1. Gold or property? Which one should you invest in this Akshaya Tritiya

Gold or property? Which one should you invest in this Akshaya Tritiya

For first time homebuyers, Akshaya Tritiya is the opportune time to buy a home for its attachment to auspicious sentiment.

Updated: April 27, 2017 11:38 AM
Gold does not generate cash flow, whereas a property earns you rent.

Dharmesh Jain

Akshaya Tritiya is as an ideal time for every Indian to explore investment options across sectors. This prosperous event that embodies luck and fortune has always been traditionally characterised by a purchase of gold. Nonetheless, the recent years have witnessed a steadfast incline towards the real estate segment. Old custom responsible for the gold rush is fading interest and giving way to rather unconventional opportunities like housing and travel.

For first time homebuyers, Akshaya Tritiya is the opportune time to buy a home for its attachment to auspicious sentiment. During this period, a buyer’s interests are best served by favourable offering in the sector. Property prices are normally low, courtesy discounts, schemes and deals offered by developers. The prospect of affordable housing with features like connectivity, infrastructure and good amenities are also one the biggest crowd pullers. It is believed that investments made on this day bring prosperity and appreciation.

Which is a truly profitable investment – gold or property? It might not be as lucrative as it seems with given fair portion of setbacks. Firstly, gold does not generate cash flow, whereas a property earns you rent. The assessment depends on the value of other cash-flow generating assets. And rightly so, realty is defined as one of the best-performing assets in the times of uncertainties and equated to a safety net.

Also, the arbitrary nature of gold prices is fickle at best and also connected to international rates, which makes it unpredictable.

Investment in gold may be a favourable choice for a shorter term; five to seven years at best. But if an investor wishes to raise money for a longer term, i.e. 14 years or more, then property acquisition is the secure option.

The stability quotient of realty also makes it more favourable in the long run as the real estate market is less volatile and market prices are bound to increase. Since future gold prices largely depend on macro-economic factors property appreciations depend on local economic factors.

Ultimately, the return on investment varies depending on the property location. Developing areas provide a higher return on investment over developed areas. Buying a property is a viable idea for Mumbai’s investors in order to maximise ROI.

(The author is chairman and managing director, Nirmal Lifestyle. The views expressed here are personal)

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