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Why property is a better investment for Accumulators than Retirees

4 Minute Read

Property investing can be lucrative as part of your overall wealth-building/financial strategy, but its benefits often align more with accumulators (those in the phase of life of trying to build up wealth while working), rather than those seeking immediate income for living expenses, such as in retirement. Here’s why:


Capital growth focus

Residential property investment typically yields returns primarily through capital growth rather than immediate income. Accumulators can benefit from long-term appreciation, as property values have tended to increase over time. However, for individuals relying on immediate income, especially retirees, the emphasis on capital growth typically does not fulfill their retirement living needs.


Time horizon

Accumulators have the advantage of a longer investment horizon, allowing them to weather market fluctuations and benefit from the compounding effect of property appreciation over several years. Conversely, individuals seeking immediate income might not have the luxury of waiting for property values to appreciate substantially.


Maintenance and expenses

Property investment involves ongoing costs, including maintenance, insurance, property management fees, emergency maintenance and potential periods of vacancy. All of these costs reduce how much net income the property actually generates year on year. Whilst accumulators often have the tolerance or capacity to absorb these costs while waiting for the property to appreciate, as they are living off their working incomes, retirees or others relying on property income to fund retirement expenditure might find these expenses burdensome. We see these expenses often bringing down the net income yield on residential property (excluding any interest on loans) to around 2-3% pa.


Liquidity challenges

Real estate is less liquid than other investment given it is a typically a large single asset and portions can’t be sold. Selling property to generate immediate income can take time, can be expensive due to transaction costs and capital gains tax, and might not align with the needs of individuals relying on regular cash flow for living expenses. Accumulators, with a longer investment horizon, may be better positioned to wait for the opportune moment to sell for maximum profit.

In particular, the combination of the often low-income yield and lack of liquidity with real estate means that it is often difficult for retirees to live off purely residential property income.


Risk and volatility

Property markets can experience fluctuations, impacting the value of investments, though not typically as much as the share market. Often capital gains in property will come very quickly over short periods of time (like covid) but then stagnate for some time. Accumulators can manage this volatility over the long term as they can afford to wait for capital gains, whereas individuals reliant on immediate income might face challenges if property values do unexpectedly stagnate or drop.

Interest rate movement is also a potential risk that can impact the appropriateness of investing in property if there is a mortgage on the property.



Many Australians favour investment properties for tax advantages, including through incentives such as negative gearing. The strategy of negative gearing may work effectively when the owner of the asset is generating a high income from work (ongoing income loss from property can be offset against other income tax – the crux of negative gearing), however when retired, the benefits of negative gearing diminish as there is typically no income or tax to offset.

The other major tax consideration for investment properties is capital gains tax when the property is sold. The digestibility of this tax can also differ for accumulators and retirees. We note a popular strategy for people planning to retire is to wait and sell property at the beginning of retirement, rather than whilst they are still working, as income (and thus capital gains tax) is lower.


While property investments can offer substantial benefits for accumulators, including potential long-term capital appreciation, it often is not the ideal investment choice for retirees, who typically need higher liquidity and access to cash flow from their investments.

This all said, for accumulators and retirees alike, the best financial strategy is one that is diversified across multiple asset types, and that is tailored to your specific goals and risk tolerance. Property investment can certainly be a valuable component of a diversified portfolio, but it remains crucial to ensure that any investment aligns with your overall objectives, and can provide you with the necessary level of security and income. Ultimately, whether it is property or any other investment vehicle, the suitability of any investment should be assessed based on its ability to meet your objectives effectively.

At Oxlade Financial, we provide comprehensive advice across all aspects of our clients’ financial affairs to ensure that they can live the life they want. This includes advice regarding investments, property and retirement planning. If you do need any assistance on this front, please don’t hesitate to reach out to one of our Independent Advisers.



Any information in this article is general in nature and does not consider any of your personal objectives, financial situation and needs. It is as intended, to be of a general nature only and NOT a recommendation to you. You should consider whether the information is appropriate to your needs, and where appropriate, seek personal advice from a registered financial adviser.

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