Ajay Ahuja Blog Post on the $65,000 question

The $64,000 question.  So here is the answer:

If you want to invest in the short term then neither.

Both promise long term gains for sure but short term gains in the stock market are reserved for the big banks.

Unless you have an army of analysts, insider information and nerves of steel you will NEVER make any serious money by playing the stock market.  Okay you might make a bit at the start but due to human nature and good old lack of discipline, greed will kick in and you will LOSE.

You can make short term gains in property.  Again you need to know your market, have information at hand that isn’t readily available and then speculate.

However if you do this over the medium term you will get caught out as you may roll up all your profits in a development that simply becomes unsaleable when the market turns.

So if you are willing to invest for the long term which should you go for?  Now I am sure you think I am going to say property as you all know I am a fan of property!  However if you are completely risk averse, want a quiet life and are simply not cut out to being a landlord then choose the stock market.

Give your cash to a well known, respected investment house and they will make you money in the long term.  Expect to make 100% of your initial investment over 25 years.

Now if you do not mind a bit of risk, are not afraid of hard work at the start and comfortable with the idea of being a landlord then WELCOME.

By using mortgages, your own brain and a little bit of sweat you can expect to increase your initial investment by 829% over 25 years.

This assumes the same growth rate of 3% applied to the stock market and property.

If we replaced the 3% with the real figures over the last 10 years then the figures would look like:

0% – Stock Market

1,845% – Property

I know this to be true as I have friends who played the stock market in 1998 and they still play the stock market now AND they still work 9am to 5pm (more like 8am to 7pm).

I played the property market and now I work when I want to!