Share in the success

Only one in 10 people under 25 and one in four people between 25 and 34 directly own shares, according to the ASX Australian Share Ownership Study 2012. 

While many Aussies have a love affair with property investment, it's not always the best option.

Young people may look at property as a good investment because you can see and touch it. Others have seen their parents' homes increase so much in value over the years, they figure it's a good way to make money. However, it's not always that simple.

Shares can make a lot of sense for younger investors. Reasons for this include:

1.     You can start with just a little – Compared to a huge home loan, you can start a share investment with a reasonably small amount. Even $1000 is a good start, if you keep adding to it.

2.     You don't need to go into debt – While you can certainly borrow to buy shares, it's not a requirement. With an investment property, a lot of your money goes into paying interest; while with shares, you can buy just what you can afford and never need to be in debt.

3.     You don't need to lose money to make it work – Many property investors negatively gear their property... While this reduces your tax bill, it also means you need to find that extra cash to top up the repayments.

4.     You can access your money if you need it – Shares are a long-term investment – usually five years at least. And while it's always better to sell them when the market is strong, you can liquidate your shares if you need to, in as little as one day.

5.     Young investors have time on their side – Shares perform best over the long-term, because their volatility can see prices go up and down in the short-term. However, since 1974, Aussie shares have earned the most income and enjoyed the highest capital growth of any asset class, growing 180 times over during this period. So if you have time on your side, as a young investor does, shares have a strong appeal.

Have a great weekend,

The team at IPS