Video: Difference Between Property & Shares in Australia

In this article:

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

SharesProperty
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 curveHigh (initially) — but it’s fun and easy with our free courses! (see below)Low
CostLow. 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

SharesProperty
How to buyUsing 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 adviceFor 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

Be Careful!

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?”

NEVER:

  • 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!”)

ALWAYS

  • 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.

Did you know Rask Education offers investing, budgeting, tax and finance courses? Here are the three most popular:

Absolutely no credit card or payment information required -- all you need is an email address!

Owen Raszkiewicz

Owen Raszkiewicz

Owen is the Founder of Rask Australia, Lead Investment Analyst for Rask Invest and head educator at Rask Education. Prior to founding Rask, Owen was an investment analyst at the highly regarded managed funds research business Zenith Investment Partners and a Writer/Analyst for The Motley Fool Australia. Owen’s formal qualifications include a Master of Applied Finance and Master of Financial Planning from Kaplan Professional, Bachelor of Technology (Information Systems) from Swinburne University of Technology, Advanced Diploma of Financial Services (Financial Planning) and Diploma of Mortgage Broking Management. He's also completed level 1 of the Chartered Financial Analyst (CFA) program.

Share this post:

Share on facebook
Share on twitter
Share on linkedin
Share on email
Share on whatsapp