Primarily each one of us ensures that we develop our skill sets, work hard so as to earn more. Secondly, it’s about investing this hard-earned income for future gains, benefits. For this, the two best options that come to one’s mind are:- Gold or Real Estate. Also, on account of Akshay Tritiya are you investing your savings in Gold or Real Estate?
It involves extensive thinking because in the past decade an enormous number of people have resorted to gold investment. As it is a proven hedge against inflation. However, the recent fluctuations in gold prices have left one to wonder. Whether it is still a lucrative investment option or not.
Similarly setting up a new home is the dream for many. But, with the changes in GST and RERA Act, owning a house (Real Estate) today does not seem implausible.
But deciding which option to opt for isn’t that easy, it involves consideration of various factors, Return on Investment (ROI). It also involves the budget available for making an Investment.
Key factors to be considered for investing in Today’s time:-
1) Tenure:
For a short-term, Gold is more lucrative as you can invest in smaller amounts. Also, now you have options such as GOLD ETFs and Sovereign Gold Bonds thus saving you from the hassle of buying gold in physical form.
Example of Gold ETF’s are, Axis Gold ETF, Birla Sun Life Gold ETF, HDFC Gold Exchange Traded Fund.
Investing in real estate, on the other hand, requires a significantly larger amount but it is essential that you carry out well-entrenched research about the Builder, various related laws and get your funding requirements for your stamp duty also down payment in order. Real estate is quite ideal in case someone is looking to invest with a long-term perspective.
2) Volatility:
The nature of gold prices are volatile and it’s connected to multiple macro-economic factors thus making gold highly vulnerable to international price movements
whereas the stability quotient makes real estate more desirable, as in the long run the real estate market is less volatile and the market prices of properties are bound to uptick.
3) Liquidity:
One of the major factors to consider when investing in gold is, how easy it is to liquidate if the requirement arises. On the other hand, real estate can be a hassle in terms of liquidity as selling a real-estate property takes up a lot of time as it requires a lot of paperwork, searching for an appropriate buyer, thus involving a lengthy procedure.
4) Tax Benefits –
Real estate comes with structured tax benefit and definite capital appreciation. Whereas acquiring physical gold is directly subjected to capital gains tax, however, one can opt to invest in
Gold in digital form.
Indian retirees are most vulnerable in the world- as per recent RBI report. The major reason behind is their borrowing and investing habits of families. Irrespective of class, most household wealth in India is tied up in real estate and gold.
Meanwhile, investment in financial asset and pension funds remain very less which is almost 5% of total household wealth. This is in contrast with households in other countries that invest significantly in financial assets and pension funds but have almost no gold holdings.
The borrowing patterns of Indians are widely different than other nations, placing them at a higher risk.
- When it comes to deploying Indians hard earned money, they rely heavily on physical assets. like gold and real estate rather than financial assets. Average Indian holds 84% of its wealth in real estate and other physical goods, 11% in gold and the rest 5% in financial assets like deposits and savings accounts, mutual funds, publicly traded shares, life insurance and retirement accounts.
On the other hand, households in Tamil Nadu, Daman, Pondicherry, Diu and Andaman and Nicobar have a strong penchant for gold as they put 28.3%, 25.7%, 24.4%, and 23.5% of their money respectively towards this assets.
Thus I would like to conclude:-
I strongly believe that you should have an investment portfolio with different classes of assets (different sources of Investment) to cater to different needs and time periods.
Example:- In case of an emergency Gold can be ideal to immediately address your capitalize needs. But from a long-term perspective, an investment in real estate is the best as it provides tax benefits and also a rental income, thus a more secure option.
However if liquidity ticks high on your investment check-list, you may consider skipping the real-estate market altogether.
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