April 26, 2023

Boost your retirement plan with real estate investment

It’s a very common apprehension. As our work-life draws to a close, we are all concerned about whether we have socked away enough to support us in our retired life. A sum which might seem adequate today, could appear insufficient tomorrow as inflation continues to erode the net value of our savings. Investing for retirement can be particularly vexing since you would want your investment to be relatively risk-free and able to keep pace with inflation.

A great way to boost your nest egg is to invest in real estate, even if you have a portfolio of stocks and bonds. Real estate is less volatile compared to other asset categories and almost always outperforms other instruments of investment.

Investing in a property or buying your own home to open up a rental income avenue or investing in trusts can all have an additive effect on your savings portfolio, while reducing taxes and costs. This is a steady retirement income option that ebbs and flows with the prevailing inflation rate, giving you that shield of protection in your golden years.

So, what are the different avenues of letting real estate boost your retirement?

# Direct ownership of your home: When you own your own home, it’s an automatic long-term asset and provides you with the built-in buffer in the form of home equity that can be leveraged if required, to generate retirement income or as a safeguard against unforeseen risks and adverse events.

# Real Estate Investment Trusts or REITS: REITS are a kind of equivalent of mutual funds. Here, instead of a basket of company stocks, investment is in a collection of properties. The dividends are usually quite high, which means a neat retirement income minus the hassles of buying or managing a property. Also, by investing in multiple properties, you can hedge your bets.

# Rental income: Buying a property and renting it out also provides you with an avenue of steady monthly income, more so when the location is right. It is usually a more stable investment than in stocks and can even pay for your house loan and other maintenance costs. Also, it’s a permanent asset and will keep appreciating in value with time.

# Buy, improve, re-sell: If you plan and start well ahead of your superannuation, you can carefully choose and invest in a property at its launch stage, spend on some home improvement and embellishment and then re-sell at a neat profit when the time is right. You need to give yourself some time in hand and pick a winning location for this ploy to work. However, plenty of people are reaping lucrative ROI on their real estate assets all the time.

# Tax benefits: Since the government supports your investment with tax breaks, real estate is a great way to make your nest egg grow. From rental properties to empty land parcels to commercial buildings, there is a substantial tax benefit in every segment of real estate, like capital gains tax, deductions, depreciation, etc.

It's always wise to have some extra stashed away for the golden years. Even your best-laid plans can sometimes go haywire for any number of reasons, not the least unforeseen medical expenditure. The best way to ensure a steady income stream post-retirement is to make a planned investment in real estate well in time.

Disclaimer : Information contained and transmitted by us are for information purposes only. All views and/or recommendations are those of the concerned author personally and made purely for information purposes. Nothing contained in the articles should be construed as business, legal, tax, accounting, investment or other advice or as an advertisement or promotion of any project or developer or locality. Pioneer Property Management Ltd. does not offer any such advice. No warranties, guarantees, promises and/or representations of any kind, express or implied, are given as to (a) the nature, standard, quality, reliability, accuracy or otherwise of the information and views provided in (and other contents of) the articles or (b) the suitability, applicability or otherwise of such information, views, or other contents for any person’s circumstances. We shall not be liable nor shall be held responsible in any manner for any action taken based on the published information (whether in law, contract, tort, by negligence, products liability or otherwise) for any losses, injury or damage (whether direct or indirect, special, incidental or consequential) suffered by such person as a result of anyone applying the information (or any other contents) in these articles or making any investment decision on the basis of such information (or any such contents), or otherwise. The users should exercise due caution and/or seek independent advice before they make any decision or take any action on the basis of such information or other contents.

Project of the week:

Boost your retirement plan with real estate investment