Interesting topic. Agree. People forget the costs of property and of course, the debt. Checked my ETF, after 15 years the total value has increased by 250% (share price plus dividends). It’s a great set & forget. I should’ve bought more earlier. I think I’ll top up soon and buy more. Property costs: strata fees for apartments & some are $10k pa, council rates, water rates, agent fees, stamp duty, selling costs, insurance and maintenance (which can cost thousands or tens of thousands).
I live off dividends on ETFs, for sure it can improve your wealth if you reinvest them to buy more shares, creating a snowball effect that allows your investments to compound over time. It's one of the most passive and effective ways to build an income stream. well managed steady growth for me.
Have you considered the possibility of cashing out some of those dividends for paying off your monthly expenses, instead of re-investing them? Bcos I need a lot as rent, inflation alone eat up almost all of what I make.
tbh I keep compounding, adhering to well established patterns from a professional, even as a rookie, can bring tremendous value! I’ve trimmed, added also and now my average growth has increased 88% in the past year while participating behind a top performer. effectively remits over 100k annually and increasing.
I bought an IP last year in a very competitive market. It took every weekend from me for 2 months. I’ve done really well and am very happy, however, in comparison to ETFs, essentially a click of a button, I’m focussing on ETFs (until I can get my 2nd IP 😂 - which may not happen). If I don’t get a second property, I’ll have a decent portfolio that will help me transition to retirement earlier :)
I have a couple properties and I regret it. Too many fees and land tax and body corp. Rates reveal estate and everything else. I got into ETFs this year. Wish I did it ten years ago.
@@DoubtingThomas333 in the video they did their math based on paying 5% of property value as a management fee, I am pointing out that the management fee will be based on 5% of the rent collected.
You need a mix of property AND ETF's. The main reason is for diversification. People too young to remember the GFC in 2008 do not realise just how badly equities were smashed. People heavily invested in the share market either in their own name or indirectly through Super were devastated. Retirees ready to retire in 2010-12 had to spend years longer in the workforce trying to make it up. Property may be a relatively illiquid asset, but it does not drop 20% in value in one day. If property is out of reach, there are other ways to diversify, such as allocating a small portion of your portfolio to quality bonds (generally do better when shares do poorly) and physical gold.
I think you're missing the point here for a retiree which is what the episode is about. The price of the stock is not of major concern, it's the income it generates. When Commbanks share price drops 40%, does that mean they've lost 40% of their customers? Of course not, revenue is still being generated by the bank which is why the dividends are not nearly impacted like the price is. As was stated, as we get older income becomes the priority and is the reason why I have a cash buffer for a down period to top up the dividends as required. As the markets improve you top the cash buffer back up and your good to go. That way you never have to sell which makes the share price something you don't need to worry about.
@@worldadventuretraveller No, not really missing the point. The dividend argument is correct in theory, and in a normal market cycle it could be appropriate for a retiree. The aspect you're not thinking about is investor psychology during a crisis, because in a crisis all rational thinking and behaviour can go out the door. Many retirees cannot accept losses, in any form, that's just the way they are. I dunno' if either of you blokes were old enough to have been invested during the GFC? Maybe not. Ppl weren't thinking about dividend streams, they were looking at their super halving in value and wondering if the entire financial system was even going to survive another week. Is it likely many sold out of the market for large losses, including retirees? Definitely. Did people rush out of their houses and whack a "for sale" sign in the grass in front of their home or IP? Not so much. That's where diversification comes in, and understanding how you will react in a crisis, which you won't know until there is one. That goes for whether you are a retiree, seasoned investor, or new to the market.
Hi Owen quick question, is Global X backed or covered under Australian financial regulations. For example what happens if Global X goes out of business for what ever reason. I noticed on their website that the custodians of the ETFs are the The Hongkong and Shanghai Banking Corporation Limited, Sydney Branch. Just a question about a worst case scenario if Global X went under what happens to etf shareholders? Sorry don't want to be the bearer of bad news but I always look at the worst case scenarios. If you have any info on this would be great. Hopefully my question makes sense. Thank you.
No no, that’s a wonderful question! Yep, so that’s just the full name of HSBC (one of the world’s biggest banks), which you’ll know. Australia’s ETF providers - and funds industry, including banks and custodians - are extremely well regulated. In the event of a collapse of an ETF provider, another would likely be appointed. And in the event of a single ETF itself closing down, which is quite common, shareholders would be notified and given the option of selling or getting cash after the provider’s sells the securities inside the ETF. Importantly, your money is not used for company purposes and ETFs are extremely transparent (unlike many managed funds, private equity, private credit, etc.). And finally - but perhaps most importantly - if you trade your shares and ETFs with a broker which provides you with a HIN under the ASX’s CHESS model - you are the legal owner of that ETF at the ASX level. Look up things like Opes Prime to understand why / when this can be so important. Rask Invest (our platform) is HIN-based for this reason. Great question. Owen P.S. nothing here is personal financial advice. It is general in nature, about ETFs broadly. ALWAYS read the fund and broker’s Product Disclosure Statement (PDS) and never act until you understand it all, or have spoken to a licensed financial adviser.
24:00- comparison of management fees of rental properties vs ETF are not accurate. In rental properties, you pay management fees on rental income while in ETF, you pay fees on total investment amount. For example, if you rented out $500K property and receiving $20000 rent per year, you will be paying $1000 at 5% property management fees. But with same $500k invested in ETF at 0.5% annual fees, you will be paying $2500 per year. Thank me later 😊
@@JLL-q3o thank you. I have calculated @5% because they mentioned in the show, but let’s say if management fees are 8% then, you will be paying $1600. It’s still less than $2500. Another main point, they missed in favour of property is that, you only pay commission to real estate agent when they lease out your property and property is tenanted. It means you do not have any liability when property is vacant. While with ETFs, you will be paying management fees even if your portfolio goes down by 50% in value. Choice is your mate !!! I am just clearing few unmentioned points here.
The majority of people are not paying 0.5% for EFTs. They range from 0.07% to 0.20% for the top 300 Aussie companies & top 1600 companies in the world After that small expense there's nothing left to pay except $9.50 for when you want to sell them. With property you've always got your hand in your pocket paying out expenses. The real returns are much lower when all the costs have been taken into consideration, not just the buy and sale price. Phantom costs really add up.
@@worldadventuretraveller you have good point, Warren. But there is selection bias here as well. You have only mentioned 2 cheapest and most popular ETFs. There are more than 335 etfs listed on ASX. As per white paper published by ASX on 1/3/24, average weighted ETF fees are 0.52%. So it’s higher than my estimate of 0.5%. Please read white paper and refer to exhibit 2. Now talking about phantom costs of property, I definitely agree with you there. Stamp duties, real estate selling/buying commission and settlement fees are outrageous. To put in comparison, there is little phantom costs with ETF’s too. There is usually buying/selling spread of few basis points. Now as high as property. Also sometimes you pay higher taxes with etf’s income because of the way AMIT contributes amount.
You guys have too little information about property . The tenant will pay the costs lol . Also you talk about how much is the average price of property . Property investors don’t buy in the capital cities . They buy where it’s gonna boom. I can find 300-450k properties . I bought a house in Perth couple year ago.. this month Perth property market is increasing 1k per daayyy!!! With you can take this money out and buy another Property or ETFs without paying any tax. And there is much more about it .. Need to learn more.
![ร้อยพ่อพันแม่ - WanMai [Official MV]](http://i.ytimg.com/vi/XY2pNYASEbg/mqdefault.jpg)
Nice work on the bike! No point having money if you don’t have health to fully enjoy it….
Interesting topic. Agree. People forget the costs of property and of course, the debt. Checked my ETF, after 15 years the total value has increased by 250% (share price plus dividends). It’s a great set & forget. I should’ve bought more earlier. I think I’ll top up soon and buy more.
Property costs: strata fees for apartments & some are $10k pa, council rates, water rates, agent fees, stamp duty, selling costs, insurance and maintenance (which can cost thousands or tens of thousands).
People vastly underestimate holding costs. ETFs are so much easier although hate the paperwork.
I live off dividends on ETFs, for sure it can improve your wealth if you reinvest them to buy more shares, creating a snowball effect that allows your investments to compound over time. It's one of the most passive and effective ways to build an income stream. well managed steady growth for me.
Have you considered the possibility of cashing out some of those dividends for paying off your monthly expenses, instead of re-investing them? Bcos I need a lot as rent, inflation alone eat up almost all of what I make.
tbh I keep compounding, adhering to well established patterns from a professional, even as a rookie, can bring tremendous value! I’ve trimmed, added also and now my average growth has increased 88% in the past year while participating behind a top performer. effectively remits over 100k annually and increasing.
@Msmelissa a lot of people let their dividends ride for the long-term given its solid returns effects overtime
Thank you guys great vid.
I bought an IP last year in a very competitive market. It took every weekend from me for 2 months. I’ve done really well and am very happy, however, in comparison to ETFs, essentially a click of a button, I’m focussing on ETFs (until I can get my 2nd IP 😂 - which may not happen). If I don’t get a second property, I’ll have a decent portfolio that will help me transition to retirement earlier :)
Put Timestamps in your videos please!
Yes please!!
@@brookes1911good point here. We’ll keep improving. Thank you!
Agreed !
Not everyone has an hour spare , time stamps would be fantastic !
💯
Agents fees can be upto 20 percent with inspection fees., renewing lease.
I invest in ETFs coz I can't afford properties 😅
Nice comparison. Could you discuss this from the perspective of people in their 20s and 30s as well?
I have a couple properties and I regret it. Too many fees and land tax and body corp. Rates reveal estate and everything else. I got into ETFs this year. Wish I did it ten years ago.
Property management fee is 5% of the weekly rent, not 5% of the funds under management.
Who's paying a 5% mer?
@@DoubtingThomas333 in the video they did their math based on paying 5% of property value as a management fee, I am pointing out that the management fee will be based on 5% of the rent collected.
The only negative is that your can't borrow 95% of your ETF portofolio like you can with a property. Unless you do high risky things like margin call.
You need a mix of property AND ETF's. The main reason is for diversification. People too young to remember the GFC in 2008 do not realise just how badly equities were smashed. People heavily invested in the share market either in their own name or indirectly through Super were devastated. Retirees ready to retire in 2010-12 had to spend years longer in the workforce trying to make it up. Property may be a relatively illiquid asset, but it does not drop 20% in value in one day. If property is out of reach, there are other ways to diversify, such as allocating a small portion of your portfolio to quality bonds (generally do better when shares do poorly) and physical gold.
I think you're missing the point here for a retiree which is what the episode is about. The price of the stock is not of major concern, it's the income it generates. When Commbanks share price drops 40%, does that mean they've lost 40% of their customers? Of course not, revenue is still being generated by the bank which is why the dividends are not nearly impacted like the price is. As was stated, as we get older income becomes the priority and is the reason why I have a cash buffer for a down period to top up the dividends as required. As the markets improve you top the cash buffer back up and your good to go. That way you never have to sell which makes the share price something you don't need to worry about.
@@worldadventuretraveller No, not really missing the point. The dividend argument is correct in theory, and in a normal market cycle it could be appropriate for a retiree.
The aspect you're not thinking about is investor psychology during a crisis, because in a crisis all rational thinking and behaviour can go out the door. Many retirees cannot accept losses, in any form, that's just the way they are.
I dunno' if either of you blokes were old enough to have been invested during the GFC? Maybe not. Ppl weren't thinking about dividend streams, they were looking at their super halving in value and wondering if the entire financial system was even going to survive another week.
Is it likely many sold out of the market for large losses, including retirees? Definitely.
Did people rush out of their houses and whack a "for sale" sign in the grass in front of their home or IP? Not so much.
That's where diversification comes in, and understanding how you will react in a crisis, which you won't know until there is one. That goes for whether you are a retiree, seasoned investor, or new to the market.
Hi Owen quick question, is Global X backed or covered under Australian financial regulations. For example what happens if Global X goes out of business for what ever reason. I noticed on their website that the custodians of the ETFs are the The Hongkong and Shanghai Banking Corporation Limited, Sydney Branch. Just a question about a worst case scenario if Global X went under what happens to etf shareholders? Sorry don't want to be the bearer of bad news but I always look at the worst case scenarios. If you have any info on this would be great. Hopefully my question makes sense. Thank you.
No no, that’s a wonderful question!
Yep, so that’s just the full name of HSBC (one of the world’s biggest banks), which you’ll know.
Australia’s ETF providers - and funds industry, including banks and custodians - are extremely well regulated. In the event of a collapse of an ETF provider, another would likely be appointed. And in the event of a single ETF itself closing down, which is quite common, shareholders would be notified and given the option of selling or getting cash after the provider’s sells the securities inside the ETF. Importantly, your money is not used for company purposes and ETFs are extremely transparent (unlike many managed funds, private equity, private credit, etc.).
And finally - but perhaps most importantly - if you trade your shares and ETFs with a broker which provides you with a HIN under the ASX’s CHESS model - you are the legal owner of that ETF at the ASX level. Look up things like Opes Prime to understand why / when this can be so important. Rask Invest (our platform) is HIN-based for this reason.
Great question.
Owen
P.S. nothing here is personal financial advice. It is general in nature, about ETFs broadly. ALWAYS read the fund and broker’s Product Disclosure Statement (PDS) and never act until you understand it all, or have spoken to a licensed financial adviser.
Hi Owen, thank you for the run down that helps in understanding the ownership of the underlying securities in the etf. Thank you 😊 @RaskFinance
24:00- comparison of management fees of rental properties vs ETF are not accurate.
In rental properties, you pay management fees on rental income while in ETF, you pay fees on total investment amount.
For example, if you rented out $500K property and receiving $20000 rent per year, you will be paying $1000 at 5% property management fees.
But with same $500k invested in ETF at 0.5% annual fees, you will be paying $2500 per year.
Thank me later 😊
True! Besides that, I wonder, are property management fees normally charged at 5%? I thought 8% was the standard
@@JLL-q3o thank you.
I have calculated @5% because they mentioned in the show, but let’s say if management fees are 8% then, you will be paying $1600. It’s still less than $2500.
Another main point, they missed in favour of property is that, you only pay commission to real estate agent when they lease out your property and property is tenanted. It means you do not have any liability when property is vacant.
While with ETFs, you will be paying management fees even if your portfolio goes down by 50% in value.
Choice is your mate !!!
I am just clearing few unmentioned points here.
The majority of people are not paying 0.5% for EFTs. They range from 0.07% to 0.20% for the top 300 Aussie companies & top 1600 companies in the world After that small expense there's nothing left to pay except $9.50 for when you want to sell them. With property you've always got your hand in your pocket paying out expenses. The real returns are much lower when all the costs have been taken into consideration, not just the buy and sale price. Phantom costs really add up.
@@worldadventuretraveller you have good point, Warren. But there is selection bias here as well. You have only mentioned 2 cheapest and most popular ETFs.
There are more than 335 etfs listed on ASX. As per white paper published by ASX on 1/3/24, average weighted ETF fees are 0.52%. So it’s higher than my estimate of 0.5%. Please read white paper and refer to exhibit 2.
Now talking about phantom costs of property, I definitely agree with you there. Stamp duties, real estate selling/buying commission and settlement fees are outrageous.
To put in comparison, there is little phantom costs with ETF’s too. There is usually buying/selling spread of few basis points. Now as high as property. Also sometimes you pay higher taxes with etf’s income because of the way AMIT contributes amount.
@@JLL-q3o Yes I pay 7.7% which includes GST charge
Somewhat speculative, but at 23.48, I couldn't help but think how Marc has an investment property himself as a ETF analyst. Hmm..
Too much general talking! Get to the point quicker; I still like the info on this channel ( just too long)
I’m not the only one
VERBOSE!! Ahhhhhh
No risky leverage = no thank you
Fair enough mate!
You guys have too little information about property . The tenant will pay the costs lol . Also you talk about how much is the average price of property . Property investors don’t buy in the capital cities . They buy where it’s gonna boom. I can find 300-450k properties .
I bought a house in Perth couple year ago.. this month Perth property market is increasing 1k per daayyy!!! With you can take this money out and buy another Property or ETFs without paying any tax. And there is much more about it ..
Need to learn more.