Property vs. shares for a 20-Something

[tech/a]

Re: Property vs. shares for a 20 something

I think Bills point hasnt been made clearly enough.
The eager investor wishes to accumulate riches NOW.

There are times to hold potfolio's and there are times to begin portfolios in each asset mentioned.
Now in my opinion is NOT the time for either.(Begining).
Keep accumulating and wait to see signs of growth OR exhaustion of supply in either.

The secret to wealth particularly when starting is TIMING.Opportunity is always there--TIMING is swift (Although opportunity in property lasted 5 yrs and the Bull market in stock 7 yrs).

In the meantime become an expert in the signs you will need to recognise in each to effect best timing.
A solid understanding of ECONOMICS will be handy
Perhaps more so the consequences of ECONOMICS--eg a war in Iraq--Gold Oil rise.
Also study RISK mitigation.

So are you saying cash is the best investment to make?

I feel like I'm achieving nothing having my money in savings accounts.

You have read this?

 

[Starcraftmazter]

Re: Property vs. shares for a 20 something

So are you saying cash is the best investment to make?

I feel like I'm achieving nothing having my money in savings accounts.

I'm saying, if you are not willing to work for it - ie. actively trade with shares or on some other liquid market in the short-term (not property), then you should stick your money in a bank account, otherwise you are likely not to get it back in the same quantity - let alone generate a return on it.

 

[suhm]

I'm mid twenties and I don't really like the idea of having non tax deductible debt. I've been investing in shares for the last 8 years only had a decent amount for the last couple of years, previously my profits paid for my car and a year overseas given I was on youth allowance whilst in uni.

Everybody's situation is different but I was only going to buy a house when I could do so outright I can't really some of my colleagues who borrow a million or more to buy property. It completely ruins their quality of life.

My thoughts are that money is only a means to an end it should be enjoyed and shared. When I talk with ppl at the end of their lives unless they are on the pension and struggling or if they are worried about how their family will cope financially.

My viewpoint may be different as I earn a decent wage have job security and guaranteed wage increases but in this market straight investment properties seem a poor strategy. The home you live is also not a pure investment decision

 

[pavilion103]

Re: Property vs. shares for a 20 something

So are you saying cash is the best investment to make?

I feel like I'm achieving nothing having my money in savings accounts.

In my strong opinion I would remain in cash.

I owned 3 investment properties and was fortunate (or intuitive) enough to dispose of them within the last 12 months once the writing was on the wall. If I had still held them I'd probably be down another 10-15% based on the suburbs.
I pursued the same strategy of putting a $25,000 deposit down originally and boughy my first invesment property at 20. Prices shot up straight away, I bought a second one at 21 and then a third at 23. Shortly after I realised that that monopoly money could not continue to pour in. I copped the selling costs and got out before calamity hits! (I'm now 26)

I've only started looking at trading in the last 15 months. I've spent around 1,000 hours educating myself and am starting to do ok now.

I also mirror the advice that unless you are short term trading (which takes much time to learn), then the best investment avenue is cash right now.

Keep saving.... if you want to be a trader, then educate yourself now while you're waiting... and then look to get into the markets in 12 months time if you know what you are doing.

People's beliefs that you can make money for nothing (property market of the past 10 years), has terrible implications for those who follow and get sucked in at the top of the market!

 

[apgb8]

Re: Property vs. shares for a 20 something

Similar position also, forget both...concentrate on trading, 5-7 years (if this is your hypothetical timeframe) of doing so, you will be generating far greater returns (if successful), than what you would otherwise get on rental yields etc.

Strictly speaking, shares > property, it would be 'easier', for lack of a better word, to generate a better return on an equivalent some of money which would otherwise be sunk into a mortgage, for numerous reasons, regardless of the current state of market(s).

i'm sorry, but property doubles in price every 7-10 years...when you can borrow up to 90% of the cash for a property, if you bought a $1M house (with a $100k deposit), in ten years (less interst repayments of say $720K and other expenses of $80k) you've got a return of $200K!
Might be able to achieve the same in shares, but i'd prefer to not have a heart attack everytime the market drops.

 

[Trembling Hand]

Re: Property vs. shares for a 20 something

i'm sorry, but property doubles in price every 7-10 years...when you can borrow up to 90% of the cash for a property, if you bought a $1M house (with a $100k deposit), in ten years (less interst repayments of say $720K and other expenses of $80k) you've got a return of $200K!
Might be able to achieve the same in shares, but i'd prefer to not have a heart attack everytime the market drops.

L_______________O______________ L !!

 

[McLovin]

Re: Property vs. shares for a 20 something

L_______________O______________ L !!

He's wrong?

 

[pavilion103]

Re: Property vs. shares for a 20 something

i'm sorry, but property doubles in price every 7-10 years...when you can borrow up to 90% of the cash for a property, if you bought a $1M house (with a $100k deposit), in ten years (less interst repayments of say $720K and other expenses of $80k) you've got a return of $200K!
Might be able to achieve the same in shares, but i'd prefer to not have a heart attack everytime the market drops.

Obvious troll is obvious?

Because I didn't think people still believed this cliche.

 

[apgb8]

So you can prove that property prices haven't doubled (usually more than doubled) every ten years since the 60's?
Some said i'm wrong, but try prove me wrong...

 

[Trembling Hand]

So you can prove that property prices haven't doubled (usually more than doubled) every ten years since the 60's?

Can you prove that at the end of the biggest credit bubble ever that they will double again?

 

[young-gun]

Can you prove that at the end of the biggest credit bubble ever that they will double again?

+1

If you have 30k cash you don't have to leave it sit in the bank. chances are it will simply get eroded as interest rates fall. at risk of getting burnt, have you considered holding some of your cash in silver or gold?

 

[young-gun]

Re: Property vs. shares for a 20 something

L_______________O______________ L !!

+1 again

 

[young-gun]

So you can prove that property prices haven't doubled (usually more than doubled) every ten years since the 60's?
Some said i'm wrong, but try prove me wrong...

do your self a favour and pull data on RE from the great depression. RE hit highs in 1929 before tumbling and staying there for the next 10 or so years. we are at the same point right now.

taking a snippet from 60's to now isn't giving you a full understanding of economic cycles.

 

[johenmo]

At this stage, it's not necessarily what you make, it's what you don't lose. Yes, there will be some who will make a return in shares and/or property. But most won't, for many of the reasons tech/a mentioned. Credit issues will last a bit longer, the ASX will be range-bound for some time so for many it's better to stay out of these markets for the next, say, 2-3 years. If property drops, imagine the bargains that will come (at someone else's expense).

If you want to make money, look where crime goes - sex/drugs/alcohol. All 3 do well in bad times, too. And if you get caught, you can get free lodging where you will get friends with benefits. This is not a recommendation - the remark was somewhat flippant!!

 

[apgb8]

Can you prove that at the end of the biggest credit bubble ever that they will double again?

well considering the prices haven't actually gone down since 2007, i doubt they'll keeping decreasing. yes maybe from 2007-2017 they won't double, but i think they will double in the next ten years.

do your self a favour and pull data on RE from the great depression. RE hit highs in 1929 before tumbling and staying there for the next 10 or so years. we are at the same point right now.

taking a snippet from 60's to now isn't giving you a full understanding of economic cycles.

I wouldn't call property prices increasing 2-3% "tumbling", and i wasn't aware Australia was amongst its biggest mining boom in the 1930's. economists rely a lot on cycles and theories, but don't take a lot of external factors into the equation. Australia's mining boom and population growth should push it through this stagnant time, highly doubt prices will go down.

 

[HarryH]

Re: Property vs. shares for a 20 something

i'm sorry, but property doubles in price every 7-10 years...when you can borrow up to 90% of the cash for a property, if you bought a $1M house (with a $100k deposit), in ten years (less interst repayments of say $720K and other expenses of $80k) you've got a return of $200K!
Might be able to achieve the same in shares, but i'd prefer to not have a heart attack everytime the market drops.

That's a pretty damn good return (not) what's that yield on a yearly basis?

You're probably trolling though.

 

[Trembling Hand]

Australia's mining boom and population growth should push it through this stagnant time, highly doubt prices will go down.

Population is not the main driver of prices. Since very few new purchases are paid with cash what sets prices is credit growth. No credit growth no increase of prices. You expecting credit growth?

 

[Julia]

i'm sorry, but property doubles in price every 7-10 years...when you can borrow up to 90% of the cash for a property, if you bought a $1M house (with a $100k deposit), in ten years (less interst repayments of say $720K and other expenses of $80k) you've got a return of $200K!
Might be able to achieve the same in shares, but i'd prefer to not have a heart attack everytime the market drops.

Some magnificent assumptions there.
Plenty of people acted on just that sort of heroic forecast and are in dire trouble now.

Today I made an offer for a house in this area that was pretty realistic on the present market to the owner who is operating sans agent. She rejected it on the basis that:

1. They borrowed 100% of the purchase price, quite a short time ago, so have almost no equity in the property.
2. At the same time they bought a block of land on which they have outgoings but no income, also in negative equity.
3. They are 'hoping' for a turn around in the market which will at least return them to break even. Hope they're not holding their breath.

What is more than likely for them is house prices will fall further, ditto the land, and it's unlikely the bank will in future loan them 100% of the purchase price. The present house is in a regional area where prices are lower than in Brisbane, so their difficulty is further compounded by higher prices in a capital city which is where they need to go.

So anyone buying on the naive 'doubling every 7 - 10 years' belief, is in for a pretty unpleasant reality check imo.

I wouldn't call property prices increasing 2-3% "tumbling", and i wasn't aware Australia was amongst its biggest mining boom in the 1930's. economists rely a lot on cycles and theories, but don't take a lot of external factors into the equation. Australia's mining boom and population growth should push it through this stagnant time, highly doubt prices will go down.

This reminds me of the house seller's further imparted wisdom, viz "if you really want to make money buy a cheap house in a mining area where they're getting rentals of more than $1000 p.w.". The notion that there are no cheap properties in such areas had not apparently occurred to her and she had no concept of ROE.

No wonder so many people end up in deep ****.

 

[Tyler Durden]

Re: Property vs. shares for a 20 something

Obvious troll is obvious?

Because I didn't think people still believed this cliche.

 

[apgb8]

That's a pretty damn good return (not) what's that yield on a yearly basis?

You're probably trolling though.

no not trolling...
how is that not good return? that's a yield of 11.6%pa...how's that not good?

Some magnificent assumptions there.
Plenty of people acted on just that sort of heroic forecast and are in dire trouble now.

Today I made an offer for a house in this area that was pretty realistic on the present market to the owner who is operating sans agent. She rejected it on the basis that:

1. They borrowed 100% of the purchase price, quite a short time ago, so have almost no equity in the property.
2. At the same time they bought a block of land on which they have outgoings but no income, also in negative equity.
3. They are 'hoping' for a turn around in the market which will at least return them to break even. Hope they're not holding their breath.

What is more than likely for them is house prices will fall further, ditto the land, and it's unlikely the bank will in future loan them 100% of the purchase price. The present house is in a regional area where prices are lower than in Brisbane, so their difficulty is further compounded by higher prices in a capital city which is where they need to go.

So anyone buying on the naive 'doubling every 7 - 10 years' belief, is in for a pretty unpleasant reality check imo.


This reminds me of the house seller's further imparted wisdom, viz "if you really want to make money buy a cheap house in a mining area where they're getting rentals of more than $1000 p.w.". The notion that there are no cheap properties in such areas had not apparently occurred to her and she had no concept of ROE.

No wonder so many people end up in deep ****.

i'm not 100% on the markets over the east, but i'm in Perth and if you look at our growth, i'd love for you to tell me some reasons why it still won't grow considering our huge population and mining boom going on right now.