Shares or property investment?

shares or property investment

Which option is the best? Shares or property

Which is the better investment – shares or property? This debate has been on for a long time and will continue to be discussed in years to come. Pro-property proponents argue that real estate is supreme, while financial planners and share market enthusiasts maintain that shares and managed funds are the trail to the Holy Grail when it comes to investments.
Answering the question of whether to invest in stock or invest in property pretty much depends on many situational factors such as market conditions, regulation, taxes and personal factors like the investor’s own experience, personality, preferences and style.
Shares and property are two very different investments. They have varying features, particularly in terms of growth, tax implications, volatility, liquidity and leverage. Choosing one over the other is not a recommended solution for an investor. Instead one should get to know the qualities of each investment and see how that particular investment meets one’s own financial income goal.

shares or property investment

Let’s begin by looking at each type of investment:
Real Estate

Basically when you invest in real estate you are buying physical land or property. Real Estate is a more tangible form of investing as you can physically see and feel the investment. With stock market investing, the investment is intangible and only visible on the screen of your computer as figures and graphs, unless of course you request to have hard copies of your shares.
One of the great advantages of real estate investment is that it always has value because housing, both residential and commercial, is one of the most basic needs. At any one point in time, people will always need homes to live in while enterprises require premises to conduct business. Even in the worst market conditions, real estate will always be in demand for that reason. This doesn’t mean you can’t lose money in real estate. Sure you can lose money, but what it does mean is that when you own a piece of real estate property, you indeed own an asset with true value.
One great disadvantage of investing in real estate is that the investment is not liquid at all. Unlike the shares, real estate investing doesn’t thrive on a quick buy and sell atmosphere. Selling a piece of property can take time – a month on average, and the time varies depending on the market conditions. This can be a problem if you need liquid cash immediately and it’s a definite disadvantage compared to stock market investing.


Buying shares of stock on the other hand means you are buying a piece of a company. Investing in stocks of a particular company makes you are part-owner of that company. If a company has 1,000,000 shares outstanding and you own 100,000 shares, then your ownership of the company is 10%. This entitles the investor to share in the resulting company profits equivalent to percentage of shares held.
Stocks, just like real estate, have a potential for high returns. With stocks an investor can make money in two ways: First, by buying stocks low and then sell at a high price. This is especially attractive to investors who hope to take advantage of short-term price changes or who expect to see the stock price grow over time. Second, the investor may settle for the annual dividends while the stock price rises moderately. Even when share prices decline, one reaps dividends from those shares for a period of time.
A big problem with stocks is that the returns are not guaranteed. Although there are a number of ways of assessing the risk of a particular stock, no one can really predict exactly how the stock will perform in the future. There are no guarantees that stock prices will go up, or that the company will pay dividends or that the company will even stay in business. The dramatic rise and fall of stock prices may lead to losses in the short-term. The investment may be recovered in the long term, but again, there is no guarantee.
Both shares and property are good investment avenues. Each type of investment has its own potential rewards and risks. Whichever path you choose, diversification is always the key to developing a safer, balanced and better performing investment portfolio. By owning a mix of different investments options you will be diversifying the portfolio. Doing so will curb the risks exposed by putting all your money in a single type of investment. Also be sure to talk to seek independent advice of a financial planner to help come up with the best plan for your particular circumstances.