The arguments for and against investing in property or shares are discussed in an article on The Motley Fool.
As the articles suggests, it’s difficult to put any real figures together, because you’re not really comparing like for like, although it’s interesting to note that house prices have risen by roughly 9% per year since 1973, whereas shares have returned an average of 11% since 1918.
Despite this, there are some important comparisons to make:
- A tangible asset. There’s not much excitement from owning a share certificate, but there’s plenty of enjoyment to be had from owning a house. Of course, there’s also the maintenance costs, but then again, your share portfolio will need monitoring and adjusting now and again, so this will incur costs too.
- Liquidity. This refers to how easy it is to sell your investment – obviously with houses this can take a long time depending on the market – with shares you can usually sell and receive the funds within a couple of days.
- Along the same lines as liquidity: Transaction Costs. There’s big differences here: you wouldn’t want to be paying solicitors and valuation fees too often, but the odd share trade now and again isn’t going to cost the earth.
Go and check out the full article.