Explained: the key differences between shares and property.
In the video above, Owen explains the key/basic differences between shares and property investing in Australia.
Please remember these are just general rules of thumb and investing in both shares and property can be very risky. That’s why we think it’s important to speak to a professional before you act on the information in this educational tutorial.
Table of Differences Between Shares And Property
|Why buy?||Share price growth and/or dividend income (sometimes with franking credits)||House price growth and/or rental income|
|Minimum amount needed||$500 (plus a small amount of brokerage)||Often tens of thousands (plus a loan) and/or equity in another property|
|Liquidity. That is, how fast does it take to buy and sell?||As quickly as a few minutes (for blue chips) to a few days/weeks (small-cap shares)||Usually a few months|
|Learning curve||High (initially) — but it’s fun and easy with our free courses! (see below)||Low|
|Cost||Low. Typically, you’ll need to pay a brokerage fee (the cost to buy and sell) and sometimes a modest account fee or fees for extras (read the T&C’s!)||High. Stamp duty, maintenance, improvements or upkeep, property managers, advertising, etc.|
This table is provided for educational purposes only and is general in nature. Each property and share will have different levels of known and unknown risk, costs and potential returns.
How to Start
|How to buy||Using an in-person stockbroker (“full service”) or online (“discount”). If you “CBF” picking shares or have better things to do, you can outsource stock picking to a professional via Superannuation, a managed fund or Exchange Traded Fund (ETF).||Speaking to a buyers agent or searching online and going direct|
|How and where to get professional advice||For personal advice: A qualified financial adviser. For investment research not specific to you, contact a ‘general advice’ provider (e.g. join a paid subscription service or find reputable online sources).||By using a buyers agent, mortgage broker, real estate agent or speaking to a financial adviser|
As with all industries, the finance industry has some sharks who will try to rip you off or mislead you (especially if you are new!).
Be careful when ANYONE says to you:
- “It’s guaranteed”
- “There is no risk”
- “It’s an easy way to get rich”
- “Just tell me your bank details to get started”
- “Can I have your password?”
- Use loans or credit cards — that you can’t afford — to invest in things you don’t truly understand
- Buy or accept anything from someone over the phone — take your time to make a decision
- Click on links inside emails sent to you (go directly to the website)
- Take advice online from someone who isn’t qualified (in Australian finance, a professional must hold an AFSL or act underneath someone who does. Check ASIC.gov.au and the “professional registers”).
- Never feel free pressured — make up an excuse to get away from pushy salespeople (e.g. “Sorry, I have to go now — my dog is competing in an online beauty contest. Bye now!”)
- Speak to multiple professionals before making a decision – even ‘professionals’ can it wrong, or…
- Read the Product Disclosure Statement (PDS), Financial Services Guide (FSG, which includes the AFSL number) and Terms & Conditions – it sounds boring but it’s a MUST DO if you’re not paying a professional for advice
- Ask questions – if you don’t understand the investment, chances are you’ll sell at the first sign of weakness (and you won’t know the right time to sell even if things go well)
Rask’s #1 Rule: Remember, only you truly have your best interests at heart and advisers only offer advice — it’s your decision.
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