Shares v houses
March 2, 2011
Question: The idea of common sense investing needs to be taught as a mandatory subject in our education system. But if you BUY Australian blue chips stocks and hold them over your lifetime the magic rule of 72, with marvelous compounding effects will return profits far in excess of an average residential home.
Take for example Westfield shopping Centers, if you invested just $1,000 back in 1960 and then reinvested the dividends, it would now be worth over $132 million dollars!!!
The average house purchased for $1,000 at that time would now only be worth around $500,000. That means shares outperform houses by a margin of over 264 times!!!
I not recommending buying Westfield shares, but what I'm saying is the investment thought process in this country is too biased towards real estate, through elements like our parents, media, political benefits, etc.
Over our lifetime there are much more rewarding investments we could make. The most intelligent advice I could give any young couple now would be something that most people don't want to hear!
Don't buy an OVERPRICED house, instead invest all your savings into the Big 4 Bank stocks, so you can retire much earlier from receiving Fully Franked TAX FREE dividends from all the other sheep in mortgage stress for the next 30+ years.
"Fortune favors the brave"
Answer: Australia seems to be divided into share lovers and property lovers and I tend to be on your side. The benefit of shares is that you can buy and sell quickly and in part and never have the worries of maintenance, land tax, vacancies, etc. On the other hand you can't generalise about the property market as some properties have done spectacularly well. For most people a diversified portfolio is still the way to go.
Read more: http://www.smh.com.au/money/ask-an-expert/blogs/ask-an-expert/shares-v-houses-20110301-1bcfu.html#ixzz1gHDqVARv
March 2, 2011
Question: The idea of common sense investing needs to be taught as a mandatory subject in our education system. But if you BUY Australian blue chips stocks and hold them over your lifetime the magic rule of 72, with marvelous compounding effects will return profits far in excess of an average residential home.
Take for example Westfield shopping Centers, if you invested just $1,000 back in 1960 and then reinvested the dividends, it would now be worth over $132 million dollars!!!
The average house purchased for $1,000 at that time would now only be worth around $500,000. That means shares outperform houses by a margin of over 264 times!!!
I not recommending buying Westfield shares, but what I'm saying is the investment thought process in this country is too biased towards real estate, through elements like our parents, media, political benefits, etc.
Over our lifetime there are much more rewarding investments we could make. The most intelligent advice I could give any young couple now would be something that most people don't want to hear!
Don't buy an OVERPRICED house, instead invest all your savings into the Big 4 Bank stocks, so you can retire much earlier from receiving Fully Franked TAX FREE dividends from all the other sheep in mortgage stress for the next 30+ years.
"Fortune favors the brave"
Answer: Australia seems to be divided into share lovers and property lovers and I tend to be on your side. The benefit of shares is that you can buy and sell quickly and in part and never have the worries of maintenance, land tax, vacancies, etc. On the other hand you can't generalise about the property market as some properties have done spectacularly well. For most people a diversified portfolio is still the way to go.
Read more: http://www.smh.com.au/money/ask-an-expert/blogs/ask-an-expert/shares-v-houses-20110301-1bcfu.html#ixzz1gHDqVARv
Investing an inheritance
March 9, 2011
Question: I am 23 years old and have recently inherited $100,000. I am uncertain as to whether I should simply leave this money in a high interest cash account, or invest in shares. Although I have studied some finance, I am unsure as to where I should go for impartial share advice. What is the best thing to do with this amount of cash at present?
Answer: Your best strategy depends on your goals because it is unwise to invest money in property or shares unless you have at least a seven to ten year timeframe in mind. Leave it in a high interest online cash account while you examine your options but cash is probably the best place for it if you are thinking about buying a house in the next three or four years.
Read more: http://www.smh.com.au/money/ask-an-expert/blogs/ask-an-expert/investing-an-inheritance-20110307-1bkop.html#ixzz1gHF0FT5a
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