ASX shares often take a back seat to property when it comes to investing. Australians have long viewed property as the ultimate wealth-building asset. Bricks and mortar have created fortunes over decades, and owning an investment property remains a dream for many.
But shares deserve just as much attention.
While property can deliver impressive long-term returns, investing in quality ASX shares offers several advantages that many investors overlook. Here are three reasons why shares may be the smarter choice for growing wealth.
You can start investing with far less money
One of the biggest barriers to property investing is the upfront cost. Buying an investment property often requires a substantial deposit, stamp duty, legal fees, inspections, insurance and ongoing maintenance. For many Australians, saving enough to get started can take years.
ASX shares are different. You can begin building a diversified portfolio with a few hundred dollars and add to your investments whenever you have spare cash. Instead of waiting until you’ve saved tens of thousands of dollars, you can put your money to work immediately.
That flexibility also makes dollar-cost averaging much easier. By investing regularly, regardless of market conditions, investors can smooth out the impact of market volatility over time.
Shares give you instant diversification
Buying one investment property usually means putting a large amount of money into a single asset in a single location. If that suburb underperforms or the local economy weakens, your investment can suffer.
With ASX shares, diversification is much easier. An investor can spread their money across banks, miners, healthcare companies, retailers and technology businesses. They can also gain international exposure through exchange-traded funds (ETFs), reducing reliance on any one company, industry or economy.
Diversification won’t eliminate risk, but it can significantly reduce the impact of any single investment disappointing.
More flexibility and liquidityÂ
Liquidity is one of the share market’s biggest advantages. If you need access to your money, you can generally sell ASX shares within minutes during market hours, with the proceeds typically settling within a couple of business days.
Selling property is a completely different experience. The process can take weeks or months, involves agent commissions and legal costs, and there’s no guarantee you’ll achieve your desired sale price.
Shares also require far less ongoing management. There are no tenants to find, no repairs to organise, no leaking roofs to fix and no unexpected maintenance bills arriving in the mail.
Many companies even reward shareholders with regular dividends, providing an income stream without the day-to-day responsibilities that come with owning an investment property.
Why not combine the best of both worlds
Investors don’t necessarily have to choose between ASX shares and property. A balanced approach can offer the best of both worlds.
For example, buying shares in REA Group Ltd (ASX: REA) provides exposure to Australia’s property market through the country’s leading real estate listings platform, while Mirvac Group (ASX: MGR) and Stockland Corp Ltd (ASX: SGP) give investors access to major residential and commercial property developments.
These ASX shares allow investors to benefit from housing market activity, rental demand, and new developments without the high upfront costs or ongoing responsibilities of owning an investment property. At the same time, they retain the flexibility and liquidity that come with investing on the share market.
The post Property or ASX shares? Here’s why I’d choose the share market appeared first on The Motley Fool Australia.
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Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.