Gold vs Real Estate which is better for investment?
As investment options, real estate and gold have their own advantages and downsides. Comparing between these choices aided by an informed knowledge will let you know which one to choose for your specific situation and needs.
The bottom line
When approached correctly,
Flexibility is the topmost benefit that people enjoy while investing in gold. It is possible to purchase any small quantity of gold depending on the amount you look forward to invest.
Real estate and gold investment comparison
In case of real estate, the investment size is huge. The prices of land are growing and you will need a lump sum amount to make the down payment as most real estate purchase deals are effected through debt financing. The size of investing in gold depends on your choice. You can buy as less as 1 gram of gold to any bigger quantity. It is advisable to buy gold coins or gold bullion instead of gold jewelry for avoiding the making charges.
Tenure of investment
Real estate is an ideal option for long term investment. Gold investment can be thought fo both for short term as well as long term. However, if you invest in gold over long term, you will be assured of higher returns.
If you need monthly income on a regular basis, real estate investment is the right option that can leave you with liquid cash. If the property is rented out, the monthly rental amount generated can help cover the mortgage. Gold investment is prone to be impacted by market fluctuations. When the price of gold drops, the investment value also comes down.
Real estate investment is characterized by lesser liquidity as against gold. It might take months or even years to sell your property. Real estate selling also involves a huge amount of paper work and other official formalities which will make the process long and cumbersome. The stamp duty expenses will make property selling a matter of big concern.
Real estate is characterized by structured tax benefits. The aspects like depreciation, maintenance costs, legal service expenses and others are considered for calculating tax. Gold investment will attract capital gains tax. In case of gold deposit certificates, the profits made is completely tax exempt.
Real estate prices are not as transparent as the gold prices. Gold is actively traded in the market and hence everyone can get to know the gold prices immediately. It might be difficult to get the past date while selling a property.
The choice of gold or real estate for investment will depend on what you expect from your investment, how long are you prepared to hold the investment and other considerations.