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Earning a passive income: The benefits of investing in shares vs property

5 August 2022 9:01 AM

Bruce Whitfield interviews personal finance expert Maya Fisher-French (Maya on Money).

- When it comes to passive income, most people generally think of property and the rental income it generates

- However, property is not a passive income according to personal finance journalist Maya Maya Fisher-French

- She discusses the benefits of earning dividends from a share portfolio as a passive income


What to invest in? @ ismagilov/123rf.com

"Passive income is a buzzword at the moment and we all want one."

But what is the best way to get your money to work for you most effectively and with the least hassle?

Bruce Whitfield chats to personal finance journalist Maya Fisher-French (Maya on Money).

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When you talk about passive income, most people generally think of property and the rental income it generates, says Fisher-French.

"Very few people actually think about shares and how a share portfolio can provide you with passive income, which is dividends."

The personal finance expert has a very different view.

People say to me 'It's easier to invest in property, I understand property. Investing in shares is so scary'... I look at property and I think, 'property is not a passive income'. Anybody who invests in property will tell you it's a lot of work!

Maya Fisher-French, Personal Finance Journalist - Maya on Money

It has high acquisition costs, high holding costs - those transaction costs on property are really expensive. There's ongoing maintenance, tenant management...

Maya Fisher-French, Personal Finance Journalist - Maya on Money

She also notes that property is not very liquid - you can't divest yourself of property overnight.

Yet it seems a lot of people go into property without understanding the complexities.

...and yet people are nervous about investing in the stock market... but in my view when it comes to investing, especially for income through dividends, it's actually a lot less of a hassle.

Maya Fisher-French, Personal Finance Journalist - Maya on Money

Whilst I meet many successful property investors... with the ability to leverage their capital by getting their tenants to pay for the property, I invariably come across a lot of people who are not successful and have been badly burnt...

Maya Fisher-French, Personal Finance Journalist - Maya on Money

In a nutshell says Fisher-French, a dividend is the portion of the profits that a company makes that it pays out to its shareholders - generally twice a year as an interim, and then a final dividend.

What I like about dividends is that - unlike the share price of a company - dividends are generally more predictable, because they're based on the profitability of a business rather than any external events that affect stock market valuation...

Maya Fisher-French, Personal Finance Journalist - Maya on Money

We're seeing now that the global markets are down but companies are still coming out with some really great profits. It's this dividend income that we should be focusing on, rather than the share price.

Maya Fisher-French, Personal Finance Journalist - Maya on Money

Scroll up to listen to more insights on the benefits of dividends




5 August 2022 9:01 AM

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