Gold Rate vs Real Estate: Which Gives Better Returns?

Your real estate investments never depreciate, only appreciate or maintain their value. With increasing urbanization, population and infrastructural development, your real estate value significantly increases.

If you rent your property, you can earn a regular income in the form of rent. This consistent stream of income can help you pay off the mortgage on the property or just have an additional income.

You can claim expenses like maintenance, repairs and municipal taxes are deducted from your taxable rental income, lowering your tax burden. Also, if you hold your property for more than 24 months and then sell it, a lower capital gain tax will be applicable on the profit you made on the sale.

Real estate investments are a great hedge against inflation. As the inflation rises, your property value and rental income also increase.

Real estate is one of the most illiquid assets, meaning it cannot be easily converted to cash. In case of an emergency, you might have to sell the property at a lower price than the average price to sell it quickly.

Huge initial investments are required to invest in real estate. If you want to invest in properties with high potential for capital appreciation, you will have to pay high prices.

Stamp duty, brokerage fees, GST and registration fees are additional charges to be paid on top of the property cost.

Robert Kiyosaki, in his book ‘Rich Dad Poor Dad’, described rental income as passive income, but that's not quite right. You need to actively manage the property, chase problematic tenants for payments and maintain upkeep of the property.

Whenever there's news of a new highway or airport being built, the prices of real estate in that area rise.

For example, when the news of a new airport being built in Ulwe spread, people started buying properties in that area. But since such initiatives are tied to long and tedious procedures, investors had to wait for years for the airport to actually start building and expect a rise in property prices.

The value of real estate increases at a slow pace and locks in your money, which you could have invested in assets like equity, where you could see quick capital appreciation.

Many investors have fallen prey to fraudulent activities where the payment was made, but the builder sold the same property to multiple people. You will often see such news making headlines in the newspaper, so it’s important to do your due diligence when buying a property.

You can sell gold bars or jewellery at the nearest jewellery shop and convert your jewellery to cash.

Gold investments protect against inflation and currency devaluation. Hence, in times of economic crisis, people tend to invest in gold as it’s a safe haven for investors.

Buying gold is a very straightforward process, you don’t need to research or have special knowledge when buying gold.

When you buy physical gold, you need to store it in a bank or in a safe. You may also need to insure your gold. All these storage and security charges add to your overall costs.

One of the highest expenses in gold is the making cost paid to the jeweller. When you buy jewellery, you not only pay the value of gold but also the making charges.

Unlike real estate, physical gold cannot generate regular income. You can earn a profit only when you decide to resell it.