Key takeaways
Property and shares both offer strong wealth-building opportunities. The better choice depends on your goals, resources, risk tolerance and investment strategy.
Property offers leverage and the ability to manufacture growth. Investors can borrow against a relatively small deposit and add value through renovations or development.
Shares offer greater liquidity, flexibility and lower entry costs. Investors can start small, diversify easily and access their money much faster.
Successful investing requires similar qualities in either asset class. Patience, discipline, risk management and sticking to a proven strategy matter more than the investment vehicle.
Property and shares can work particularly well together. Combining property’s leverage with shares’ liquidity and flexibility can create a more diversified wealth strategy.
Are you looking to build greater wealth but unsure which investment vehicle is right for you?
When it comes to building wealth, few debates are as enduring as property versus shares.
Recently, I sat down for a live conversation with Louise Bedford - one of Australia's most respected trading educators, a bestselling author of six books on the share market and founder of Trading Game.
The conversation was particularly interesting because we approached wealth creation from opposite directions.
Louise started with shares and added property later, while I started with property and have since added shares.
Rather than turn it into a competition, we agreed to explore why each of us chose our starting point, what drew us to the other asset class and where the two can work well together.
Louise's journey began at 19, when she attended a seminar where a speaker outlined three paths to wealth: property, shares or owning a business. The speaker argued that everyone should ultimately think like a business owner, regardless of which asset class they use to get there.
For Louise, shares won out for a few clear reasons:
- Low cost of entry. She didn't have a large deposit to work with, and shares allowed her to start small.
- Flexibility. You can't sell off "one room" of a property if you need liquidity, while shares can be partially sold or adjusted much more easily.
- Control over risk. Strong risk management principles could be applied trade by trade.
Louise illustrated the difference in entry costs clearly: on a $500,000 property, transaction costs such as stamp duty and building inspections can run to around $39,000.
The equivalent entry cost into $500,000 worth of shares might be as little as $600.
On returns, Louise noted that property has compounded at roughly 7-7.5% a year on average over the past two decades, which is a solid result.
She also pointed to the top-performing shares this year, which returned more than 3,300% on earnings, while acknowledging that such outlier results require real skill, discipline and a well-executed trading plan.
Why I Started With Property
My path went the other way.
Property felt like the logical and accessible choice. I bought my first property for around $100,000, using a comparatively small deposit and borrowing the balance.
The ability to use other people's money at scale through leverage was a major drawcard, and its importance shouldn't be underestimated.
I also found success by adding value to properties, renovating or developing to build equity and cash flow, then repeating the process.
I even did this with my own home, convincing my wife to live in a renovation project (a decision she wasn't especially thrilled about at the time).
Other draws for me:
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- Property felt lower risk and fairly simple to understand.
- Everyone needs somewhere to live, so there's a built-in tenant demand.
- It suited a long-term, less hands-on approach compared with active trading.
Eventually, though, I hit a wall many property investors will recognise: borrowing capacity.
Once lenders won't extend further credit, a property strategy can no longer scale on its own. That led me to start learning more seriously about shares.
Where the Two Paths Converge
As our conversation progressed, it became clear that property and shares require a similar underlying mindset.
Louise made the point that traders in her mentoring program who have a property background tend to perform well early, often seeing their equity grow almost immediately.
Her view is that the qualities needed to succeed in property - patience, discipline and the ability to stick to a plan - transfer directly to share investing, even though the investment vehicle and tools are different.
We also discussed the role of ego and discomfort when investors venture into an unfamiliar asset class.
Property investors have already taken the leap into their first asset class and found it manageable, so they often carry a quiet confidence they may not fully recognise.
When they apply that same discipline to shares, the danger they had imagined often seems exaggerated.
Louise's own move into property came through Michael Yardney, whom she had known for decades.
She described feeling like "Henny Penny", convinced the sky was falling, before recognising property as a natural way to diversify beyond shares. She also appreciated that property forced her to think in years rather than weeks.
A Practical Framework, Not a Winner
A more useful starting point emerged from our discussion: if your income stopped, a health crisis hit, or you needed liquidity quickly, would your current setup support that?
Considering flexibility and growth alongside liquidity and leverage is more useful than simply taking a side.
Property's strengths include:
- Access to leverage (borrowing against a smaller deposit)
- Capital growth and tax benefits
- Ability to add value through renovation and refinancing
- A long-term, lower-maintenance approach once established
Shares' strengths include:
- Very low cost of entry and transaction costs
- Greater liquidity and flexibility
- Ability to start small (including strategies like regular small contributions to ETFs)
- Potential for outsized returns, contingent on skill and discipline
We both came away from the conversation believing that the two approaches can complement each other.
The discussion reinforced that diversification, by combining property's leverage with shares' flexibility, may serve investors better than treating this as an either-or decision.
The discipline, patience and commitment to a plan that build wealth appear to matter more than the asset class you start with.
