When planning for retirement, a lot of people opt for property investment, as it provides a wide range of attractive advantages. Nonetheless, before making your decision, you need to do your research and, only afterwards, make an informed decision. Not every property is suitable for investment. Thus, consider the following tips that will come in handy in helping you to select the best kind of property investment to assist in retirement planning.
The right type of property
Before you make your decision, the best thing for you to do is to opt for the assistance of experienced professionals, this assistance will usually come from a finance broker, financial planner and an accountant. This is a very important decision, as it can ensure your future financial security for years to come. Thus, given the fact that we are talking about significant amounts of money, asking for the opinion of a professional is a must.
You certainly have a wide range of choices when it comes to property investment, whether you choose a new or old property, house or unit, building or land only, so on and so forth. Every option itself encompasses its set of advantages and disadvantages. To put it more clearly, a new property might embody higher chances of depreciation, while, on the other hand, an old property is certainly cheaper for you to buy and potential gives your the opportunity to add serious value through a development. Also, a unit may attract a larger amount of rentals while a house certainly implies a more significant capital growth potential in the long run.
As you have a lot of options at your disposal, it might be quite confusing to make your decision. However, don’t let this overwhelm you, first and foremost, determine your goals and appetite for risk. Once this has been established you can begin to look for the asset class that will allow you to reach your end goal.
Are there any risks involved?
As with any investment, there are always risks associated. After all, an investment is a gamble, ultimately, so property investments do come with risks. However, the positive news is that these risks can be minimised if you take the time to look into the interested assest class and you do your research. Risk factors can be timing, age, the type of property, macro economic conditions etc.
For example, you have to pay attention to the housing market – it is cyclical, so in some periods it will be rising, but other times it will be falling, ideally you dont want to invest in a declining property market. Also, you need to take into account the sheer expense related to taxes, upkeep and maintenance. Underestimating them can lead to a risky investment if you fail to keep up with them. As a general rule, you should be realistic concerning your anticipated profit, so that you don’t get your hopes up.
The key to positive retirement in Australia is having enough income to see you through to the very end without any assistance from the governement. Property investment can have a positive influence on your retirement portfolio however you shouldn’t just focus your attention only on this aspect. Planning your retirement means diversifying. Thus, our piece of advice is to consider discussing with your financial adviser about ways in which you can expand your retirement plans, to work best for your advantage and well-being.