All That Glitters Is Not Gold

In this Readers’ Platform, your author explains why real estate is a better option than gold.

Gold has always been a favorite investment vehicle of Indian households, as many people transfer the yellow metal from one generation to another. The biggest advantage of gold is that one can be flexible with investment size or amount. Whether you put in Rs 1000 or Rs 1 crore plus, gold is accessible for everyone to buy. Also, gold is highly liquid.

Real estate also scores high for investment purposes, but compared to gold, it requires additional funds and the buyer needs to have long holding power. Well, real estate can be an attractive long-term investment option where the property value increases over time. So, if approached in the right way, real estate can deliver you incredible profits.

The one thing that is common between gold and real estate is that both have a strong sentimental value for Indian investors, with strong reliability and sustained nature. So how do you choose where to spend your money if you have a sizeable amount to invest? Well, I would recommend real estate any day, as there are various reasons that real estate scores over gold. Let’s have a look at them:

Passive Income

Real estate has the potential to create regular income with additional tax benefits. Whether residential or commercial, real estate has the potential to generate passive income for investors in the form of monthly rentals paid in cash, which gold investments cannot do.

Rate of Return

History suggests that real estate can give up to 15% annual return, thanks to rising rentals. The value of property improves with the market and economy. On the other hand, gold is used to hedge against inflation, which means that the return from gold is in line with inflation, which is aimed low by all governments. Also, gold shines when your paper currency is depreciated, making the return nominal.

Volatility and Risk

Real estate is a highly stable investment option, which comes with low risk. Property brings mental satisfaction due to it securing your future. On the other hand, gold is a commodity, which is traded on the bourses. It comes with higher volatility and risks of being stolen.

Expenses Add to the Value

One may argue property incurs the cost of maintenance and renovations, unlike gold, which is altered at will. However, this cost not only appreciates your asset, but also allows you to take taxation benefits.

Property brings mental satisfaction due to it securing your future.

Long-Term Value Creation

It is a no-brainer that the value of real estate increases the longer you hold it. It is simply because you cannot create land, and with rising population, demand increases, which ultimately leads to rising prices. On the other hand, gold can be purchased in a digital form, as well. This might reduce the risk of being stolen, but it still is an intangible asset.

Aids the Economy

Real estate might require large funds, but survival of a lot of sectors depend on it. Debt servicing, cement, housing finance, building materials and various others depend on real estate at large. It also creates a large number of informal and indirect employment opportunities.

Tax Benefits

The investment in real estate comes with numerous tax benefits, such as tax deduction on mortgage interest, operating expenses and legal costs, property taxes and depreciation.

Real estate is not only a safe investment but can generate better returns over a period of time while you are still earning a regular income if you are using it as a rental property. It is a great investment option for many reasons, such as a fantastic tax advantage, and you can leverage it to build wealth and assets.