Millions of Brits banking on property as pension fund

9 July 2009

Around five million Britons are relying on property to fund their retirement, despite the fact that residential prices have plummeted across the globe over the past couple of years, according to the employee benefits consultancy Foster Denovo.

The research further shows that up to 10 million workers are not members of a personal or company pension scheme, suggesting that even more people may turn to investing in property, now that a number of worldwide property markets appear to be at or near the bottom of the cyclical downturn.

Editor’s comment:

“Whether your investment strategy is for income yield or capital growth, a long-term strategic investment in property has historically proved safe as houses for many people.

“Unlike many investment vehicles, property allows people to gear their money to maximise returns. See examples:

+ “Should someone buy a property in Portugal for €100,000, using a 20% (€20,000) deposit and that home was to appreciate in value by 20% then the investor would have made a €20,000 gross profit, or a 100% return, effectively doubling their initial €20,000 investment, to €40,000.

+ “Should someone opt to invest on the stock exchange instead of property and buy €20,000 worth of shares in any one given company, and the value of those shares increased by 20%, then the investor would have made a reduced gross profit of €4,000 on their initial investment.

“While property can offer potentially higher returns through the means of leveraging money, shrewd investors will be well aware of the associated risks, most notably the fact that property values, like any investment stock, can depreciate, leaving people in negative equity.

“Anyone investing in property should always ensure that they conduct all appropriate due diligence before committing to buying a property.”

See Also:   Marc Da-Silva, Overseas property investment news, Portugal