The turmoil in the international stock markets is having a tragic impact on the retirement plans of many retired Australians.

For example, during September 2008, it was estimated by Super Ratings, a company that tracks the performance of super funds, that Australian super funds lost as much as 6% of their value. During the past year they lost 12% of their value.

The reason for the massive decline is the current superannuation rules which effectively place the Australian superannuation system in a virtual stock market strait jacket.

Over the years, The Investors Club has argued strongly that Australians should have greater flexibility in using their superannuation to invest directly in property and also to help pay off their mortgages.

This stock market strait jacket has been highlighted by a recent report from the Australian Prudential Regulation Authority (APRA) that tracked the performance of superannuation funds in Australia during the period 1997 to 2006.

Super woes highlighted

The report showed that the ten-year average annual return for super funds with assets more than $100 million was around 6.7% before they imposed fees and charges.

During the same period, figures produced by the Real Estate Institute of Australia (REIA) show that the annual average returns (taking into account capital growth and weekly rents), for a three-bedroom residential home in the major capital cities varied from 11.2% to 16.8%.

The heavy investment in the stock market by super funds is underlined by the APRA report which showed that during 2006 nearly 60% of investments were in Australian or international shares.

The current superannuation rules virtually prohibit the use of superannuation for residential real estate and goes against the basic investment tenant of not putting all of your eggs in one basket.

By allowing Australians to use their super contributions to pay off their mortgage, this would encourage additional super contributions. For example, someone has to earn $150 and pay $50 tax before paying $100 off their mortgage.

It would also allow more first home buyers to enter the housing market at a time when Australia is recognised as having among the most expensive real estate in the developed world and the worst housing shortage.

Interestingly, financial advisers and stockbrokers are the prime beneficiaries of this share market splurge and it is no coincidence that they are major contributors to both political party’s election funds.

It is now time that ordinary Australians were given a greater say in where their superannuation is invested and this should include the option of investing in residential real estate which is a proven long-term investment to create wealth.

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Despite unstable interest rates, women remain avid property investors. In fact when it comes to satisfaction with their choice of investment, women with property out-rate their male counterparts.

In a recent survey of property owners by investment house, women were more upbeat about their choice of bricks and mortar than men, with one in five aiming to build their portfolio with as many investment properties as possible. The majority (55%) of women interviewed own one investment property, while 41% own between two and five properties.

The remainder own over six properties with a small, but noteworthy, proportion of 1% owning a staggering 11 or more investment properties.

According to Property Choice national manager corporate affairs, John O’Rourke, women are increasingly making a large impact on the investment property market. He says: “You only have to visit a handful of auctions to work out how many women are confidently investing in real estate, often by themselves.”

Property has long been a favourite among Australian investors though the survey identified different points of appeal between the sexes. Apparently, women are more likely to opt for houses in a bid to set themselves up for the future. Men, on the other hand, are more likely to buy property for the tax deductions, provided by negative gearing. This could be a possible reflection of wage differences between men and women.

Julianne Chancey, author of a recently published book about property investment says: “Women have always been comfortable with the ‘look-feel’ aspects of property investing.” She adds: “With the high number of divorcees and singles, women are often conscious of the need for security, and real estate caters to that need on a psychological level.” A

spate of loan interest hikes followed by recent drops may have left home investors worried and uncertain as to the future, but it doesn’t seem to be discouraging female property investors who are adopting a range of measures to cope with higher interest charges.

According to Mortgage Choice, 37% of female investors manage their own rental properties versus 33% of men, saving on professional property management fees which can be around 8% of gross income.

And despite a well publicised rental rent creep, female landlords are likely to be more sympathetic with tenants. Only 24% of women have raised the rent on their investment property, compared to 38% of men.

Gender shouldn’t be a factor when it comes to finance. Paul Grogan, a Mortgage Specialist with NAB, says: `Lenders don’t discriminate between male and female. It comes down to security, your ability to repay and your credit history.” He said that men appear to have a clearer idea of the sort of finance they want.

He advises: “Do plenty of investigation, be prepared to take advice, and if you are still unsure, speak to someone you know and trust.”

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Brought to you by Kevin Young, CEO of the Investors Club. The Investor’s Club help people build wealth through sound property investment with a long-term outlook.