![]() When the cost of buying and selling property is factored in – solicitor’s fees, ongoing maintenance and the potential for capital gains tax, not to mention the hassle factor – she believes that pensions can often outperform bricks and mortar.īut whether you’re looking at pensions, property or paintings to help fund the later years – either as a key investment or an interesting side hustle – your current life stage should be a crucial factor in your calculations.Ī key to successful retirement planning is managing liquidity at or near to retirement. ![]() “Relying solely on property to fund your retirement means you aren’t sufficiently diversified and if the market drops, then so will your retirement fund.” However, while there’s been strong growth in the property market, it’s not immune to falls, she warns. “Property is often discussed as an alternative to pensions, with the self-employed in particular favouring it,” says Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown. For people who prefer to enjoy their investments every day rather than charting their gains and losses on a screen, real estate can offer a far more visceral experience, despite being in the illiquid category. That’s not to say you should turn your back on property, of course. As long as an investor is prepared to hold the asset for a minimum of four to five years, he believes returns can be impressive. While some devotees will put up to half of their retirement assets into art, his company advises sticking to 5% or 7% at most, “and ditching any notion of making a fast buck”.įor those who can lay their hands on a minimum £75,000, Hoffman recommends buying one quality artwork in favour of a collection of lower-quality pieces. “We steer our clients away from more than 90% of the pictures they want to invest in because as experts, we know they will not give them the returns they are looking for,” says Philip Hoffman, founder of the Fine Art Group, which represents some of the wealthiest art collectors in the world. However, a basic lack of knowledge poses the biggest danger for any investor looking to tie up large swathes of their retirement pot in rare coins, cars or digital assets. Relying solely on property to fund your retirement means you aren’t sufficiently diversified The ever-present threat of counterfeiting is also a worry. It can be tricky to dispose of them if needed, while they can attract high costs and fees. These assets can be borrowed against or sold, or even simply enjoyed.īut while it may be satisfying to own a Banksy or a vintage Ferrari, collectibles too are illiquid assets. The lure of transforming a lifelong passion for fine art, vintage cars, rare coins, stamps or whisky into a bankable collection may hold appeal for some, rather than charting the vagaries of the property or stock markets. Hedge fund investors need to lock their money away for some years, while commodities are fairly volatile, particularly at a time of heightened geopolitical tensions. However, some investors might prefer to look elsewhere. ![]() Both have proved to be “a good portfolio risk mitigant” in uncertain times, says Tom Kehoe, global head of research at the Alternative Investment Management Association Luckily, there are alternatives to conventional assets to help fund the golden years without the need to rely solely on drawdown or annuities.Īmong the alternative assets that have performed well in previous inflationary environments are commodities and hedge funds. With life expectancy on the rise, higher inflation and the risk of below-average stock market returns, those who choose this route may find they have less to live on than they’d hoped. Still, putting all your retirement eggs into the traditional pensions basket can seem rather unambitious. However, if the market cools, those attractions could dim. Why property? Unlike pensions, it offers tangible assets that are often easier to understand. Buy-to-let opportunities have been a particular focus, offering both rental yield and capital for those willing to play landlord. In recent years, surging house prices have cemented the appetite for property investing. But with experts predicting a flattening housing market this year, is it time to consider alternatives? With record increases in house prices, it could be tempting to fund your retirement through bricks and mortar, rather than a pension.
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