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Investing Money Property vs. Shares

Investment Articles > Article: Investing Money Property vs. Shares

Your money is hard to earn and investing that money into the right method will give you the results you need and want. Yet, there are many types of investing available to you, and choosing the right one can be the most difficult task of all. Two options you have are investing money in property and investing money in shares. The stock market and the real estate market have plenty of opportunities to provide to those in need. Neither one is the wrong way to invest because each fills the needs of some people. As you compare these two investment sectors, determine which the best is for you in particular.

Explore The Risk

One reason to consider investing money into the property market or the shares market is risk. Risk is a factor in any type of investment method. For some people, risk can be measured by necessity. For example, you know you plan to retire in five years, and therefore you can't be too risky with your investments. For others, time is on their side and investing with more risk is okay. There are several aspects to consider here.

  • Risk levels should be defined before you begin investing. If you are working with a professional stock broker, they must know the level of risk you are willing to take so they can help you choose the most appropriate type of investment for you.
  • More risk can sometimes bring more reward, but it also brings a higher chance of losing it all. For high risk situations, be careful in investing more than you can afford to lose.
  • Lower levels of risk still offer opportunity, but with less money to gain.

Understand your level of risk and how well property or shares fit it. For example, there is a large amount of risk in the stock market, depending on what types of stocks you invest in. Additionally, property is a more stable type of investment in the long term. Even with property prices fall, in the long term, they do well. The longer sessions of stock markets also usually equal more investment security. Chances are good you'll make faster money in the stock market with a few good opportunities if the real estate market isn't doing as well.

The Economic Factor

There is little doubt that your investments are likely tied to the economy. For example, in Australia, the bottoming out of the stock market drove some investors away. They turned to the real estate market instead. In this case, property seemed like a better opportunity because prices are falling, making it easier to get into. At the same time, though, investors should consider factors like interest rates, which continue to grow.

Another factor to consider here is how you plan to invest in each sector. For example, when investing in the property market in Australia, you may be concerned about interest rates and property values. With these factors so high currently, you could have more difficulty making enough money from tenants to pay for the bills on the property (not to mention make a property on it.) Yet, a closer look reveals that rents are also on the rise. As more and more Australians are hit by the housing market here and are unable to stay in their homes, they are moving into rented spaces. This means there is also more demand for available rentals. In this case, it could be profitable to invest in the real estate market over the traditional stock market, which may be too risky for too many investors.

Making The Decision

To help you get the right level of investment for your home, you'll need to consider your financial goals in the short term and the long term. Do you have the funds to invest into a shaky shares market where you could lose substantially in the short term, but may make a significant income in the long term? Or, are you looking for more immediate action and gains and want to take advantage of the rental market? Each person will have their own goals, and if you are unsure about the right way to invest your money, talk to your financial planner or advisor. Get a good understanding of where you are and what excites you, as this will drive your passion more so than any other type of investment.

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