It is hardly a surprise that people approaching retirement have turned to property as an investment solution for retirement, given the performance of the alternatives.
In its recent Financial Stability Review (Sep’14, p50), the RBA noted that while property investment and gearing increased only modestly since the early 2000s, “the share of investors aged 60 years and over increased significantly.”
The relative wealth preservation ability and income potential of property might be the reason.
Consider some alternatives:
- The ASX200 index is still 21% below its Oct’07 high and 6% less than it was at the start of September 2014
- Emerging markets are 24% below their Oct’07 high according to the MSCI Emerging Markets (EEC)
- Term deposits, a highly secure income paying investment, will earn an investor earn less than 4.00% p.a for two years on $200,000, without any prospect of capital gains
Yesterday, Glenn Stevens of the RBA announced the cash rate would remain unchanged at 2.50% p.a and “On present indications, the most prudent course is likely to be a period of stability in interest rates.”
Property is a solution in a low interest rate environment but what about people who want a high regular income and have enough direct property investment already? Peter Benson offers selective commercial loans as an alternative for diversification. Commercial loans can generate income between 7.00% p.a and 9.50% p.a and capital is secured by a registered first mortgage over real property with conservative loan to value ratios verified with independent valuations.
Disclaimer: This information does not take into account your individual objectives, financial situation and needs. You should assess whether the information is appropriate for you and seek specialist advice from a qualified and licensed advisor.