Klevah™

Why Shares Over Property?

€ Share investments have a lot of advantages over property for those new to investing. Shares can be bought in very small or very large amounts in an instant on the exchange. When selling, whatever fraction needed can be sold just as quickly with the money back in your account in 2 business days. Brokerage costs are small. Property takes time and high costs to purchase and sell. It usually requires a large deposit and loan. Stamp Duty sets the investment back tens of thousands of dollars from the start. There is a lot of extra work in managing tenants, insurance, damage, upkeep, taxes, etc. that costs time or money to get someone else to do it.

€ When you make continual small investments in shares you gain from having more of your money invested more of the time as well as the higher rate of return shares offer. With property investing, your investments are lumpy. You must save a lot to eventually buy a house and then save as much again to add the next one. In between these asset purchases your incremental savings are going into paying down debt. It is good to pay down debts once you have them, but the returns on each dollar saved is lower than property or share returns. Only buying the property gives you an appreciating asset. Paying down the debt is saving at a moderate rate of return. Share investing gets the best returns out of your savings dollars as they become available – fluently growing your wealth without attached debt.

€ With shares you can make your purchases and then set and forget your investments if you wish. Only a small amount of work is needed at tax time. For all the extra effort involved with property you might hope for a better return but in fact shares generally win here too. The clearest reason why investors just starting out should choose shares is because you can make very small investments to begin with. Then, invested in just the same shares or ETFs, you can grow (or sell down) your holdings over time at whatever pace you desire. Shares crush the competition for their high returns, simplicity and flexibility.