If you’re aged 65 years old are more and have just retired and paid off your mortgage, you probably consider you have managed your money pretty well.
And you have.
But you could have made a bigger profit.
Official statistics suggest you have probably lived in your home since 1995 – and although residential property has outperformed other investment in that time, the value of your home only ranks third on the list of top investments.
If you had invested £10,000 in global shares in 1995, they would have returned a profit of £52,154 – a total return of 521% at an average of 8.26% a year, according to investment platform Hargreaves Lansdown.
UK shares would have performed marginally worse, with a £45,847 profit at 7.76% a year.
Homes come next, piling on a £31,018 profit climbing by 6.32% a year, says the Nationwide Building Society. An average home costing £51,633 in 1995 is now worth £211,792, building on those figures.
Hargreaves Lansdown also looked at the increasing values of three other popular investments since 1995: gold inflation was slightly lower than that of homes – 6.21%; commercial property was slightly lower again at 6.11%, while gilts – UK government bonds – were safe but not spectacular at 5.1%.
Across the 23 years, inflation rose by an average 1.96% a year.
But how do you get at that money locked in your home?
Pension freedom and easy-access to bank savings, share funds and ISAs make them reasonably liquid assets. If you want some money, you can generally draw the amount down in a week or so.
Extracting profit from your home as a pensioner is more difficult as selling takes months, sometimes years.
The other option is equity release.
Equity release lenders will let a homeowner borrow money against the value of their home on terms that let the owners live there as long as they want.
Unlocking that cash has consequences as the lender will want the money back plus interest at some time, but your estate will never owe more than the value of the property.