INSIGHT
INSIGHT
The Critical Role of
Property Investment
Towards a Sound Retirement
BY PIERRE VAN DEN BERG
Emotions are soaring and more money than ever before is finding its way out of the country. Reasons include politics, the unsure future of SA, and the weak performance of the Rand. But who are these few fortunate South Africans who have sufficient money to transfer or invest abroad? Chances are they have put considerable effort into planning, and that property investment has most likely played a substantial role in their success.
Are the rest of us, including the average salary earner concerned about the bad economy, or even conscious about the impact on our future and retirement? Or are we totally exposed to the mercy of circumstance with the only resolution left to hope that matters will improve? I am afraid that most of us are caught up in this very unfortunate position, with nobody to blame but ourselves.
You can work your way for years to retirement, but if you have not invested and accrued wealth over time, you will only be left with a measly little payout, which will hardly cover the bare essentials. Some people even think [ or hope?] that pension benefits will be sufficient to take care of them at retirement. Do you also have relatives who are a classical example of this scenario? We all have to realise that it is a total ridiculous prospect to retire without having invested. This is why the majority of people become broke. Aggravating“ curve balls” are the fact that we now live longer, and the“ evolution” of disruptive technology, which will cause more and more people to lose their jobs in future.
Hopefully this is a wake up call for young people to realise the critical importance of investment and proper retirement planning. The good life and carefree days of your youth unfortunately end much sooner than expected, and you can easily find yourself
in above-mentioned scenario. Or are you guaranteed that your future inheritance will be sufficient and keep up with inflation to take care of you in your retirement years? Then just hope that your parents are not already in a similar situation as discussed here!
In 1991, and at age 27 I bought my first property. Up to this day I have found property to be an absolute winner investment strategy: – the physical and uncomplicated nature, the degree of control you have, assured yield, inflation beating, low risk, etc. On the contrary, I believe that most alternative investment products are becoming increasingly complicated, riskier and / or providing unstable yields- especially with the uncertain global markets nowadays. Way too many people still entrust their hard earned money to someone else or blindly follow their financial advisor.
Will the yield from my SA property portfolio keep up with inflation and global economic challenges to still provide me with a decent living standard for the next 20 to 30 years? Three years ago I was advised by a visionary global investor to sell some of my properties to be able to buy into the USA property market. Not following this advice, I now realise the lost opportunity to have acquired at least one income generating asset in first world currency, and to have significantly improved my financial future.
As long as we learn from our mistakes or lack of action. A rewarding and wise strategy has always been to accrue assets whereby passive income can be generated. Additional to this, first world assets are becoming a necessity in ensuring your investment will provide sufficient future growth, and compensate for inflation and the weakening Rand.
RESOURCES
ThanksToProperty. com
64 JUNE 2016 SA Real Estate Investor www. reimag. co. za