As we age, hold more shares?

[sptrawler]

When the share price drops, in line with a general market drop, it is usually quickly followed by a comensurate dividend drop or worse still no dividend at all.

That's not a problem if you have other income and are at an age that you can wait it out.

If you are in your twighlight years, you don't want to have to forgo those holidays while you wait for the recovery, you want to just do them and use that 10 years of fonancial growth rather than waste those 10 years of actual life which you may not have.

Like I've said before everyone's in a different boat and one size does'nt fit all.

I have about 8 years of cash available getting 4.3% and we have enough income from it and the shares to do as many holidays as we can fit in, so it fits both myself and my wifes comfort zones.
So why disrupt it?
Like I said earlier a mate who I did my apprenticeship with, is worth about $20m still working shift work in a alumina plant.

Another mate who was actually only a meter reader, never married no kids, owns about 10 houses here and 20-30 overseas, still lives on a shoe string and flies economy on whichever is the cheapest airline, he's a couple of years older than me.
I ask, "what's the end game", but they enjoy it so hey, everyone to their own, as I say.
Having said all that, I do have a lazy $250k that I'm waiting to move into VAS, when it appears sensible to do so, whether I can pick that time is the question.

 

[Dona Ferentes]

When the share price drops, in line with a general market drop, it is usually quickly followed by a comensurate dividend drop or worse still no dividend at all..

..or
... when a company reports lower earnings, it may have less capacity to make distributions. Diversifying across companies, sectors, markets, will help to smooth out dividend flows.

 

[Chipp]

I do have a lazy $250k that I'm waiting to move into VAS, when it appears sensible to do so, whether I can pick that time is the question.

No rush imo , you can get a reasonable ( at least price inflation ) return while you wait . I'd be looking for a multi month low type scenario . I am the guy who cannot buy the recent high outside of an exceptionally rare occurence though .

 

[sptrawler]

..or
... when a company reports lower earnings, it may have less capacity to make distributions. Diversifying across companies, sectors, markets, will help to smooth out dividend flows.

Or as Bill let slip in 2019, no franking credit for SMSF's, then 4.3% in term deposit, looks a lot better than 4_5% in dividend and the possibility of your capital halving and your dividend disappearing. Lol
Like you say Dona, diversification is the key to sleeping well in retirement.
There is another old saying about magic investments, 'if it sounds too good to be true..."
Retirement for the rich and famous, isn't a problem, for the rest of us, well we all end up with the same amount in end, my late Dad is as rich as Kerry Packer now.
Enjoy the journey, happiness is being happy with what you have, then you will have money left over to invest. Lol

 

[sptrawler]

No rush imo , you can get a reasonable ( at least price inflation ) return while you wait . I'd be looking for a multi month low type scenario . I am the guy who cannot buy the recent high outside of an exceptionally rare occurence though .

Yes that's sitting at 4.9% until Oct, which is usually an interesting month, a lot of it is made up of FMG which I picked up at $14+ a couple of years ago and offloaded recently in the high $20's.

 

[Value Hunter]

why not start a conversation about which assets you believe would be suited to a retirement portfolio in your opinion, that both provide the same level of income as equities but also provide more capital growth over time.

I believe equities but being more active than passive investment into a basic index fund. Yes a certain level of skill and risk taking is involved.
That can be a mix of individual stock picking and it can also be investing in markets which are undervalued (currently many emerging market indexes are looking undervalued) as are certain sectors (such as oil stocks, small cap gold stocks, etc) one can buy ETFs, etc to get broad based exposure to those markets and themes and one can rotate their portfolio every once in a while to get more exposure to undervalued assets.

Also I feel retirees can have a portion of their portfolio in a mix of physical gold and silver bullion, Bitcoin and Ethereum and cash. That portion of the portfolio can be 10 - 20% depending on the person. Ethereum provides income (albeit paid in ETH) if you stake it, and although I would not recommend it you can lend out your bitcoin and earn interest on it. Physical gold and silver don't generate income but will diversify the portfolio and maybe sometimes when equities are crashing precious metals and bitcoin might be up (low correlation to stock markets) so you can sell some and not have to sell down your share portfolio when markets are depressed.

All of the above is stuff that a regular retiree can do. If we are talking about a very wealthy retiree ($10 million plus net worth) than all sorts of additional investment opportunities open up (angel investing, private equity, small business ownership, art investing, commercial property, etc).

 

[divs4ever]

..or
... when a company reports lower earnings, it may have less capacity to make distributions. Diversifying across companies, sectors, markets, will help to smooth out dividend flows.

as will LICs that smooth dividends ( some do , and i hold some of them in addition to other holdings )

 

[Value Collector]

1. I believe equities but being more active than passive investment into a basic index fund. Yes a certain level of skill and risk taking is involved.
That can be a mix of individual stock picking and it can also be investing in markets which are undervalued (currently many emerging market indexes are looking undervalued) as are certain sectors (such as oil stocks, small cap gold stocks, etc) one can buy ETFs, etc to get broad based exposure to those markets and themes and one can rotate their portfolio every once in a while to get more exposure to undervalued assets.

2. Also I feel retirees can have a portion of their portfolio in a mix of physical gold and silver bullion, Bitcoin and Ethereum and cash. That portion of the portfolio can be 10 - 20% depending on the person. Ethereum provides income (albeit paid in ETH) if you stake it, and although I would not recommend it you can lend out your bitcoin and earn interest on it. Physical gold and silver don't generate income but will diversify the portfolio and maybe sometimes when equities are crashing precious metals and bitcoin might be up (low correlation to stock markets) so you can sell some and not have to sell down your share portfolio when markets are depressed.

3. All of the above is stuff that a regular retiree can do. If we are talking about a very wealthy retiree ($10 million plus net worth) than all sorts of additional investment opportunities open up (angel investing, private equity, small business ownership, art investing, commercial property, etc).

1. the average person can’t beat the market average. If you put half the market in the hands of people that buy and hold it, and the other half of the market to a group that trade it among themselves, the active trading group as a group will under perform the inactive group. Only some of the traders will beat the buy and holds, and that will be at the expense of their peers.

2. gold is a terrible idea, it’s doesn‘t meet your goal you stated of avoiding capital draw down, because it pays no dividend and the person has to begin drawing capital on it from day one, at best it’s capital value will hold pace with inflation, but no income means you have to spend an ounce or two of it a month live on.

3. They all take work and skill I don’t think you are really retired if you are putting all that effort into money management. And you have a good chance at underperforming that Japanese index if you try and be to active.

 

[Value Collector]

When the share price drops, in line with a general market drop, it is usually quickly followed by a comensurate dividend drop or worse still no dividend at all.

That's not a problem if you have other income and are at an age that you can wait it out.

If you are in your twighlight years, you don't want to have to forgo those holidays while you wait for the recovery, you want to just do them and use that 10 years of fonancial growth rather than waste those 10 years of actual life which you may not have.

Like I've said before everyone's in a different boat and one size does'nt fit all.

I have about 8 years of cash available getting 4.3% and we have enough income from it and the shares to do as many holidays as we can fit in, so it fits both myself and my wifes comfort zones.
So why disrupt it?
Like I said earlier a mate who I did my apprenticeship with, is worth about $20m still working shift work in a alumina plant.

Another mate who was actually only a meter reader, never married no kids, owns about 10 houses here and 20-30 overseas, still lives on a shoe string and flies economy on whichever is the cheapest airline, he's a couple of years older than me.
I ask, "what's the end game", but they enjoy it so hey, everyone to their own, as I say.
Having said all that, I do have a lazy $250k that I'm waiting to move into VAS, when it appears sensible to do so, whether I can pick that time is the question.

It does come down to how strong your stomach muscles are and how much volatility you can emotionally handle, volatility doesn’t bother me at all, but I feel if you had say three years wages as cash they rest can be held in a broad index.

yea there might be a crash, but your would have participated in the boom before the crash, so it’s not to bad.

VAS and VGS are both good, if you are worried about picking a time to enter, just dollar cost average in over a year or two.

 

[sptrawler]

It does come down to how strong your stomach muscles are and how much volatility you can emotionally handle, volatility doesn’t bother me at all, but I feel if you had say three years wages as cash they rest can be held in a broad index.

yea there might be a crash, but your would have participated in the boom before the crash, so it’s not to bad.

VAS and VGS are both good, if you are worried about picking a time to enter, just dollar cost average in over a year or two.

That's generally what I'm doing, I am keeping enough dividend flow to live on, dividend reinvesting in long term shares, buying into weakness and then selling eg MCR and FMG then buying VAS.
While also having a reasonable term deposit that covers my normal outgoings.
IT works for me.

 

[investtrader]

1. the average person can’t beat the market average. If you put half the market in the hands of people that buy and hold it, and the other half of the market to a group that trade it among themselves, the active trading group as a group will under perform the inactive group. Only some of the traders will beat the buy and holds, and that will be at the expense of their peers.

2. gold is a terrible idea, it’s doesn‘t meet your goal you stated of avoiding capital draw down, because it pays no dividend and the person has to begin drawing capital on it from day one, at best it’s capital value will hold pace with inflation, but no income means you have to spend an ounce or two of it a month live on.

3. They all take work and skill I don’t think you are really retired if you are putting all that effort into money management. And you have a good chance at underperforming that Japanese index if you try and be to active.

I hope this post is relevant to the thread. I do agree with at least having significant allocation to shares in retirement and I will outline how I am doing it.

@Value Collector I agree totally with your point 1. I have 'traded' of and on for 15 years and you have good periods and bad periods. It is a lot of work and stress. I have recently retired and have no interest in trading price based systems anymore.

However, my personality says surely you can beat the market and not just blindly stick it in Index Funds! So for the last 3 or 4 years I have followed and researched how to get better returns. Conventional wisdom is that managed funds can't beat the market and also if you invest in the winners then you will get mean reversion. However, after lots of research I have found that there are plenty of managers in one area of the market that can out perform, and that is Australian small caps. I will define these as anything outside the ASX 50 as a rough definition. This makes sense to me as there are so many really poor companies within this index.
Using Fund Monitors and other information I have researched lots of managers - not just on returns but a lot of factors. In regards returns, they must beat the market over longer periods - preferably 7 years. Short term performance is not that relevant. I then selected 12 managers. I have followed them for three years now. My logic is that if you pick one or two managers you stand the risk of under performance for quite a few years, so I tried to minimise manager risk this way.
I have included two graphs of these managers vs Small Ords for both 3 years and 7 years. The last 3 years have been challenging so I was pleased with how my basket performed ( forward tested in real time).

 

[Value Collector]

I hope this post is relevant to the thread. I do agree with at least having significant allocation to shares in retirement and I will outline how I am doing it.

@Value Collector I agree totally with your point 1. I have 'traded' of and on for 15 years and you have good periods and bad periods. It is a lot of work and stress. I have recently retired and have no interest in trading price based systems anymore.

However, my personality says surely you can beat the market and not just blindly stick it in Index Funds! So for the last 3 or 4 years I have followed and researched how to get better returns. Conventional wisdom is that managed funds can't beat the market and also if you invest in the winners then you will get mean reversion. However, after lots of research I have found that there are plenty of managers in one area of the market that can out perform, and that is Australian small caps. I will define these as anything outside the ASX 50 as a rough definition. This makes sense to me as there are so many really poor companies within this index.
Using Fund Monitors and other information I have researched lots of managers - not just on returns but a lot of factors. In regards returns, they must beat the market over longer periods - preferably 7 years. Short term performance is not that relevant. I then selected 12 managers. I have followed them for three years now. My logic is that if you pick one or two managers you stand the risk of under performance for quite a few years, so I tried to minimise manager risk this way.
I have included two graphs of these managers vs Small Ords for both 3 years and 7 years. The last 3 years have been challenging so I was pleased with how my basket performed ( forward tested in real time).

The way I look at is.

The market average return over time of say the ASX300 index should be a decent return made of both income and capital growth, and it is so easy to just buy and hold an index and be guaranteed that market average return.

However, as you point out it is possible to Beat that average return, but attempting to beat that average return also comes with the risk that you might not beat it, and might fail completely.

So how do I handle this conundrum?

Well, over time I have personally been able to beat the market averaging gains of more than 20%, but it’s important to have a bit of humility eg. was that out performance due to taking on more risk? Was it some what due to luck? its possible that I might not be able to continue this outperformance and I can’t comfortably recommend the average person to try and do what I do, knowing that even I might not be able to maintain that myself, when there is a decent guaranteed option I could recommend to them.

So, the way I deal with this is to keep running my personal portfolio in a way I believe will out perform the market, However as a back up to this, should I ever completely fail and suffer a huge permanent capital loss I have a certain portion of my annual profits that are diverted into index style investments in My super, My wife’s Portfolio, and another little side investment/pension fund I run for myself, where the funds are put into Australian and international share indexes, property indexes and some infrastructure and other unlisted stuff.

I actually love my set up, I see my personal direct investing portfolio as kind of being my creative outlet, giving me endless things to study and research and make investment decisions on And so far it pays extremely well. But the index side as being a steady accumulation of long term capital that is my back up, where I just own a broad cross section of the rest of the world.

———————————
I actually used a similar system when I used to play black Jack at the casino, I would have the $100 I was willing to play with, and as I played every now and then my wife would take some of the chips I won along the way and put the them in her purse, if I ended up losing my $100 capital, atleast we had all the chips my wife had tucked away as I played, So I put a percentage of my annual returns into my index system for the same reason.

 

[Value Hunter]

1. the average person can’t beat the market average. If you put half the market in the hands of people that buy and hold it, and the other half of the market to a group that trade it among themselves, the active trading group as a group will under perform the inactive group. Only some of the traders will beat the buy and holds, and that will be at the expense of their peers.

That is definitely true and is an indisputable fact and a universally acknowledged truth.

Those who feel they do not have the inclination time or skill can invest in a passive index.

However for those with the intelligence, discipline and ambition (which would be many of the people on this forum) they can strive to do better.

Its also true that real wages (when measured properly not using fake CPI figures) have gone sideways for decades while house prices have skyrocketed so for younger people today they almost must take more risks to get a comfortable retirement or face a retirement of eating tins of baked beans and playing bingo.

Unfortunately for a lot of young people today they must take additional risks if they want to retire comfortably and at an age where they can still fully enjoy it (say below 50). I personally think for most people working until you are 65+ is silly. Sure some people love their jobs but that is a minority. Most people would not work if they did not have to. And thus if you want a comfortable retirement at a reasonable age additional risk taking to get above market returns is almost a necessity (unless you are a high income earner).

2. gold is a terrible idea, it’s doesn‘t meet your goal you stated of avoiding capital draw down, because it pays no dividend and the person has to begin drawing capital on it from day one, at best it’s capital value will hold pace with inflation, but no income means you have to spend an ounce or two of it a month live on.

I agree gold over the long term doesn't really provide much return and obviously it produces no income. I don't think gold should ever be a main investment but a small allocation is good hedge tail risk and buffer your portfolio in a downturn. There are plenty of crises situations historically where gold shined. I think of it as insurance for your portfolio. I have a small percentage of my portfolio in gold.

Also my long-term gold position has done reasonably well and generated similar returns to the ASX because I was selective about the prices I paid for gold and did not buy at the high points in the cycle. I did not dollar cost average. Almost all assets have price cycles and if you have the skill to generally buy at below average prices rather than dollar cost averaging you will do better over time. Obviously not everybody can do that. Again not everybody can be above average, but in general I would say this is a forumk of people mostly striving to be above average.

3. They all take work and skill I don’t think you are really retired if you are putting all that effort into money management. And you have a good chance at underperforming that Japanese index if you try and be to active.

I agree in principle but I think I already covered this in my response to point 1. This is not the general public on this forum, rather this is by and large a forum for people striving to be above average and as such my thoughts were catering to such people. People who are happy being average are on forums such as the bogleheads forum and those people by all means should buy broad based index funds and set and forget.

 

[Value Collector]

1. That is definitely true and is an indisputable fact and a universally acknowledged truth.

Those who feel they do not have the inclination time or skill can invest in a passive index.

However for those with the intelligence, discipline and ambition (which would be many of the people on this forum) they can strive to do better.

2. Its also true that real wages (when measured properly not using fake CPI figures) have gone sideways for decades while house prices have skyrocketed so for younger people today they almost must take more risks to get a comfortable retirement or face a retirement of eating tins of baked beans and playing bingo.

Unfortunately for a lot of young people today they must take additional risks if they want to retire comfortably and at an age where they can still fully enjoy it (say below 50). I personally think for most people working until you are 65+ is silly. Sure some people love their jobs but that is a minority. Most people would not work if they did not have to. And thus if you want a comfortable retirement at a reasonable age additional risk taking to get above market returns is almost a necessity (unless you are a high income earner).


3. I agree gold over the long term doesn't really provide much return and obviously it produces no income. I don't think gold should ever be a main investment but a small allocation is good hedge tail risk and buffer your portfolio in a downturn. There are plenty of crises situations historically where gold shined. I think of it as insurance for your portfolio. I have a small percentage of my portfolio in gold.

Also my long-term gold position has done reasonably well and generated similar returns to the ASX because I was selective about the prices I paid for gold and did not buy at the high points in the cycle. I did not dollar cost average. Almost all assets have price cycles and if you have the skill to generally buy at below average prices rather than dollar cost averaging you will do better over time. Obviously not everybody can do that. Again not everybody can be above average, but in general I would say this is a forumk of people mostly striving to be above average.


I agree in principle but I think I already covered this in my response to point 1. This is not the general public on this forum, rather this is by and large a forum for people striving to be above average and as such my thoughts were catering to such people. People who are happy being average are on forums such as the bogleheads forum and those people by all means should buy broad based index funds and set and forget.

1. I think a smaller percentage of people can beat the market, I don’t even think the average pundit on here can, As I explained back in post 132 on this thread, even I am humble enough to own the index even with my 20 year history or beating the market, your retirement sayings to important.

2. If you had chosen the asx300 index as your savings vehicle for a home, you would have outpaced house price growth.

3. I think probably the majority of people on this forum avoid indexes because they believe they can beat them, but in reality probably can’t, few probably even measure and track their performance against the index.

There is one quite out spoken Trader on the forum here who hates the idea of index investing, but and instead loves TA but I doubt they have actually been able to beat the index, I mentioned once to them that I was in the top tax bracket even though I am retired and they seemed confused how that could be possible. Now that doesn’t sound like some one with 20+ years of stock market experience should be confused about if they truly can beat the market.

 

[Value Hunter]

2. If you had chosen the asx300 index as your savings vehicle for a home, you would have outpaced house price growth.

Possibly true but in Australia in the very long term returns are close enough for property and shares that it really depends on which timeframe you select. I have looked at 10 and 20 year return periods for both. Sometimes shares win and sometimes property wins.

Here is an article from beta shares about this topic:

Property vs shares: the age-old debate

Property vs Shares: invest in the sharemarket now, or do you take advantage of low interest rates and dive into property? Learn more.

www.betashares.com.au

"Potential for growth

Both investments offer the potential to grow in value over time.


A 2015 research paper from the Federal Reserve of San Francisco titled The Rate of Return on Everything looked at nearly 150 years of data to uncover very long term returns across a range of asset classes and geographies. Australian housing returned 6.37% p.a. in real terms over the full sample of data, while equities returned 7.81% p.a. Looking at just the data since 1950, housing performed better, returning 8.29% p.a. vs 7.57% p.a. for equities. However, looking at just the more modern series since 1980, the pendulum swung back the other way, with equities returning 8.78% p.a. vs 7.16% p.a. for housing.


Comparisons have their limitations of course. Returns can vary according to the timeframe selected, and you can break property down into different regions, or equities into various sectors. It’s important to keep in mind there have been periods of boom and bust for both asset classes. Returns change further once gearing and costs are introduced into the equation. Also, it’s important to keep in mind past performance is not indicative of future performance.


Regardless of how you cut the data though, it’s clear that both equities and property have produced attractive long-term returns."

Also just to reinforce the point here is a chart from StockSpot:


But the main point is percentages vs dollars. Unfortunately in our current financial system you cannot get as advantageous borrowing terms with shares as you can with property. If somebody has a share portfolio worth $30,000 and after 10 years that turns into $70,000 and if house prices go up the same percentage and the house they are trying to save for goes from $500,000 to $1,166,000 their deposit as a percentage (6%) has stayed the same but now to put down a 10% deposit the shortfall goes from $20,000 to $46,600. This is the math that makes it hard for first home buyers to get on the home ownership ladder.

 

[divs4ever]

There is one quite out spoken Trader on the forum here who hates the idea of index investing, but and instead loves TA but I doubt they have actually been able to beat the index, I mentioned once to them that I was in the top tax bracket even though I am retired and they seemed confused how that could be possible. Now that doesn’t sound like some one with 20+ years of stock market experience should be confused about if they truly can beat the market.

i use index funds as 'insurance' ( against a series of bad selections )

but i really need to push harder for portfolio growth

and have been blessed with some very lucky breaks ( good selections , and timely exits , but not every time )

 

[Value Hunter]

But the main point is percentages vs dollars. Unfortunately in our current financial system you cannot get as advantageous borrowing terms with shares as you can with property. If somebody has a share portfolio worth $30,000 and after 10 years that turns into $70,000 and if house prices go up the same percentage and the house they are trying to save for goes from $500,000 to $1,166,000 their deposit as a percentage (6%) has stayed the same but now to put down a 10% deposit the shortfall goes from $20,000 to $46,600. This is the math that makes it hard for first home buyers to get on the home ownership ladder.

And that is not even getting into the problem of the total purchase price and hence loan amount. To pay a $1 million dollar is much much harder than to pay a $500,000 loan. The same problem applies to people upgrading houses. If a young married couple with no kids buys a 2 bedroom starter house and later they have 2 kids and upgrade to a 4 bedroom house with a bigger backyard that costs twice as much if house prices double over that time the size of the loan increases massively for them to upgrade. So if the starter house is $1 million and the bigger house is $2 million at the beginning and then after 10 years both houses double in price they go from needing an additional $1 million to needing an additional $2 million dollars ($2 million - $1 million compared to $4 million - $2 million). Even if you can get the $2 million dollar loan because you have enough income its a huge burden to pay off a $2 million dollar loan.

 

[Value Collector]

Possibly true but in Australia in the very long term returns are close enough for property and shares that it really depends on which timeframe you select. I have looked at 10 and 20 year return periods for both. Sometimes shares win and sometimes property wins.

Here is an article from beta shares about this topic:

Property vs shares: the age-old debate

Property vs Shares: invest in the sharemarket now, or do you take advantage of low interest rates and dive into property? Learn more.

www.betashares.com.au

"Potential for growth

Both investments offer the potential to grow in value over time.


A 2015 research paper from the Federal Reserve of San Francisco titled The Rate of Return on Everything looked at nearly 150 years of data to uncover very long term returns across a range of asset classes and geographies. Australian housing returned 6.37% p.a. in real terms over the full sample of data, while equities returned 7.81% p.a. Looking at just the data since 1950, housing performed better, returning 8.29% p.a. vs 7.57% p.a. for equities. However, looking at just the more modern series since 1980, the pendulum swung back the other way, with equities returning 8.78% p.a. vs 7.16% p.a. for housing.


Comparisons have their limitations of course. Returns can vary according to the timeframe selected, and you can break property down into different regions, or equities into various sectors. It’s important to keep in mind there have been periods of boom and bust for both asset classes. Returns change further once gearing and costs are introduced into the equation. Also, it’s important to keep in mind past performance is not indicative of future performance.


Regardless of how you cut the data though, it’s clear that both equities and property have produced attractive long-term returns."

Also just to reinforce the point here is a chart from StockSpot:
View attachment 174140

But the main point is percentages vs dollars. Unfortunately in our current financial system you cannot get as advantageous borrowing terms with shares as you can with property. If somebody has a share portfolio worth $30,000 and after 10 years that turns into $70,000 and if house prices go up the same percentage and the house they are trying to save for goes from $500,000 to $1,166,000 their deposit as a percentage (6%) has stayed the same but now to put down a 10% deposit the shortfall goes from $20,000 to $46,600. This is the math that makes it hard for first home buyers to get on the home ownership ladder.

Yes the returns are close, hence my I own both property and shares, but you can put small amounts into shares over time and grow a large portfolio, where as Buying a home requires a large upfront payment of atleast 20% or so.

So, using shares as a vehicle to save for your home is a good strategy, because you will earn more in dividends than you would bank interest on cash, and your capital has a decent chance of growing.

if you tried to save for a home using term deposits it’s going to be tough.

———————
Leverage is a double edged sword, if you borrow to buy a property using a 90% loan, and the property value goes up 10% you double your money, but if it drops 10% you lost 100%.

but you can borrow to buy shares, but that is not the topic I was talkng about. I simply saying investing is shares to save for a deposit is a good strategy if you are worried inflation and house price growth will out pace your savings rate based on term deposits

 

[Value Hunter]

So, using shares as a vehicle to save for your home is a good strategy, because you will earn more in dividends than you would bank interest on cash, and your capital has a decent chance of growing.

if you tried to save for a home using term deposits it’s going to be tough.

Obviously saving for a deposit in an index fund will be better than cash but for a lot of people it won't be enough they need to go higher up the risk curve to actually break into the housing market (geared index funds, emerging market ETFs, individual stock picking, Bitcoin, etc).

 

[investtrader]

I seriously question the long term return quoted for residential property. No one seems to factor in properly the holding costs, maintenance costs and land tax. The only way to make big money is to take big risks in the form of leverage.