This is a very interesting concept that I stumbled across several years ago and it definitely rings true for property investors.
We are constantly told that we must work hard at school, get a ‘good’ job and keep working hard for at least 40 to 50 years and then retire from work and live a great retirement.
Along life’s journey we generally meet the person of our dreams, buy our own home, raise a family, take some holidays, care for elderly parents, change jobs and career paths a few times and then eventually hit that magic age where you can sit back and relax.
There’s only one problem with that strategy – The only way we can keep the glass ‘half full’ in retirement is to keep working.
A source of reputable information is Australian Bureau of Statistics (ABS).1It shows that the average superannuation balance in 2017-18 for people aged 15 and over was $168,500 for men and $121,300 for women.
These stats verify that without some other means of income, a retiree will need to access the pension which currently constitutes a very small proportion of a wage earner’s income.
So how can the half full glass be refillable?
The common sense way is to start investing from an early age to give yourself enough time in the property market for capital growth to occur. This is to ensure that in your retirement, you have additional income streams (investments) providing you with more cash throughout your retirement years.
So how do you achieve that?
Most investors start their property investment journey in a very conservative way, often spending less than $400k on the first investment. It’s important to get a feel for how it works and even better if you are coached throughout the process. You don’t need to spend large amounts of money to purchase a great performing investment property.
If the goal is to have additional income in retirement, you may choose to either use the equity in the first property to purchase the next one or pay down some of the debt on the first property before accessing the equity to continue building your portfolio.
Either way, you are pursuing your goal and with time in the market you will be in a far better position in retirement than someone who has not invested.