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  1. #21
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    Quote Originally Posted by Bob Kane View Post
    That's a compelling line of logic which I have to agree with.
    Good on you Bob, appreciated.

    This is a property forum and naturally members favour property investment. I have no problem with that. All I am trying to say (because I'm silly enough to think I understand broad types of investment ) is that there are other valid choices.

    My background is 30 years of helping ordinary people buy homes, farms and businesses. Plus I have followed and invested in the share-market for all of those 30 years.

    For what it's worth, my conclusion is property is the best choice. Not the easiest, not the fastest, not the best return - but solid and understandable over decades. And not far behind shares.

  2. #22
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    Ok, the Herald article. Its fair and accurate. Indeed what it tells us (but does not say) is that investing in index funds over long periods beats all the fund managers. Benjamin Graham knew this and Warren Buffet could confirm it. They however were among the rare people who could winkle out share investments above the long-term averages.

    So - if you ignored fund managers and simply purchased share market unit trusts you'd pay very low fees and reap the benefits - so long as you were patient. Plus you'd have dividend income which in NZ not so long ago was 7-9% and higher.

    Shares are far far easier to buy than land. You don't need much money and you can sell them almost overnight. Try doing that with land.

  3. #23
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    Olly - a clever guy, worth listening to, but his Landmark properties bit the dust in 1988. All the people who trusted and believed in Olly lost their money. I notice Olly survived - did he pay back his investors? Landmark invested in land - how could that go wrong?

    I think his criticism of the Herald article is mistaken. He says that the NZX top 50 should be compared with the top 50 suburbs but that's nonsense. The reality is the top 50 shares simply represent the largest 50 companies in NZ - not the best 50 companies. In among the 50 is Telecom: originally listed at $2 rose to $8 and today trading at $2.60. So that index has dogs and greyhounds just like the property statistics.

    Furthermore companies pay dividends which is exactly the same as rent from owning a building. Dividends and rent are the return on capital.

  4. #24
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    Quote Originally Posted by Winston001 View Post
    Furthermore companies pay dividends which is exactly the same as rent from owning a building. Dividends and rent are the return on capital.
    And the NZSX50 includes dividends.
    Shares v's property - the same but differant
    Shares
    - easy to buy a few with little money
    - easy to diversify. If you had say $40k you could buy several (say 5) differat companies in differant sectors
    - hard to leverage
    - can produce nice dividend
    - liquid - easy to sell when you need

    Property
    - easy to leverage
    - hard to diversify unless you have lots of money. $40k may get you the deposit on 1 house, one income stream
    - illiquid
    - can produce a nice ren return
    - safe as houses except in a downturn - so long as you don't have to sell you will be OK

    I have heard it said before that you make your money in business (own direct, shares etc) but store that money in property.

  5. #25

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    Quote Originally Posted by Bob Kane View Post
    Now, from that fraudulent press release in that other thread is says shares returned 11% over the last 40 years.
    The capital gains in houses was 9% and of course the snake-oil salesman omitted the rental return which, to be conservative, I'd suggest 5%. Some investors aim for a higher return but let's try to understate it for now.
    So houses with 9% capital gains and 5% rental returns = hang on, something's not quite right...
    Bob, are you wanting to compare both investments without any borrowings, or are you assuming the IP is leveraged?

  6. #26
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    When it comes to making money the best asset I own is shares in a private company.
    Not listed - so harder to sell and the whole investment could easily be lost if the company went bust.
    Can't say I've ever had tenant or maintenance problems with shares.
    And they're soooo "productive" as well!

    Better investments around than buying "retail" off brokers.
    The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

  7. #27
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    how do you find the private company to buy shares in?

  8. #28
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    Network. Talk. Lawyers. Accountants. Do Business with..
    Shares can be closely held - especially small companies paying good dividend.
    Just another option to know about and more risky.
    The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

  9. #29
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    Quote Originally Posted by speights boy View Post
    Bob, are you wanting to compare both investments without any borrowings, or are you assuming the IP is leveraged?
    I want to compare both investments without borrowings.
    Shares returns 11%pa
    Property returns 9% capital gains + 5% rental income = 14%pa
    Seems to be a one horse race so far.
    Are my figures wrong?
    If you want to use leverage then the property returns just go crazy.
    I've been waiting for someone to produce figures showing how good shares are - I recall someone once posted on PT something to that effect but I haven't been able to locate it.
    So in the meantime I'll use ol' snake-oil salesman's figure of 11% which he's no doubt wrung out to the maximum.
    I imagine a few property investors would be a bit disappointed if they could only get 11% return on the combined capital gain + rental returns.

  10. #30

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    Quote Originally Posted by Bob Kane View Post
    I want to compare both investments without borrowings.
    Shares returns 11%pa
    Property returns 9% capital gains + 5% rental income = 14%pa
    Seems to be a one horse race so far.
    It would appear so.

    However if you are starting with no savings and the ability to invest only a modest amount eg. $1-2k per month, then the point where earnings start is significantly different.

    Of course we don't do that, as we borrow for housing.
    This is the correct and usually the only thing to do when starting off in property.
    But that is not what you were asking.


 

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