Property Beats Superannuation Hands Down When It Comes To A Comfortable Retirement

THROW in the towel on a dream home and aim to build up a $1.6m property portfolio is the latest advice for those who want to retire comfortably.

WealthMarket property consultant Steve Smith believes a property portfolio could beat superannuation hands down but it would require assets worth about $1.6m generating an annual return of about 5 per cent.

He said such a portfolio had the potential to bring in $80,000 a year in passive income – significantly higher than the $20,000 a year that many rely on off a pension.

“Rather than continuing to save money to purchase their dream first home in a place they want to live, it’s about entering the property market sooner rather than later by buying property as an investment,” he said. “Be a smart first-time investor, rather than a first-time homeowner buyer.”

With it came “all the deduction benefits such as depreciation and interest, that investment property ownership brings”, he said.

According to a HSBC retirement report, only 21 per cent of Aussies believed they would have a comfortable retirement.

Dmitry Kotleev, 37, has made a start towards getting his portfolio off the ground, putting $18,000 down on an off the plan property (5 per cent deposit) which settles in 2019.

“You only need a small deposit to purchase your first investment property,” he said.

TOP QUESTIONS TO ASK YOURSELF:

1. What’s the end game

Is it to fully find your retirement with passive income? Start by doing the numbers, and work out how many properties you need to acquire to generate your income, taking into account tax, strata levies, and maintenance costs.

2. What’s achievable

Can’t afford a $1 million investment property returning a 5 per cent yield – that’s going to deliver $50,000 in income? Nor can most people. Be realistic and look at acquiring multiple, more affordable properties.

3. What’s going to give solid capital growth

To fund your retirement, you’re going to need solid capital growth. This means you are able to buy more properties as the accrued equity from investment one will help you fund the deposit for number two. And, if you have any outstanding debt on a multi-property portfolio you can sell off half your portfolio to pay off the remaining assets – living on the remaining income.

4. What can you do quickly

The longer you hold your investments, the more capital growth you will achieve. Plus, it takes a bit of time to get your portfolio together.

5. What help do you need

Talk to a professional who knows the investment market before starting your journey. They can help you with everything from tax to location to debt management.

Source: The Courier Mail 7 November 2017

The post Property Beats Superannuation Hands Down When It Comes To A Comfortable Retirement appeared first on Real Estate in Australia.