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Shares vs Property Investment

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Property

Pros Con
  • Physical asset
  • Income from rent
  • Potential capital growth
  • Access to equity
  • Generally less violatile than shares
  • Option to make enchancements (renovate)
  • Potential tax deductions
  • High entry/exit costs
  • High management fees
  • Illiquid
  • Interest rate risk
  • Recurring expenses on top of interest
  • Potential for large capital works
  • Tenant vacancy

Shares

Pros Con
  • Low entry/exit costs and requrements
  • Income from dividends (plus franking credits)
  • Potential capital growth
  • Generally Liquid
  • Can diversify easily
  • Potential tax deductions
  • Volatile
  • Stock prices can go to zero
  • Interest rate risk (if borrowing to invest)
  • LVR risk (if borrowing to invest)
  • Currency risks on international shares
  • Dividends can be cut or eliminated
  • Challenging to pick individual shares

Why is investing in property so popular in Australia?

  • Capital growth
  • Tangible investment
  • Rental return
  • Range of prices
  • Tax incentives

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