Booming property, flatter shares and cash is no longer king! - Finness Advisory

Booming property, flatter shares and cash is no longer king!

You may have noticed that the share market has taken a breather in the past few days and property continues to rise. Typically the share market reacts to changing economic conditions very quickly and property is more like a large ship that takes longer to turn.

When Reserve Bank Governor Phillip Lowe lowered rates a few months ago and promised to leave them lower for longer, the share market took off like fuel to a fire.

You see, lower interest rates mean lower cash deposit rates, and lower cash rates means people will seek higher yields and capital appreciation in different asset classes such as shares and property.

Shares are far more reactive because they’re more liquid i.e., it’s quick and easy to buy and sell shares. But property is not like that.  You have to prepare it for sale, list it, advertise it, exchange contract and finally settle the property 42 days after sale (in some states) so the whole process from start to finish can take many months.

Shares have risen more than 55% on the ASX from the bottom of the market around a year ago following the outbreak of Covid.  That said, they’re now floundering around the 7,000 mark on the All Ordinaries because the next phase needs to be either organic growth in profits for companies listed on the ASX or further government stimulus. I think neither are likely at this stage, although the US is contemplating further stimulus.

Contrarily, property is looking stronger because it tends to rise slower for longer. Property also didn’t fall like shares so it’s coming off a higher base.

For those in secure jobs with growing incomes, investing into shares or property has become a new and growing interest. People are borrowing money to buy both shares and property like never before.

The importance of understanding the tax consequences of your actions is absolutely paramount to the success of your investment, and ultimately, your net return.

So if you’re looking to invest in shares or property, please make sure you talk to me before making your first investment and definitely before you sell.

Understanding capital gains tax can save you tens of thousands or hundreds of thousands of dollars!

So feel free to contact me if I can help you.  Simply complete your details below and I will contact you. Alternatively just email or call me for a no obligation no cost chat.

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