Investors overestimate property

Most investors are under the misconception that property has outperformed shares over the past 20 years and hold unrealistic views about property investment returns, according to a survey by BT.

Seven out of 10 investors surveyed believed property was the best performing asset of the past two decades while just 22 per cent correctly chose shares, according to the survey of 1,000 people who were representative of ABS weightings, a statistic BT investment specialist Michael Bailey described as “alarming”.

Even after the falls associated with the global financial crisis, shares remained the strongest performer, particularly when property maintenance costs were factored in, Bailey said.

This belief may undermine an investor’s long-term wealth creation and retirement income ambitions, Bailey said.

When asked how they would invest $200,000 over the next 20 years, just over half of respondents selected property, and only a third thought shares bought either directly or via a managed fund would generate a better return.

This denial of history represents a weakness within the investment community, Bailey said. Rather than trying to “shoot the lights out” investors should be satisfied with more easily attained market returns, he said.

The survey also revealed that half of the respondents expected to rely on the age pension when they retire, despite the fact that Australians in general have embraced a long-term view on investing and know their superannuation balance.

Many still believed that safe cash investments were the best option in retirement, raising the question of whether Australians had truly embraced the concept that diversified shares investing would lead to better outcomes even after retirement.