Your $2 million Choice Picks

Thank you everyone who has written with their pick on the ‘$2 million choice’.

As you may recall last week, we wrote about the RSL lottery, which is conducted by the RSL Art Union, an organization that raises funds to help Australian veterans.

Last year, the RSL raffle offered something they called the ‘$2 million choice’ as their first prize.

That is, if you won, you could choose between two options.

The first was a three-bedroom penthouse in Sydney with a private roof terrace and panoramic city views. It came with $97,800 in furniture, transfer fees and $250,000 in gold bullion. The prize was valued at $2 million.

The other choice: $2 million in gold bullion.

In other words, the winner could choose between property or gold.

Which prompted us to ask Money & Markets readers the following question: If you won the $2 million choice today, which would you choose? Would you choose property or gold?

If you missed it, you can read the full article here.

Would you choose gold over property?

Well, the question brought in plenty of mail from the readers.

Here is what one reader wrote:

 ‘Cutting to the chase; I would choose Gold. But only because I already have a nice property portfolio, primarily in regional areas of South Australia. Notwithstanding the likelihood of a flat-lining in capital value, property will give passive income. Period. Gold on the other hand can only either appreciate or depreciate in value. If you spend it for living, you have cashed in and it is gone. If you spend the income from property, the property is still there in its entirety!

And another:

Having $2 million solely in property or gold would be unwise for me. Don’t get me wrong – I currently own both gold, gold mining shares and property.’

‘My plan would be to diversify the $2 million over a number of investment types. Selling property takes time.. selling gold can be done in minutes. You cannot sell part of a property – but you can sell part of the gold.

They both bring in an important point: diversifying.

Residential property is expensive in Australia, which puts you at risk of having too much of your portfolio skewed towards property. A property downturn could set you back years.

Yet, the same goes for having most of your portfolio in gold. As the last reader points out, having $2 million solely in one type of investment is unwise.

That’s why diversifying is key.

Here is another reader:

I too would take the Gold. Gold holds its value and has done throughout history. If you had the equivalent in cash, it loses value. Property, if it is your home as Robert Kyosaki says is not an asset. It does not pay you anything. If it is an investment property that is positively geared that is a different matter.’

And another:

When property prices rise as they have done in recent years it doesn’t mean that the property has more “value” – After all it is the exact same thing minus wear and tear etc. It means that inflation is putting upward pressure on prices. Every time a house is sold in Australia (which is many every day) – a little bit of equity (derived from price inflation) leaks out into the wider economy. Rising wages do not cause inflation – they are a lagging indicator that inflation is present. In Australia it is property prices (bid up through irresponsible lending and interest rates) that have absorbed inflation to date, but look out, when the few people that understand this explain it to those who don’t!

Both readers bring a good point on price versus value.

Yes, gold has a historical proven track record of holding its value throughout history.

On the other hand, we have seen property collapse spectacularly in 2008 in the US and Europe.

In Australia, low interest rates have in part fueled the property markets and land prices.

Yet, higher prices don’t always equal higher value. And, to me, the higher the price goes, fueled by borrowed money, the more of a chance for a correction.

Here is one reader:

We all need a roof over one’s head! Your home is in a way your palace. You don’t have to pay rent. Gold costs money to store, doesn’t pay interest; you only rely on capital appreciation to increaser your wealth. Try to sell gold in bad economic times and you will be ripped off by the gold dealers!

And another:

Gold does not give you an income of course whilst the apartment could set you $74,000.00 PA Further, you will pay capital gains tax on BOTH when you sell if they increase and none if they fall in value..

They both bring some good arguments.

The property market is fragile

It costs to store gold, and it doesn’t bring you an income.

Having a place to live is a necessity, which could save you some rent. If you decide instead to rent the property, it will bring you in some nice rental income. But either way, there are still costs attached to it too. Taxes, owners corporation fees, maintenance costs…

Yet, it was striking to see that most readers that wrote in had a clear choice: Gold.

Of course, there is no right or wrong answer, no one can predict the future.

But, it will be interesting to see in a few years’ time which one has done better.

To me, the fact that the property market has increased in price so quickly in such a short time and that people have incurred into so much debt for it makes the whole system fragile.

And the fact that the Royal Banking Commission is exposing some questionable lending practices could cause a tightening in credit…which could cause the property market to decrease even further.

Thank you to everyone that wrote in. While I don’t get the chance to publish as many of your letters as I would like, I certainly read all the emails that come in.

And, as always, it’s great to hear from you. Remember, you can always reach me at

Selva Freigedo is an analyst with a background in financial economics. Born and raised in Argentina, she has also lived in Brazil, the US and Spain. She has seen economic troubles firsthand, from economic booms to collapses and the ravaging effects of hyperinflation, high unemployment, deposit freezes and debt default. Selva now writes from her vantage point here in Australia. She is lead Editor at the daily e-letter Markets & Money. And every week, she goes through each report and research note produced by our global network of trusted advisors to find the best investment opportunities for you in Australia and overseas. She packages these opportunities for you in Global Investor.

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