Property or Equity? Which is the best investment?

Mark Twain said; “Buy land, they’re not making any more of it”

One question I am repeatedly asked is this: “which is a better investment, Property or the Stockmarket”.

As with so many things in life, the answer is “it depends”.
I have to agree with Mark Twain’s observation. Land is a finite resource, and we live on an Island. You don’t need a PHD in stating the obvious to realise that an investment in land or property should, over time, appreciate. Property isn’t a bad investment.

However, when it comes to the question, which is the best investment think of it like this……..

If I am a business making widgets in a factory, I need a building to house that factory. My company can either buy or lease the premises. But the key consideration is this. It makes economic sense for me to use the property to run my business. In other words, I can add more value from the production of the widgets than I can from the property itself.
Now, it doesn’t matter what I choose to do in the building I could be a hairdresser or a Lawyer, the fact remains that after costs (ie rent or loan repayments to the bank) I can make a profit from my business.

Intuitively, a company is sufficiently rewarded from taking the risks of running a business that it can make more money from carrying on in business than it can from simply renting the premises to another business.

Logically, which is the best investment? An investment in Equity of course. Buying companies should reward an investor more than an investment in property in the long run. Numerous studies and empirical evidence has supported this conclusion.

The difference is that an equity investment is typically more volatile. The moves in price up and down are more rapid and therefore we say that the risk is greater. However, property is a relatively illiquid asset. Ask my client who bought a property in Florida as a “sure thing” and still can’t sell it some two years later.

Equally, when it comes to a private investor who may have hundreds of thousands or even millions of Euro tied up in residential property through their main residence, common sense says, that a prudent investor would look to invest in something other than more residential property.

We had a client the other day tell us that they were diversified. They had a property in Ireland and one in Spain and one in France………diversification? I think not.
_________________
Marc Westlake Dip PFS,QFA

INVESTMENT WARNING
The information available through this Website is for your general information and use and is not intended to address your particular requirements. We do not, nor are we authorised to, offer advice on specific investments in the UK.
In particular, the information does not constitute any form of advice or recommendation by Gold Investments and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision.
For your information we would also like to draw your attention to the following general investment warnings. The price of shares and investments, and the income derived from them, can go down as well as up. Investors may not get back the amount they invested. Past performance should not be regarded as indicative of future performance.

Mark OByrne

Also on news-goldcore-com

Videos

New Russia/China Gold Backed Currency Imminent

This Little Known Indicator Says Gold Is Still Set For A Major Rally In 2022

David Hunter Stock Market Prediction – DOW 45,000 In 2022

Blog posts

Central Banks…Why Bother?

Central banks…why bother? Inflation is here and it cannot be contained. US inflation is touching a 40-year high, the UK has hit the 40-year high, and the EU’s has already hit an all-time high. Figures of 8%, 9%, and 7% respectively are bad enough. This gives people strong enough reason to want to abolish central […]

READ MORE

New Russia/China Gold Backed Currency Imminent

We were delighted to welcome Simon Hunt to GoldCore TV this week. David Russell interviewed the expert economist and global observer to ask him about the Russia-Ukraine war, central bank tightening, and the future of the US Dollar hegemony. This is a sobering interview where investors will be interested to hear his take on market […]

READ MORE

Is Gold Starting to Behave Itself?

Gold is doing what it is supposed to do!  Equity markets are tumbling, “NASDAQ 100 Rout Erases $1.5 Trillion in Market Value in 3 Days” reads one Bloomberg headline. The big names such as Apple lost over US$225 billion, Microsoft almost US$200 billion, Amazon and Tesla each lost US$175 billion market value over the three […]

READ MORE

Featured

Rick Rule- Should You Invest In Gold 2022

READ MORE

Jim Rogers- The Worst Bear Market is Coming

READ MORE
Newsletter
Category
Archives
Popular

No posts available

Videos

New Russia/China Gold Backed Currency Imminent

This Little Known Indicator Says Gold Is Still Set For A Major Rally In 2022

David Hunter Stock Market Prediction – DOW 45,000 In 2022

Blog posts

Central Banks…Why Bother?

Central banks…why bother? Inflation is here and it cannot be contained. US inflation is touching a 40-year high, the UK has hit the 40-year high, and the EU’s has already hit an all-time high. Figures of 8%, 9%, and 7% respectively are bad enough. This gives people strong enough reason to want to abolish central […]

READ MORE

New Russia/China Gold Backed Currency Imminent

We were delighted to welcome Simon Hunt to GoldCore TV this week. David Russell interviewed the expert economist and global observer to ask him about the Russia-Ukraine war, central bank tightening, and the future of the US Dollar hegemony. This is a sobering interview where investors will be interested to hear his take on market […]

READ MORE

Is Gold Starting to Behave Itself?

Gold is doing what it is supposed to do!  Equity markets are tumbling, “NASDAQ 100 Rout Erases $1.5 Trillion in Market Value in 3 Days” reads one Bloomberg headline. The big names such as Apple lost over US$225 billion, Microsoft almost US$200 billion, Amazon and Tesla each lost US$175 billion market value over the three […]

READ MORE

Featured

Rick Rule- Should You Invest In Gold 2022

READ MORE

Jim Rogers- The Worst Bear Market is Coming

READ MORE