(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