Unlocking Wealth: Stocks or Real Estate – Where Should Your Money Be?
Investing is often seen as the highway to wealth creation, and rightly so. However, the dilemma that usually confronts the average investor is the choice between the most popular investment vehicles – stocks and real estate.
Be it real estate or the stock market – both have their unique advantages, risks, and degrees of complexity. In this article, we’ll dissect the various aspects of both investment types, utilizing statistics, comparisons, anecdotes, and in-depth reasoning.
Nevertheless, which is the superior investment – the tangible allure of real estate or the dynamic appeal of stocks? Join us on this journey as we delve into the fascinating complexities of both asset classes, dissect their advantages, and understand their drawbacks.
Real Estate: A Tangible Investment
Investing in real estate involves the purchase of physical land or property. Some people prefer real estate investment because of the perceived stability and the potential for steady, passive income if rented out.
What are the 10 advantages of real estate investment in India?
1. Steady Income: The growing urbanization in India makes rental income from real estate properties a steady source of income. For instance, in cities like Mumbai or Delhi, a decent flat can yield a monthly rent of INR 20,000-50,000.
For instance – places like Oragadam township in Chennai have an attractive rental yield on most properties.
2. Capital Appreciation: Over time, property prices in India have shown a substantial appreciation trend. The National Housing Bank’s RESIDEX, a real estate price index in India, showed an average annual growth of approximately 8-10% in major cities over the past decade.
Oragadam real estate investment is a good option to look at for investors who would like to see a consistent growth in their property’s valuation. Oragadam properties turn over significant returns on income for investors in just a few years.
3. Tax Benefits: Real estate investors in India can avail various tax benefits under sections 24, 80C, and 80EE of the Income Tax Act. This includes deductions on principal repayment, interest payment on home loans, and stamp duty and registration charges.
In places like Oragadam township in particular and real estate Chennai in general – investors could acquire a real estate asset and claim a host of tax benefits as listed above.
4. Increasing Urbanization: Rapid urbanization and the growth of Tier II and III cities in India have enhanced real estate’s investment potential. According to a UN report, India is projected to add 416 million urban dwellers by 2050.
5. Population Growth: The growing population is leading to increased demand for housing and commercial properties. India, being the second most populous country, is witnessing a burgeoning middle class with increasing disposable income.
6.Infrastructure Development: The ongoing infrastructural development and government initiatives like ‘Smart Cities’ and ‘Housing for All’ are significantly impacting real estate’s value and appreciation.
Such development initiatives led to the emergence of places and opportunities like Oragadam real estate investment. Oragadam properties within the Oragadam township has seen sizable value appreciation in real estate as an asset class.
7.Inflation Hedge: Like global markets, real estate in India acts as a hedge against inflation. When prices rise, so does the price of properties and rents. As an asset class, real estate comes with steady and consistent appreciation in its value.
This results in long term wealth generation and automatically becomes a hedge against inflation given the continuous returns over the years.
8.Favorable Legislation: The implementation of RERA (Real Estate Regulation Act) has brought transparency and accountability in the Indian real estate sector, increasing investor confidence.
Real estate Chennai is a market which has particularly benefited from legislation and laws being enacted to regularize the real estate market which has resulted in a positive experience for investors and home dwellers alike.
9.Diversification: Any and every investment advisor worth their salt would advise having a variety in an investor’s asset class. Real estate brings in much needed variation and diversification in an investor’s portfolio.
Real estate is a tangible asset that can balance a portfolio focused on equities or bonds.
10.FDI Inflow: India’s growing economy and positive demographics have attracted foreign direct investment (FDI) into its real estate sector.
According to the Department for Promotion of Industry and Internal Trade (DPIIT), the construction development sector (townships, housing, built-up infrastructure, and Real Estate) attracted FDI inflow of US$ 28.62 billion between April 2000 and December 2020.
Such positive investor sentiment leads to the creation of industrial corridors and then residential estates in the neighborhood, which culminates in the creation of places like Oragadam township.
The growing aspiration of the working class also results in upscale properties being in demand. Luxury apartments in Oragadam are just one such example of premium real estate being a much sought-after asset.
Thus, the Indian real estate market offers numerous advantages to investors, primarily due to its robust growth potential and government initiatives.
However, as with any investment, it’s crucial to conduct thorough research and possibly seek the advice of a local real estate expert.
Stocks: An Intangible Investment
Investing in stocks involves buying a share of a company, representing a claim on part of the company’s assets and earnings. Stock market investing has the potential for high returns but also comes with risks.
What could be the top benefits of investing in stock markets?
1. High Returns: Over the long term, stocks have the potential to yield high returns compared to other asset classes. For instance, the Sensex, which started at 100 points in 1979, has crossed the 60,000-mark in 2021.
2. Liquidity: Stocks listed on exchanges can be bought or sold with ease, providing investors with high liquidity.
3. Easy Entry: Investing in the stock market has a low barrier to entry. You can start investing in stocks with a small amount, which makes it accessible to a broad range of investors.
4. Diversification: Investing in different stocks helps diversify your portfolio, reducing the risk associated with the investment. You can diversify across different sectors and market caps.
This is where real estate becomes very handy. While investing in different stocks gives a sense of diversity, the asset class still remains the same. Acquiring a property in the real estate market adds genuine variety to an investor’s portfolio.
It becomes even more beneficial when such properties are part of Oragadam real estate investment given the potential return on investment.
5. Ownership Stake: When you buy a company’s stock, you become a partial owner of the company, which entitles you to a portion of the company’s profits and assets.
6. Dividend Income: Some companies distribute a part of their profits to shareholders in the form of dividends, providing a regular income stream.
7. Flexibility: The stock market offers a wide variety of stocks, ETFs, and mutual funds, providing investors with the flexibility to choose based on their risk tolerance and investment goals.
8. Ease of Trading: With the advent of online trading platforms, buying and selling stocks have become easy and convenient.
9. Potential Tax Benefits: Long-term capital gains (on stocks held for more than one year) are taxed at a lower rate than short-term gains in India. Moreover, dividends received from Indian companies were tax-free in the hands of investors until 2020 (the tax liability now rests with the company).
10 Regulated Environment: The Securities and Exchange Board of India (SEBI) strictly regulates the Indian stock market. This regulatory body ensures fair practices and reduces the risk of fraudulent activities.
Be it the stocks or real estate market – investment decisions should always be made with caution and on the advice of qualified professionals.
Be it real estate Chennai or luxury apartments in Oragadam or stocks of blue chip companies – investors should be aware of market conditions before taking a plunge!
FREQUENTLY ASKED QUESTIONS
- Which is better: investment real estate or stocks?
The volatility of stocks poses a high risk to investors’ hard-earned money, despite their high potential for return. A property investment has the ability to create assets and can be sold at a premium after years of holding, despite lower returns than stocks.
- Is real estate a safe investment option?
A real estate investment can be much safer than other investments like the stock market, gold, cryptocurrencies, and even banks. The financial exchange changes constantly.
- Is there any risk in investing in real estate?
Key dangers incorporate terrible areas, negative incomes, high opening, and issue inhabitants. The real estate market’s unpredictability, hidden structural issues, and a lack of liquidity are additional risks to consider.