How investing in real estate is best when compared to investing in gold?
The traditional Indian investing in real estate or gold, with a preference for one or the other.
Because of stock market fluctuations and unit-linked investment scams, the mere mention of
stocks makes people feel hostile and suspicious. People usually think of this topic as risky
and maybe a little bit inconsistent. It’s best to save it for another time, another day.
Let’s talk about the pros and cons of investing in gold and real estate, which are both
generally seen as safe and reliable options.
- Take a look at the numbers here to get an idea of how much gold has changed the
way Indians buy things.
- The value of all the gold on the Indian market is thought to be around 30 lakh crores,
which is close to twice the amount of foreign currency held by the RBI.
- Gold can be bought in many different ways, but jewelry is the most common. Some
investors like to hold this valuable item in the form of gold coins.
- The rest of the group prefers non-physical investments like Gold Exchange Traded
Funds these are units like mutual funds that represent physical gold in paper or
dematerialized form and are traded on the exchange like a single stock of a company
- Investors in real estate can choose to put their money into land, apartments, or
commercial buildings like offices, warehouses, etc.
- The land is a strategic investment that often has different legal and tax implications.
The most popular choice has been an apartment, either for personal use or as a
- The most important decisions to make are when and how much to pay for a house or
piece of land.
- Now that we know how to invest in these things, we’ll look at the market and risk
factors for each one to help us make the right choice.
- You can make money from the property by renting or leasing it to people who want
to buy it. This can be counted as a monthly cash flow from year to year the minimum
lease period in India is close to 13 months, which could be a good hedge against
property loans or the investor’s own needs for personal protection.
- On the other hand, investors in gold ETFs stand to gain a little bit from dividends
announced on the ETFs. Other ways to invest in gold don’t make money when they
- Gold can be bought in any amount that fits an investor’s budget, and it can also be
turned into a liquid quickly, according to the investor’s day, time, and needs.
- On the other hand, a real estate investment is often required and advised to be held
for at least a certain amount of time so that it can grow in value. In this case, it is hard
to use liquidity options.
- So, Gold wins in terms of its ability to be sold quickly, which is a key factor for
investors who want to use this option in a short amount of time.
- Real estate is a fixed investment, so it is usually seen as less un-portable than gold,
which is easy to trade in local or other regional markets in India.
Other Goods and Services
- In this area, real estate did better than other investments because mortgages and
leases are good for investors. Still, small investors could choose not to do this if they
don’t want the bank to be able to take their property if they can’t pay their bills.
- Gold investors can also get loans from banks or pawn shops for 50–70% of the value
of the gold they put up as collateral.
- Gold is thought to be a good investment for the short term. In the past, gold prices
went up the most between 1999 and 2022. This made the average investor think that
gold prices would go up even more year after year.
- But, as the past few years have shown, gold prices do sometimes go back to where
they should be.
- The golden truth, then, is to keep gold as an investment option for a short time and
keep a real estate investment for at least three years.
- On different types of real estate, a big amount of tax can be saved every year.
- For example, if an investor buys a home to live in, he or she may be able to claim the
interest paid on borrowed money under Section 24.
- However, this is subject to certain conditions. Gold gives you little or no tax benefit if
any at all
- Still, Gold has shown that it is the best way to protect against inflation in the short
term. But if you look at it as a hedge, Indians haven’t thought about this market yet
because most of their purchases are still from jewelers.
- Only inflation is worse than gold. When real inflation-adjusted returns are used to
compare it to real estate, it does not do as well. If you put your money into gold for a
long time, you would lose out on other opportunities.
- So, any serious investor should have some of their money in gold to protect against
inflation and more of their money in real estate or property because it will last longer
and give them more for their money.