Real Estate v/s Other Assets: Your ideal choice?

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While investing your hard earned money, you must assess which should be your investment choice

 Investing in different assets demands a thorough analysis, because its implications may vary accordingly. 

 Real estate, gold and mutual funds are the most common types of assets. 

There are pros and cons of every asset, so they must be chosen according to one’s financial capability and risk tolerance.    

Let us differentiate each of these assets according to their advantages and disadvantages.

Real Estate: Capital intensive yet higher returns  

It includes land or any kind of physical property which may include buildings, houses, industries etc. The return on investment time period is comparatively longer for real estate compared to other assets.  

Advantages

  • Real estate prices increase gradually along with low volatility which makes it a stable investment option
  • One can rent out properties and thus enjoy regular monetary benefits
  • Property can be purchased with the help of home loans
  • By investing in renovation and repair one can add value to real estate
  • Can be mortgaged
Disadvantages
  • Liquidity resistant in case of an    emergency
  • High cost of maintenance involved
  • High transaction costs due to    registration and stamp duty
  • Requires huge capital for investment

 Gold: An asset since ages

It gives consistent return on investment and is thus considered to be a high return on investment asset.

 Advantages
  • Can be easily sold
  • Can be used for personal use
  • Gives high rate of return
  • One does not require deep knowledge of    the product before investment
Disadvantages
  • There are no tax benefits.
  • There is no regular income in form of    rents or dividends
  • Higher security threat and storing costs
  • Gold prices fluctuate due to various    macro-economic factors

 Equity, Mutual funds and bonds: Modern assets

 Though the returns on investments are higher but the risk involved is also big in these kinds of assets

 Advantages
  • Liquidity is comparatively high
  • Low amount of investment possible
  • Professional fund managers handle the    assets
  • Gives high rate of returns on investment
Disadvantages
  • Thorough knowledge of the product is a must
  • Non physical asset
  • Prone to high risk

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