Real estate and shares are probably two of the most common asset classes. There’s really no one shot answer for everyone in which one you should choose to invest in. Your financial position and your mission in life is unique, and always different from everyone else. The following list of pros and cons of both asset classes might help you decide in which you should invest in the short term, middle term and long term.
Real Estate
Pros
- Inflation hedge
- Ease of borrowing
- Sound long-term returns
- Good tax efficiency
- Add value potential
- A physical investment
- Easy to understand
- Traditional investment type
- Historical low volatility
Cons
- High entry/exit costs
- Vacancy risk
- Damage risk
- High borrowing costs
- Generally not a liquid asset
- High maintenance
- High ongoing costs
- Finding data can be difficult
- Annualised Return
- Standard Deviation
SHARES
Pros
- Low entry/exit costs
- Liquidity
- May invest small amounts
- Very tax efficient
- Ease of sale
- Good long-term returns
- Inflation hedge
- Low costs
- Easy diversification
Cons
- Lack of knowledge
- Gearing generally 70%
- Risk of margin call
- Propensity to sell asset
- Lack transparency
- Inability to add value
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