Realist
Billie Jean is not my lover
- Joined
- 1 June 2006
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Imagine you have $50,000 to invest...
You ask the bank to borrow money to buy shares or a house, they will lend you $100K to buy shares and $250K to buy a house.
Then imagine they both go up 10% each year for 5 years.
You'll make more buying a house right?
That is the conclusion of some stupid woman called Karina in this morning's Daily Telegraph who wrote the book "The power of property".
This irks me how so much disinformation goes out to the public by morons who probably made a little money during the last property boom and think they are experts.....
Dear oh dear....
My thoughts...
First of all leverage works both ways, and in most cases for most people it should be avoided with both shares and investment properties. Sure there are times it works in your favour but you need to be very careful especially if interest rates are high.
Secondly if your property goes up 10% each year and you are paying 7.5% interest on 84% of your asset, as well as stamp duties, agents fees, repairs, rennovations, empty time, rates, body corporate fees, water, insurance, advertising, capital gains tax then against inflation you will make bugger all.
Thirdly history shows that shares (including dividends) increase significantly more than property and once bought have zero costs involved, few problems like bad tenants, places you can't sell easily and a well diversified fund in foreign and ASX shares is safer than having one property as Sydney owners have found recently and Perth owners are about to discover.
Finally there is contention about whether the ASX and resource stocks in particualr are overvalued. There are arguments either way and the solution is to be diversified and have overseas shares as well. There is virtually no argument that property is overvalued though, if you are expecting 10% gains each year for the next 5 years you are dreaming!! 10% is conservative after dividends for ASX stocks.
Anyone disagree?? (apart from tech/a)
You ask the bank to borrow money to buy shares or a house, they will lend you $100K to buy shares and $250K to buy a house.
Then imagine they both go up 10% each year for 5 years.
You'll make more buying a house right?
That is the conclusion of some stupid woman called Karina in this morning's Daily Telegraph who wrote the book "The power of property".
This irks me how so much disinformation goes out to the public by morons who probably made a little money during the last property boom and think they are experts.....
Dear oh dear....
My thoughts...
First of all leverage works both ways, and in most cases for most people it should be avoided with both shares and investment properties. Sure there are times it works in your favour but you need to be very careful especially if interest rates are high.
Secondly if your property goes up 10% each year and you are paying 7.5% interest on 84% of your asset, as well as stamp duties, agents fees, repairs, rennovations, empty time, rates, body corporate fees, water, insurance, advertising, capital gains tax then against inflation you will make bugger all.
Thirdly history shows that shares (including dividends) increase significantly more than property and once bought have zero costs involved, few problems like bad tenants, places you can't sell easily and a well diversified fund in foreign and ASX shares is safer than having one property as Sydney owners have found recently and Perth owners are about to discover.
Finally there is contention about whether the ASX and resource stocks in particualr are overvalued. There are arguments either way and the solution is to be diversified and have overseas shares as well. There is virtually no argument that property is overvalued though, if you are expecting 10% gains each year for the next 5 years you are dreaming!! 10% is conservative after dividends for ASX stocks.
Anyone disagree?? (apart from tech/a)
