Wealth Creation | Property Investing | Share Investing

Property vs Shares – what’s best?

BiG Tips: How do you decide whether to buy property, shares or both? Don’t just pick based on slick marketers or your confirmation bias, or that of friends, parents or others (learn more about hidden biases in Investing in You). Think about why you might prefer one asset class and avoid others.

Here are some pros and cons for investing in real estate or shares and some ideas to help you choose which suits you best.

Why invest in shares – some ‘pros’:

  • liquidity (quicker to buy and sell compared to real estate)
  • low entry and exit costs
  • little active management
  • you can enter the property market through vehicles such as real estate investment trusts (REITs/(Australian) AREITs) and Exchange Traded Funds (ETFs)

Some prefer shares and aren’t comfortable investing in property because of:

  • pressures on borrowing, affordability and capital growth – in current financial times (see Michael McNamara below)
  • property bubbles (see Michael McNamara below)
  • the need for active management
  • vacancy and tenancy risks

Reasons not to invest in shares – some ‘cons’:

  • volatility/risk
  • lack of personal control and ability to add value
  • too little knowledge and understanding about the company, its business, its board and management

Here’s some commentary and resources to help you choose whether to invest in property or shares:

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