Last week I was sitting down with an investor who said:
“I wish I’d never invested in property. I would’ve made more money if I’d just put my money into the S&P 500.”
It’s true that shares have had an incredible run. Property hasn’t – not over the last few years.
But there’s a trap in this type of thinking. Here’s why 👇
Yes, shares have smashed property over the last 10 years
Over the last 10 years, New Zealand property prices have increased by around 3.7% a year (QV).
The S&P 500 has returned around 13.1% a year.
That’s a massive difference.
But there’s something important missing from those stats: Where each investment is currently within its cycle.
For instance, let’s say you were investing in property in November 2021. That was right at the top of the Covid-19 boom.
You could have looked back over the last decade and said, “Property has gone up by 10.2% per year!”
But if that was you back then, you shouldn’t think that will necessarily continue – you’re measuring the returns at the top of the market.
