As a trainee solicitor in Ashfords' commercial property team, I am particularly interested to know more about what motivates people to invest in property, and how popular property is as an investment asset. I was particularly interested when the Bank of England's chief economist ruffled feathers last month when he asked which was a better bet for retirement, pensions or property? Andy Haldane commented: "It ought to be pensions but it's almost certainly property".

Graham Davidson, the managing director of Sequre Property Investment came out in support of Haldane's view confirming that 95% of their investors purchased property with their pension in mind. However, holding the torch for pensions, the former Pensions Minister Ross Altmann has labelled Haldane's remarks as "irresponsible" and "divorced from reality".

So what is the right choice? It is understandable that the average worker in the UK (earning a salary of around £150,000 less than that of Andy Haldane) may face more difficulty in making the choice between pensions and property.

Pensions are generally regarded as being a safer bet than property because traditionally the pension funds are invested in a diverse portfolio of companies, meaning that your eggs aren't all in one basket, so to speak. The more obvious positives are tax savings, employer contributions, and the introduction of pension freedoms in 2015 which has allowed greater flexibility on how you can access your funds.

However, there is often very little control over where your money is invested (in the case of work-place pensions rather than self-invested personal pensions) bearing in mind that the value of your investment don't doesn't always go up. Furthermore, as we have recently experienced, the government can make changes to policy at any time and this does include changes to the rules around access to pensions.

With property, the two main ways that you can make a return is by rental income and by selling for a profit. As with pensions, the value of your property can both increase and decrease within a volatile short-term market. Nevertheless, UK property is generally regarded as a relatively safe long-term investment so the potential for both rental yields and asset appreciation is positive.

Getting on the property ladder can be expensive, especially considering the additional stamp duty costs for properties that are not a primary residence. There are also more additional costs associated with property rather than pension with the additions of income tax, capital gains tax and potential management fees.

Realistically, whether or not you choose to invest in property or pension is dependent upon your personal circumstances. Choosing an investment vehicle for your future is a complicated business. Both pensions and properties come with pros and cons and neither guarantee an increase in value with the general opinion being to aim for a varied portfolio of investments. There are also other investment schemes such as ISAs that could be given consideration. As such it is always advisable to seek professional financial advice before making any decisions on your future nest egg.

Investment in Property

Pros Cons
Perceived as a safer long term investment Property market is more volatile over short term than pensions
Property is a physical asset which you can also use personally i.e. holiday or retirement home Increased expenses - mortgage payments, agents fees, maintenance etc which may not be offset against rent if you have void periods
Two ways to make a return - rental yields and asset appreciation High entry cost - a hefty deposit is required
You can control level of likely rental returns and asset appreciation through location selection Additional stamp duty for investment properties alongside income tax and capital gains tax
Buy to let mortgages are readily available to assist with funding Increased time and effort required when buying, maintaining and selling property
You can sell the property at any time and use proceeds to reinvest elsewhere Lack of liquidity - house sales can take a long time to sell

Investment in a Pension Scheme

Pros Cons
It is perceived that there is little chance of ending up with less than what you invested Access to funds are restricted to the age of 55 and even then there are still tax restrictions on access
Many employers contribute towards your pension - essentially meaning you are receiving free money The Government can change how you can access your pension at any time as well as other aspects of your pension
The 2015 pension amendments give greater freedom as to how you can access your money You have little control over where your money is invested with work place pensions
Tax relief is available and capital gains tax does not apply Investments can go up and down
Pensions are generally industry standard schemes which are managed for you Most pensions require regular contributions to be beneficial
You can choose to take a lump sum payment and then invest this in other avenues such as property Many find pensions complex and confusing