Real Estate Investment V/S Other Investments
Real Estate V/S Stocks
With uncertainty prevailing due to COVID-19, and the emergence of stock market volatility, investing in real estate properties has become crucial. And it’s only getting better.
The crisis has highlighted the need for shelter and protection during tough times, and individuals have realized the fact that owning an apartment is much easier than dealing with the unpredictability of living in rented accommodation.
According to MoneyControl.com, the real estate segment offers relatively lower risks and a greater scope for diversification as compared to other asset classes. In uncertain times, it also provides for a steady income stream.
Thus, instead of looking for investments with quick returns, we suggest going the traditional way and selecting long-term investment options like real estate. By being less volatile than market-driven investments, it is a safe bet in the current scenario. The real estate industry is currently witnessing one of the lowest home loan interest rates in decades, currently averaging between 7.15% to 7.8%. On top of this, Rivali Park is offering home loan interest rates at 6.95% onwards!
Let’s take a look at why investing in real estate is more fruitful than investing in other asset classes during these trying times:
According to a recent report by Money Control, only 25% of the country’s population seems to be up for investing in stocks. Interestingly, 72% of buyers in cities like Mumbai, Bengaluru, and Hyderabad still prefer investing in property, of which, 44% have not changed their minds regarding property investments in the wake of COVID-19.
This is because the stock market is subject to several risks; market, economic and inflationary risks. Stock values can also be incredibly volatile with their prices subject to fluctuations in the market.
In a country like India, political or economic troubles also cause the stock market to suffer. Stocks are subject to the economic cycle as well as monetary policy, regulations, tax revisions, or even changes in interest rates set by the RBI.
Therefore, for many other prospective investors, real estate has always been more appealing because it is a tangible asset that can be controlled, with the added benefit of diversification. Real estate investors who buy property, own something concrete for which they can be accountable. Since real estate is not traded on the exchange, prices don’t fluctuate due to market forces. Thus, investment in real estate has not seen a drastic decline. It has been strengthened by lower interest rates on home loans and a renewed perception of people towards owning a stable home.
Real Estate V/S Fixed Deposits
The latest interest rate cuts owing to the COVID-19 pandemic has caused great heartache for FD investors. Despite the RBI keeping key rates unchanged, major banks have continued cutting interest rates on fixed deposits. The country’s largest bank, State Bank of India (SBI), reduced fixed deposit rates in both February and March. According to a Times of India news report, this is the first time that SBI’s fixed deposit rates have fallen below 6% since August 2004.
So what should fixed-income investors invest in now?
Well, if they’re looking for a fixed income avenue, now is the right time to invest in property. This unexpected interest rate cut is likely to reduce equated monthly installments of borrowers, and also make it easier to take new loans, especially home loans. Additionally, the real estate industry is currently witnessing one of the lowest home loan interest rates in decades!
Real Estate V/S Gold
Though gold is among the top 3 preferred choices for investors, it remains well below par as compared to real estate.
In the current scenario, investing in gold may fetch negative returns due to market volatility. Additionally, to ensure high long-term investments, real estate provides a high return on investment, while small saving schemes or gold offers short-term, low to medium returns.
Keeping in mind the uncertainty of these assets, real estate is undoubtedly the safest investment option for people across segments! Physical assets always provide the highest sense of security. And now, due to a reduction in stamp duty charges and government initiatives, first-time homebuyers are being presented with offers they can’t refuse! Besides, this is the right time to negotiate hard and strike a deal with real estate developers to receive top-tier discounts.
Real Estate V/S Mutual Funds
COVID-19 has served a double blow to mutual fund investors. Firstly, fund values dipped significantly due to the stock market crash in March, as economies worldwide came to a standstill. Secondly, the pandemic capped the chance of grabbing opportunities to invest in a falling market, to acquire a higher number of MF units at a cheaper NAV through physical applications.
Mutual funds are also subject to market risk, and the returns are tied to the performance of markets. With the Indian economy under distress due to COVID-19 and other internal issues; such as restricted spending by the government and lower investments by private players; expecting a high return from mutual funds in the short and long term may not be appropriate.
Thus, while stocks, fixed deposits, gold, mutual funds, and other forms of investment each hold water in their way, real estate offers something that others can’t; cash flow that is directly correlated to one’s decisions. In other words, your actions are responsible for your net income, and your dependence on fluctuating market forces is close to zero.
In Mumbai, Borivali is an upcoming residential hub, ideal for property investments, ensuring a high return on investment for years to come. With several developers shifting their operations there, flats are available at competitive prices, making it an advisable area to invest in!