Changing your mix of property investments as you near retirement

While individual investors may well have specific strengths in different areas such as new developments, rental properties and more speculative purchases, it is always good to have a mix. Maintaining a mix of different types of assets, in different areas, will ensure that if one particular asset class is struggling then the other asset classes will give you the chance to balance your overall returns. History shows us that individual asset classes perform differently in different economic environments, which perfectly illustrates how it is risky to have all your “eggs in one basket”.

It is also worth noting that as you grow older you will probably need to adjust your asset mix to reflect your changing requirements.

Creating a backbone

Whether you’re in your 20s or in your 70s you will still require a backbone of solid but perhaps less volatile assets. These assets will not necessarily be dramatic performers, on the upside and downside, but they will offer consistency and reliability in the longer term. This backbone will likely consist of income producing assets which offer a degree of long-term capital appreciation and relatively high occupancy rates. While you will likely tinker with your property portfolio backbone in the longer term the concept should remain intact.

In the early years

As more and more people now look at their property assets as their long-term pension fund in theory you can increase your risk profile in the early years by introducing some speculative investments. This is not to say you need to take enormous risks with your investments but you can look at capital appreciation above rental income because in theory you will have more time to make up any losses or underperformance. However, you will likely also require some income producing assets because in the early years you likely have some form of finance in place and regular payments to meet.

Approaching the midpoint

When you approach the midpoint of your investment horizon and begin looking towards your retirement this is where many investors will start to change their mix of assets. Portfolios will likely see the introduction of more income producing assets as opposed to those focused purely on capital appreciation. While in theory the financial liabilities taken on board to acquire these assets will have reduced over the years many looking towards their retirement will need to build up some kind of war chest. These decisions should be taken with your professional financial advisers as part of your regular investment review.


In retirement there will be a necessity for income, part of which can be paid from the war chest you have built up over the years, ongoing rental income together with funds raised from asset disposals. This is probably the time when many would look at investing for rental income over and above long-term capital appreciation in order to fund living expenses in later life.

Some investors may question why a simple sale of assets to raise funds, and a continued focus on capital appreciation, would not be more favourable. The simple fact is that regular income requirements in retirement will place pressure on cash flow and if you are forced into selling a particular property it may not be the right time or the right thing to do. This is where you require a degree of financial headroom which will allow you to take actions as and when you want not because of a financial shortfall.


All of your long-term property investments should be structured under an appropriate tax umbrella to negate any future tax liabilities. Investing in the early days does give you the opportunity to take more speculative positions although this is not a licence to gamble your money. As you approach midlife and then retirement there should be a greater emphasis upon regular cash flow via rental income which may limit your opportunities for capital appreciation but ensures that you have sufficient funds for living expenses and extras.

As and when you might consider switching from a strategy of capital appreciation to one more focused on cash flow and rental income will depend upon your individual and financial circumstances.

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