Property Vs Pension investment – this weeks debate

“Assuming that property prices continue to increase over the coming 20 years in the way they have in the past 20 years, a property of today’s average value of 235,000 will be worth 1 million by 2038.”

Says James Davis the founder of letting agent Upad. Jamie has 20 buy-to-let properties and his confident that they will see him through his retirement. Property investment is a secure way to build your retirement fund. Even with the worst-case scenario of not making any monthly profit from your property (which you will), you will still have a significant amount of capital appreciation.

But what type of person are you?

Property and pension are two completely different entities. Depending on circumstances, lifestyles, strategy and risk, depends on which one a person may choose. As an investor you need to ask yourself how much disposable income do you actually have? When purchasing a property, you need to think about the initial costs and post-cost which refer to the renovations and management fees. Securing these investments are time consuming which can be enough to put someone off this strategy. With pensions you can save for a retirement through achievable monthly payments over a much longer period.

Property Investment

• Property will almost certainly over perform with return on investment
• Beware of stamp duty and taxation on buy to let income
• Government schemes available to get you on the property ladder like Help to Buy
• You can cash in when you want and at any time
• Monthly income, without waiting until retirement age
• Increased risk and time consuming with managing the properties
• House pricing keeps rising
• You can re-mortgage to reinvest
• Property is a tangible asset, which gives people comfort and security

Pension Investment

• Tax-efficient way of saving, government offering tax relief on pensions
• Many different ISA’s to help you gain pension interests
• Pensions are not enough to live on throughout your retirement period
• You will need to wait till the requisite age to get hold of your funds

Richard Carr house purchase