Wise Investment- An Open Plot Or Gold?
Just because investing in real estate may be an unfamiliar investment, doesn’t mean it should be avoided. If approached correctly, a real estate investment can be a profitable and reliable investment opportunity to generate substantial returns. It can create a regular income flow while supplementing your portfolio with exceptional benefits such as tax advantage, diversification, and a less risky investment choice.
On the other side, there are numerous reasons why people, especially Indians, prefer gold as an investment vehicle. Many families in India treasured gold for ages passing it from one generation to another as a means an asset. The top benefit of investing in gold is that your investment is very flexible. You can purchase as small as 1 gram, or any amount of gold depending upon the amount of money you have to invest. Similarly, land or open plots are also passed on as fixed assets as an heirloom. It yields more returns as compared to gold over a period of time and also can be used for constructing a house or using it for other tangible purposes. Though it appears to be a tough choice to make investing in open plots always scores more as compared to investing in gold.
Difference Between Real Estate vs. Gold
When it comes to investing, experts suggest buying gold. However, they also recommend investing in real estate, where you can enjoy passive income from monthly rentals. Whether you prefer gold or real estate depends on your personal preferences. The two can generate high yields, but the question is, which is better?
Real estate
Investing in real estate is a good way to generate a steady passive income and profit. In contrast, gold is an expensive investment with higher volatility and risk of theft. It also requires a certain amount of maintenance and renovation. However, real estate investments does offer tax benefits.
The price of gold fluctuates on a daily basis. A plot of land can be leased to companies or organizations and can generate income. Real estate is also a good choice for tax deductions, as its rental costs, utilities, and maintenance can all be deducted from tax returns.
Gold
Investing in gold is a good idea for those who want to beat inflation. The value of gold rises with the depreciation of the paper currency. Moreover, it is less volatile than real estate, which can be altered at your convenience. Nevertheless, this decision has to be made by each individual investor.
If the soil is greater than the nearby road it could be challenging to lay drainage and water lines. Additional earth needs to be removed to keep the land accessible. If the land is significantly lower than the road’s level, significant costs are incurred for filling the land. When you are valuing a piece of property, it is important to be aware of all expenses for leveling.
Size of investment
The investment size is huge in the case of real estate. Land as a limited resource has a growing demand with exponential prices. To invest in real estate, you need a lump sum amount to pay as a down payment, and it involves debt financing.
The size of the investment wholly depends on your investment appetite. In the case of gold investment, you can start buying as low as 1 gram of gold. It is advisable to invest in gold coins or gold bullion than gold jewellery as the jewellery is subject to additional making charges. Moreover, the resale value of gold in the form of jewellery is less. But Investment in open plots is less risky and less fluctuating with assured returns.
Tenure
Real estate investment is ideal for long-term investment. You can hold gold for the short as well as long-term. Though investing in gold in long term can give a higher rate of return, subject to market price. Hence, an open plot is a better investment as compared to tenure.
Earning potential
Real estate is one of the best ways to produce a regular monthly income in the form of liquid cash. A rental property can get a monthly rent and part of which can be used to pay the mortgage. The returns fluctuate with the market. If the price of gold drops, the investment value also goes down.
Liquidity
Though real estate offers less liquidity as compared to gold, the gains on an investment are always high compared to gold. Selling off your property could require a number of days or even months. It involves paperwork and stamp duty while selling the property which makes the process lengthy and complex. Buying and selling gold is a simple process. Gold is a liquid asset and can be encashed at any point in time with no formalities. But selling a property or an open plot will give you enough investment in returns.
Volatility
Real estate is subject to low volatility as compared to gold and other investment options. Gold is more volatile than real estate. The value of gold changes almost every day.
Returns in Real Estate vs. Gold investment
History says that real estate has given on an average of 8 percent returns and can go up to 15 percent or more. Despite the growth in rentals, the rental yield in India is around 7 to 9 percent which is lower than other investment options. However, if you look at the other side of the coin, real estate can produce regular monthly income which a gold investment cannot. Real estate can be an attractive long-term investment option where the property value increases over time. Real estate provides better returns than gold without much volatility. Additionally, when the market improves, so does the value of your property. It is wise to include real estate as a part of your overall wealth creation strategy.
Gold investment is worthwhile as it gives inflation-beating results. Over a period of time, returns from the gold investment are in line with the inflation rate. However, the dark side is when gold appreciates value, it is because there is a devaluation of the paper currency. Hence, returns become nominal in the case of gold investment.
Why Invest in Real Estate?
Real estate opens as a wiser option because of the following reasons.
Low volatility: Real estate property is a stable investment option as compared to gold. Also, owning a house means you are ensuring a secure future.
Lease it out: Even if you are using the property, you can always lease it out to produce a regular income. Rental returns are an excellent option for generating a positive cash flow. You can also mortgage the property against a loan.
The value of the real estate will always increase over time: The longer you hold onto your real estate property, the more value you are likely to get.
The investment in real estate comes with numerous tax benefits such as tax deductions on mortgage interest, operating expenses and legal costs, property taxes, and depreciation. Real estate investment 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 fantastic tax advantage, and you can leverage it to build wealth.
Get your piece of open plot today with Book my plot ventures and be a wise investor.
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