Property, Shares or Crypto? A (Slightly Biased) Answer
It’s one of the most hotly debated questions.
What’s best?
Property or shares … or even the latecomer … crypto.
Now, as you can imagine, I’m going to say property.
And sure, I run a leading property consultancy so you’d expect I’d say that.
But it’s also because it’s true.
Property is, hands down the best investment class for creating long term wealth.
No other asset class comes even close to creating a fraction of the wealth as property.
For me, for our clients, and for hundreds of thousands of ordinary Aussies.
But.
This doesn’t mean there isn’t a case for other assets.
In fact, other assets have some enormous benefits which property doesn’t have.
And for some people they make sense, either in combination with property or just on their own.
So let’s break down all 3 asset classes to see what’s what.
And we’ll start with my favourite …
Property
One of the best reasons to love property is it’s a real, physical thing.
You can see it, even touch it (just not when you’ve got tenants in there).
It’s not going to disappear.
And the most valuable part of it is the land itself.
After all, they’re not making any more of that.
It’s also something people really need.
Nobody needs 100 shares of BHP.
Or a bitcoin.
But everyone needs somewhere to live, so there’ll always be demand for it no matter what.
It also generates an income (rent) while it goes up in value at the same time.
The government’s got your back too with a raft of friendly taxes to support investors.
And it’s also the most stable of all 3 asset classes, since it grows nearly every year, and any historic falls have been minor and short-lived.
But it’s not all roses of course.
Property’s expensive to get into.
The entry costs are enormous because you need a deposit, you have to pay stamp duty and a whole lot of other levies, legal fees and expenses.
And you can’t get many of these sunken costs back.
It’s also not very liquid.
You can’t just cash out $500 worth of property if you need it.
You can’t grab a couple of bricks and a downpipe from your investment property to pay for tonight’s groceries.
You have to sell the whole thing.
And that takes time too, as well as being expensive.
It’s also prone to fluctuating market cycles, and at some point growth will slow down before speeding up again.
Having said this, the fluctuations aren’t as wild as other asset classes and the long term trend is very positive.
Shares
Shares are also a very good asset class to invest in as well.
And when I say shares, I also include Exchange Traded Funds (ETFs) as well which are funds which consist of different shares.
Shares are very attractive because they’re highly liquid.
You can get in and out of trades in seconds if you want.
And you’ll always be able to buy or sell shares any time the exchange is open.
Like I say, they couldn’t be more opposite to property in terms of liquidity.
Just like real estate, many shares pay an income too in the way of dividends.
And you can get started with a very small outlay, even a couple of hundred dollars.
Of course, there are some drawbacks to shares and ETFs.
Firstly, you can’t leverage shares very effectively. At least, not like real estate.
With real estate you can put in $1 (a 10% deposit) and control $10 worth of real estate.
The best you can do with shares is control $2 worth with $1.
They’re also very volatile.
On October 20 in 1997 the ASX lost 25% in a single day.
In 2002 the Dotcom bubble burst and the market deflated 22% in a year.
In 2008 it sank 54% during the GFC.
And when Corona hit, the ASX lost a third of its value in a month.
Ugly, right?
It’s also very passive, in that you have zero control over the companies you invest in.
It’s not like you can barge into the CBA boardroom and tell them what to do.
You’re also largely in the dark about how the business is really performing.
Compare this to property where it’s your house, and you can do anything you want to it to increase its value and rents.
It’s all in your control.
Crypto
What about the latest craze sweeping the world.
Crypto’s hot news at the moment, especially since US President Donald Trump threw his weight behind it.
I’m not totally in favour of it, but not totally against it either.
It certainly has enormous growth potential with some cryptocurrencies doubling, even tripling or more overnight.
They’re also highly liquid like shares, and you can buy and sell them any time of the day or night.
They’re also decentralised and borderless, not controlled by any banks or government.
This also has its drawbacks too because if you need help, who are you going to call?
But with such high returns come extremely high risks.
And with so little regulation and nobody to call if you need help, you could easily find yourself in trouble.
You really need to know what you’re doing here.
It’s also a 100% digital asset, so there’s nothing, no actual company selling goods or services, and no bricks and mortar to support its price.
So, What Wins?
Every time I look at the options, property keeps coming out the clear winner.
It’s made me (admittedly) very wealthy along with our clients who are experiencing enormous gains every year.
Far higher than they could ever get with shares.
And with a lot less risk too.
But maybe the best answer is to have a combination of assets in play.
Especially using shares to help you get enough money to invest in property faster.
But if you had to choose just one … you’d be wise to choose property.
Ready To See This In Action?
In this article I’ve gone through some of the benefits of investing in different asset classes.
In particular, property.
But I haven’t really shown you how benefits such as leverage, rental income and tax can help you grow your wealth faster.
To do this, it’s best to sit down (on Google Meet is usually how we do it) and take you through it.
Our team have some spots in our calendar and you can get in touch with us to make a time and find out how it works.
Fill in your details below and we’ll get right back to you.