Older individuals often forget to perform checks on their retirement savings.
It is essential that individuals check that their retirement savings are on track to finance their planned standard of living in retirement. Otherwise, they could be left short when they are ready to retire.
A common time to perform these checks is in the final decade before the date of intended retirement; however, it is a good idea to perform them throughout a person’s working life.
Performing these checks can also allow an individual to focus on maximising their super in the countdown to their retirement.
Policymakers are also interested in retirement savings checks as it allows them to gain an understanding of whether Australia’s retirement savings will be adequate, or if there will be strong demand for the age pension.
Shares and property are two popular investment options for those with a self-managed super fund (SMSF). However, they both have very different attributes and choosing the one that will achieve the best outcome for an SMSF depends on your personal goals and situation.
While the price of shares can vary drastically, property is a relatively stable asset, making it appealing to those who want more security and predictability. Property prices are also negotiable unlike shares, and you can generally borrow money at a lower rate for property purchases.
It may seem hard to find the perfect investment property, but older and undercapitalised properties can be renovated for profit. However, returns from property rentals can be dented due to factors such as land tax, utilities and rates, maintenance and tenancy vacancies.
Shares are more dynamic and volatile than property. One advantage is the accessibility of investing in shares, as you can enter the share market with a few thousand dollars – much less than what you need to invest in a property.
Maintaining a portfolio of quality shares that pay tax-effective dividends may be a good way to fund retirement. With the right portfolio allocation, shares also have the potential to provide a better, stronger income than property rentals, as long as that income is sustainable and increasing.
Property can generally be used as a wealth-creation tool, while shares can create a reliable retirement income. For those who can afford to put more money into investments, it may be a good idea to consider investing and diversifying in both. If you’re unsure about which investment option is right for you, seeking financial advice may be the best option.
