How could investing in property help you retire? - 17/02/23

Most people would argue the key benefit to growing personal wealth is to achieve an earlier retirement, or indeed the freedom to choose your day to day routine beyond the work place. Which route one might take to achieve this can be extremely varied, and in some cases, there could be a more prudent option beyond your typical pension saving schedule.

Property has become an increasing popular asset class used to generate retirement income. When the UK government changed the capital controls allowing many to pull vast sums from their pension savings, much of this capital found its way into property investments.

Was this the correct choice?

Many people prefer to use their property as their pension, and those who haven't had time to save for it sometimes have plans to sell their current residence, downsize, and use the equity released to pay for their later years.

The best alternative is to buy one or more properties and rent them out to tenants to generate a consistent monthly income. Investors have the option to continue earning a consistent income from these properties or perhaps sell them for a lump sum in the future as their value may rise over time.

Although a recent Savills report indicated the UK property market’s growth may slow slightly in mid 2023 following the release change in interest rates, they still project 7.5% growth for the entire year. Notwithstanding the challenges, the demand for buy-to-let continues to outpace supply, making it a reliable investment as a replacement for pension funds. Both immediate income and long-term profit are promised by the combination of capital growth and rental returns.

A pension is along-term investment strategy with tax advantages. The pension is a worth while investment above many other possibilities because as you make contributions, the funds will grow through compound interest over many years. The sooner you begin investing, the more you stand to gain, and the combination of tax breaks and employer contributions may increase your returns even more.

Property investment has repeatedly shown its value, surviving the turbulent recent few years in particular exceedingly well. However, choosing where to invest will always depend on your own unique position. Research is essential and speaking with qualified property professional can assist you in creating a plan and identifying the best investments.