Should I invest in an annuity or property for a better return?

In this conversation, a reader asks an investment expert two questions.

The first question concerned the growth of the user's pension fund. After transferring to a new preservation fund in August 2017, the user had the impression that their investment would double every five years, but it had not reached that growth. The user wanted to know if this was normal. The investment expert explained that several factors influence returns, including asset allocation, market cycles, fee structures, and interest rate environments. Specifically, the expert mentioned that while equities generally provide long-term solid returns, Regulation 28 limits on equity and offshore exposure apply. The expert advised a longer-term perspective (30 to 40 years) for equity investments and suggested a portfolio analysis to ensure the reader was on track.

The second question was whether to invest in property, a retirement, or a life annuity. The expert recommended a diversified investment portfolio rather than focusing solely on property, citing property’s illiquidity and the challenges of operating costs, rental income growth and tax implications. The expert emphasised that a well-balanced portfolio, with a mix of asset classes, would offer better returns and risk management over different economic cycles. Additionally, the expert highlighted the importance of tax efficiency and liquidity, especially when planning retirement.

Read the full article by Elke Brink in Moneyweb of 16 October 2024 here: https://www.moneyweb.co.za/qa/advisor-questions/should-i-invest-in-an-annuity-or-property-for-a-better-return/