Real Estate Benefit:
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 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 expenses add value: The value of the property can be increased through repairs and renovations. Unlike gold, the property can be altered as per your convenience.
The investment in real estate comes with numerous tax benefits such as tax deduction on mortgage interest, operating expenses and legal costs, property taxes and depreciation. The 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.
Gold Investment Benefits:
Hedge against inflation: Gold has proven to be an excellent hedge against inflation because the price of gold tends to rise with the rise in the cost of living.
Holding its value: Unlike paper currency, the gold has maintained its value throughout ages. People look upon gold as a way to pass on and maintain their wealth from one generation to other.
Portfolio diversification: The purpose of portfolio diversification is finding investments that are not closely related to one another. Gold has a historically negative correlation with stocks and mutual funds. So, it turns out to be the diversification instrument in your portfolio.
Gold has no counterparty risk: In the case of gold, there is no legal formality or a paper contract to make it valid. There is no need for an intermediary to fulfill the contractual obligations.
Liquidity and portability: Gold investments especially, gold coins and gold bullions are ideal because they are the portable and highly liquid investment. You can carry gold anywhere in the world and can sell in any corner of the world within minutes.
No maintenance and carrying costs: Unlike real estate, gold doesn’t need maintenance. You can simply lock it until you need it. Additionally, gold is a value dense. You may carry lakhs of rupees of gold in your home without paying a carrying cost.
| Real Estate | Gold | |
| Size of investment | The investment size is huge in the case of real estate. The 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 investment wholly depends on your investment appetite. 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. |
| 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 the 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 | Real estate offers less liquidity as 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 very liquid asset and can be encashed at any point in time with no formalities. |
| Volatility | A 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. |
| Tenure | Real estate investment is ideal for a long-term investment. | You can hold gold for short as well as long-term. However, investing in gold for long-term can give a higher rate of return. |