Gold vs Real Estate: As soon as the name of investment in India comes, two options are first revealed- Gold and Real Estate. These are not only economic decisions, but are also associated with cultural and emotional engagement. Both of them gave reliable returns for decades, but now the investment world is changing- digital assets, easy liquid investment options and new generation priorities are challenging traditional options.
In such a situation, it has become necessary that we test both these asset classes from the new perspective whether Gold is a really ‘safest investment’? And is investment in property still a profitable deal as ever? Also, it will be right to invest in which of these two?
Benefits of investing in gold?
Gold has been a means of preventing inflation and currency fluctuations for a long time. This is the reason why it is considered the safest investment. In the last few months, when US President Donald Trump’s tariff war and geopolitical tension increased, investors turned to gold. During that time the price of gold reached ₹ 1 lakh per 10 grams in India. If we talk about the decade between 2010-11 and 2020-21, according to the World Gold Council-Gold has given an average of 8.0% to 8.5% annual return.
The biggest thing is that gold also has social and cultural importance in India. Due to this, people also have emotional connection. At the same time, options like Digital Gold, Gold ETF and Sovereign Gold Bond have made it even more accessible.
According to experts, if an investor’s priority is liquidity and diversification, gold can be a safe option. It also maintains its price in economic uncertainty. If you want long -term growth as an investor, then gold should be kept as a supporting asset in the portfolio.
What are the risk on investment in gold?
- Gold does not provide any passive income. In such a situation, it should be avoided to make the basis of investment portfolio. It should be kept as support.
- It has been seen many times when Gold gave Zero or negative returns for years. Investors should be ready for such condition.
- Even though Gold has performed well in recent years, its Cagr has often been lower than real estate or equity over the long term.
- Indian families often put a large part of the portfolio in gold due to emotion, which reduces the diversification and disrupts long term growth.
- Gold prices are affected by factors such as international market, dollar rate, geopolitical tension and central bank’s purchase and sale. Therefore, there is a possibility of sudden decline.
Benefits of Investment in Real Estate?
Real estate, especially residential property, is considered a symbol of stability and social status in Indian families. RBI’s House Price Index (HPI) data suggests that the price of houses from FY 2010-11 to FY 2020-21 has increased at an average rate of 10% annually.
Talking about the financial perspective, the residential property not only gives price increase in the long term, but also gives practical features such as tax benefit (section 80C and 24 (b)) and rental income on home loans.
India’s residential property market is currently indicating stability and growth. Attractive interest rates, festive discounts and rising housing demand have kept it strong. Experts believe that if someone’s income is stable and investment deadline is moderate to long -term, then property investment in urban areas can be a better option for wealth creation.
What are the risk on investing in real estate?
- Real estate can be a problem of ‘liquidity’. It is difficult to sell immediately when needed and it may take time to get the right price.
- While purchasing or selling property, costs like stamp duty, registration fees, agent commission, and tax can be 7–12% of the total investment, which can reduce the return.
- Tenant handle, bill filling, repairing and coordination with the society constantly seek time and energy, especially in Residential Property.
- Many factors such as location, developer defaults, authority approvals or changes in government policies affect the value of property. Choosing the wrong project can cause huge damage.
- Depending on rent can be risky. The expected income is not available due to empty property or non -payment tenants. Rental yields are limited to 2–3% in many cities.
Gold or real estate, where to invest money?
This largely depends on your capital and financial goals. Experts believe that both gold and real estate are strong investment options, but their role is different. Gold is considered a safe haven at the time of economic uncertainty. It is liquid, that is, you can sell immediately if needed. Also, gold also provides protection from inflation. But it neither gets rent nor any regular income. Therefore, it is prudent to keep gold as diversification and emergency funds in portfolio.
At the same time, real estate is a long-term asset that not only gives capital appreciation, but can also generate regular income from rent. Facilities like tax benefits and property ownership make it a permanent investment. However, it consists of lack of liquidity, maintenance and legal pachidagis. Therefore, real estate may be better for those whose income is stable and the attitude is long -term.
According to the expert, if your investment attitude is from short to medium term and you want liquidity, then you should turn gold. At the same time, property may be a better option for those who have a permanent attitude of long term growth. But, before investing in any asset, you should look at your financial position, risk ability and target.
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