{"id":273014,"date":"2025-11-09T10:21:16","date_gmt":"2025-11-09T10:21:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/273014\/"},"modified":"2025-11-09T10:21:16","modified_gmt":"2025-11-09T10:21:16","slug":"should-you-invest-in-property-or-the-stock-market-my-answer-may-surprise-you","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/273014\/","title":{"rendered":"‘Should you invest in property or the stock market? My answer may surprise you’"},"content":{"rendered":"

Warren Shute is a multi award-winning Chartered Financial Planner, Certified Coach, author of The Money Plan, and Sunday Mirror columnist\"WarrenWarren Shute, finance expert(Image: thelyndonagency.com)<\/p>\n

Bricks and mortar, is there a better way?<\/p>\n

When I started in financial planning in 1995, the most common objection I faced when recommending an investment was: \u201cI\u2019m buying bricks and mortar, that\u2019s my pension.\u201d<\/p>\n

This went away slightly during the 2008 global financial crisis, in part, I think, because of the difficulties of arranging mortgages, but also because the market became less attractive.<\/p>\n

Recently, several new clients have told me they no longer want to be a landlord. The legislation and complexities have got too much. Capital gains tax allowance has been reduced from \u00a312,300 to \u00a33,000.<\/p>\n

The final nail in the coffin was probably the higher tax rate, for higher rate tax payers, on property gains verses other investments.<\/p>\n

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Apart from a flirting pass in the 90s, I have always invested in equities. There are a few logical reasons why I believe equities make better investments than property, but we don\u2019t buy with logic, we buy with emotions, justifying our decisions with logic that will back up the choice we made.<\/p>\n

A great example: I was speaking with a client recently and he was very proud (read: boasting) of a property he purchased in 2000 for \u00a380,250, which today is valued at \u00a3220,000, a gain of almost \u00a3140,000 (I\u2019ll ignore the costs for now).<\/p>\n

That\u2019s a pretty nice return, but annualised it\u2019s only 4.1%. Nicky and I are selling our home after 20 years and, coincidentally, this also reflects our annualised growth of 4.1% \u2013 and this excludes all the improvements we have paid for.<\/p>\n

But how does a 4.1% annualised return compare with the stock market?<\/p>\n

If he had invested his money in 2000 not in Tesla, Microsoft or Rightmove but in a boring, straightforward world<\/a> equity fund, he would have around \u00a3541,901 \u2013 over \u00a3321,900 more, almost an 8% pa return over this period.<\/p>\n

When you buy the world stock market, do not think of it as just buying a fund. Think of it as becoming a part-owner in some of the greatest companies from around the world, such as Apple, Microsoft, Exxon, Johnson & Johnson and Visa.<\/p>\n

Which would you prefer: a rental property in your local town, or ownership of some of the world\u2019s greatest concerns? I\u2019d rather own the company than the building they work from.<\/p>\n

You might be thinking, wait, you\u2019ve forgotten about the rental income he receives. True, this is generally around 3.5%, which is what my client\u2019s property achieves, in a lower-risk family unit. But this isn\u2019t what he keeps.<\/p>\n

After deducting the tenant voids, letting agent fees, building insurance and tax, what\u2019s left is generally just enough to keep the roof up.<\/p>\n

Because over a 25-year period, how much do you think he needed to spend on the house to keep it in good repair? The odd plumbing fix, a new bathroom and kitchen, and let\u2019s hope he didn\u2019t need a new roof, or major structural work.<\/p>\n

My grandmother Shute always said to me: \u201cWarren, it\u2019s not what you make that\u2019s important, it\u2019s what you keep.\u201d<\/p>\n

An \u00a380,000 investment can be managed hassle-free, generally tax-free within ISAs and allowances, but when my client sells his home, he\u2019ll pay a \u201csuccess tax\u201d of 28% on the profit he\u2019s made, paying tens of thousands of pounds to HMRC, and that will really eat into his return.<\/p>\n

If you buy your own home, you should. It\u2019s a place to build memories. Nicky and I are not looking at our next home to make money, but to make memories.<\/p>\n

For my investments, I\u2019ll keep backing Global PLC and let the best brains and talent grow my wealth tax efficiently. For more on investing visit www.LexingtonWealth.co.uk.<\/p>\n","protected":false},"excerpt":{"rendered":"Warren Shute is a multi award-winning Chartered Financial Planner, Certified Coach, author of The Money Plan, and Sunday…\n","protected":false},"author":2,"featured_media":273015,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[1337,64,63,99,186,40346,158657,2577,4363,184,185,158656,4679,4961,35880],"class_list":{"0":"post-273014","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-apple","9":"tag-au","10":"tag-australia","11":"tag-business","12":"tag-finance","13":"tag-financial-crisis","14":"tag-global-pc-inc","15":"tag-microsoft","16":"tag-pensions","17":"tag-personal-finance","18":"tag-personalfinance","19":"tag-rightmove","20":"tag-stock-market","21":"tag-tax","22":"tag-visa-inc"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/273014","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=273014"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/273014\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/273015"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=273014"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=273014"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=273014"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}