Savings is one of the most efficient ways of accumulating wealth and securing a better future, and investment is one of the most effective ways of saving. However, with the current world being flooded with many investment opportunities, it at times becomes quite difficult to know where to invest the money. The two significant investment areas that were always in focus and had a high level of interest are real estate and gold. These two assets have been safe investments for a long time since the rate of interest in these assets has been increasing year by year. Major real estate consulting firms in India suggest real estate is the best investment option for the long run. On the other hand, Gold has been a popular hedge against inflation assets for decades. Thus, the question that comes to mind is which of the two is better – real estate or gold. To decide this let’s understand what can be a better investment real estate or gold.
Real Estate Investment – Pros and Cons
Investing in real estate has always been a preferred option among investors, largely because it is a form of tangible asset which is an essential need for people and offers a stable income. Real estate investment has various benefits which include the regular income from rent charges, an increase in the value of the investment over time, and more so the various tax benefits accrued to the investor. Real estate investments, on the other hand, involve a considerable amount of capital and may take years for large profits to be realised. Furthermore, the management of the property could be an issue and also, costs associated with maintenance and repairs are steep.
Gold Investment – Pros and Cons
Gold investment has remained a favourite investment instrument from time immemorial because of its features such as scarcity, marketability and glamour. Gold is considered a form of wealth that is meant to be stored for the long term and has proved to deliver better returns than most assets. It is also an ideal hedge asset that is specifically useful during episodes of financial turmoil and political risk. However, gold investment does not produce any income or dividend and it is not a necessity or a basic life requirement like property or other physical assets.
Comparative Analysis – Real Estate vs. Gold
In order to draw a conclusion and determine which one is a better investment, real estate or gold, we have made a comparative analysis of both kinds of investment. The analysis includes factors such as profitability(ROI), diversification, liquidity, volatility and the growth of the investment.
- Return on Investment: Real estate investment provides an average annual return of around 8-10%, while gold provides an average annual return of approximately 3-5%.
- Diversification: Real estate investment is less volatile and provides diversification benefits due to its low correlation with other assets. Gold investment is highly volatile and is a good diversification option during times of economic instability and market downturns.
- Liquidity: Real estate investment is less liquid than gold investment and takes a longer time to liquidate. Gold investment is more liquid, and investors can buy and sell gold easily in the market.
- Volatility: Real estate investment is less volatile than gold investment and offers a stable investment option. Gold investment is highly volatile, and the prices fluctuate daily based on global economic and political factors.
- Growth Potential: Real estate investment has the potential for capital appreciation over time, and rental income provides a steady source of income. Gold investment is a store of value and a hedge against inflation but does not provide any growth potential.
Conclusion
In conclusion, holding the analysis of real estate and gold above, it is clear that each of the assets has its strengths and weaknesses as an investment instrument. Real estate investment has long-term consistent and secure returns and is effective as a diversification investment. In contrast, gold investment offers the benefits of liquidity, safe-haven demand, and inflation hedging. Hence, the investors should make their decision on which investment option to undertake depending on their financial objective, the capacity of risk that they are able to handle and the objectives that they would like to achieve. When facing challenges with decision-making to buy your perfect Mumbai Sea View apartments, HomeSharp could be your go-to option, they have tie-ups with the best real estate advisory firms in India which would assist investors in the selection of the best investment opportunity for real estate.
