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The Sophisticated Property Investor: Thursday 30 August 2012

Welcome to The Sophisticated Property Investor, our controversial eNewsletter for smart property investors.

If you want to see just how emotional a bunch of supposedly calm and rational investors can get, ask them whether they think property or shares make a better investment... Then duck for cover as claim after counter-claim is thrown out and the debate steadily degenerates into name-calling and verbal abuse!

Great fun to watch (if you have a slightly sadistic streak and don't get caught up in the argument yourself) - but is there a clear winner between property and shares?

In this edition of the Sophisticated Property Investor, we'll examine the question in a different way - one that shows how the debate between property versus shares actually misses the point entirely...

Later in the newsletter you'll also discover how investing in shares can actually help you succeed in property, and you'll find an opportunity to meet one of my own mentors - an internationally recognised share expert who presents on the world stage alongside legends like Robert Kyosaki!

Let's get started...


Property -VS- Shares

Volatility and Quick Profits

It's said that the stock market can be far more volatile than the property market, and indeed a chart of ASX movements over the past couple of years looks more than a little like the ECG printout of a patient undergoing a heart attack!

But the same volatility that can result in a sudden loss on the share market can also deliver a very quick gain, and share market advocates will often point to 'fast gains' as an advantage over investing in property.

Fair enough, but having just settled on a property that I bought for $50k under market value (which the bank has acknowledged and just written me a cheque for the difference), I can confidently say that huge cash profits can be made in property just as quickly, if not quicker. In fact, I don't know of anything other than property that can deliver tens of thousands in immediate profits just by signing a piece of paper!

Leverage

Some argue that property is better than shares because of the availability of leverage (i.e. that borrowing up to 95%+ of the value of the asset allows you to access greater growth returns with less money invested).

But on the flipside there are ways to use leverage in shares too - and not just through margin loans, but through writing options which allow leveraging into growth in the value of a share at a fraction of the cost of the actual share.

'Average' Returns

All sorts of arguments are made about the 'average' returns from property or shares over time, in an attempt to demonstrate that one asset class offers a better investment than the other. Curiously, BOTH sides of the argument seem to be able to come up with statistics and charts demonstrating that 'their' asset class has better 'average' returns over time than the other!

As the saying goes, there are "Lies, damn lies, and statistics"...

But this whole argument about whose 'average' returns are better is actually a very UNsophisticated approach. On both sides, the argument about better 'average' returns is based on buying and holding the asset for the long term. In essence, it's an approach based on "buy, hold, and pray the asset goes up in value".

As SOPHISTICATED investors, we want to OUTPERFORM the 'average'. A sophisticated investor should be quite unhappy with an 'average' return no matter what the asset class!

A Dark Secret...

It's a little known fact that I actually started my 'investing career' by trading shares rather than buying properties, and to this day I'm still a big fan of using shares for building wealth.

Now, before you think I've gone over to the Dark Side, let me assure you that my first passion remains property investing. But shares have a very real place in my overall investing approach.

Allow me to explain...

When I was just starting out on my investing journey, and had made the conscious decision that property would be the vehicle to get me to my financial destination (Freedom City), it didn't take me long to recognise that one of the greatest challenges I faced at the time was raising my first deposit.

You see, despite being on a good professional salary, I'd fallen into the middle class debt trap. Like so many others I was living to my means, buying things on credit, and basically spending everything I was earning.

Raising the cash required for the deposit and closing costs on an investment property is probably the biggest stumbling block for many budding property investors - even with 95%+ LVR loans available. And with limited savings at the beginning, it certainly was a major stumbling block for me!

So, having made the decision to begin investing in property, I took the scissors to the credit cards and started saving hard. But I could see that just saving alone (even on a bread and water diet) was going to take a while to get the deposit money that I wanted.

I've always been a bit impatient, so I looked for ways to take my "small money" (limited savings) and grow it more rapidly into a useable deposit than just saving alone would allow.

And, attending a short seminar at the stock exchange one lunch hour I realised that I could use share investing - done the right way - to help me do exactly that!

I educated myself in share trading tools and techniques, and - by putting what I learned into practice - within just a few short months I was able to quickly build my "small money" into a deposit sizable enough to purchase my first investment property! The rest, as they say, is history.

As a result, I've always been fond of shares as an investment strategy, and as a great way of rapidly building deposit funds that can then be leveraged into property deals. In this way, shares have become an integral part of my property investing approach.

These days I continue to invest in both shares and properties, although personally my portfolio is heavily skewed towards property.

Nevertheless, shares remain an important component and have allowed me to buy far more property than would otherwise have been possible.

Property -VS- Shares... Conclusion: BOTH Sides Are Wrong!

Neither asset class - property OR shares - is inherently better or worse than the other. It really comes down to how you use each type of asset to help you achieve your financial goals.

Rather than blindly buying either shares or properties and speculating - i.e. hoping to profit from general price rises over the long term, sophisticated investors educate themselves and use methods that provide greater control over the profit outcome than the 'average' investor.

Sophisticated investors use their financial education to create above-average profits, and do so in ways that make money regardless of whether the market is going up, down or sideways!

In contrast, the average investor only makes money if the market is moving up (and even then they'll make less than the sophisticated investor who understands how to optimise their profits).

While the smartest investors I know might have a preference for one asset class over another, they use ALL asset classes (property, shares, cash and businesses) to help overcome financial obstacles, maximise their momentum, and optimise their returns.

As such, sophisticated investors know that the debate between shares and property is really a foolish argument best left to the speculators.

Property and shares can be used intelligently together in order to accelerate the sophisticated investor's achievement of their financial goals.

If I Knew Then What I Know Now...

When I started out with my investing, I used very basic share trading techniques to build up my deposit funds for buying properties.

Back then, I had no clue how to safely use smarter techniques to gain leverage and protect myself so that I'd be adding to my cash flow and deposit money whether the share market went up, down or sideways.

These days my own mentor when it comes to all things shares is my good friend George Fokas. George has been at the shares game for well over a decade and has taught me techniques that provide consistently high returns while keeping myself far better protected.

I wish I'd known George back when I was getting started, as his help would have multiplied the returns I made from my share trading, helped me avoid mistakes, and given me an even faster start.

George is one of Australia's most highly regarded experts on low-risk high-return share strategies and has more integrity in his little finger than most people in the wealth creation industry! He's well known on the international stage and was recently invited by legendary financial educator Robert Kiosaki to present at Robert's own events in America.

I've been leaning on George for ages to come and present on his strategies, and he has FINALLY agreed to take a break from his international engagements and do a series of small group talks around the country.

It's a great privilege to be able to offer you, as a reader of our Sophisticated Property Investor e-Newsletter, the opportunity to meet George Fokas in person!

If you want some proven techniques to help you rapidly build "small money" into sizable deposit funds for property investing, then this is an opportunity you won't want to miss!

Come along to a free evening or morning talk, where George will demonstrate how you can potentially generate income from the stock market without risky speculation or having to allocate a lot of time (George has shown me how to do this in less than 60 minutes a month).

Most people in the share market only make money if their shares go up in value, but George will show you the astounding technique he uses to earn high returns and a monthly income irrespective of whether the stock market goes up, down or sideways!

With George heading back overseas soon your chance to hear an internationally recognised expert speak candidly about these techniques won't come around again for some time. There's not a lot of seating room at these venues, so book quickly to avoid disappointment!

You'll also receive a free e-book from George revealing a secret to supercharging your investment portfolio that only 5% of the most successful traders know!

Don't miss out - click the link below and book your free seat NOW!

Book Your Free Seat To See George Fokas Live!

 


Property / Investor

When you think about your own property investing, consider that there are TWO words in the title: "Property Investor".

Where do you place the emphasis in your own investing? Is it on the word "Property", or on the word "Investor"? Are you simply someone who collects properties like trophies, without regard to optimising your returns...

...Or are you an INVESTOR first and foremost, who uses investing in various asset classes to achieve your financial goals in the fastest and most efficient way possible?

Food for thought!

Until next time...

Invest Wisely!

Simon Buckingham
Director & RESULTS Coach


Why We Provide These Newsletters

We invest our time and energy into writing these newsletters and providing the information to you at no cost for two reasons:

  • Most of the information out there about the property market and what it takes to be successful in property investing is, in our opinion, just plain wrong. We wanted to provide an independent counterpoint to combat misinformation and help people make better, more sophisticated property investing decisions. (We'll never try to sell you a property and we have no affiliation with any major property developer.)

  • We hope that you'll find the information valuable and useful, and may as a consequence consider becoming a full member of the RESULTS Mentoring Program, our 12-month coaching program for people who are serious about using property as a means for achieving financial freedom.
  • To find out more about the RESULTS Mentoring Program, visit ResultsMentoring.com