If there’s one question I get asked almost relentlessly, it would hands down be “What’s better, Property or Shares?” That age old question. And it doesn’t matter where I am. I could be at a bar, at the beach or standing in the male urinals. Without fail some genius will ask me what I do for a profession, then drop the old I know better than you “property vs shares” question. “Oh great here we go again”, I ponder to myself. In-fact it’s actually become worse, people now ask me “What’s better Shares or Bitcoin”. Oh dear. Now usually I don’t mind answering this sort of a question, especially when it’s my bread and butter. But what I’ve noticed is that those that ask this question, are usually heavily biased towards property or Bitcoin and are only interested in proving me wrong. They’ve numerous useless facts stashed up their sleeve, just waiting for the perfect opportunity to let them rip. “You’re dreaming mate, Property and Bitcoin is the way to go” or this “Property always goes up”. Blah Blah Blah. I never get a word in. So my answer to that age old question is this – “Is chocolate flavoured ice cream better than strawberry flavoured ice cream?” So is it? Chocolate or Strawberry? Obviously Strawberry. It tastes better. Who in their right mind picks chocolate? I mean seriously. Now I’m sure we could sit here and argue about this for hours on end but the honest answer is – There really isn’t a right answer. Why? Because it all comes down to your personal preference, style, likes and dislikes and a bit of luck. You like chocolate and I like strawberry. I like investing in shares you like property. And then there are those that like Bitcoin. Let’s not talk about them. Both return exactly the same on average. The common misconception is that property is safer and a more successful investment option than shares. Property is less volatile than shares and on a long term basis, property yields far higher than shares. Rubbish. Forget what you think you know, both asset classes are as volatile as each other and both return the same. But everyone says Property returns more? The illusion is that stocks appear to be a lot more volatile than property. But they’re not. It only appears this way because stocks are liquid and are valued in real time. They can be bought and sold at the press of a button. That makes stocks appear more volatile because you see its valuation bounce around every second. But what would happen if you subjected the property market to daily trading and instant valuation. What would happen if you could buy and sell property like stocks? At the press of a button, you could offload your property and buy another at a cheaper price. The property market too would appear volatile. Imagine seeing your property fluctuate by $10k-$60k on any given day. Therefore the best way to compare the two is to take the last 20 years and compare averages. Apples with apples. The median house price in Australia in 1997 was about $122k. In 2017 the median house price is now $585,000. That’s an outstanding gain of 375% or $463k. Not bad at all. But wait a minute. What about all the costs that go with owning a house, such as upkeep, rates, water, parks, and renovations? OK for simplicity, let’s ignore all these costs so that we don’t complicate things. Now let’s say you bought Woolworths (WOW) which was a large blue chip stock back in 1997. Woolworths has been on the Global 500 list for 20 years. It was trading at $5.13 towards the end of 1997. Today WOW is trading at $25.86. That’s a 400% return. Almost identical to property. But you might ask why I chose Woolworths and not NAB? Back in 1997, NAB was trading at $20 and today it’s only $30. That’s a…

This article is for members only

To read this article - sign up for a FREE 14 day trial NOW

Blurred Text