'We have €200k in cash and already own property. Time to consider stocks?'

Welcome to The Money Coach, a Times of Malta column where readers can ask questions about life's money issues. Send your questions about personal finances, inheritance, gifting or other personal finance topics to moneycoach@timesofmalta.com

Dear Luca,

I am 39 years old. My wife and I own our home outright and have a loan on two apartments, which we currently rent out. The rent comfortably pays the loan, and by the time we are both around 60, these apartments will be fully paid off, meaning we will be receiving the rental income in full.

So far, property has always given us an excellent return and it’s the only thing we’ve ever invested in.

We now also have over €200,000 in cash and are looking to invest further. Our target is not necessarily to stop working completely, but ideally to retire or at least reduce our workload significantly in around 10 years’ time.

Many of our friends have made quite a lot of money from investing in the stock market. One close friend who has been investing consistently since 2012 told us that she achieved an average return of around 15% per year.

I’ve always kept away from financial markets – my parents lost quite a bit of money when they invested through one of Malta’s biggest banks and their experience left a lasting impression on me.

Now I wonder if we should invest this €200,000 in the market, to ensure a more balanced portfolio, or if we should trust what has worked for us in the past and use the money to buy a third apartment.

We would really appreciate hearing your thoughts.

Cautious but Curious

Luca responds:

'Property or stocks?' It's one of the most common questions I receive (if not the most) from professionals and couples who are trying to make the most of their investments.

Many people regard the stock market with suspicion. It is often misunderstood, and when it goes through a bad year, people are very quick to point out its dangers, volatility, and lack of reliability (while forgetting the bigger picture).

You mentioned your parents’ bad experience when investing in stocks. I can relate. My father had a very similar experience back in the 1990s, when he invested in what was considered one of the most attractive investments at the time: infamous Argentinian bonds. He ended up losing a lot of money.

That experience affected my relationship with investing from a very young age. And it taught me an important lesson: not all investments are good investments, and not all “market investing” is the same.

When people say, “I made an average of 15% per year in the stock market,” they often oversimplify a much more complex reality. The outcome depends on what you invested in, how you invested, over what timeframe, and with what level of understanding. Blindly following advice — whether from banks, friends, or headlines — is rarely a good strategy.

Now, let’s take a look at some data.

When people refer to “the market,” they often mean indices such as the S&P 500, which is essentially a snapshot of 500 of the largest companies in the US. Over the past century, the S&P 500 has averaged returns of around 8–10% per year. This, however, is an average. Some years perform exceptionally well, while others experience losses — sometimes significant ones.

This is where consistency becomes crucial.

One of the most effective ways for people to invest — especially those starting out — is through what is known as Dollar-Cost Averaging (DCA). This involves investing a fixed amount of money regularly, regardless of market conditions. By doing this, you’re not trying to time the market. You’re entering it at different price levels over time, which helps smooth out volatility and reduces the emotional stress that comes with investing lump sums.

However, before even comparing property and stocks, I’d like to take a step back and ask a more important question, one I raise often: What does your version of ‘retirement’ actually look like?

Do you want to fully stop working, or simply reduce your workload? How much do you realistically need per month to live the life you want? Which expenses will remain, and which will likely disappear?

Early or semi-retirement is not calculated by chasing the highest possible returns. It is calculated by matching predictable income streams to your future living expenses.

Property does this very well. Rental income is tangible, familiar, and psychologically reassuring. But it also comes with concentration risk, i.e. a large portion of your wealth is tied to one asset class, in one country.

Stocks, on the other hand, offer diversification and liquidity, but they require something many people underestimate: emotional tolerance for volatility. This is often where past family experiences (like the one you described) quietly influence our decisions more than we realise.

So what would I consider prudent in your situation?

Instead of placing the entire €200,000 into another property, or investing it all into the market, this may be an opportunity to take a more gradual and balanced approach.

Putting all your €200,000 into the market at once, especially considering that you have never invested before, might not be the best idea emotionally. If the market happens to underperform shortly after you invest, the stress can be overwhelming.

I’ve seen many people become anxious when their portfolios drop by just a few percentage points. Now imagine investing everything at once and then seeing a 10–20% drop shortly after. Even if the investment is sound long term, emotionally, that can be very hard to handle.

Taking a smoother approach and investing gradually (such as through the DCA method I mentioned earlier) often makes a big difference. It helps reduce emotional pressure, smooth out volatility over time, and makes it far easier to stay invested consistently.

Remember, diversification does not mean abandoning property. It means reducing dependency on a single path.

I also strongly encourage you to seek advice from a licensed investment advisor before making any decisions. Not to hand over control blindly, but to get clarity on the options available and how they fit within your broader goals.

That said, before even doing that, educate yourself.

This is your money, and no one will ever care about it more than you do. Having even a basic understanding of how markets work, the types of investments available, and the risks involved can make a significant difference to long-term outcomes. In this column, I always try to explain things without jargon and in a way that’s easy to understand; but there is always more to learn.

Finally, remember this: the goal is not to outperform your friends. The goal is to build a structure that supports the life you want.

Sometimes, the best investment decision is not the one with the highest projected return, but the one that allows you to sleep at night and stay consistent for decades.

Luca is the founder of the Money Coaching Hub. Email him your financial questions or your response to today's question for a chance to be featured in a future column.

Disclaimer: This column is intended to provide general information on various topics related to personal finance. The information provided is for educational purposes only and should not be construed as personalised financial advice for your specific situation. Financial decisions are highly individual and can vary greatly based on your unique circumstances, goals, and risk tolerance. The author of this column is not authorised to provide financial advice. Before making any financial decisions, it is recommended to seek professional financial advice from an authorised financial advisor.