@annz My PPOR turned into IP in Perth averaged 4% pa over but it went down for the first 5 years but took off after covid (a once in a century event) hit. There is rental income, there is negative gearing, there is leverage but you can negative gear and leverage for stocks with debt recycling too apparently. If you have 1 IP, your asset is not really diversified until you buy multiple IPs in different suburbs. I’m a newbie too but I’m leaning more towards stocks and ETFs for religious reasons as well.
@annz I’d caution property on that sort of time frame.
Whilst capital cities do get 5-6% long term that doesn’t mean every suburb gets 5-6%. You’re also at risk of bad timing that you buy at a peak and don’t see any growth for a few years
You also need to factor in
about 5% in buying costs
about 3% in selling costs
about 1-2% negative cash flow in capitals
I have multiple properties, they all do well, but I bought them for decades to hold.
@annz Here in Perth, that would seem pretty reasonable. House prices in some suburbs went up about 9-13% last year and are expected to do the same in the next year, so an average 4% over the next 10 years would be quite reasonable.
A few caveats, it's the house and land packages (with a backyard) that are holding and growing their value the best especially over units, and also I have no idea what's happening in the rest of the country.
If you are tossing up between buying Aus shares or an investment property, might I add US shares to the mix. Over the long-term they give about 12% returns a year.
Check out the performance of SPY, SPHQ, and MOAT over the long-term, with MOAT being my favourite. And to add a little bit more of a kick, throw a bit of SOXX and IHAK in the mix.
@floraspec Thanks for the suggestion. By my rough calculations in Excel, 14% returns from ETF will match 4% from property for 100k cash investment and 10-year time horizon.
I don't know which one has the better odds of eventuating, but I like the flexibility and diversification benefit of ETFs.
@annz Yeh it depends on your risk profile I suppose.
Least risky investments < cash < bonds < commodities < property < whole market ETFS < specific market ETFs < individual stocks < gambling/CFD's etc < most risky investments
If you have a high risk tolerance put it all into tech stock ETFS like IHAK and SOXX. Very few people would bet against semiconductors and cybersecurity companies going up over the long-term so while its still technically a very risky investment I don't think it has much downside but if analysts are right it still has a lot of upside.
And mathematically, I think it would be the best way to maximise your returns without using leverage.
But honestly, I have a bit of a gambling streak so take this advice at your own risk lol
