Solid shares v Property

[oxley]

Anyone out there have any thoughts about $200k investment property versus buying in $200k in a solid share portfolio(to have and to hold) not short term trading.

Property would be in SA with rent income at about $200/week.

Looking for any suggestions.

Cheers Oxley:):):)

[laurie]

Well for a start you are getting 5% gross return on the property so I think some of the bluechips can give better returns with 100% fully franked dividends as you haven't given your finanical situation it's hard to give you your answer

cheers laurie

[oxley]

To finance this we ARE RESTRUCTURING THE FARM/B&B.

CHEERS OXLEY

[laurie]

Oxley
Just use Telstra as an e.g you would be be getting over 9% return on its current share price

cheers laurie

[oxley]

Thanks Laurie, see your point, but would need to factor in the rise in capital valiur of the property.

Also would be looking at spreading the shares over 5-10 companies.
propert
The pro's for a share portfolio are that you dont get bad tenents and no maintenance. Also no council rates.

My wife likes the property because (A) you can touch it.

And (B) I have lost about $12000 over the last two years(hard to believe I know, but its true. If i buy into a share it gets the Oxley curse and they nearly go broke.

But i have promissed her that these will not be spec shares and i would not be trading them.

I tried to explaine to her that if you run into a bit of trouble you can sell some shares in a minute, whereas you cant sell the master bedroom.

[8D][8D][8D][8D]

Cheers Oxley

[nelehdine]

Shares any day ... A 5-10 Company you might consider,

BHP Billiton
CBA
General Property Trust
Publishing & Broadcasting
QBE Insurance
Rinker
Transurban
Wesfarmers
Woodside Petroleum
Woolworths

[oxley]

Thankyou all for the postings, and will be talking to our accountant shortly.:D:D:D

Anyone at all in favour of the bricks and mortar[?][?][?]

Interesting portfolio and very well balanced will pass that on to the acct. thanks "nelehdine":):):):).

I do however suspect that the general is either your uncle or second cousin by marriage Rupert. And am hoping that TOX has broken the bad luck run.

Cheers Oxley

[limegreen]

No to bricks and mortar. Neleh usually holds good growth stocks, and I'd vouch for Rinker and BHP, and would consider many of the other stocks listed there!

DISC: RIN, BHP:D

[oxley]

Thanks limegreen for the confidence in neleh. I have just checked the graphs for those stock over the last three years and all but transuban are almost a straight line.

What i need to do now is also look at the div paid over the same period.

Cheers Oxley[:p][:p][:p][:p][:p]

[limegreen]

Good to see that you're looking at graphs. Identifying up and down-trends is a very good way to start IMHO (and then of course, only buying into uptrending stocks). Rinker in particular makes me look like a brilliant investor, and I have just topped up on it's recent weakness!

[laurie]

Oxley
I have property but as Rupert said pain in the bum having saying that I got into property many years ago until I saw the light with shares BUT and a BIG BUT rent will always be there if you have good tenants regardless what's happening with the market

cheers laurie

[kura]

Don't know if a share forum is the best place to get advise on property, doubt if an accountant would be much better, accountants are great for telling you how to structure you affairs in the most tax effective way, but they don't have a crystal ball, as far as the future goes.

[wns]

Hi Oxley,

I have investments in both real estate and shares since there’s money to be made out of both investment vehicles.

If you go with shares, 5-10 companies is a sensible number to have and I would consider some of the companies in Nelehdine’s list.
Even though they are good companies I wouldn’t just buy them at any price because the price you pay determines your return. You want to make sure you buy at a price that represents good value.

If your approach is buy & hold then I’d suggest you look for companies that (amongst other things) consistently earn a high return on equity and high return on capital, high net profit margins, consistently increasing their earnings and have a strong balance sheet.

In regards to property, I have a property management company look after my properties for me. They deal with the tenants and maintenance issues. I just get the occasional phone call when the property manager needs to talk to me about something. It really isn’t much hassle at all.

You mentioned that to finance this you will restructure the farm / B&B. I’m assuming that means you are taking out a loan against some of the equity & therefore this money will be costing you interest (eg. 6.8% or similar)?? If so, I’d be looking for a yield that was at least that much, so that you don’t go backwards in terms of cash flow.

[absolut-advance]

More money to been made in shares by far over the long run, the housing markets over heated, and capital growth looks slimmer by the day. Buy good companies on weakness and do the 10 year hold thing.

[oxley]

Have just keyed in a paper exercise on the ten stocks from Neleh's list and will keep an eye on them for any dips in the market price and look at buying in then.

That is when the acct has done his sums and got our tax done to see if we can afford to do all this.[8D][8D][8D][8D][8D]

Cheers Oxley

[ruethewhirl]

Oxley,

You've lost $12000 over the past two years?

How the hell you manage that?

It sounds like you've "paid your tuition" as far
as stocks are concerned.

Disillusionment is a very very good thing in this
game.

There is no such thing as an Oxley curse tho'.

I wonder if you've read many books on share
investment? A good one to start on is Trading
For a Living by Alexander Elder.

[JBmurc]

property for me by far is a greater investment(leaverage people) there is far more work involved\,is more of who you know than what you know in many cases(unlike buying 5 blue chips that some broker recommend invest your money watch n wait)[}:)]boring. even in shares I,ll far rather invest in higher risker higher return short term investments

same with property if i can,t make money on my investment within a short term then I won,t invest in it ,interest rates kill the profit margin very quickly when your highly geared .(if not highly geared long term is good)

my reason has been the proof over the last 6-7yrs of investing my hard earned $$$$$- SHARES my first 2-3 yrs on the NZX I lost $24,000 about 40% invested I used a broker for all my buys[xx(]-next 2 yrs i made couple thousand 5-6%Ann I did my own trading online ASX NZX - the last couple yrs I,ve traded only on the ASX making good gains 20-30%ann.

PROPERTY-my first property investment i made 400% invested 40,000 into my first development 8months later walkout with 200,000 in my account , most of my later 7 property deals made on average 100-200% back on cap invested ,hard work & big risk at times but great gains
my only worst property deal had me working for 6 months to just make a bum wage out of the job.;)


For me both shares & property are great investments it more depends on the person who,s investing the money ,who they know ,what they know,how they handle risk ,how hard are they willing to work.;)

[oxley]

Have been doing a paper trade(naturally a profit is being shown) from the ten shares($10K per share) that nelehdine gave me and so far after only a week or so are showing a profit of nearly $2000.:):):)

Only two of the share have gone down a little and rinker up 7%

Just waiting now for our tax to be finished and then hopefully get on board.

Cheers Oxley

[oxley]

Just my luck, after Nelehdine had given me the list in Nov the value has risen over 8% so far and that doesn't factor in any dividends.

But of course this is just a paper trade.

Cheers Oxley

[Arthur]

I agree that the long term return from equities is likely to be better (and less risky) than 1 property in South Australia. However if your wife is not happy with shares I would be very wary of investing all of the money in them. She will want to pull it all out at the bottom of the next downturn and it could be very bad for your relationship.

Were you planning on borrowing anything for the property investment? Perhaps you could borrow some "on the property" and invest some of the "cash" in shares.

Why stick to Austalia? 1% of the worlds economy and vunerable to a change in the world economy.
An excellent international fund manager is Platinum.
www.platinum.com.au and/or try some of the "capital guaranteed" MAN products.

Disclosures hold MAN, Platinum (and lots of others)I got last in last years sharetrader Aussie competition.

[nelehdine]

I have a far more levergaed portfolio stock portfolio than the 10 stocks I mentioned Oxley ... am up a whopping 16.8% so far this year ... the market is on fire at present, great if you have been in for a while but getting pretty " over-bought " I would have thought over the short term. Have sold a few of my more speculative mining stocks today ... some of which have risen 30-40% already this year. Bought a few utility stocks today ... B&B Wind Partners, DUET, GPT and Transurban ... looking for 6-7% yields and a little bit of bond exposure via equities. Interest rates look stable to me and would expect the next cycle to be lower rates rather than higher. Replacement costs for assets like downtown office towers, and 1000km gas pipelines and 6 lane motorways are only going one way !! existing assets are great long term investments.