December 15, 2020

#79: Property v Shares - How to strike the right balance in your investment portfolio, which investment strategy is superior, how to get sta

46 minutes

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode #64 of the Property Planner, Buyer and Professor Podcast, the team discuss "Property v Shares - How to strike the right balance in your investment portfolio, which investment strategy is superior, how to get started and should it actually be property AND shares?", as Dave, Cate and Pete discuss: Weekly market insights 1. Australian bonds in negative yield territory For the first time ever, Australian bonds have been purchased at a negative rate last week, with an average yield of 0.01% and buyer's who bid most aggressively receiving a yield of minus 0.01%. 2. Landlords and tenants in limbo as VCAT unable to settle interstate disputes The Court of Appeal has ruled that property disputes in Victoria involving landlords who are residents of other states are not within VCAT's jurisdiction. This means that neither the tenant or the landlord can apply to have a tenancy dispute managed in VCAT. We expect this unsatisfactory state of affairs will be dealt with and rectified by the Government shortly. 3. Savings spike the highest since the 70's One silver lining of the coronavirus pandemic is that many Australian's are saving more money than ever. The last time we saw a spike in savings this high was in the early 70's where fuel was being rationed. Increased savings will add fuel to the property fire for many borrowers whose borrowing capacity is contingent on their deposit size. Property v Shares 1. Share investment lessons from the property experts The Property Planner, Buyer and Professor share their first-hand experiences and lessons learnt the hard way from their first foray into shares. 2. What does an investor need to do to be purchase-ready? It's a lot easier to get your foot onto the share market ladder, than the property ladder. With the ability to invest a few $100 in the share market and low transaction costs to purchase and sell, the trio share with you what you need to do to get purchase-ready. 3. Leverage and borrowing funds to invest One key difference between property and shares is bank policy in providing funding, which typically allows for lower loan to value ratios of 50-70% for margin loans. Whereas home buyers can seek loans of up to 95% to purchase a property. This is because of the perceived risk and volatility in the share market and relative stability of the property market. This also means that the value of the investment that you can purchase with your initial capital is greater, and this leveraging bolsters net capital growth, which translates to more opportunity to invest and leverage in the future. 4. Share trading v share investing The trio explain the differences between share trading and share investing, and if you're not a share market expert, why share investing is likely the right strategy for you. 5. How mortgage strategy applies to shares The good news is that the same principle of mortgage strategy apply to share investing as property investing. The Property Planner, Buyer and Professor outline the key strategies to implement. 6. Market volatility While there is certainly more risk in the share market, there is also more gains to be had when leveraging is not considered. The value of shares can increase by 10 times their original amount and some companies just seem to take off. In contrast, outperformers in property see typically 10% or more capital growth in a year. However, it seems with shares that as quickly as they go up, they can come back down. We highlight th...

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