We have paid off our house, and now we wish to invest our surplus money for our future. We are tossing up whether the best investment would be shares or an investment property. I’d appreciate your thoughts on this.

I’ve been comparing the two for decades, and while both have their place, the differences are stark. The first major difference is entry and exit costs. With shares, there are virtually none – just a small brokerage fee to buy or sell. Property, by contrast, attracts stamp duty, legal fees, inspections, and mortgage costs on the way in, and agent commissions and advertising when you sell.

There’s no easy answer when comparing shares to property, but the latter certainly involves more ingredients.Credit: Simon Letch

Next is the ability to add value. You can renovate or extend a standalone house, but apartments offer little scope beyond paint and a recarpet. The best gains have traditionally come from improving a residential property, but those opportunities are now prohibitively expensive in most capital cities.

Liquidity is another key issue. If I have $1 million in shares, and you have $1 million in property, and we both need $100,000, I can sell part of my shares and have the money in the bank within 24 hours.

You can’t sell the back bedroom – you must borrow against the property or sell the entire asset, triggering capital gains tax and transaction costs.

Tax treatment also differs. Dividends from Australian companies often carry franking credits,........

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