There is growing uncertainty around both the state of home ownership and pensions, yet both remain the foremost options available to savvy 21st century investors. If you’re considering investing in property and wonder whether it will help alleviate an ailing pension plan, here’s all you need to know…
Diversifying your pension
Property prices are set to increase over the next 20 years, so if you’re in a position to start investing in bricks and mortar now, its a wise investment. Pensions however appear to be in a state of flux – with more and more people turning to new methods as a means of supplementing their forthcoming income after retirement. There are several benefits to opting for property investment as a replacement for – or at least alongside – your pension pot.
If you are able to invest fully in a property then it can subsequently be rented out, and you will benefit from ongoing rental payments whilst still retaining a degree of power over the investment. The property can be redecorated, sold for a higher price – these are all options which are only available for those who begin to dabble in property investment rather than relying only on their pension.
Greater Return on Investment
The returns which can be gained from savvy property investment – including not only traditional property ownership but alternative methods such as crowdsourced funding and part-ownership – are mostly greater than even the most generous pension. Paying monthly into a pension plan is still a wise way to help safeguard for the future, but it is worth noting that property is a growing piece of capital, and shouldn’t be disregarded.
Understand the Risks
No investment strategy is entirely without risk, but where property is an asset class, pensions allow the investor to make monthly payments over a lengthy time period, and frees them from the need to have a large sum up-front for initial investment. Purchasing an entire property often requires a large initial payment and then there are also other fees to consider, particularly for those who feel that renovation will be necessary, or who want the property to be maintained through outsourced means. The new generation of property investment tools has helped to make getting on the property ladder simpler, and in turn is likely to attract a dynamic new flock of investors, eager to see their investments grow.