Background
Property and shares are both very rewarding investment vehicles. The question as to priority among the two is arguable and indeed could be a subjective one. When answering the question of investing in property versus shares it is important to remember that this is a question purely based on preference, risk and return, not one of academic discuss. If these two very different but effective brands of investments medium are both employed efficiently, both can provide the same independent financial freedom.
State of the Market
Proficiency in the Knowledge of the dynamics of both markets is germane. For a while now some Financial Planners have been preaching how shares have been a better form of investment than Property. Over the last few years few would argue on this line, until share prices plummeted recently.
A study of the Nigerian Real Estate sector would reveal that over recent history says the last 50 years, you would have trouble finding a time when prices of properties have fallen more than 5%, even in the civil war era. However, with stocks and shares, whilst you can make quick gains you are exposed to equally large and sudden losses.
Andrew (Twiggy) Forrest of Fortescue Metal fame was listed as being worth $13 Billion months ago but with the recent decline in FMG share prices his wealth has dropped to $1.3 Billion robbing him of his short-lived crown as Australia’s wealthiest person.
Now the rise and fall are fine and just a normal part to investing in shares. The thing with shares is that the people who will usually get caught out are the novice investors who jumped on board too, paying N10 per unit of a particular share because everyone else was making profits. These people still own the same shares which are now worth N1.50 or there about. This can happen in reverse. The worst of it can affect even the professionals who study the markets as a job.
If the same investor spent his money on property they may be down about 5% at the moment which is even rare in our property cycle, the idea is to be in a position to ride out the storm as property always eventually recovers and goes on a jolly ride continuously up the slope. This unfortunately can’t be said for shares which sometimes completely collapse leaving the investors substantially out of pocket.
In short both investments involve risk; the difference is the size of the risk. If you can hold on through the tough spells property always increases in value over time. With shares this increase can happen a lot quicker but you can also lose the lot just as fast.
The only question you need to ask as an investor is how long I will have to wait to double my money; the answer is usually answered at the point of buying; the question of what you bought, how you bought, when you bought and where you bought answers all questions.
Conclusion
The choice of shares as an investment vehicle is as good as investment in property. Both instruments are overtly rewarding, but require commitment, patience and proficiency in the dynamics of both markets. It is however, unarguable that the property market has a better element of stability.
Contact Palydom now or email us at info@palydom.com, for a FREE, No Obligation consultation regarding any of your property related issues or requirements.