Real estate v/s other avenues of investment

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Real estate in not the only option when it comes to investment. Other avenues like mutual funds, bonds and traditional investments like gold are becoming popular again. 

Investment opportunities have and will continue to be an integral part of everyone’s lives. At different stages of life, one debates with themselves as to which option is best suited for them. Real estate, gold, mutual funds and equity are some of the main investment options that one looks into, but each has their own pros and cons. Each aspect of these investment opportunities make them unique and to make money, one has to have a better understanding of both the positives as well as the negatives. Let us take a look at these points of debate -

Real Estate: It is an avenue which takes a longer period to see a return on investment.

Advantages:

  1. Low volatility and a gradual increase in market prices lend stability to the investment
  2. Through renovation and repairs, the performances of your investment can be amplified
  3. Benefits from home loans for each property purchase
  4. Can rent out properties which provide a monthly income

Disadvantages:

  1. High transaction cost is incurred due to stamp duty and registration
  2. Capital intensive in nature
  3. High cost of maintenance
  4. Difficult to generate cash in case of emergency, however, mortgaging the same is possible

Equity, Mutual Fund and Bonds: There is a multitude of varieties and styles of Mutual funds; it is a high-risk investment class of asset.

Advantages:

  1. Offers an opportunity for high rate of return on investment
  2. Easily convertible into liquid cash when required
  3. Less capital intensive
  4. The assets are handled by professional fund managers

Disadvantages:

  1. High risk
  2. Requires in-depth understanding and knowledge while choosing good equity stocks
  3. Nonphysical asset

Gold: This is a category that all Indians traditionally invest in. It is also an asset that gives a consistent return on investment.

Advantages

  1. Investing in physical gold does not require any understanding or knowledge of the product
  2. High rate of return over time
  3. It can be used for personal consumption
  4. Easily sellable

Disadvantages

  1. Gold prices are coupled with several macro-economic factors 
  2. Cost of storing and maintaining gold is high and poses security risks
  3. There are no tax advantages for gold investments 
  4. No regular income in the form of dividends or rent 

Disclaimer: The views expressed in the article are solely of the author and may not represent 99acres.com's opinions on the subject. 99acres.com does not take responsibility for any actions taken based on the information shared by the author.


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