Money-Magnets.Net

Written by Karen Leslie

Wednesday, 23 April 2008 10:47

When I ask "What sort of investor are you?" I don't mean whether you are good or bad, but rather what sort of investments appeal to you. Some people like to own something that they can see and feel, and if you fall into the sort of category property investment may appeal to you. If you care more about the money rather than the actual investment vehicle then you can think about shares or property. Depending on the laws in your country there may be more benefits to having one type of investment over another. For example in some countries you can borrow money to buy property but not to buy shares. This is because property is seen as a more stable investment. However with both property and shares there are many ways of making money in both markets.

The first step before any investment is to get some financial education. This can be through books, seminars, DVD’s, what ever appeals to you. Just don’t go into any investment without knowing anything about it since that increases your odds of failure. And yes I do speak from experience!

Difference between shares and property

Shares: not always able to get loans to buy them
Property: it's tangible, you can see and feel it
Property: you can improve the value of the property by renovations, extensions etc.
Both can give cash flow is you use the correct strategy
Shares are more liquid than property
Shares cost less to start than property
Property has more associated costs such as stamp duty (depending on your state and country)
Property: If doing buy to let then there is issue of tenants
Property has a higher loanto value ratio (can borrow up to 95% for a property but ususally only 50% for shares)
Shares are in a global market
Property is a more local market

What you tend to find is that the average investor will switch to shares if the property market goes down, or switch to property if the share market goes down. However the ideal is to make money in any market. As I’m writing this many property markets around the world are in trouble due the to credit crisis in the USA. Falling property prices if you are a owner and need to sell are a worry but if you are an investor it’s like going to a sale. That doesn’t mean that you can just buy any property but it means that you can get them at a lower price. If you have shares you can certainly make money in a falling market as well as a rising market.