Andrew Bailey, City Watchdogs Feels that you should not
Top city watchdog Andrew Bailey has stated that he believes investing in property to fund retirement over a pension is a mistake. Responding to Andy Haldane’s comments that property was a better investment than pensions, Mr Bailey said:
“As long as we continue not to build anything like as many houses in this country as we need to… we will see what we’ve had for the better part of a generation, which is house prices relentlessly heading north.
“There is an argument that pension saving would be assisted by people holding more housing in their stock of pension assets, based on the real appreciation in the value of housing.
“I don’t subscribe to this argument. Why? First, because given the scale of uncertainty over long-run real returns on assets, I would not favour over-weighing to any one asset class, while recognising that a balanced investment portfolio can be exposed to property.
“But, increasing the weight on housing investments could be self-defeating. In the FPC we have been concerned about increasing levels of household indebtedness.
“If the effect of increasing the demand for housing as an asset to own is to push up the cost of ownership, an increase in holdings of housing as pension assets will tend to increase the real cost, and thus household indebtedness.”
Mr Bailey’s argument has been backed up by Pension’s Minister Ros Altmann who also criticised Haldane’s view, claiming it was an irresponsible position.
So what is the best way forward where your retirement is concerned?
This is the question that is difficult to answer. Right now property is increasing in value and has done for some time, but how it performs over the next ten years and beyond is impossible to predict.
Pensions are also complex. Andy Haldane recently stated he found them hard to understand despite his good understanding of financial matters.
Arguably, the best starting point is to look at what kind of retirement you want, what you are trying to achieve and identify your goals, and then look at your investments as a whole. Putting all your eggs in one basket, say property or pension is not a good idea due to the uncertainties you could face.
Given this uncertainty and the wisdom of not putting all your eggs in one basket, turning to an award winning financial adviser such as myself is a good move. Together we can look at your investments and assets, and see what you need to reach your goals.
Source: This is Money