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Property Vs Other Investments.

Discussion in 'Investing Strategies' started by Zman, 10th Feb, 2008.

  1. Zman

    Zman Well-Known Member

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    Hey guys.

    I have been thinking about buying a house but hate to be bogged down with it right now. How is shares/other investment options compared to properties in terms of returns and long term income generation?
     
  2. samaka

    samaka Well-Known Member

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    What do you mean by bogged down? You don't want to buy with the current interest rates as high as they are?
     
  3. Zman

    Zman Well-Known Member

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    Yes and the amount of initial outlay.
     
  4. Billv

    Billv Getting there

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    Well, with property you will leverage better so if you put down 20% you will be able to borrow the rest. With shares you can't do this.
    At the same time, interest rates on property are lower than margin loans.

    My worry with buying shares right now is the risk of entering a market that is going through a correction cycle.

    In this climate if I wanted to take the risk I would probably trade shares (instead of the norm buy and hold) but then you may miss out on the dividents...

    Cheers
     
  5. samaka

    samaka Well-Known Member

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    Actually you can with Macquarie Prime (probably others too).

    Although I do agree it's a volatile time to buy shares - and yes interest rates are much higher with margin loans as opposed to property.

    If you can get the FHOG - so no stamp duty plus $7000 then it makes property a bit more attractive.
     
  6. Zman

    Zman Well-Known Member

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    Yes i can get both of those.

    Im guessing a PPOR turned into a IP after 6 months is much better than going out right with a IP?
     
  7. Billv

    Billv Getting there

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    I agree
    Cheers
     
  8. NickS

    NickS New Member

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    Yes, especially if you consider the nice little tax law that allows you to double dip if you rent out your PPOR. Then your interest becomes tax deductible and by keeping it as your PPOR you also don't have capital gains for up to 6 years :)
     
  9. Saskatoon

    Saskatoon Well-Known Member

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    Investment returns

    Hi,
    this is one way of looking at the question. According to the ANZ Property Outlook: in risk adjusted terms since 1984, residential property returns have more than tripled those of equities and more than doubled those of commercial property.

    ANZ Property Outlook: Jan 2008; see page 3

    I suppose in general terms the younger you start the more risks you can take, since there is more time to recover from setbacks.
     
    Last edited by a moderator: 11th Feb, 2008
  10. Saskatoon

    Saskatoon Well-Known Member

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    Hi NickS,
    be cautious about this. The intent of the legislation is to allow people who are required by their employer to move from their PPOR and need to rent O/S or interstate (e.g. consular staff or executives moving interstate) to keep the exemption from CGT for their PPOR. If you cannot justify renting out your PPOR then the ATO may not allow the exemption, and possibly catch you in the anti-avoidance net! This could be expensive.
     
  11. bella

    bella Well-Known Member

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    It is more correct to say that property has less volatility (proportional to return) than equities.
    Increased volatility does not necessarily translate to higher risk.

    Personally I think residential property is more risky than equities for most people, given that it leaves less room for portfolio diversification.