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How Does This New Home Strategy Fit Into My Overall Retirement Plan?

How Does This New Home Strategy Fit Into My Overall Retirement Plan?

  • 17 Feb 2020

In order to work out a good retirement plan, you should speak to a financial advisor. As an overview, the key to a good retirement plan is diversity. You may choose to include a combination of a few different options.

These could be high-risk/high-gain stocks and shares. You may also choose medium-risk/medium-gain mutual funds. Finally, you may want to add low-risk investment strategies such as savings and property to your retirement plan.

Of these different options, property has the advantage of being stable and predictable over the long-term. The fact that this low-risk investment can also be income-producing is the cherry on top!

One of the big advantages that real estate has over other investment strategies is that real estate gives you a passive income while you keep the asset, so you get income and you get to keep the asset.

This is in contrast to investments such as shares. Although shares may increase in value over time, you have to sell them in order to get your income. Once you have sold them, you have lost that asset.

Saving your money in the bank may seem a good idea, and it is always prudent to have some money readily to hand. However, even if you’ve got a substantial amount of money in the bank, the rate of return on most savings accounts is very low—less than two percent.

If you buy a good investment property, then, as well as the capital growth that you can experience, your rental return can get you about four and a half to six percent per annum.

Property Offers Predictability

Beyond diversity, the reason I view real estate as such a good strategy in your overall retirement plan is because it's simple and straightforward to understand. This gives you a far greater degree of autonomy.

When you invest in real estate, you don't have to understand the stock market or rely on a stockbroker to explain things to you. This gives you more control over the decisions that you're taking because you know what you're doing.

If you go to a stockbroker or a wealth manager and have them invest on your behalf, then you're relying on sources which may be out of your control.

Not only this, but if you invest $100,000 in the stock market, your money may not grow. You may even lose money. If you put the money into property, evidence shows that over the next 25 years, you will have doubled your money. This is because the property cycle always trends upwards over time.

Once you reach retirement and your mortgage is either paid off or very low, then the income you get from your property doesn't just fall back into the mortgage. It rolls into your pocket.

When you invest in property, you can very clearly map out the road you're travelling down. You can see where the beginning point is. You can see where the end point is, and you can see every stage in between. You know exactly what you're buying into.

Property is one of the few things that is recession-proof. A strong cash flow in a property can actually ride you through a recession. During a financial crisis, if you have stocks and shares, you might lose everything.

If you have property, then even though the value of your house might decline, people are still going to need houses to live in, so they'll still pay rent. When everything stablilises, the value of your real estate will start to grow again.

Set And Forget

The specific advantage of new property is that it is “set and forget.”

You have a six-year structural warranty. The maintenance is very low. The rent comes in and the mortgage gets paid. Without you having to think about it, your investment keeps on going and growing. It's easy.

If you think ahead and plan things properly, you can grow your property portfolio by using the equity from your first investment property to fund the second one. This second property will then fund a third one and so on. Over time all these properties will grow in value, and they'll give you an income. This income will mean that you can live more comfortably in retirement.

To your success,


Tony Myers

Australia’s Authority On Real Estate Investment For Busy Professionals

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Oliver Myers Real Estate Gosford is a long standing and well established leading Central Coast Business serving the real estate needs of an ever growing population in an highly efficient and customer focused manner.
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West Gosford

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Lambton NSW