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Property sound investment for retirement - APIA

Strategic thinking about retirement investments is crucial, the Auckland Property Investors Association has warned in the wake of the latest OCR cut.

Monday, March 14th 2016, 12:42PM

by Miriam Bell

APIA president Andrew Bruce said falling interest rates will be causing cracks in many nest eggs – and that’s why property investing is a sound investment option.

“Gone are the days when Kiwis can expect to simply live off term deposit interests once they stop working.

“For example, ten years ago this week, the average one-year term deposit interest rate was 6.9%. Today it is nearly half that at 3.5%.”

This means that on a $500,000 term deposit, the annual gross return today is $17,350 per annum (or $1,446 per month) down from $34,570 per annum (or $2,881 per month). 

Bruce said this showed that investing for an additional income stream is no longer a luxury, it is a necessity.

“No one can afford not to take control of their financial destiny when the pay cheques stop coming in. New Zealanders have to become more financially literate and proactive in terms of planning for their future.”

He said APIA’s top five tops to help people to think strategically about their retirement are:

  1. Understand how much you need to retire on – and don’t underestimate the amounts.
  2. Maximise your return streams, so think about how many streams of return an investment will give you.
  3. Always make sure your investments are managed competently and keep an eye on the person or company manging them for you.
  4. Think about the potential for growth and reliability - because people are living longer a long term approach is essential.
  5. Get started immediately - no one is too young to be planning for their retirement.

Bruce said property investing gives people a solid base to achieve these recommendations.

For example, it allows investors to maximise return streams.

This is because a savings account gives a cash flow (interest) return while a rental property gives both a cash flow (rental) return and a capital growth return.

Property investing also allows for more hands-on management and thus greater control, Bruce said.

“A property investor has the ability to add value to his holdings in a way that shareholders often can’t to a business.”

Finally, a strategic investment should have good potential for growth and the robustness of its return should be sustainable – and property offered these things, he said.

“Take Auckland properties, our long term population projection is telling me that there is going to be a supply and demand imbalance in the investors’ favour for a long time coming.”

 

« OCR cut fuel for housing fireFree Investment Property Showcase Events: Auckland, Wellington and Christchurch »

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Lender Flt 1yr 2yr 3yr
AIA 5.95 4.85 5.35 5.65
ANZ 5.94 ▲5.95 ▲6.40 ▲6.59
ANZ Blueprint to Build - - - -
ANZ Special - ▲5.35 ▲5.80 ▲5.99
ASB Bank 5.85 ▲5.35 ▲5.80 ▲5.99
Avanti Finance 5.95 - - -
Basecorp Finance 6.95 - - -
Bluestone 5.89 7.49 8.09 8.19
BNZ - Classic - ▲5.35 ▲5.69 ▲5.99
BNZ - Mortgage One 5.94 - - -
BNZ - Rapid Repay 5.94 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.94 ▲5.95 ▲6.29 ▲6.59
BNZ - TotalMoney 5.94 - - -
CFML Loans 6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Co-operative Bank - First Home Special - ▲4.75 - -
Co-operative Bank - Owner Occ 5.85 ▲4.85 ▲5.35 ▲5.65
Co-operative Bank - Standard 5.85 ▲5.35 ▲5.85 ▲6.15
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.95 5.45 -
Heartland Bank - Online 4.10 ▲4.40 ▲4.90 ▲5.10
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.10 5.00 5.75 -
HSBC Premier 5.89 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.25 4.39 5.09 5.45
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 5.50 5.85 6.19 6.39
Kiwibank - Offset 5.50 - - -
Kiwibank Special 5.00 4.85 5.19 5.39
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society 6.45 ▲5.55 ▲6.15 -
Pepper Money 4.49 - - -
Resimac 6.19 5.60 6.16 6.29
SBS Bank 5.79 5.05 5.69 5.89
SBS Bank Special - 4.55 5.19 5.39
Select Home Loans 4.09 4.29 4.86 5.09
TSB Bank 5.59 5.14 5.79 6.15
TSB Special 4.79 4.34 4.99 5.35
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 5.74 4.95 5.75 -
Westpac 5.94 ▲5.95 ▲6.29 ▲6.59
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.94 - - -
Westpac Special - ▲5.35 ▲5.69 ▲5.99
Median 5.85 5.00 5.69 5.99

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