Every investor wants to feel that their capital is secure, and never more so than in retirement. Many people need to supplement their pensions, but unfortunately, interest rates are so miserly that traditionally low risk investment options are offering dismally low returns. In this article, we’ll look at some alternatives to the usual savings accounts, ISAs and managed investment funds – alternatives which can deliver high yields without increasing your levels of risk.
Retirement – not the time of life to start speculating
After a lifetime of working, supporting a family and making provisions for the future, now is not the time to be taking a hopeful punt with any capital you may have; you need assurances that it is as secure as possible, that it will earn you a worthwhile regular income and that you will be able to make significant capital growth at the time of your choosing.
This rules out your standard High Street options in terms of an income stream, and although stocks and shares may do well for you over time, you’re completely at the mercy of the market and as such pretty much powerless to control your capital growth options.
Diversification is the name of the game, and identifying market and economy-proof opportunities.
Property can still be a viable option – just not buy-to-let
The woes of UK buy-to-let landlords have been well documented, with Stamp Duty surcharges imposed, tax allowances slashed and soon to be scrapped altogether, licensing criteria tightened and enough legislation in place to baffle a High Court judge. It’s not a recipe for a relaxed retirement, and the rewards, at around 3% gross, simply aren’t worth the headaches.
There are, however, intriguing possibilities in the commercial sector, specifically serviced apartments and student property. Both are resilient to economic downturns and are unaffected by fluctuations in the residential housing market.
Because of the rise and rise of the tourism and higher education sectors, both these property types, formerly the preserve of the big institutional players in real estate, are now available as individual investment units to the private individual.
The best UK examples offer an assured income of 8-12% fixed for 10 years or, in the USA, as an ongoing rental revenue share contract.
No effort required
Best of all, especially if you’re retired or approaching it, these commercial units are fully managed onsite 24/7 at no extra charge.
The developer appoints a sector specialist management company to take charge of every single operational detail of the property – from marketing to maintenance, from rentals to repairs, from utilities to upkeep – without you ever having to move a muscle or pay a penny.
Although having said that you don’t need to leave home or move a muscle, some Orlando serviced apartments do offer investors personal use of their own apartments, which are large enough to accommodate children and grandchildren for the family trip of a lifetime.
James Harrington, Business Development Manager at commercial property specialists Emerging Property, has noticed a lot of interest from buy-to-let owners: “The majority of UK landlords are aged 55 or over, and thinking about retirement themselves. Renting out property in the UK is an increasingly thankless task and these experienced old hands find the idea of a fully managed investment property delivering high assured yields – well, it’s Shangri-La to them. The prospect of a free stay in one of Orlando’s newest, best-appointed resorts goes down quite well, too. It beats a trip down to Wickes on a wet Sunday every time!”