdings and am hoping to do it again in the coming week.
As always, depends on your horizon. If you don't need the money back for 10 years, then if you are just stuffing all of you cash into your matress then you are definitely going to suffer a significant opportunity loss.
Do You Rather Invest in Stocks or in Properties Now?
Depends on your investment strategy.
Regional residential property would be where I’d park money. Block of flats in somewhere like Wagga or Albury. Rental vacancy rate is on the floor. Purchase price is dirt cheap, rents are ok. Great ROI.
Purchase price is dirt cheap, rents are ok. Great ROI.
What about capital gains/losses ?
Not bad, you won't see the growth you see in Sydney for example but that's not the name of the game - it's like buying Tesla vs something for dividends.
For example re the flats in Albury, you might buy a block of four for 650-700k now, five years ago you would have probably only needed 450-500k would be my guess. The individual would have to research each market to see what the future might hold, but in a solid regional city with employment prospects and population rise, I see no reason why you would lose value.
In general, if rental returns are good, then capital gains are bad…
What are tenants like in regional towns compared to cities?
Are they more/less/equal likely to
- default on their rent
- stay for long term
- damage propertyWas looking at property in a city but yields are so low.
I've read vacancy rates in regional towns are low. I'm just concerned this won't continue long term.
Vacancy rates in some regional towns are low now but will change going forward. In others I would suggest they will stay very low. Medium density and high density properties are hard to come by but are in high demand among renters. If you find a regional city (i.e. Albury) with strong employment prospects that isn't shrinking in population I don't see why you'd have an issue with vacancy rates changing. AFAIK they have been extremely low for at least 5 yrs in Albury, for example.
As for your other points I can't say, but you'd find discrepancies with those in the Sydney submarkets anyway, for example, so it's hard to rule out regional vs metro based on those factors alone. I would guess that you'd have long term renters more often. The other two, really hard to say. If you're in the bottom of the market in Sydney I think those issues would be worse than anywhere in the regional market.
Thanks for your insight.
What do you consider medium density in a regional town? A Townhouse? What about house on 800sqm 3km from the main shops?
My (incorrect) thinking- the only reason I'd buy/live in regional cities is to get away from people so I'm thinking acreage! haha But makes sense that some people don't want to the hassles of a ride on mower so would prefer medium/high density .
One reason why I'm (rightly or wrongly) hesitant of investing in regional is that generally it's a lower socioeconomic class (sorry if that offends anyone, but ABS income doesn't lie) and therefore I may get a higher than chance of damage/rent default. I also agree that in each capital city, you'll also get areas which you won't walk around after dark, you get my drift.
@JimB: My pleasure!
Medium density always (in the property / urban planning field) basically encompasses denser than a standalone house and less dense than an apartment building with lifts. Typically you'd think villas, townhouses, walkup apartment buildings (i.e., 1-3 storeys).
800sqm 3km from the shops is not medium density haha. That would be a house, and you could subdivide it and still not be medium density.
Well people moving from cities to the country would maybe have that in mind, sure, but there are lots of people who are just 'from' there and need somewhere to live. Plus people who want to live near friends, relatives etc, walk to the shops and the community centre and the doctors and so on. Same reasons people want to live near the CBD in a metro area.
Socioeconomic data is difficult to use as a metric for anything because it has to change for regional areas. The types of jobs are totally different. You don't have high paid lawyers and accountants making 400k changing the averages etc. It doesn't mean that everyone there is povo. If you make less money and things are cheaper, you're not 'poorer' per se. It doesn't necessarily mean that you're going to have derros in your rental breaking stuff every week. A single nurse making 65k in Albury might only be able to afford a 300/w apartment. The nurse isn't going to wreck it just because they live regional and it's lower SES there.
What you probably want to look for is crime rates etc. NSW site called BOCSAR has all of that publicly available if you're interested.
@jrowls: Thanks again.
"doesn't necessarily mean that you're going to have derros in your rental breaking stuff every week'
I'm probably watching too much A Current Affair.. haha but I do know that drug use is higher in regional towns compared to cities.
@JimB: It definitely is a bigger issue in regional areas vs cities, but again, if you're buying something at the cheaper end of the market in Sydney… you're gonna be looking at a similar demographic.
If you have been watching any ACA you've been watching too much lmao
@jrowls: Hence why I'm hesistant to invest in the cheapest suburbs of any capital city!
ACA pops up on FB and I can't resist of watching the train wreck interviewees! Of course they will drain your bank account if you provide the scammers with your password. haha
Actually I'm secretly watching in the hope that one annoying ACA reporter gets belted.
Was looking at property in a city but yields are so low.
Capital gains are generally high though.
I agree, but at current prices, further short to medium capital growth is unlikely as people are already stretched financially and IR are going up.
@jv: True but no doubt reason for recent property boom has been access to cheap finance.
It doesn't matter if that beachfront house in double bay is $1m if you can't finance it….
True but no doubt reason for recent property boom has been access to cheap finance.
That's just one reason, there are lots of reasons… That's why the prices keep going up.
regional going through cycles, properties hold most value where there are jobs and infrastructure around
people follow jobs, big bucks jobs in banking, finance and tech still in big cities
housing price dictates what people in that cities earned, more job, bigger pay expensive housinglook at US states when big tech move in town and start paying big bucks massive housing demand and price
currently the Texas state in the US, companies start to move there and lot of job going there, house price going up one way
our Aussie Reece (share owner) is expanding in the US and doing well and has head quarter in TexasThat's an excellent point about jobs and infrastructure around.
Question is where is the next regional city/town in Australia which will do well?
I would personally
- Invest in PPOR if you have the money. Market will be cooled down (already cooling down)
- ETFs are good. Majority of my investments are in ETFs and just DCA as you go
- Crypto: I have some money in crypto. I don't recommend you to put too much into it but if you do enough research and really trust in a project then put a small amount in it. I feel like once the market recovers, some projects will go parabolic.
if you forget tax and government concessions ie grants etc the answer is 'stocks' you can invest in property via the stock market either commercial or residential.
HOWEVER
for most people that own a house that is biggest asset thus due to the 'highly' inflated house prices most people in Australia are over exposed to property in there net worth.
Unless you really knew what you were doing, I wouldn't be putting any serious money into either at the moment. Both are inflated and I foresee a correction in both in the short to medium term. If you can afford to hold either of them long term, then I don't see any problems getting in to either as long as you pick stable stock. Although I think you'll be able to get discounted stock if you can hold off for a bit.
So where would you put serious money into? Would you just hold it in cash and earn between 0.2 and 1% (i.e. less than inflation)?
Yes. I think if you don't really know what you're doing, you'll lose less by doing that and holding for a year or so until we get past this slump. If you know what you're doing, I think stocks would be where you should be putting your money at the moment. The larger gains in property have been realised, you'll likely see slower growth over the next decade now.
Myself 👌🏾💪🏿
A lot of ETFs on the market and some of them are actually special ETFs and serve different purposes. However, one of the best performing ETFs in the last 12 months, is still in the red had you invested in that 5 years ago.
Had you purchased any shares of quality companies when the Covid first hit (the big market crash), you would have easily done better than most of the ETFs. Had you purchased any property when the Covid first hit, you would be laughing too.
It doesn't matter whether you buy properties or shares. It's more about whether you have the ability to correctly value what you are buying and avoid fomo purchases. Do your homework, rather than ask on OZB. Even buying shares Warren Buffett recently purchased is unsafe. I also know someone who bought a big block land 10 years go, and yet he is struggling to find a buyer at the moment (bad location).
LOL what ETF is this.
ASIA? not sure, but massive fall from grace.
Buy the dip this week. Everything just got slaughtered.
Code and bots is the future.
Now You Can Rent a Robot Worker—for Less Than Paying a Human
Automation is reaching more companies, imperiling some jobs and changing the nature of others
Jose Figueroa, who manages Polar’s production line, says the robot, which is leased from a company called Formic, costs the equivalent of $8 per hour, compared with a minimum wage of $15 per hour for a human employee. Deploying the robot allowed a human worker to do different work, increasing output, Figueroa says.
https://www.wired.com/story/rent-robot-worker-less-paying-hu…Getting in early is an asymmetrical bet that has an uncapped upside.
Don't over-complicate things.
Just invest in diversified ETFs.
Make sense. Thank you
Don't just blindly follow what other people said. You often hear what other people are doing as their recommendations (but they already purchased way earlier). Most people invested in ETFs in the past few years are generally reasonably happy with them (for obvious reasons). However, in the past few years, if you invested in anything decent, you would most certainly do better than cash and be reasonably happy.
When share prices drop, it is us (long term investors) who suffered. One of my family friends is a big time day trader. He is more than happy to short sell shares when the market is down.
Diversified ETFs is so generic. Which ones? They all carry different level of risks and rewards. With the exception of one or two special ETFs (which are designed to do well when the markets go down), most people cannot seriously be happy about the share markets and ETFs for the past few days. Day traders are probably having a fun time at the moment.
Do your homework, rather than following other people's footsteps. If you really want to follow someone, follow a good friend that's doing well. Not that other friend of yours. He is clueless. For housing market to go down, interest rate needs to go up. When that does, share markets will do well? Our big 4 banks will have a massive share price rise when that happens? Seriously?
Buy after you researched and are comfortable with the products, not FOMO.
Again, make sure you actually check and do your homework. Have you looked at some of those ETFs? Had you purchased some of them at the beginning of this year, you are in the red:
Vanguard Australian Shares Index ETF (ASX 200): -8.33% year to date
Invesco QQQ Trust Series 1 (Nasdaq): -14.08% year to date
Vanguard Diversified High Growth Index ETF: -7.12% year to dateIf you purchased 12 months ago, only 1 of them gives you 5% return. The highly diversified one only returned 0.90% over the last 12 months. Honestly, if any of the quality shares only return 5% in the last 12 months, I wouldn't be happy. However, it is true that these ETFs are a bit safer when there is a big market drop (in terms of having less drop in value) compared to a lot of the quality shares, but they still go down. So, if you cannot hold onto them long term, you can suffer sharp drops in them.
While currently, it might be a good time to buy cheap (though honestly, they are not at bargain prices), you still need to at least read up on business news and at least look at the futures.
Dips are for buying.
@rektrading: Public holiday here today.
Checking futures on US markets, right now, looks like a rebound is expected later today. Too early to tell right now. All eyes on the upcoming US Federal Reserve announcement later today (US time, would be tomorrow our time).
Investing in property is a meme that is perpetuated because it was good when our parents did it. Even the covid thing is chance, nothing tactical.
"Study hard, go to college/uni, get a job and buy a house." is their motto.
Baby Boomers: Rich With Real Estate and Not Letting Go
The generation has possessed most real estate wealth for two decades.
By Michael Kolomatsky July 8, 2021
https://www.nytimes.com/2021/07/08/realestate/baby-boomers-r…Boomers are only making the 2021 housing crisis worse
Hillary Hoffower Sep. 22, 2021, 2:39 PM
https://www.businessinsider.com.au/boomers-worsening-america…They use young people as their exit liquidity.
Is the property market going to crash? Are you suggesting to avoid it? or don't have value any more?
The % you earn rev isn't worth the risk and maintnence of the property. Just do EFT's.
Do You Rather Invest in Stocks or in Properties Now?
Startups…
I no longer believe in using debt to invest. Consequently, I do not have enough money to buy more property and so stock it is, which I acquire through mutual funds. If I had more money, the desire to work harder on my investments and the ability to find a bargain and improve it, I would consider more property, but in addition to shares. That last factor is very important, most money to be made in property at the time of purchase, through buying an undervalued property. It does take some level of skill to identify those rough diamonds and then to polish them up.
Looks like a lot of people are recommending a mix of ETFs and Props.
If you don't have time, then yes. However, going for ETFs feels like doing the same type of investment as your Super, except only not needing to pay the admin / management fees.
When people mention ETFs, they generally refer to more stable ETFs. However, right now, at least for the past 5 days, they are just following the market trending downward.
There are special ETFs though. Those are more volatile and some of them are specials. For example, there are ETFs which follow the opposite trend of the market. There are so many products out there which most of us don't know or aren't aware of. Even if you decided to go with one of those more stable ETFs, you should still keep an eye on them.
Definitely the way to go.
That is because a lot of us can only buy or sell properties. We don't want to renovate or sub-divide & build.
Using debt to invest is actually okay for now, due to the low interest rate, you just need to ensure you get more returns than the interest rate. That was most certainly quite doable if you purchased quality shares or properties in 2020, 2021.
There is no absolute. On 'most money to be made in property at the time of purchase, through buying an undervalued property', it is equally important to sell at the right time. Also, this 'must find absolute bargains in properties' could also mean you miss out on opportunities. It's the same in shares. A mate told me to buy Tesla shares before the share split, I should have listened.
Any gains I was sitting on have been wiped in the last 2 days of trade….. While I believe there most definitely has been an oversell, it will take quite some time before we start to see a decent recovery, especially with the US in 30 trillion dollars of debt.
crypto is very volatile, you could try swing trading it if you like to gamble, just keep your eye on elon musk tweets, LOL
Salary sacrifice some into super if you're looking at ETFs anyways. You'll immediately get 15% saved on tax unless you're looking at cashing out sooner.
Interesting thread and here is my 2 cents: Salary Sacrifice into Super - if your Super allows you to mix and match then spread the investment (eg: Intl 25% + Aus 50% + Emerging 25%). For hassle-free (& long term) invest remaining money into ETFs - StockSpot is good platform to start as they give general advice on the investment once reaches to a certian amount. Otherwise Selfwealth or CommSec is also good for own purchase of ETFs. If someone wants to play around for short term, invest a small amount (that you wouldn't bother much about losing that capital) into some penny stock to test how volatile some stocks can be but it can be potive as well.
spread the investment (eg: Intl 25% + Aus 50% + Emerging 25%)
I'd argue that you have total 50% China exposure. Because 25% emerging markets are mainly China. Plus your Aussie shares 50% of that 50% is exposed to China/iron ore.
Thanks for the insight. Agree with your viewpoint as well.
Hi fam,
FUD is giving the market a good shake.
Ukraine tensions: Joe Biden says US citizens should leave Ukraine now
https://www.bbc.com/news/world-europe-60342814It's time to back up the fiat truck for some sniping.
what?