real estate or stocks as an investment??

[mmoojooo]

lets say if u have roughly about 400k in saving, would you rather buy real estate or stocks as an investment now??

[Boris]

For that small amount IMHO -- keep it in the bank and wait for he inevitable drop that all the media are talking about and seems to the main talking point everywhere.

FYI - my wife ( in the property biz ) has come back in the last couple of weeks with reports of visits to house developments nr Sai Kung ( 4 houses 32 - 37 million ), Belchers ( 32 million ) and one in mid levels (50 million ). To my surprise ALL went within 7 days. So despite the mainstream view of prices rising but sales being sluggish, it seems some sectors are bouyant. Just not for " normal " people.

[PDLM]

Assuming that's HK$400K, then probably what Boris says, since you won't get much real estate for that! If you mean HK$3M or so (US$400) then it rather depends what your objectives are - for long term yield I still think some stocks are good value (e.g. HSBC, even at HK$80, will have a medium term dividend yield of about 7% and potential for capital growth). Property in HK is a tricky one - if you want to buy a place to live in yourself then that probably makes sense because the mortgage interest rates are so low, so use some of your cash for the deposit and invest the rest in carefully selected equities.

There are also still reasonable yields (5%+) to be had on some corporate bonds, particularly if you buy those with redemption date such that you intend to hold to maturity, thereby giving you a defined cash flow.

Beyond that, I think diversity is key - into what exactly depends on your risk profile. Personally I am investing in a business and property in the Philippines, and also funding a money-lending business there which generates about 10% per year. But these are obviously pretty high risk for a whole heap of reasons.

Currently, for what it's worth, I am about:

50% in listed equity and equity funds (covering pretty much all areas of the world, but about 8% is in HSBC, and another 8% in India)
12% in bonds
20% in HK property (that we live in)
5% in Philippines property (that we live in)
3% in other Philippines property
4% in Philippines money-lending
6% in our restaurant business in the Philippines

The proportion in equity has grown quite a bit in the last few months simply because of my patience in holding on to some stuff through the hysteria, and one or two good calls close to the bottom (CITIC Pacific particularly).

[mmoojooo]

wow.. those replies are very detailed and informative. Thank you, will remember u guys if i do get rich=)

[er2]

Just for the record - with 400k you could get a mortgage and buy some tiny apartment in the NT for about 1.2 million and rent it out for about 6k per month / 70k a year. Since your interest payments should only be 20K per year, this should be a rather decent investment if you a) don't mind having the hassles that come with being a landlord b) plan to stay in HK for a while and c) are not afraid of skyrocketing mortgage rates (not that I'd expect these, but you never know) or putting all your money in one asset.

My new landlord did exactly this for his mother's retirement plan, he said it is fairly popular among locals who look for fixed income assets since the interest rates here are ridiculous.

[mmoojooo]

ya i heard about , but after downpayment, i will have nothing left for stocks when it does drops.

at this time, I'm not sure which is more profitable at the end.

It seems real estate is less risky but lower return comparing to stocks atm?

[MovingIn07]

To bet the whole lot on either property or stocks is probably risky - diversity is the less risky proposition.

[PDLM]

Stocks have been good for the last 6 months. They're not going to be as good for the next 6.

A good way to lose a fortune is to invest in the things that did well last year.

[PDLM]

Indeed The Economist has run the stats on this...

If you started in 1900 with $1 and had invested it in a broad basket of American shares (with dividends reinvested) then 100 years later it would have been worth about $15,000.

If, with perfect foresight, for each of those years you had invested in the asset which generated the highest return over the year (even including taxes) then after 100 years the $1 would become $1.3 quadrillion ($1,300,000,000,000,000). Which is meaningless of course because that is orders of magnitude more than the entire world's financial assets.

If, on the other hand, without any foresight, you had invested in the previous year's best performing asset the $1 would be worth $783.

However, if you had taken a contrarian view and invested in the previous year's worst performing asset, the $1 would be worth $1730.

And if you had simply invested in US Treasury bonds then the $1 would be worth $86.

For those of you who have an Economist subscription, here are the links to the articles in the archive:
INVESTING | The foresight saga | Economist.com
Investing | The Foresight saga, continued | Economist.com
Charlie Contrarian | Economist.com

Very interesting stuff.

And for those of you without a subscription to The Economist then I strongly recommend that you get one! For a weekly roundup of all that's important globally, written beautifully, and with occasional flashes of brilliant dry humour, it can't be beat!

[=XTR=M=]

lets say if u have roughly about 400k in saving, would you rather buy real estate or stocks as an investment now??

personally i would choose stocks as the main choice. considering that you only have a decent 400k budget, there is not much headroom or leverage for the low-medium range condos compared to the prime assets.

these days, prime assets are the biggest movers due to large inflow
of capital investment from China. there isn't much focus from these
hot funds on medium-to-low range assets so much as there is on the high assets. therefore there should not be too much leverage for the medium-to-low range considering the prices have moved up considerably too.

no doubt that stocks have been much fired up by the sentiment that the worse is over and the econ is back on track to recovery. but there is still chance of a deep correction and that is where you can move in and pick the right stocks, stocks which pay good yields are better than putting the money in FD.

and stocks have better liquidity than property. you can move in and out without the hassles of liquidating your asset.