Alternative Investments to Residential Property- Do you own any?

[Davo36]

ENP, if it were me, I'd just keep paying the mortgages down until you're ready to buy another one.

I say this because a) You are slowly getting to be able to buy again and b) You are reducing your risks and increasing cashflow by paying down the mortgages.

[speights boy]

a large slice of the NZ bonds are from the big four banks,

If you are talking about debt instruments which trade on the NZDX, then that is simply not true.

NZX/ASX have a large weighting of the big four banks.

ASX yes, NZX no, this is not the case.
BNZ and ASB shares are not even listed here.

There is a NZ owned bank which is listed on the NZX which has increased in price 80% over the last 2 years, and is paying a 7.5% dividend yield.

[Eugene]

The important thing property has over shares is the ability to leverage. I have both property and shares and a level of gearing I am comfortable with; the loans are of course secured over the property not the shares.
Buffet recently recommended investing in low fee managed funds; from memory he specifically recommended the Vanguard conservative fund.
I am happy with the low fee funds offered in NZ, Fisher funds and Milford are among them, also some offered by the trading banks.
I like managed funds because I don't believe I (or anyone else for that matter) can pick shares, and they provide diversification.
Over the long term shares do slightly better than property (sorry can't give you a source for that statement), no work is required, they are more liquid than property, and you are diversified across asset classes.

[marklowes]

Obviously the majority of people on here are residential property owners.

However, do you also own other investments such as shares, a business, commerical property, managed funds, etc?

Why do you invest into these rather than pay down your mortgages? Also, at what stage did you invest in these alternatives, i.e before property, with first house or once established with several properties?

You only have to beat 6-7% p.a return investing in shares to make it a better option than paying down mortgage.

I have a lot of shares. I like diversification like others have said. I consider property (if brought after solid research) to be low risk, solid return compared to my share investments which are much more risky and generally not fully under my control.

Last couple of years I've made a lot in shares as anyone has, but I see now as a good time to take profits and put them somewhere safer, so have been buying good yielding property.

Whatever you do in investment only invest in what you know and understand and only do so after researching it well would be my best general advice on the topic

[marklowes]

Nonsense. How much work does it take to buy a property? How many hours spent looking at properties, considering locations, transaction costs, dealing with building inspectors etc?

Property is an active investment and if your sum total involvement is a couple of email a week you'll never make a decent return on it.

Could say that about anything in life though.

Blinding buy into any old managed fund and you'll likely find your returns to be not too flash either.

[elguapo]

Could say that about anything in life though.
Blinding buy into any old managed fund and you'll likely find your returns to be not too flash either.

A managed fund takes literally minutes to get out of, a house could take years.

[forbsie]

Different investments have different characteristics.

Property is not particularly liquid, but in the absence of a crisis not particularly volatile.

The old principle of diversification still holds strong.

[Eugene]

An article on Michael Yardney's site on property vs shares at
propertyupdate dot com dot au

[elguapo]

An article on Michael Yardney's site on property vs shares at
propertyupdate dot com dot au

The indexes for returns on property are all highly suspect, it is almost impossible to calculate the return on property in that way. I've never seen one that factors in the actual costs of ownership such as maintenance and improvements.

[Eugene]

Thanks. Good point.
I liked some of the analysis in the commentary.