Everybody needs financial security when they retire. However, the mistake most people make is failing to utilise their hard earned resources properly when they are still working. Another mistake comes about when a person saves money diligently for retirement but makes wrong investment decisions. Such mistakes are fatal, as one may have to continue working past the retirement age, or one could even get conditions associated with stress and depression.
A superannuation investment can mitigate risks described above. Firstly, superannuation is a long-term savings plan where the aim is to obtain the savings in the form of income during retirement. A superannuation gives one several investment options ranging from property, equity, fixed income securities and cash.
Investment in property
Investing superannuation in property, sentinelpg.com.au explains, has some advantages over the other classes of investment listed above. The benefits are explained under the headings below
Property investment is generally more stable as compared to other categories of investments. A good example of extremely unpredictable and volatile investment is an equity investment which can fluctuate up and down in a matter of days. While the return on investment on equity investment tends to be high, the risk of loss is equally very high. Property investment offers a more stable investment.
Earning income and capital gain
One can earn rental income from property investment that can be used for further investments. Another benefit is an increase in the value of the property. Property rarely depreciates so one can be sure that the price at which the investment was purchased is bound to rise, and the increase could give very handsome returns when sold.
One saves costs when investing in a superannuation property as compared to taking a loan and acquiring property. This is because, for a loan, there is an interest to be paid. The interest could increase if inflation levels rise. Also being a property owner, the rental income received might not be sufficient to cover the interest on loan payment together with property expenses.
Retirement income is not money which one should be gambling with or investing in high-risk assets. One is strongly advised to invest in a superannuation in property as it has several advantages over other forms of investment. It is stable, cost-efficient and enjoys capital appreciation which is very crucial when one retires.