Property vs shares, the pros and cons

(Australian Associated Press)

 

PROPERTY VERSUS SHARES

PROPERTY PROS

– No capital gains tax when you sell your home, provided it has been your principal residence

– Enforced saving, as you have to make regular mortgage repayments

– Historically good long term gross returns

– Potentially owning a physical asset that you could continue to live in once you retire

PROPERTY CONS

– Expensive entry, given tens-of-thousands of dollars required for a deposit

– Hefty costs upfront including stamp duty and legal fees

– Ongoing costs such as maintenance and council rates

– Time consuming to sell if you need to access cash fast

SHARE MARKET PROS

– Cheap entry, given you can buy a share parcel with as little as $500

– Upfront costs such as brokerage fees are cheap compared to buying property

– Settlement for the sale of shares happens two days after the trade, so it’s quick to access money

– Can usually claim a tax deduction for the loan interest if you borrow money to buy shares

– Historically good long term gross returns on Australian shares

– Regular dividends

– Investments in shares can be spread across a range of sectors

SHAREMARKET CONS

– Taxed when you sell

– Quick and easy, therefore tempting to dip into your portfolio to access cash

– Can be risky. You could end up with nothing if your shares tank

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