Akshaya Tritiya is celebrated each year in India, as it is said to bring good luck and prosperity to people who purchase gold on that day. In the past decade, more and more people have resorted to gold, as it has emerged as proven 'hedge' against inflation. However, the recent fluctuations in gold prices have left one to wonder, whether it is still a lucrative investment option for investors.
Against gold, the next most traditional investment avenue is real estate. And why not! Setting up a new home is the dream for many. And with the changes in the GST and implications of RERA, owning a house today does not seem impossible. Therefore, on Akshaya Tritiya 2019, if you looking for investment opportunities besides gold - especially in the real estate segment, let me dish out a few points you should definitely consider.
Size of investment & Tenure
For a short-term perspective, gold is more lucrative as you can invest in smaller amounts. Also, now you have a slew of options such as GOLD ETFs and Sovereign Gold Bonds available in the market; saving you from the hassle from buying gold in physical form.
Investing in real estate, on the other hand requires a significantly larger amount. Prior to making your investment, it is essential that you carry out a well-entrenched research and get your funding requirements for your stamp duty and down payment in order. Yet, real estate is quite ideal in case you a looking to invest with a long-term perspective. If one wishes to raise money for a longer term i.e. 14 years or more or setting up assets for the next generation, then purchasing property is a more secure option.
One of the factors to consider when investing in gold is, how easy it is to liquidate if requirement arises. On the other hand, real estate can be a real hassle in terms of liquidity. Selling a real-estate property takes up a lot of time as it requires number of paperwork and can be a lengthy procedure.
Therefore, in case liquidity ticks high on your investment check-list, you may consider skipping the real-estate market all together.
The arbitrary nature of gold prices is that it fickle at best and since it is connected to multiple macro-economic factors - making gold highly vulnerable to international price movements. On the other hand, the stability quotient does make real estate more desirable, as in the long run the real estate market is less volatile and the market prices of properties are bound to uptick. This ensures that there are several takers in the real estate space.
Real estate comes with structured tax benefits, along with the prospect of gradual yet definite capital appreciation. Ample financing options and home loan accessibility increases the investor attractiveness on this sector. Whereas, acquiring physical gold is directly subjected to capital gains tax - though one can navigate around it by opting to invest in gold in a digital form.
The Final Verdict:
I strongly believe that you should have an investment portfolio with different classes of assets to cater to different needs and timeframes. For example, in case of an emergency - gold can be ideal to immediately address your funding needs. But from a long-term perspective, an investment in real estate not only provides tax benefits and a rental income but will prove to be a secure option for future generation.
Therefore, on Akshaya Tritiya 2019 - plan your investments wisely to secure your today and as well as your future!
(The writer is the Head, Personal Wealth Advisory, Edelweiss)