Why is it important to plan your retirement through property investments?
Julian Fadini | June 15, 2018
You’ve probably heard these wise words from everyone and anyone who’s ever doled out investment advice: property investments are the best for planning your retirement. Most Australians believe that the returns from their super will be enough to cover their expenses during retirement. Unfortunately, this could not be further from the truth. More people are increasingly realising the importance of saving for their retirement nest egg, so they can live a comfortable life without having to worry about unexpected expenses. And while there are many avenues to choose from, when it comes to retirement planning, few are as reliable, effective or secure as property investments. Here are a few reasons why-
1. Pays for itself
One of the biggest draws towards investing in property is that a property investment almost pays for itself. By putting your assets up for rent, you can generate income, part of which can be used to pay off the investment loan. Then, once your debt is cleared, you can choose to use the extra income to fund a more comfortable retirement lifestyle or reinvest it in more property to fund long-term wealth growth.
2. High potential for appreciation
Oftentimes, real estate investors will purchase properties at a low-value price with the intention of improving its value through renovations and restorations. This is a great way to drive up the asking price of a property and is an easy strategy to get a higher net return on your investment. Keep in mind that this requires a certain amount of effort from the part of the investor, as you will need to manage/oversee the renovation work.
3. Long-term gains
There’s no better way to guarantee long-term growth for your money than by investing it in a property. While the average growth rate of property values in Australia overall is not too high, investing in property in the Australian capital cities will be a more fruitful investment, with sources claiming an average rise of 4% to 8% [Source]. However, property markets are infamous for going through patchy periods of little to no growth, and at times they may experience a drop-in value. On the bright side, Australia’s population is forecasted to grow to between 36.8 million and 48.3 million, a statistic that should brighten the day for anyone thinking of investing in property.
4. High level of control
When it comes to managing your personal wealth, it helps to have a high level of control. Property investments allow you to fine tune multiple parameters, like setting the asking price, screening tenants, hiring property managers, and so on. You’ll be hard-pressed to find an investment vehicle that allows you this high a level of control.
5. Never too early
Lastly, when it comes to picking the right time to start investing in property, there’s no time better than now. Investments compel you to put aside a part of your income for long term savings, and the experience of starting investments at an early age helps you get a hang of managing your finances.
So, take the first step towards securing your financial future by investing in smart properties today!