Property vs Shares E-Book

Peter Koulizos

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 368

Veröffentlichungsjahr: 2013

Beschreibung

A comparison of property versus shares and how to find the right mix for a profitable portfolio Almost every investor eventually considers the question: which is the better investment, property or shares? The answer isn't as simple as one or the other, since both asset classes offer different benefits and risks. And if the best answer is a mix of the two, how do you strike the right balance for sustained returns? This book takes an unbiased look at these two asset classes, explaining the risks and benefits of each, dispelling stubborn myths, and giving you the facts you need to find what's best for you and your portfolio. Offering a point-by-point comparison of shares versus property, this easy-to-read guide argues that a combined strategy is smartest and safest for most investors. It then goes on to give you the information you need to tailor your portfolio to your own level of acceptable risk versus desired reward. * Offers a simple, in-depth side-by-side comparison of the two most vital asset classes in any portfolio * Peter Koulizos is a popular speaker and commentator on property investing and the author of The Property Professor's Top Australian Suburbs * Zac Zacharia is founder and managing director of financial services company, The Centra Wealth Group, and is a lecturer in share investment, a regular speaker and media contributor * Includes helpful tips on what and when to buy, as well as how to avoid both property and share scams Every portfolio should be different, depending on your own individual goals and needs. With this handy guide, you can find the right mix of assets to achieve healthy and consistent returns.

Leseprobe

Property Vs Shares: discover your knockout investment strategy

Table of Contents

Foreword

Round 1: The basics of investment

Asset classes

Cash

Fixed interest (including bonds)

Property

Shares

Why does the sharemarket exist?

Round 2: Why invest?

Reasons for investing

Retire richer

Retire earlier

Supplement income

Work part time

Give up your day job

Investment options

Why invest in property?

Potential for significant capital growth

Regular rental income

Secure hedge against inflation

Numerous tax benefits

Greater degree of control

Lower volatility

High demand for property

No margin calls

Cheaper finance

Higher leverage

Why invest in shares?

Potential for the greatest capital growth

Potential for regular dividend income

Ability to outpace inflation

Tax benefits

Higher potential returns

Lower holding costs

Lower entry and exit costs

Need less money to start buying

Liquidity and quicker settlement (access to cash)

Leverage

Availability, speed and immediacy of information

Diversification

Less need for legal involvement and costs

No tenants

Make money from the market going up or down

Hedging

So which is best: property or shares?

Round 3: History of the property and share markets

History of the property market

Property prices

History of the stock market

History of the Australian stock market

How shares have performed over time

How properties and shares have performed over time

Growth

Round 4: Investment cycles

Stages within the business cycle

The expansion phase

The contraction phase

The relationship between the sharemarket and the business cycle

The relationship between the property market and the business cycle

Round 5: Where to do your research

Websites

Property research websites

Share and investment research websites

Magazines

Property magazines

Share investment magazines

Round 6: Understanding the tables and statistics

Understanding property statistics and data

Discussion

Understanding share price data

Share price quotes

Company fundamental analysis

Round 7: The risks of investment

What is your attitude towards risk?

Controllable risks

What to buy

When to buy

How much to spend

How much you will borrow

When to sell

Non-controllable risks

Economic risk

Business risk

Legislative risk

Interest rate risk

Controllable risks

Non-controllable risks

Inflation risk

Market risk

Currency risk

Legislative risk

Interest rate risk

Performance risk

Counterparty risk

What is your investment time frame?

Working out your risk profile

Round 8: Return on investments

Income

Capital growth

Yield or return

Income yield

Return

Residential property

Commercial property

Rental return from property

Capital growth from property

Purchase house

Purchase commercial property

Market capitalisation

The role of stock indexes

Business sector or industry

Business influences

Round 9: Costs of investing

Property costs

Buying property

Holding property

Selling property

Share costs

Transaction costs

Holding costs

Administration costs

Round 10: Market participants and facilitators

Buying property

Accountant

Banker

Building inspector

Buyer’s agent

Conveyancer

Lawyer

Mortgage broker

Pest inspector

Qualified property investment adviser

Quantity surveyor

Valuer

Holding property

Accountant

Property manager

Handyperson

Selling property

Accountant

Auctioneer

Real estate salesperson

Real estate agent

Sharemarket participants and facilitators

Retail investors

Retail traders

Stockbrokers

Margin lenders

Financial planners and other intermediary advisers

Institutional investors

Boutiques and hedge funds

Listed investment companies (LICs)

Exchange traded funds (ETFs)

Research providers

Platform administrators

Custodians

Share registries

CHESS (Clearing House Electronic Subregister System)

Round 11: Managed investments

Property trusts

Property syndicates

Managed investments

Managed funds

Exchange traded funds (ETFs)

Listed investment companies and trusts

Round 12: Trading vs investing

Investing in property

Real value

Trading property

Property renovation

Property development

Investment in shares

Trading shares

Differences between share investing and share trading

Round 13: Financing your investment

Property loans

Types of loan

Features of loans

Margin loans

Round 14: Investment structures

What to consider

Types of structure

Individual name or sole trader

Partnership

Company

Trust

Round 15: Self managed superannuation funds

What is an SMSF?

What does an SMSF do?

What can an SMSF receive?

Types of investments available

Investing in property

Tax benefits

Factors to be considered

Borrowing in an SMSF

Investing in shares

Administering an SMSF

Costs of running an SMSF

Round 16: Tax and investments

Property and tax

Before purchasing a property

During ownership

Expenses during ownership

Selling the property

Record keeping

Shares and tax

Acquiring shares

Holding shares

Disposing of shares

Franking credits

Round 17: Legal issues

The contract — transferring title

Certain prescribed particulars of land

Cooling-off rights

The purchaser

Fixtures and fittings

The purchase price, the deposit and the balance

Settlement

Special conditions

After settlement

House and land packages

Ownership

Shareholder rights and obligations

The settlement process

Advisers and brokers

General versus personal advice

Round 18: Overseas investments

Online and full-service brokers

Managed funds

Exchange traded funds (ETFs)

Exchange traded international securities (ETIS)

Benefits of overseas investment

Risks of overseas investment

Questions to ask your broker

Round 19: Schemes and scams

Identifying a Scam

The warning signs of a scam

How to avoid scams

Legitimate property schemes

Defence Housing

National Rental Affordability Scheme (NRAS)

Property Options for Pensioners and Investors (Popi)

Property scams

Land sales

Mezzanine finance

Shares scams

Pump-and-dump scams

Offers to buy your shares off-market

Pyramid (Ponzi) schemes

Early access to your superannuation

Fincorp Investment Ltd

Opes Prime Group

Storm Financial

Round 20: Top questions to ask

Buying property

Holding property

Selling property

Buying shares

Holding shares

Selling shares

Round 21: Case studies

Round 22: Advanced investment opportunities

Options

Joint ventures

Short selling

Exchange traded options (ETOs)

Investors: lock in a buy price now for shares you want to buy later

Investors: protect (hedge) your investment portfolio from price falls

Investors: if you are prepared to commit to buy shares at a lower price than they currently are

Investors: to generate additional income from your shares

Traders: to profit from price rises

Traders: profit from price falls

Investment warrants

Cash extraction

Borrowing in super funds

Contracts for difference (CFDs)

Round 23: Conclusion: and the winner is . . .

Capital growth

Income

Tax effectiveness

Degree of control

Volatility of returns

Frequency of returns

Finance

Leverage

Liquidity

Entry, holding and exit fees

Ease of getting started

Information

Diversification

Legal issues

Hassles

Make money from falling markets

Advanced investment opportunities

Summary

Zac would like to dedicate this book to his wonderful wife, Kelly, for her incredible encouragement, love and support, and also to his late father and mother, who have inspired him to become the best he can be — and also taught him the importance of helping others to change their lives for the better.

First published in 2013 by Wrightbooks, an imprint of John Wiley & Sons Australia, Ltd 42 McDougall St, Milton Qld 4064

Office also in Melbourne

Typeset in 11/13.5 pt Bembo Std

© Petraki Pty Ltd and ZIZ International Pty Ltd 2013

The moral rights of the authors have been asserted

National Library of Australia Cataloguing-in-Publication data:

Author: Koulizos, Peter, author.

Title: Property Vs Shares: discover your knockout investment strategy / Peter Koulizos and Zac Zacharia.

ISBN: 9781118613139 (paperback)

Notes: Includes index.

Subjects: Real estate investment.

Stocks.

Investments.

Other authors/contributors Zac Zacharia, author.

Dewey Number: 332.6

All rights reserved. Except as permitted under the Australian Copyright Act1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.

Cover design by Paul McCarthy

Cover image: © iStockphoto.com/Viktor Kitaykin

Printed in Singapore by C.O.S Printers Pte Ltd

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About the authors

Peter Koulizos

Peter ‘The Property Professor’ Koulizos is coordinator of the property and share investment courses for TAFE SA. He also teaches in the Victoria University property investment workshop in Melbourne, Sydney and Brisbane. In addition to his teaching in property investment, he teaches property, valuation and property economics at the University of South Australia. Peter holds a teaching degree, a graduate diploma in property and a master of business (property). Peter also personally invests in property and currently holds several investment properties. Peter’s previous book is entitled The Property Professor’s Top Australian Suburbs.

Zac Zacharia

Zac Zacharia is founder and managing director of a financial services business, the Centra Wealth Group, through which he provides financial planning, investment advice and education services to his clients. Before founding Centra Wealth, Zac had worked as a senior private client adviser at one of Australia’s most respected financial services businesses. He lectures to students of the share investment course at TAFE SA as well as providing training services to students and members of Kaplan. He is a sought-after speaker and regularly contributes articles and investment opinions to numerous publications.

Zac’s qualifications, together with his personal investment and trading experience have provided him with the street smarts and intuition to understand how global investment markets interact, so as to provide dynamic investment strategies for his clients and fulfil his passion for helping people change their lives financially for the better.

Acknowledgements

This book would not have been possible without the help of a number of specialists that we consulted. A big thank you to:

• Dom Cosentino, Partner, Kennedy & Co Chartered Accountants, for his contribution to the chapters on tax.

• Matt Davis, licensed mortgage broker, Property Planning Australia, for his input into the property finance section.

• Steve Russo, Partner, Kennedy & Co Chartered Accountants, for his specialist knowledge of self managed superannuation funds.

• Sean Ryan, Director, FBR Law, for his contribution to the discussion of legal issues in relation to property and the advanced property investment strategies.

Introduction

Finally, here is one comprehensive book that covers both property and share investment! Many books deal with property or shares, but this is the first to provide the facts about both of these asset classes, side by side, in a tell-all, no-holds-barred style.

Is one kind of investment better than the other? Does one provide more capital growth? Is one better for income? What about the risks? This book will dispel the myths and break through the misinformation about both of these asset classes. You will learn the facts, benefits, risks and much more about each of these investments so that you can decide for yourself which, if not both, is good for you.

Our motivation behind writing the book is to help answer the endless stream of questions we are asked regularly that boil down to: Which is the better investment — property or shares?

We believe that a lot of people have a vested interest in promoting either property or shares — but we would like to present the facts on both so that people can formulate their own opinions.

This book:

• is set out in an easy-to-read format

• is divided into succinct chapters, covering issues related to both property and shares

• is written by professionals who not only teach but also personally invest

• provides helpful tips on what to buy, and when to buy

• includes details on what to look out for, such as property and share investment scams

• provides an unbiased point of view on both asset classes

• includes case studies that aim to provide guidance to readers on their investment strategies

• is supported by our website at www.propertyvsshares.com.au.

Property Vs Shares is intended to serve as a reference guide to potential and existing investors in each asset class. Whether you have already invested in shares or property, or you are just starting to consider investing in these assets and want to find out about the risks and benefits of each, this book provides the necessary information to help you make an educated and informed decision based on your own investment goals.

Our website

We have created an exclusive website for readers of Property Vs Shares to supplement your learning beyond your reading and study of this book. The website address is www.propertyvsshares.com.au.

It includes a bonus chapter available for you to download that contains our top picks for property and shares until 2020. Through our website we will keep the material in this book up to date and relevant — and continue the debate about which is best: property or shares!

Our website will also keep you updated as to our current opinions on the property and sharemarket, as well as provide you with a wealth of resources and helpful hints and tips.

Disclaimer

The information presented in this work is general in nature and of an educational and informative nature. It has been prepared without taking into account your objectives, financial situation or needs; therefore, before you decide to act on any of the suggestions and strategies that are contained in this book, you should consider their appropriateness having regard to your objectives, financial situation and needs. This work is sold with the understanding that neither the authors nor the publisher are engaged in rendering legal, financial, accounting, tax, or other professional services. If professional assistance is required, the services of a competent professional person should be sought.

The authors certify that all of the views expressed in this book accurately reflect their personal views about any and all of the subject securities or issuers. Although the authors believe that the information contained in this book is accurate and reliable and is based on their skills, knowledge and experience and obtained from reputable websites, research organisations and published works, neither the authors nor the publisher make any representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties, including without limitation warranties of fitness for a particular purpose. The advice and strategies contained herein may not be suitable for every situation. The fact that an organisation or Website is referred to in this work as a citation and/or a potential source of further information does not mean that the authors or the publisher endorses the information the organisation or Website may provide or recommendations it may make. Further, readers should be aware that Internet Websites listed in this work may have changed or disappeared between when this work was written and when it is read. Except to the extent that liability cannot be excluded, neither authors nor the publisher nor contributing writers nor any associated entities, shall be liable for any loss or damage arising from this here Work for any reason including if caused by any error in, or omission from the material presented in the work.

Please remember that past performance is not a reliable indicator of future results. The forecasts used in this work are intended as a guide only. They are predictive in character and as such may be affected by inaccurate or incomplete assumptions or by known or unknown risks and uncertainties and therefore may differ materially from the results that individual investors ultimately achieve.

Information concerning taxation is of a general nature and does not constitute advice. Please consult a qualified accountant or financial adviser who will be able to provide you with reliable advice for your individual situation.

The basics of investment

Investing requires you to give up the opportunity to spend money you have today in order to earn more money (that will be available for you to spend) . In other words, you are making a sacrifice of a today for the potential to receive an and benefit from the investment at some point in the future. An investment in a growth asset does not carry a guarantee of how much money you will receive in the future, but you can expect that it will be more than you initially invested.