Battle of Luxury Investments: Comparing Gold and Real Estate

• 28 April 2017 | 1520 Views | By Mint2Save

Making money via investments hasn’t been much of a difficult for the rich. New avenues are on the rise and so are changes and improvements in the old ones.

Two of the evergreen investments that have always proven their worth are real estate and the yellow precious metal of Gold. In the current economic scenario, these investments are among luxuries. Not anybody can go ahead buy a chunk of real estate or some grams of 24K Gold.

Though both, gold and real estate, are totally different types of assets, in the world of investment, they fight for the same money. As a result, it often becomes quite confusing on where to head ahead and what to choose among these two.

In this article, we are going to explore some crucial points that explore pros and cons of investing in gold and real estate.

Indians are known for their love for the yellow metal, especially as India is the second largest consumer of gold in the world. Still, today it has been observed that a  huge rush is heading to dive in the realty sector in India, and numerous Indians are not hesitating to promise or sell their gold to invest in the booming real estate sector. What an investor wants is to pick the assets that have the most potential for gain and every type of investment has its own pros and cons

Whether gold will deliver good returns or the real estate depends on your risk appetite and the investment sphere. It would be best if the real estate or property is chosen for long term holding and however, for short term holding gold is better.  If we talk about quality and valuation standards are known and reasonably transparent, real estate involve you to spend more time and energy in understanding the market and trying to determine a value which looks reasonable. As the investment you have in mind gets lower then it makes sense to shift towards gold.

Let’s have a look at the advantages and disadvantages of both these luxury investment categories: 

1) Want to invest  in physical then gold is easy.

2) Over the long run, gold investments give high dividends and good returns.

3) Gold can be easily credit for availing loans.

4) Gold can also be converted into jewellery and ornaments for personal use.

Disadvantages are:

1) No tax advantages for gold investments. 
2) Gold prices are tied with some macro-economic factors.
3) Less lucidity while buying and selling physical gold.

4) The cost of maintaining and storing gold is high. You will have to maintain a locker

5) Gold poses security and purity risk.
6) Investing in gold would not generate regular income in the form of dividends or rent.

The benefits of investing into real estate are:

1) If property is rented out, it will generate regular income.

2) Steady increase in market prices lends stability to the investment.
3) Renovation and repairs helps to increase the performance of your investment.
4) When clear legally, it can be mortgaged to avail various finance facilities. 

Disadvantages are:

1) You will need large capital to invest in property, thus more money.
2)  The Cost associated of maintaining a property is high.

3) While buying a property there is high transaction costs due to stamp duty and registration.
4) To sell the properties immediately is very difficult, making it hard to liquefy your investment during emergencies.

Purchasing and investing in real estate requires various things that include stable income, save money for a down payment and credit. Though, it also reflect a faith in the authenticity of the local property laws and legal system where you will be secure in that property from which no one can illegally take it from you. No doubt that gold is more or less convenient as it frequently can be traded extra and legally. It is a part of currency that will value even in a bad era when society breaks down. Gold is a negative investment as it reflects evade against the potential fall down of the existing order. The principle is that gold is real money. To know the exact price of any investment, you should see its price in terms of true money, i.e. gold.

Both gold and real estate are very good investments but both it depends on an individual to select one of them because both have its own pros and cons. As a real estate can definitely gives a good return in present scenario where you can rent your property and earn revenue which is not possible with gold and even when you sell gold certain percent will be deducted as wastage or as a tax. If real estate can be purchased on loan money it will be a more better option as interest rates will invalidate according to the rate of inflation and devaluation of currency and will further add to good returns because what Rs 200/- could buy today that may be available for Rs 600/- after a year due to increase in money supply. And also if we talk about gold then gold prices always increase faster than compared to any other investment every year and even in terms of safety, control and good returns you might prefer gold as a better investment.

Lately, everything has come on papers too. Real estate based mutual funds are now openly traded and gold is being in huge amount in form of sovereign gold bonds.