WHAT ’ S BEEN THE BEST INVESTMENT LONG TERM ?
Although people buying and selling property quickly have done well through the pandemic , holding property longterm is always the best strategy to build wealth . Even if you buy at the absolute peak of the market , keeping a property for a long time means that it barely matters . And having a fully owned home at retirement puts you in a vastly different situation to a renter . But how does property compare to other asset classes ?
Bitcoin has topped the list over the past decade
Working out the best performer by asset class is difficult for a number of reasons . When you buy it and when you sell it is critical . Entry and exit costs differ according to what you ’ re buying . For the share market we ’ ve used both the ASX and the NASDAQ , however different shares yield different returns . Similarly , you can ’ t buy a Sydney median-priced house , and house prices vary a lot across cities but also within suburbs . This analysis doesn ’ t provide a perfect comparison but does give an insight into what has performed well over the past decade and what hasn ’ t .
The star performer over the past decade has been Bitcoin , rising by close to 160,000 per cent . Generally seen as one of the most high-risk investments , it ’ s certainly paid off for anyone that invested a decade ago . At the opposite end of the spectrum are term deposits and Treasury bonds .
As opposed to Bitcoin , these are considered the most risk-free investments and their returns have reflected this . A term deposit would have only given you 12.7 per cent return over 10 years .
How did property fare over this time period ? Sydney house prices have seen the most growth , up 237 per cent . They were narrowly beaten by the NASDAQ , a selection of US stocks . Hobart was also a top performer , followed by Canberra . In fact , most Australian capital cities did far better than the Australian share market . The ASX beat only Darwin and Perth over this time period .
Tax systems favour property investment and being an owner-occupier
Once purchased , the family home is a tax free asset in most of Australia ( Canberra is switching from stamp duty to an annual land tax system ). Buying a family home , instead of renting and investing in other asset classes , can mean much less tax is paid over time .
Property investing ’ s role in supply of rental properties also means some tax incentives are in place . In order to ensure a steady supply of rental housing , negative gearing and capital gains tax concessions are in place for those that buy rental properties .
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