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Gold has traditionally been a safe haven for investors over the past many years. Malayalees flock to buy gold for most festive occassions, marriages and religious functions. Gold buying in Kerala has had a meteoric rise over many years and so has the gold prices touching 3000 rs. per gram this quarter.
So do you invest in Gold or real estate if you have surplus funds in your hand.
If you look at all the asset classes for an investor over the last few years, you can easily make out that in India, equities have barely given returns of 5%. The appreciation in stock markets witnessed in 2003 - 2007 was quickly wiped off in 2009 and since then equities have had a tough time. The prospects also don't look bright for equities until end of 2013. Stock trading has become a game of choosing the right stocks or on the contrary a fall in earnings. This has lead many stock traders to instead invest in Gold coins, ETFs and for retail consumers to buy gold from the market. Gold ETFs as per market stats has given standard returns of about 25% over the last 3 years which makes them an attractive proposition.
Let's take a look at real estate. If you consider property appreciation in Kochi or Trivandrum from 2009-2012, there was a steep rise as is evident from the RESIDEX india from 2010 to 2011 end. However prices have stabilised over the short term in 2011-2012 and investors who clinched deals in 2009-2010 really got good appreciations of over 30% in their real estate investments. But markets like Kochi are likely to offer stable growth of 10-12% over the short term and Trivandrum is likely to offer 18-20% in the short term considering the huge influx of IT companies and working professionals into Trivandrum.
Recommendation:
If you don't have liquidity right now to invest in Real Estate, build a corpus with the right investments maturing in 2 to 3 years
Build up a good amount of funds via Gold ETFs, NCDs (Non convertible Debentures) and FMP (Fixed maturity plans) over the next 2- 3 years which offer annual returns of 15-20% per annum. This will enable you to just have enough to buy a good property after this time. For it is likely, that real estate prices might again shoot up after a few years, once the surplus inventory lying in Kochi is sold out and real demand kicks in Kerala due to the influx of software professionals. To give an example with 20% return annually and an investment of about Rs.30,000 per month in the right asset class you would have a corpus of approximately 13 Lacs in a span of 3 Years. This might just be enough to help you make a down payment for a bank loan for an investment in land or an apartment. Over the long run, real estate is likely to surpass gold in terms of real returns.
If you have enough liquidity, scout for the good deals in the market. Go for a trusted advisor or consultant.
An astute investor having sufficient amount of funds should keep a close watch for good deals in the prevailing real estate market and make profits when the market growth kicks in 3 years time. A good time to exit would be 6 to 7 years after the property investment (about 2018), if your need so dictates. Going with a good property consultant should help you sail through and pick the not so evident good deals in the market.
So do you invest in Gold or real estate if you have surplus funds in your hand.
If you look at all the asset classes for an investor over the last few years, you can easily make out that in India, equities have barely given returns of 5%. The appreciation in stock markets witnessed in 2003 - 2007 was quickly wiped off in 2009 and since then equities have had a tough time. The prospects also don't look bright for equities until end of 2013. Stock trading has become a game of choosing the right stocks or on the contrary a fall in earnings. This has lead many stock traders to instead invest in Gold coins, ETFs and for retail consumers to buy gold from the market. Gold ETFs as per market stats has given standard returns of about 25% over the last 3 years which makes them an attractive proposition.
Let's take a look at real estate. If you consider property appreciation in Kochi or Trivandrum from 2009-2012, there was a steep rise as is evident from the RESIDEX india from 2010 to 2011 end. However prices have stabilised over the short term in 2011-2012 and investors who clinched deals in 2009-2010 really got good appreciations of over 30% in their real estate investments. But markets like Kochi are likely to offer stable growth of 10-12% over the short term and Trivandrum is likely to offer 18-20% in the short term considering the huge influx of IT companies and working professionals into Trivandrum.
Recommendation:
If you don't have liquidity right now to invest in Real Estate, build a corpus with the right investments maturing in 2 to 3 years
Build up a good amount of funds via Gold ETFs, NCDs (Non convertible Debentures) and FMP (Fixed maturity plans) over the next 2- 3 years which offer annual returns of 15-20% per annum. This will enable you to just have enough to buy a good property after this time. For it is likely, that real estate prices might again shoot up after a few years, once the surplus inventory lying in Kochi is sold out and real demand kicks in Kerala due to the influx of software professionals. To give an example with 20% return annually and an investment of about Rs.30,000 per month in the right asset class you would have a corpus of approximately 13 Lacs in a span of 3 Years. This might just be enough to help you make a down payment for a bank loan for an investment in land or an apartment. Over the long run, real estate is likely to surpass gold in terms of real returns.
If you have enough liquidity, scout for the good deals in the market. Go for a trusted advisor or consultant.
An astute investor having sufficient amount of funds should keep a close watch for good deals in the prevailing real estate market and make profits when the market growth kicks in 3 years time. A good time to exit would be 6 to 7 years after the property investment (about 2018), if your need so dictates. Going with a good property consultant should help you sail through and pick the not so evident good deals in the market.
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