Oliver Maher is a director at United Advisers Marine. Disclaimer: UA/BFMI is a member of Nexus Global and an appointed Representative of Blacktower Financial Management (International) Limited (BFMI). BFMI is licensed and regulated by the Gibraltar Financial Services Commission (FSC). UA/BFMI are not tax advisers and clients should always seek independent tax advice for their individual circumstances. +34 871 115 928; www.unitedadvisersmarine.com
The property-vs-pension debate has been raging for decades, with investors around the world having strong feelings over which retirement funding solution is best. Although the war often makes for interesting conversation, it doesn’t have to be an either/or situation. You don’t have to pick a side and stick to it. Instead, a multi-asset approach to financial planning can help you build a diverse, secure, and flexible portfolio that grows over time.
The tax benefits that come with pensions are hard to deny but investing in property at the same time can provide you with a bridge to retirement. In fact, according to the LV= Wealth and Wellbeing Monitor, more affluent consumers looking to retire early are twice as likely to use the value of their homes to fund their retirement. With that in mind, here are a few things to consider.
A Multi-Asset Approach to Financial Planning: Pensions can be extremely rewarding. Workplace pensions offer tax relief, employer contributions, and investment gains. Private pensions are also a smart move for anyone looking to save for retirement in a tax-efficient way.
Making the most of your pension is just one part of the puzzle, especially if you have a large amount of money that you’d like to spread across a multitude of assets. The stock market is of course another popular option, with many investors turning to ETFs and index funds or building their own stock portfolios themselves. Property deserves a place in your portfolio too.
Property is More Passive Than it Used to Be: It’s possible to invest in bricks and mortar without becoming a landlord. If you want to reap the rewards of rental income, but you don’t want to try your hand at finding tenants or managing repairs, there are people who can do all of this for you. Your property portfolio can become a valuable source of passive income, while you focus your time on your work, other investments, or simply living your life.
Specialist Financial Advice Can Help You Increase Your Profits: Since April 2020, mortgage interest can only be offset up to the value of basic-rate tax relief. This sparked frustration amongst many higher-rate taxpaying investors because they’d previously benefited from 40 percent relief on mortgage interest.
However, a growing number of investors, particularly those with large portfolios, are investing via limited companies due to the tax advantages that this strategy offers. Seeking specialist advice can help you determine whether this is a smart move for you.
With the right help, you can increase profits and make the most of your investments.
This article orginally ran in the January 2022 issue of Dockwalk.