It's a classic investing dilemma – should you invest in ASX shares or property?
The current bear market has made that choice even harder to deal with right now. The S&P/ASX 200 Index (ASX: XJO) has fallen more than 20% in 2020 and is currently trading at 5,252.30 points.
That's a long way shy of the 7,139 point record-high the benchmark index reached in February 2020.
But is your money better served in ASX shares or property in 2020?
Why ASX shares could still outperform property in 2020
People may point out that ASX shares have fallen while Aussie property hasn't. However, the valuation isn't really that simple.
Property is inherently less liquid, which makes valuation a little harder. In truth, the value of Aussie properties are changing each and every day.
However, you only really find out property values from periodic valuations or infrequent asset sales. Meanwhile, ASX shares change hands on mass every single day.
That means you get a much better idea of what your Commonwealth Bank of Australia (ASX: CBA) shares are worth compared to your residential property.
An incredible 6,689,173 CBA shares were transacted yesterday. That means you've got a big sample size to see what everyone thinks they are worth.
Another thing other than valuation is the recent share market drop. As we've entered the current bear market, your ASX shares will have been hit hard.
Selling now would not be a very wise strategy.
If you've ridden your investments so much lower, selling at or near the bottom would crystallise your losses rather than letting your investments bounce back over time.
But the nature of the coronavirus pandemic may settle the property versus ASX shares debate once and for all.
Many Aussies are going to struggle to make mortgage payments this year. Australia has some of the highest household debt to income ratios in the world.
That means that significant financial stress from the pandemic could trigger some forced selling. More supply lowers prices and could mean that property prices fall in 2020.
If you're really looking for residential property exposure, you could like to buy an ASX REIT like Mirvac Group (ASX: MGR).
Foolish takeaway
I might be biased, but I'd prefer to buy ASX shares over property in 2020.
The market will bounce back when COVID-19 has passed, and I'm hoping to buy cheap ASX 200 shares to make the most of it.
