They are both great in creating wealth but which would be your pick?
Shares/Etfs Or Property?
The way i see it these days property does not make any sense as an investment. High entry,low rent,high upfront outlay,stamp,insurance blah blah
What do you all think? What is the trick these days?
Falcon vs Commodore?
ketchup vs. catsup
Labor vs Liberal.
I'm in way over my head
AMD vs Intel
Beta vs VHS
MP4 vs MKV
Leaded vs Unleaded
AMD vs Nvidia
Pick your sauce :P
PS. I like farming carbon credits for investment over property or shares (averaging ~ 47%pa for past 3 years)
How does that work?
buy land, sign up for carbon credit schemes, let land absorb carbon (quickest way is regenerative farming with ruminants), be rewarded carbon credits to sell on the open market ;)
Best land is ex-mono cropped farmland as the land starts carbon depleted, so you can pack far more carbon in there than normal land :P
Can land be anywhere? Got link about this or youtube?
@Retiredandsilly: Most western countries have multiple carbon credit schemes, just google them and see what criteria each scheme has (in some countries you can sign up for multiple schemes at once) …
The US under Biden was the best per acre, Trump hasn't cancelled it yet (but expected to eventually!) :P
Here is how Gemini summarises the Australian process:
To earn carbon credits and sell them, you must participate in a recognized carbon market, like the Australian Carbon Credit Unit (ACCU) Scheme, by implementing eligible projects that reduce or sequester carbon. Landholders then partner with project developers, or use registries and brokers, to document, register, and verify their carbon reductions before selling the resulting credits to companies or governments needing to offset their emissions.
1. Understand the Carbon Credit System
What are they?
Carbon credits are permits representing a tonne of carbon dioxide (or its equivalent) that has been removed from the atmosphere or avoided.
Market Structure:
Credits are generated by projects that go beyond normal business practices and are verified to be "additional"—meaning they wouldn't have happened otherwise.
Who buys them?
Companies, governments, and individuals buy these credits to offset their own unavoidable emissions, creating a financial incentive for emission reduction activities.
2. Plan a Project
Land-based Projects:
For landholders, projects can include:
Soil Health: Implementing no-till farming, cover cropping, or returning biomass to the soil.
Land Management: Restoring forests, converting land to grasslands or woodlands, and practicing crop rotation.
Water and Nutrient Management: Upgrading irrigation systems or optimizing nutrient application to reduce reliance on fertilizers.
Eligibility:
Ensure your project meets the "additionality" and other criteria of a recognized scheme to be eligible.
Documentation:
Meticulously document all stages of your project to provide the necessary data for verification.
3. Choose a Carbon Standard and Register Your Project
Registered Schemes:
Participate in the ACCU Scheme in Australia or other recognized standards like the Verified Carbon Standard (VCS) or Gold Standard.
Project Development:
Partner with a carbon project developer or use the resources provided by the Clean Energy Regulator to understand the process of planning and registering a project.
4. Generate and Sell Your Credits
Verification:
Have your project's emissions reductions or sequestration verified by an accredited party.
Registry and Transfer:
The verified credits are registered, and you can then use the market to connect with buyers.
Selling Options:
Brokers: Work with carbon brokers who can help connect you to buyers.
Carbon Market Exchanges: Sell your credits through specialized environmental exchanges.
Direct Sales: Sell to companies that are looking to meet their emissions obligations or voluntary targets.
Retirement:
For a credit to be "used," it must be "retired" in the registry, meaning it is taken out of circulation and claimed by the buyer to offset their emissions.
How does that work?
Doesn't work. It is more and more being considered a scam with numbers rigged to look like its working to reduce the country's carbon emissions.
Julia Gillard wouldn't lie to me
No more of a scam than EVs, solar, wind, methane reduction, etc … people will always dump stupid money into it ;)
Happy to receive those proceeds rather than losing money to them :P
Pepsi vs coca-cola
Big Mac vs Whopper
Is leaded vs unleaded petrol a real question?
(averaging ~ 47%pa for past 3 years)
Are you the guy I spoke to last time that is doing this in the States? The Aussie market isn't quite this lucrative.
Is this a 47% cash out per p.a or paper value of ACCU's and land values (or whatever the US equivalent is).
Or the US government subsidize's it with cash pay outs or the like?
this in the States?
Yeah, the green new deal was stupid lucrative for this stuff (it was why Bill Gates was buying up used farm land!)
Is this a 47% cash out per p.a
Total of credits sold over three years ($3,285,372) divided by initial investment of land 3 years ago ($2,335,000) divided by three years to get per annum.
with cash pay outs
Wasn't eligible for that scheme :/
Property’s main advantage is it can be greatly leveraged, so if you buy a $1m property with a 10% deposit and it grows to $1.1m you have doubled your money.
The tax treatment with negative gearing and CGT lowers holding costs and rewards capital growth.
That said, it’s hard to see where the next doubling in property can come from (but I said that years ago too.).
Shares are so variable it’s hard to describe them as an investment class, as you can target income producing stocks for yield, or growth stocks for capital gain. You can seek out undervalued businesses, or you can just invest in a market index fund.
I think you need both in your investments, and since you probably already have a house, it makes sense to start investing with shares.
If you are over 60 as your username suggests, I would strongly urge you to invest via superannuation, as there are massive tax advantages to do so, and you can access your funds at any time.
How about stamp duty
How about stamp duty
Shrug, sure. Nobody would sell after a 10% gain because transaction costs are high.
But the question wasn't about trading, but investing, and if stamp duty is going to be a big part of your costs you likely need to factor in that to the plan. Where I am, stamp duty is about 3%. It's a big number on a $1m place, but it shrinks in the rear view mirror over time with inflation.
Yep, property is definitely the way to go as long as negative gearing and the half price capital gains discount is there. You are tax funded to hold property and all your gains are leveraged because if a property price goes up by 50% and you paid a 10% down payment then you've made a 500% gain. Having said that, it's good to diversify in case Australia ever wakes up and removes negative gearing and the half price capital gains discount. In that event, house prices will drop about 40% and no investor will stay in the market unless they have good rental yields (eg. apartment blocks).
Lol, shares get the same 50% capital gains discount.
Not to mention you can also negatively gear into shares.
Of couse there is no The Block for shares so the average Aussie thinks that Property is the one true asset class.
Impossible to imagine a 40% drop in property, but maybe over 20 years in real terms while prices stay flat. Investors make up about 30% of the market, and those negatively geared a subset of that, so more than 3/4 of property owners would be unaffected by change to negative gearing, and almost as many by changes to CGT.
Even without discounted CGT, property is fine longer term as you can sell in retirement or leave it in your will, or borrow against.
Historically, properties become positively geared relatively quickly. Perhaps less so now, but the vast majority of properties I dealt with as a tax accountant were positively geared. Getting rid of it is not the magic bullet people think it will be.
Capital gains discount applies to all investments held greater than one year. The cost to the government of negative gearing is 0.06% of the housing market per annum. Studies suggest removing it would cause hiuse proces to drop 1.5%, but I personally believe that is an over estimate.
Leverage does not come free though. For a $1m property with 10% deposit and 5.5% Interest rate you are paying $49k in interest. Not saying this make property worse option especially with negative gearing in play but just something to consider while making the comparison.
Pointless comparison. It all depends on your appetite for risk. If you said Nvidia shares 5 years ago, then it's a no-brainer. But you don't have a crystal ball and could have easily picked a loser. Property is a uniquely 'safe' investment in Australia due to tax breaks. You can also leverage existing assets to borrow more and essentially 'gamble' with house money.
All investments have exactly the same tax breaks.
I'd say an index-tracking ETF is a safer investment than property. Markets tend to return a fairly stable average return over the long term, whereas any particular property is really at at whim of what's going on in the community.
It's certainly easier to leverage house purchases, which IMO is the only reason for investing in property besides PPOR.
The main thing I see is property is a big lump and shares are smaller parcels. If you need money for anything and your money is tied up in property then you need to sell a big asset and it will take time. There is the ability to take an equity loan out on the property but that involves paying interest.
Property will involve upkeep and management, whereas shares just tick along. Shares are more volatile so there are winners and losers dependent on when you sell them.
Whatever you are thinking I would talk to a good financial advisor.
High entry,low rent,high upfront outlay,stamp,insurance blah blah
When was the last time that wasn't true?
I look at it this way, I don't want to be a landlord. That makes the decision for me. I've yet to meet a landlord that doesn't stress endlessly about their property, who's in it, spending half their time ranting on the internet about landlords rights, etc. With shares I only worry about whatever comes out of Donald Trump's mouth today, but even he hasn't ruined the stock market.
Figure out what your goals are and what investment suits that best. That you're still at the question of "shares vs property" means you probably shouldn't be taking many risks with hundreds of thousands of dollars.
This is the best comment here.
Also this mentality helps you stop being part of the housing problem. Buy to own/live. Not to invest. As long as people keep using them as investments it's just going to get exponentially worse - the flip side is that corporations will do it regardless… So is it better to have a few properties in the peoples hands or developers/corps.
I just want a simple life/place. I rent currently, our plan is probably honestly just save for another few years and yeet outta Australia tbh lol. (DINK)
Well, someone had to build your rental place right? It didn't pop out of nowhere to be available to rent. Investors are also solution to a housing problem as government is not willing to build rentals (nor it should be).
The Waiting Place
You’re off to invest! But wait… not today.
You’re waiting for your bonus pay.
Or maybe for the month of May.
Or maybe just another day.
You’re waiting for the news to say,
“The risk has passed, it’s safe to play.”
You’re waiting for the dip to buy,
The stock to fall, the stock to fly.
You’re waiting for the other guy.
Waiting for the boom to boom,
Waiting for the boom to stall.
Waiting for the earnings news,
Waiting for the earnings call.
Waiting for a deeper dip.
Waiting for the flu to skip.
Waiting till a sign appears,
That “Now’s the time, the coast is clear!”
You’re waiting for a tariff rate.
You’re waiting, but it makes you late.
While you wait there in the queue.
The market - it won’t wait for you.
So stop the waiting, the buts and whens,
The time to start is now… not “then.”
The market chart will twist and climb,
But holding on wins every time.
With patience and purpose you’ll grow as you go,
Oh the gains you can gain, oh the wealth you can grow!
Not from the waiting, the fretting, the fear…
But starting today, and staying the year.
Oh, the Places You'll Go! (Dr. Seuss, 1990)
What?
It’s a Dr Seuss reference
Waiting for another chance…. Hits hard every time
Well said. Don't wait. Get in. You are in for the ups and downs. I don't have property yet but bought shares. 5 years ago.. Little company called nvidia 😆
I think the question is impossible to answer without knowing a LOT more specifics about the person it's applying to.
Over simplifying stuff into a one size fits all is not a good idea.
Over simplifying stuff into a one size fits all is not a good idea.
Unless the one size fits all approach is taking an experimental injectable or else lose your job.
Shares
Rental income is taxed. Fully franked dividends have franking credits so you get a return rather than being taxed
How do you get a return on franking credits?
When you submit your tax return
What if you’re in a higher tax bracket than the company who paid the tax?
None of the above.
Shares are over-priced. P/E is too high. That indicates a correction of some sort will occur.
Property? Canada saw its housing prices start falling. Now the same has happened in New Zealand. Australia has got to be next. Its just a matter of when.
There is so much Australians could invest in, and they are just speculating. Driving the price up in the hope it will keep going up. But it can't forever. Part of the problem here is compulsory superannuation. Even though we are one of the smaller rich countries we have one of the biggest superannuation pools because of it. We just simply have too much to invest compared to what we have to invest in, so we speculate, and that just means we end up paying more for things we need to pay our own investment returns.
Actually after reading your post, agree.
None of the above and rather spending in a good, quality life (perhaps even, God forbidden, helping others), enriching your soul and mind will be the best investment alternative.
Gauging shares based on P/E is so 2015.
People have been predicting a housing crash my entire life, hasn't happened yet. As for shares are you expecting a GFC style crash? Won't happen, there has been a number of corrections or buying opportunities over the years.
The problem with people with the 'sky is falling' mentality is that when the actual event happens they won't know where the bottom is and will still be waiting. Then when things are going back up they will say it's a dead cat bounce. Then before you know it everything has recovered and you're still waiting for the bottom.
None of the above.
Your advice to invest in nothing is really quite dumb.
The Liberal party is almost dead and politicians are finally openly addressing the housing investment bubble as a problem. The future of the housing bubble is uncertain.
Buy a "dead" politician and sell his life again?
It's not a bad idea, if all the renters of Australia contributed money to bribe politicians into building enough houses for everyone.
That money would be missing in Defence, Health, Education and other sectors…
Property is a good investment if you live in it long term and maintain or improve it. If you buy and sell frequently, you lose money with each transaction, and it may not be long enough to make any capital gains. Not interested in investment properties because life is complicated enough as it is, Don’t want part of my mind tied up in worrying about houses I’ve got no control over, agents, rental prices, taxes, wear and tear, maintenance, insurance, extra mortgages, etc.
A mind free from worry and calculation is better geared for creation and productivity.
freedom's just another word for nothing left to lose.
I reckon a certain amount of stress is healthy. It's productive at least.
Become someone of value
Shares vs Property
Why not shares in a property?
That is how I describe buying an apartment in a development…….🤔
Another 12 minute waffler promoting his scam…
Superannuation
Oh oh 🤣🤣🤣
You trust the government not to change the terms and conditions of super? They already started.
@brendanm: The biggest change since compulsory super came into being, was making it tax-free for over 60s
@brendanm: It affects the minority (as long as it starts to get indexed once it hits probably 1-1.5m in todays money). The current implementation of super costs more in tax concessions than the pension costs. Those who are hitting the cap would have been previously getting $0 from pension and now they get more in concessions up to 3m than anyone would have gotten in pension. So at the very least I don't think its a big deal.
@brendanm: Well, while the median earners are paying about the same or a little more tax - the top tax bracket is still paying less tax than the last time they were adjusted. So good for some - bad for others.
@brendanm: Which is lower than it used to be - and kicks in at a higher amount after accounting for inflation than it used to.
@filmer: Which group contributes the most to income taxes? You think people should be taxed more than half their earnings over the threshold?
$190k a year doesn't even qualify you for an average house in Sydney or Melbourne.
So I have both, and their are pros and cons either way. Property works well in Australia because of the tax benefits, it's also a pain with maintenance etc. Even with estate agents managing most things there are always things to approve/deal with. The tax returns are great, capital being tied up is not ideal of all people's scenarios though.
Shares, I just auto transfer 5% of income every fortnight to Vanguard and split between an international and Australian ETF. Set and forget, don't try and pick individual stocks. It's easy and grows fairly consistently over time, and can be cashed in quickly and easily.
There are more pros and cons of each but these were the main ones that immediately came to mind. I like having both. But probably won't go much further with investment properties due to the extra admin involved.
Shares is more of a set and forget investment with fixed costs. Hoping for the best. Smart investors get massive gains.
Property could become very involved, subject to the whims of changing governments, needs maintenance, costs fluctuating rates and etc, unknown returns but statistically very high.
I must be both smart and stupid, coz I've had great gains on stocks and some spectacular losses.
I reckon stocks are for day traders and gamblers, ETFs are for investors.
Property is good if you don't have a lot to invest, and are happy to lock up for funds for a long time.
OP, the only trick is investing in what works for you.
For me, shares are too volatile and required too much time to research and manage. I went with property. I'm in my mid 40s and have a fully offset house. But it wasn't smooth sailing with my property investments but I was always more confident that I could solve the property issues than shares issues (which my only options are typically buy, hold or sell). I don't earn mega bucks through my job either.
Risk vs Return
Keep under mattress: Inflation eats all that burglars miss
Hoop or no hoop bank: tax and inflation eat it all
Crypto: mine with a blue box and join Gina's parties.
Start a charity: Get holy without taxes.
Buy CSL stock: They are there when you get sick.
Write a bot that offers 50% to every property for sale and applies for every lender .
Buy the right politician: Highest risk but above all the very highest RETURN!!
For the last decade or so obviously property has been a clear winner when you combine leverage ability. However the last decade or so is not the norm and now with the draconian anti landlord rules in many states a lot of investment is leaving property. Shares are stable and relatively safe with better returns, can't quite get the same degree of leverage though.
Everyone should get a house. The ppr tax free is the best real bargain the government gives you. Once you have a house for your old age then get property and shares and super. Have some cash outside super. If you are older super is the best investment of any as you get access to it if you are over 60 and earnings are tax free.
Porque no los dos?
I do property myself….only because I dont know much about stocks. Always wanting to learn but the same effort could be used to just further myself in property.
Investing in shares offers a relatively affordable starting point, with entry options beginning at around $1,000.
For beginner investors, this typically involves no leverage, making it a lower-risk way to build exposure to financial markets.
On the other hand, property investment often requires substantial borrowing - sometimes up to ten times your annual income.
This leverage can dramatically magnify your returns, but it also heightens your exposure to market fluctuations.
In short: greater potential reward, greater potential risk.
PS: this is not a personal financial advice.
If you're in the higher tax brackets property wins, easily. It's not even close.
If you aren't shares are probably comparable.
How come?
Instead of just giving the government 45 cents per dollar earned you spend it on the property to get it's value up even higher.
Every expense is a tax deductible along with completely fabricated 'depreciation'
You can't make shares appreciate more using money that would have gone to the ATO.
For this do we need to have the property under a loan?
You can't make shares appreciate more using money that would have gone to the ATO.
Yes you can. Margin loan.
Certainly property for me.
Bought first one interstate in QLD. Over $200K+ growth in 2 years. Rents have also risen by more than $200/w. Get all the tax benefits including depreciation. After Resi portfolio is complete, will move to Commercial.
That's a great return, where did you invest? Looking interstate QLD but not sure where to start or best source property
Android vs iPhone?