With the S&P/ASX 200 Index (ASX: XJO) crashing nearly 30% over the past 4 weeks, many investors would probably be swearing off the share market.
"Only fools invest in shares" was something I actually heard uttered last week by a disgruntled investor.
Sure, if you only started buying shares in January because you heard how well they were doing, you'd be feeling peeved right now. And doubly so if you were going on margin.
But for all those investors swearing off shares and sticking with that great Aussie passion of property, I have 3 reasons why ASX shares are still a better choice right now.
You can get started in ASX shares today
The median house price in Sydney and Melbourne is still pretty close to a million dollars. That would put a 20% deposit at around $200,000, more if you include stamp duty and other taxes. That's a lot of saving required (made all the more difficult by our record low interest rates).
In contrast, if you'd like to start a share portfolio, all you need is $500 for an ASX trade. And you can add to your portfolio as much as you like – I myself aim for once a month. And while you build your portfolio, you're getting dividends and capital growth (most of the time) along the way.
Franking credits
When most ASX companies pay dividends, they come attached with varying amounts of franking credits. Franking credits are one of the best tax breaks in the entire tax system – they give you a refund of the company taxes your businesses have already paid (a refund not available in most other countries).
There's nothing better than doing your tax return and seeing that deduction from your shares' franking. It beats negative gearing any day of the week, in my view.
ASX shares are cheap right now
As I mentioned earlier, the ASX 200 has lost close to 30% of its value. That means there are a lot of ASX shares going for very cheap prices relative to their recent norms right now. That's everything from blue-chips like Australia and New Zealand Banking Group (ASX: ANZ) and Telstra Corporation Ltd (ASX: TLS) to growth shares like Afterpay Ltd (ASX: PT) and Altium Limited (ASX: ALU).
If I had to choose between getting a gross rental yield of around 3% for a capital city property or a grossed-up yield from Telstra of 6.56% for income right now, I know which one I'd pick!
Foolish takeaway
Of course, there are many advantages of owning real estate, and I'm not disparaging anyone who follows a successful pathway for investing in property. But I do think investing in ASX shares is a great idea for building long-term wealth right now. So don't listen to those people who are 'done with shares', there's a lot to like right now!
