Property Vs Pension

22 Nov 2019

When it comes to saving money for retirement, the number of people who prefer property to pensions is on the rise.

Property has had some massive growth over the years, and UK house prices have far outstripped inflation, by some 3% a year since 1955.

But the UK stock market has grown faster still, gaining investors on average over 6% above inflation, over the same time period.*

Property can be time consuming and requires a lot of effort and buying and selling can be costly and drawn out.

Investing in a pension can be more relaxed. When you put money in, you get a boost from the Government of up to 45%. A generous tax perk, and one of the main reasons why so many people put money in a pension in the first place.

Like the stock market, the value of property can fluctuate, and property with a mortgage, is at risk of falling into negative equity if house prices fall. With tax benefits on property not as generous or rewarding as they once were.

Pension or property?

One is not necessarily better than the other. Both have their advantages and disadvantages, and what’s right for you depends on how comfortable you are with the risks of each.

Investing is all about distributing money in order to benefit from a decent return, and there’s no reason property and pensions can’t complement each other as part of a investment portfolio.

*Numis and London Business School.