The difficult part is not the choice available, it’s learning to decide which are right for you. Where do you actually put your money to ensure that when you are heading towards your golden years you have peace of mind when it comes to your finances and future? The answer to this question is partly dependant on your personal preferences and personality, and perhaps even what you have had success with in the past, so there is no real hard and fast rule. But, two investments considered the best retirement investments are stocks and property, so let’s take a look at why we think buying property is the better of the two:
Stocks
Buying stocks in simple terms means buying a part (a very small part) of a company and in return are given a small profit based on your share. Stocks are often seen as one of the best retirement investments around, and there’s no doubt about it — there are some people in the world who are making good money on the stock markets. These people tend to be trained, knowledgeable professionals, some of which actually do it as a profession. However, the average person trading doesn’t understand how important having patience is and will try different stocks, not necessarily knowing what they are doing. As a result, they’ll end up not making that much through stocks and will sometimes lose their initial investment altogether. Stocks also take a very long time and a lot of money to give you any worthy return, and if you haven’t already invested in stocks (from that first paycheck), it might not be the right option to invest in just before you retire.
For many people, trading on the stock market also seems to be a little like a guessing game (a very volatile one) which makes it a no-no for the risk averse. However, in the long term (very long term) there is the potential for very good returns.
Property investments
In our opinion, one of the very best retirement investments is property, and there are people that also see it as one of the least risky. In fact, a huge percentage of millionaires actually got there through investing their money in property. One of the biggest reasons that many people focus on property investments instead of stocks is that property is tangible. You can look at it and touch it — it’s not just something you have on a piece of paper.
For many people, there are numerous benefits to buying property over stocks: according to this article, “real estate has many advantages over the stock market; being able to leverage your money, cash flow, tax breaks, appreciation and the biggest advantage is you can buy real estate below market value.”
And while there are certainly some cons to buying property (especially initially), such as property taxes, transferral fees, and the fact that you can’t sell a property until a certain period has lapsed, property, if rented out, is a great source of income and regular cash flow. And if you haven’t paid off the mortgage yet, it helps you to do so. Long term rentals mean guaranteed income in retirement, meaning tangible money in your ‘pocket’. If you have more than one rental property, you might be able to cover your retirement expenses from your properties alone.
However, again, the right investments will differ from person to person, so when looking at the best retirement investments for you this is what you should look at:
• The risk measured against returns — how risky is the investment and how does the risk measure against the returns?
• The actual capital required — buying a house and doing repairs requires a lot more money potentially than buying a few stocks.
• Tax — you need to pay tax on property and stocks but there are also some tax benefits to owning property.
• Inflation — property tends to rise with inflation, whereas stocks are not protected against inflation.
• Timelines — how long it will take to see a return on your investments, and how long you are wanting to wait for that return.
At the end of the day, the ‘best’ retirement investments are going to depend on your finances, your level of comfort, your knowledge of both of the industries and your preferences, as well as how much time you have to wait for the return on the investments. Do as much research as you can, and if you really need to, consider getting a trusted financial advisor onboard.
If you decide that property investment is definitely for you than look no further than property in Calpe. Incredible properties with a great location are bound to ensure a continuous stream of renters. Contact us to have a look at our incredible choices of property in Calpe where you are bound to find the ideal property for your investment portfolio. What’s more is that our in-house letting agent can assist you every step of the way!
