Real estate is one of the most popular investment options in India. Despite the investment market presenting a lot of options like stocks, bonds, gold, and more, we need to analyse why real estate appeals to the common people. Whether it be buying apartments in TNagar or plots in the suburbs, real estate is a major attraction to serious investors. In the coming passages, we compare the performance of real estate in comparison with other investment options.
Advantages of Real estate investment:
A study conducted in 2017 concluded that real estate has been a strong investment opportunity since investors have a tangible asset that appreciates over time. Real estate investment is flexible and offers the investor the freedom to buy and sell on their own. This gives more control over one’s finances. You can even make upgrades to the property, increasing its value, which can’t be done with the other things in your portfolio. It also has the capacity to generate monthly income if you rent them out. With a little research into the real estate market, you can tap into so much financial potential.
Real estate investment Vs Stocks:
Stocks add diversity to any investment portfolio. Investing in stocks of companies that perform well will bring both short-term and long-term profits. By spreading out the investment over different companies, you can also reduce the risk. But they are also highly unpredictable. Even the smallest PR mishap can send stock values plummeting into the ground. The profits can disappear as quickly as they come.
Investing in stocks also requires research on a micro-level. You are also at the mercy of stockbrokers and financial advisors, but they do not share the liability that the stocks bring. This barrier doesn’t present itself in real estate. As long as you have an idea of how the infrastructure development around the project is, you can make informed decisions.
Real Estate Investment Vs Bonds:
In India, there are several types of bonds to invest in. They have the benefit of generating interest during the maturity period and are low-risk ventures. However, the returns on bonds are affected by inflation rates. Say you were earning 3% on a bond, and if the inflation rises by 1%, then your returns decrease by one third. But real estate value increases with inflation as material and labour prices increase. The rental value of the property also increases. Additionally, real estate investment offers tax exemptions and discounts which cannot be availed in bond investments.
Real Estate Investment Vs Certificate of Deposits:
At the first glance, certificates of deposits can seem like a low-risk venture. But they have significantly lower profit margins and returns than Real estate. The fluctuating interest rates keep the returns on bonds relatively low. CD’s are also taxed and are subject to very few tax deductions. On the other hand, the Real estate comes with plenty of flexible investment options and tax deductions.
CD’s can take between 5 to 10 years to mature and you can’t access them during that period. Real estate, on the other hand, brings liquidity to the table. Even if you are unable to sell the property, you can rent it or lease it and earn a steady income from it.
Real Estate Investment Vs Real Estate Investment Trusts:
Real Estate Investment Trusts are the companies that own and operate income-producing real estate. Individuals have the option to buy shares from them. However, it only gives you access to a share of their profits, and not to physical property ownership. Buying actual real estate will give you higher dividends and more equity. REITs only yield annual dividends of 2-3% and it can be even lesser depending on the current market state. The relative flexibility and value of physical assets, helps investors expand their portfolios faster than investing in REIT.
Real Estate Investment Vs Gold:
It is a well-known fact that India is one of the largest markets for Gold and Jewellery. It has steadily increased in value, even taking a large leap in the past year. But it is to be noted that most people buy gold as a personal indulgence rather than as an investment. Additionally buying real estate earns you passive income from that asset, when investing in gold only yields returns when you dispose of it. Your overall cash flow improves considerably even if you are still paying off the mortgage on the property.
In conclusion, we can safely say that real estate investment is better than all other commonplace investment options. It is an investment that can contribute to your income from day one of buying it. Lifestyle Housing is a reputed developer of luxury apartments in Chennai. Our latest projects include 2 BHK flats in Porur and 3 BHK flats for sale in T Nagar.