According to a database of asset returns since the late 1800s, “residential real estate is the best long term investment, not equity”. With less volatility and uncertainty compared to stocks, real estate investments deliver on the promise of stable, if not higher, returns over time.
Nudged by the Indian Government’s policy interventions such as RERA, GST, and FDI, the Indian real estate market is on a growth curve. By 2020, it is expected to reach USD 180 billion. If that is not reason enough for you to invest in the sector, here are 5 more reasons why realty investments are better than stocks.
While stocks may allow greater liquidity, there is no guarantee on returns for your investment, given the risks associated with the stock market. You need to keep up with market fluctuations, buy and sell with the tides of the market to capitalize, or pull out before the market takes you down with it.
While real estate is also prone to slumps, it is a relatively fair bet. According to this Livemint article, housing performed better than equities in 16 countries in the last 100 years. Once you buy an apartment, it not only grows in value over time, you can also have a stable secondary source of income, by renting it out.
Residential real estate is a tangible investment, unlike stocks and derivatives. It is one of the time tested ways to hedge against inflation. The chances of being defrauded are also slim. You can show up to inspect the property physically, and trace documents and approvals, before you make a decision. Equities on the other hand, are intangible. Instruments such as equities backed derivatives leave investors more susceptible to fraud.
Although stocks allow a certain degree of rights to the stakeholder, in addition to income from dividends and bonus shares, you don’t really get a say on the business decisions a company makes. On the other hand, when you buy real estate, you enjoy full ownership of your property. You can rent it out, will it to your kids or grandkids, or simply enjoy the comforts of a good home.
So, if you are looking for luxury homes in Chennai, there has never been a better time to make the leap and just do it.
Leverage on Capital
Real estate investments come with tax benefits such as exemptions on interest on home loans, whereas dividends from stocks are subject to dividend distribution tax (DDT). You can therefore enjoy a greater leverage on capital, by choosing your investment instrument more wisely.
Unless you are adept at stocks, you need a broker or advisor to aid you in your investment decisions over time. Investing in equities is not a one-off task. This can also pile on the fees and the cost of investment in the market.
On the contrary, when it comes to real estate, once you make a purchase, your property is all yours. It gives you the promise of appreciation over time. With limited maintenance and management for upkeep, you get more bang for your buck.
So, if you are looking for properties in Chennai for your real estate investment, we assure you, you are on the right track.