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Should you invest in property or shares?


Investing in property or shares are two of the most common ways to build wealth outside of superannuation and which is best is often subject to debate. But it’s not a debate that advocates of either investment will ever win because it really comes down to which is most suitable for your personal situation.

There are commonly held misconceptions that property is the safest type of investment and that it’s always going up in value.  At the same time, many perceive investing into the stock market to be like playing at the casino or that it’s too complicated to understand. None of these assumptions are true. Investing into property or shares will both work as solid investments for anyone that does it properly.  To help you decide which is best for you, here are benefits and risks of each.

Why you’d want to invest in shares

  • They’re liquid – if you need to sell, you can have your money in a few days
  • They’re divisible – you can sell just a few shares, or half, or all of them
  • You can start with a very small balance
  • They’re diversified – you can own banks, retail, technology and medical companies in both Australia and overseas
  • They’re relatively hands off – you don’t need to worry about managing the company
  • The income can be tax effective

Why you’d want to invest in property

  • You can borrow a large amount of money against your property, magnifying your potential capital returns up to 10 times
  • Income is paid on a regular basis
  • It’s a tangible asset – which is comforting for some people
  • You can depreciate some properties, allowing you to pay less tax
  • It’s a less volatile asset – values typically don’t fall rapidly

Why you wouldn’t want to invest in shares

  • They are volatile – their value can fluctuate on a regular basis
  • You can’t see or control the asset
  • They are expensive to borrow against and you can’t borrow as heavily

Why you wouldn’t want to invest into property

  • It’s highly illiquid – you need to market and sell the property then wait weeks for the money at settlement
  • It’s a large asset that generally isn’t divisible – you normally can’t sell a portion of it
  • You need a large deposit to start
  • It needs to be managed – you need to find tenants and deal with repairs
  • Transaction costs to buy and sell are high

While nothing is perfect, there should be a scenario that suits you better. Comparing one to the other without taking all the structural, borrowing, taxation and cash flow details into consideration will lead to inaccurate conclusions for you. Ignore the hype, media and other people’s opinions at barbeques and take the time to work out what is right for your unique situation. Keep in mind you may not want to put all your eggs in one basket and take a long term view.


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Our response to limit the spread of COVID-19

  • As COVID-19 continues to spread, we would like to take a moment to let you know what Financial Spectrum is doing to respond.

    While we haven’t been directly affected with any confirmed cases, we are taking all reasonable precautions to remain safe.Our priorities are:

    1. Keep our staff and clients safe
    2. Stay fully operational in our service delivery and continuing to manage your financial affairs
    3. Play our part in minimising the impact on our community against the spread of COVID-19

    Financial Spectrum has the technology, infrastructure and systems to continue business as usual remotely and our staff will now be working from home.

  • You should notice no change to our service, with the exception that we are encouraging our clients to meet via video call, rather than face to face, unless requested. We will be contacting all clients with meetings booked over the next two weeks with instructions for a video call.This is an evolving situation and we will continue to monitor developments. We will keep you informed of any material changes to our approach.

    These are unprecedented times and we understand that many of you will be feeling unsettled about your finances. We would like to assure you that we are open for business and are here to help you. If you don’t have a meeting booked but would like one, or if you have questions, please contact us at info@financialspectrum.com.au or on
    02 8238 0888

Brenton Tong

Managing Director

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