Why ‘Property Is My Super’ Could Be a Risky Strategy

We’ve all heard it at backyard barbecues: “I don’t need super, property is my retirement plan.” While property can be a valuable part of your retirement strategy, relying solely on it could expose you to unnecessary risks. Let’s explore why diversification matters.

Understanding the Property-Only Approach Many Australians favour property investment, often viewing it as a ‘safer’ option than superannuation or other investments. The logic seems simple: property values generally rise over time, you can generate rental income, and it’s something tangible you can see and touch.

Key Risks to Consider:

1. Lack of Diversification

· All eggs in one basket

· Exposure to single market fluctuations

· Property market downturns can significantly impact retirement plans

· No buffer from other investment types

2. Liquidity Challenges

· Property can’t be sold in small portions

· Quick access to funds can be difficult

· Forced sales might result in lower returns

· Market conditions may not align with your retirement timing

3. Ongoing Costs

· Property maintenance

· Council rates and strata fees

· Insurance premiums

· Potential vacancy periods

· Management fees

4. Market Volatility

· Property markets can experience downturns

· Regional factors can affect property values

· Interest rate changes impact investment returns

· Changing demographics affect demand

5. Tax Implications

· Capital gains tax considerations

· Land tax obligations

· Limited tax advantages compared to superannuation

· Missing out on super’s concessional tax treatment

The Benefits of a Balanced Approach A diversified retirement strategy typically includes:

· Superannuation

· Property investments

· Shares and fixed income

· Cash and term deposits

· Other investment options

Why Super Shouldn’t Be Overlooked:

1. Tax advantages

2. Compulsory employer contributions

3. Professional management

4. Investment diversification

5. Regulated environment

Creating a Better Strategy Consider:

· Combining property with super

· Understanding your risk tolerance

· Planning for different market scenarios

· Having multiple income streams

· Regular strategy reviews

Smart Property Investment Within Super You can still include property in your retirement planning through:

· Property within an SMSF

· Listed property trusts (REITs)

· Property-focused managed funds

· Direct residential or commercial property

Take Action A comprehensive retirement strategy should:

· Spread risk across different assets

· Provide reliable income streams

· Offer tax efficiency

· Allow for market fluctuations

· Maintain flexibility

Want to develop a balanced retirement strategy? Book your complimentary 30-minute consultation with our wealth specialists.

Contact us: �� 02 8248 8800 �� astonia.com.au

We can help you:

· Assess your current strategy

· Understand investment options

· Create a diversified portfolio

· Plan for various scenarios

· Optimise tax efficiency

Remember, successful retirement planning isn’t about choosing between property and super — it’s about finding the right balance for your situation.

General Advice Warning: The information contained in this blog has been provided as general advice only. The contents have been prepared without taking account of your objectives, financial situation or needs. You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs.