Things that you are never taught in school are how to save money and how to create wealth. I could go into reasons ‘Why’ but will leave that for the time being and concentrate on ‘How.’
Again I say that I am totally biased towards property as a wealth-building tool, which puts me at odds against people pushing shares as an investment. So here is my simple thinking.
Bear with me; The All Ordinaries Index is based on the aggregate market value (AMV) of a wide selection of the companies quoted on the ASX. The market value, or market capitalisation, of any company in the All Ordinaries Index portfolio is the number of shares on issue multiplied by the current price per share in that company. The AMV of the All Ordinaries Index share portfolio is simply the sum of the market values of the companies included.
One interesting point to appreciate is that if companies fail or start to fail they are taken out of the index and replaced with companies that are doing better.
Basically the losers are taken out and shot and fresh blood takes their place. That tends to reduce any ongoing losses the index might sustain when larger companies lose value.
This is one of the reasons investors should be cautious about advisors who point to a perpetually rising index as a reason for investing in the stock market. As the old song goes “It ain’t necessarily so.”
So, let us compare the ‘All Ords’ to the median price of property over 10 years. The stats I am quoting are from 2004 till 2014, which is what was available and the housing I am quoting is for Victoria, which is what I know to be the trusted state to deliver strong gains in property.
All Ordinaries:
1 December 2004 4053.10
1 December 2014 5388.60
Victorian houses:
December 2004 $381,211
December 2014 $711,999
All Ords gain over 10 years 1335.50 32.95%
Property gain over 10 years $330,788 86.77%
That is a 53.82% difference
Am I simple and biased or just aware and smart?
Why am I making these points? For the simple reason that I want to help and assist people to create wealth through property and after over 40 years in the real estate and property sector I feel that I can do this for you.
All you have to do is ask!
As I said in my previous blog post; this year I will be harping on creating wealth through property, because it saddens me to see so may people missing out on what is ‘easy money.’ It is easy when you know how and if you do not know how; all you have to do is ask by emailing bertram@bertramdaniel.com.
