Posted on 12 October '15 by , under General News.
Shares and property are two very good investment options for those with a self-managed super fund. However, since they both have very different attributes, choosing the one that will achieve the best outcome for an SMSF depends on what the trustee wants to achieve.
The advantages of investing in property include:
property prices are negotiable
undercapitalised properties can be renovated for profit
property prices are less volatile since it can take months to advertise, sell and settle a property purchase in Australia.
However, returns from property rentals are usually low due to factors such as land tax, utilities and rates, maintenance and tenancy vacancies.
Shares are more liquid, dynamic and volatile than property. Maintaining a portfolio of quality shares that pay tax-effective dividends may be a good way to fund retirement. With the right portfolio allocation, shares also have the potential to provide a better, stronger income than property rentals, as long as that income is sustainable and increasing.
Property can generally be used as a wealth-creation tool, while shares can create a reliable retirement income. For those who can afford it, it may be a good idea to invest and diversify in both. For those who remain unsure about which investment option to pick, seeking financial advice may the best option.