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How much property is enough to retire comfortably

PROPERTY investment is one of the most popular ways to build a big retirement nest egg, and you may not need as many houses as you think.

Experts are divided when it comes to the magic number, but it typically ranges between one and four.

In new book The Armchair Guide to Property Investing, authors Ben Kingsley and Bryce Holdaway say 73 per cent of real estate investors stop at one investment property while less than 10 per cent have more than two.

You wont achieve a passive income from buying just one investment property, they say.

However, you also wont need the 10-plus properties promoted by some industry insiders and investment books. We think in most cases you actually only need three-to-five.

But you need to choose carefully when you invest and plan Kate Johnstone and Matt Moloney were crowned investors of the year in 2012 by a financial magazine for buying 16 properties.

They built up a $8.5 million property empire which was generating them $570,000 a year in rental income.

But now the pair are bankrupt because the property values in the central Queensland mining town of Moranbah where they purchased have plummeted and they cant repay their loans.

The book crunches the numbers to find that couples starting in their 40s and 50s can achieve a passive income of $2000 a week in retirement with four or fewer properties.

It says rather than think about the number of properties, investors should focus on their combined value and income. While property investing is not easy, it is relatively simple when you follow a process and cover all the bases.

Real estate author, lecturer and investor Peter Koulizos says most people work and accumulate superannuation, so that plus one fully-paid-off house often is enough.

That doesnt mean you live off the rent of that, he says. You would have to sell that house.

Living off the property proceeds, plus super, plus possibly a part age pension, is usually enough for most people to retire in comfort.

Koulizos believes if you want to live off the rent alone, you need to own about eight investment properties outright beyond the reach of many. To do that you probably had to work really hard to buy eight houses and pay them off, and then your children enjoy those houses, he says.

Koulizos says there are a couple of key questions people need to ask themselves before crunching the property investment numbers. One, how much money do you want to retire on and, two, do you want to leave everything to your children?

How super fund fees can hurt your future finances

EXORBITANT super fund fees could cost you hundreds of thousands of dollars in retirement so it’s wise to make sure you’re not paying more than you should.

Superannuation specialists say fees are more transparent than ever with easy checks available online and on annual fund statements which should arrive by the end of September.

Comparing fees starts with taking an interest in your super. Its your money, just like cash in the bank or a share portfolio, but with extra rules that stop you from withdrawing it all before you retire.

Compare super fund fees

Research group Canstar examined almost 70 industry and retail super funds and found the cost of paying the highest fees, rather than average fees, on an $80,000 super fund balance could shrink a nest egg by more than $200,000 over 30 years.

It found for an $80,000 balance, total annual fees could range from $450 to $2322. For a $140,000 balance the fee spread is between $728 and $3966, and for a $200,000 balance its between $998 and $5610.

Canstar spokeswoman Justine Davies says there are some great value funds, both retail and industry super. But there is a big difference in fees being charged and all other things being equal, this can have a big impact on your retirement nest egg, she says.

Davies says fee disclosure has improved in recent years but is still confusing for many workers, who need to learn about administration fees, investment fees and potentially adviser fees. Just try mentioning those words at a barbecue, and watch peoples eyes glaze over.

People who havent examined their super fund fees for years or decades may be getting ripped off, because some old funds charge ridiculously high management fees and exorbitant entry and exit fees.

Wealth on Track principal Steve Greatrex says most modern super products are generally competitive and the fees you pay usually depend on the features you are getting.

There are several super comparison websites available, and has a good guide to using and understanding them. However, dont just chase the cheapest fee.

Basic funds may have low fees but offer little flexibility, while a fund with more features such as active investment management, capital protection or the ability to buy and sell individual shares can cost more.

My personal super is in a fund that is relatively expensive, but it is managed to avoid volatility because I am getting closer to my retirement and I dont want to suffer a huge fall if we have another GFC, Greatrex says. Many of his older clients share a similar view.

Greatrex says comparing super funds long-term investment returns is as important as comparing fees.