Using your savings to invest in property during your 20s and 30s is a largely accepted and common place wealth strategy, but is it ever too late to start investing in property? If you are in your 40s or 50s with no investments and worried about your financial future, there is no need for concern. Wealth creation through property has no hard age limit, especially considering the average person works into their mid-60s, and the minimum retirement age will only continue to rise.
There are many benefits in waiting to invest later in life:
- You have an established network
- You will have more experience
- Better people skills
- Overall wisdom
- Higher superannuation funds to use for investments
Are there risks with investing in property later in life?
Many have the mindset that it is too late or perceive it as overly risky to start investing later in life, despite securing a decent income or equity in their principal place of residence. To start investing you should firstly become educated and develop the right mindset.
Will it take too long to reap the benefits?
It’s true that property, like all other investment types, takes time to mature and for you to see a return. You may decide to “fix and flip” real estate, meaning completing repairs or upgrades on a property and trying to sell it for profit, but this may not be a practical choice for you especially if you are still working full-time.
The more common choice is to buy and hold the property relying on appreciation (or capital growth), counting on the fact that house prices increase over time. Residential real estate in Australia is historically strong, so positive gains are highly possible, even if you start investing in your 50s.
Moreover, these investments and assets can be a legacy for your children, and they will almost certainly appreciate the leg up!
The economy and market conditions
Worried you’ve waited too long and are now priced out of the market? Never fear, whilst Sydney prices are certainly beyond the reach of many investors, there are other more affordable markets that are currently primed for significant growth. With the right research and advice, you can buy in high-growth, high-yield markets and maximise your time in the market.
Ways to minimise risk
Evidently, any form of investment strategy entails some level of risk, and this is definitely the case for investors who are “late bloomers”, meaning they will have a shorter period to grow their property portfolio and retirement funds.
Here are some risk minimisation strategies:
Financial buffer – Organising a pool of emergency funds or “buffer” to ensure you could cope with unforeseen circumstances such as maintenance, interest rate rises or property vacancies.
Being smart with tax – Utilising tax-effective methods to buy and manage your investment properties, including keeping effective records so you remember to claim things like purchasing costs and borrowing expenses, including loan interest and loan mortgage insurance (LMI).
Insurance – Looking into income and life insurance as well as landlord insurance to protect your interests.
Review and Plan – Making plans and holding open discussions on your property investments, almost like running a business, and ensuring a regular review of your portfolio with a qualified property investment advisor.
Having armed you with adequate research and education, your property investment advisor should then help you source a high-grade investment property that will deliver high capital growth and rental yields and with the right financial structure in place to support your purchase, you should be looking at solid returns on your investment.
It’s never too late to invest in property
Investing involves maximising returns by using your income-producing years to hold investments over the long term. So, with at least 10 to 15 years of working life still in front of most 50-year-olds, property is still an exceptional investment to consider. With all the risks and varied factors to think about, getting professional property investment advice is in your best interest to minimise any stress and maximise your chances of an optimised property portfolio.
Richard Sheppard is the CEO and founder of inSynergy Property Wealth Advisory. inSynergy provides
a broad range of professional services designed to help with all aspects of property investment.
Phone 1300 425 595 or visit insynergy.net.au