{"id":2907,"date":"2022-06-27T04:47:25","date_gmt":"2022-06-27T04:47:25","guid":{"rendered":"https:\/\/royabhishek.in\/urbanbuyer\/with-only-10-years-to-retirement-can-you-actually-build-wealth-through-property-investment\/"},"modified":"2022-06-27T04:47:25","modified_gmt":"2022-06-27T04:47:25","slug":"with-only-10-years-to-retirement-can-you-actually-build-wealth-through-property-investment","status":"publish","type":"post","link":"https:\/\/royabhishek.in\/urbanbuyer\/with-only-10-years-to-retirement-can-you-actually-build-wealth-through-property-investment\/","title":{"rendered":"With only 10 years to retirement…can you actually build wealth through property investment?"},"content":{"rendered":"

[ad_1]
\n<\/p>\n

\n

It takes time to build financial freedom, but if you only have a short timeframe ahead of you to build your nest egg, all is not lost.<\/p>\n

A number of years ago I was asked by Your Investment Property Magazine to devise a strategy for success to help readers James & Elizabeth.<\/p>\n

Here’s what I said:<\/p>\n

\n

INVESTOR SCENARIO\"Couple

James and Elizabeth are a married couple both aged in their mid-50s.<\/em><\/span><\/p>\n

James is a public servant and Elizabeth is a school teacher; between them, they earn around $130,000 a year.<\/em><\/span><\/p>\n

They have two adult children and owe $115,000 on the mortgage on their home, which is worth around $550,000.<\/em><\/span><\/p>\n

They have no big debts, other than a $3,000 credit card limit, but they also have no big assets either \u2013 and with retirement just a decade away they’re starting to worry about their financial future.<\/em><\/span><\/p>\n

What can James and Elizabeth do now to start planning for their future retirement?<\/em><\/span><\/p>\n

Firstly, James and Elizabeth should be congratulated for starting to consider their financial future \u2013 unfortunately many people don\u2019t do this until it\u2019s much too late to change the outcome.<\/p>\n

That said, it takes time to build financial freedom and they only have about 10 years or so ahead of them before retirement, which does make it a little more difficult compared to if they had started planning when they were in their 30s or earlier.<\/p>\n<\/div>\n

The scary fact is that the vast majority of Australians won\u2019t retire with enough superannuation to see them through the remainder of their lives. <\/p>\n

<\/strong><\/p>\n

This is because the average male\u2019s superannuation balance is about $200,000 at retirement in Australia and a woman’s is about $100,000, and because we\u2019re all living longer our super nest eggs need to financially provide for us during some 20-plus years of retirement.<\/p>\n

So, if they are to enjoy financial freedom during their twilight years, James and Elizabeth will need to grow a significant quality asset base over the next 10 years, which will include their home, superannuation and investment properties.<\/p>\n

Needless to say, the number of properties they have in their portfolio on retirement won\u2019t be anywhere near as important as the net value of those assets and the total rent achievable.<\/p>\n

The thing is, to achieve financial freedom, they will need to do things differently from how they have done them in the past.<\/strong><\/p>\n

They will need to invest in high-growth properties that generally have negative cash flow, as they don\u2019t have a lot of time on their side to see the wonders of compounding growth work their magic.<\/p>\n

This means James and Elizabeth will have to budget and sacrifice a little now so they can enjoy their retirement later.<\/p>\n

If they don\u2019t, the alternative is that their golden years will be defined by money worries as they struggle to make ends meet on their pension and their inadequate superannuation balances.<\/p>\n

Financial freedom is a goal for many people, but it is something that very few achieve. \"property

In fact, James and Elizabeth will need to do things differently from the majority of Australian property investors.<\/p>\n

Statistics show that of those who buy an investment property in Australia<\/a>, 50% end up selling their property within the first five years, and of those who retain their properties, close to 90% never own more than one investment property.<\/p>\n

And of course, one investment property is not enough to gain financial freedom.<\/p>\n

So, with only a decade ahead of them, how can James and Elizabeth create a better financial future?<\/p>\n

Let\u2019s consider some options for them\u2026<\/p>\n

Taking steps towards financial security<\/span><\/h2>\n

The first step for James and Elizabeth is to gain a sound education in investing, tax, superannuation, and property.<\/p>\n

In particular, they must understand the power of leverage because it will be leveraging the equity in their home, and borrowing to buy high-growth properties, that will help them secure their financial future. \u00a0\"Property-Investment-Checklist-300x199\"<\/p>\n

Secondly, they should gather a team of professionals around them who can offer sound investment advice.\u00a0<\/strong><\/p>\n

Their advisors should be independent and unbiased and not salespersons or marketers trying to sell whatever shoddy, second-rate property they\u2019ve got on their stock list.<\/p>\n

This team should include an independent property strategist who can project manage their\u00a0investment strategy<\/a>, as well as the other consultants; a finance broker to help them through the maze of lenders; a financial planner who can discuss concepts such as self-managed superannuation funds (SMSFs) and insurance with them; and a property-savvy accountant.<\/p>\n

Early in the piece James and Elizabeth will need to gain a better understanding of their current financial position \u2013 money warts and all!<\/p>\n

Questions that they need to know the answers to include:<\/strong><\/p>\n