Shares vs Property

I often get asked whether clients should invest in shares or property so I thought I would highlight a few facts for you to consider: Shares and Property are what we call “growth” assets, that is, they are both expected to grow in value over time, and also pay you an income (rent from property and dividends from shares).

There are some differences in both assets, let’s have a look at these now:

• Liquidity – property is not considered a liquid asset, that is because it takes time to sell and is not divisible; shares can be sold within 3-10 days and are easily divisible (you can sell a part)
• Investment risks - with anything in life it’s important to understand the risks, avoid risks that are simple to avoid and manage the risks we can manage. Property carries some market risk and volatility is less visible; Shares are easier to diversify specific risk but prices can be volatile in the short term
• Taxation – both assets may be subject to capital gains tax on sale, property may provide you with deductions for depreciation; Shares may receive franking credits to offset tax.
• Management and maintenance – Property requires initial research but not as much ongoing research. Property needs ongoing management of tenants and the property itself. Shares do require initial research and ongoing research but there is very little ongoing management and no maintenance costs.

I love both these asset types but consideration should be given to your personal goals, budget and investment time frame.

General Advice Warning - This communication has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives, needs and financial situation. The information may not be appropriate to your individual needs and you should seek advice from your financial adviser before making any investment decisions.