From: News Limited Network
December 29, 2012
PROPERTY versus shares – where is it best to invest?
It’s been a close-fought fight for many years, and diehard supporters of each side have zero respect for the opposition.
Both shares and property have looked like punch-drunk former champions in the years after the GFC. But for an investor the answer to the top question is pretty simple. And, as a bonus, it rhymes.
If you want long-term growth, invest in both.
A financial adviser recently told me there are only three basic types of investment – cash, shares and property and everything else is derived from that.
Cash is a safe haven but never a growth investment, and in recent months its returns are looking pretty shabby.
If you remove one of the other two from your investment portfolio, you’re not left with much diversity.
Of course, there are many different types of property and experts recommend holding a mixture if you can. The biggie for Aussies is residential real estate, but commercial property ranging from retail to industrial to holiday apartments can be bought directly or through investment funds.
Shares are simply small slices of a business, and will make you a part-owner of household names such as Woolworths, the Commonwealth Bank, Telstra, Coles and Bunnings.
If you own both property and shares, it can help balance your asset mix because they tend to follow separate paths.
When shares were in the toilet in 2008 and early 2009, property was doing pretty well.
Similarly, property has been flat this year but shares have sparked into life since July.
Shares are a lot more volatile than residential real estate, but also have much lower buying, holding and selling costs.
You can touch property, of course, but you can also hug a Woolworths store if you really want to.
Millions of Aussies have been burnt by investment and superannuation losses in recent years, but if you ignore property and shares you’re only ever going to have low-income cash investments where the value of your initial dollar gets continually eroded by inflation.
Nobody expects either to shoot the lights out in 2013, so taking a long-term view is vital.
Also vital is the ability to sleep at night when volatility strikes, and an investment time frame that lets you ride out the inevitable future storms.
Shares versus property? There are no losers. Or winners, depending on your view of the world.
Read more: http://www.news.com.au/realestate/investing/property-versus-shares/story-fndbarft-1226544938599#ixzz2HN2p7P5x