Choosing the right investment plans is crucial for a secure future. You can only expect an optimum return when you opt for the right investment option. Although there is no one best option for all, the decision will depend on various factors. So before you pick your choice of an investment plan, ask yourself the following questions -
- What is the purpose of your investment?
- How much risk are you willing to take?
- Are you planning for long-term investment or, you wish to invest in the short term?
- What result do you obtain when you compare your investment choices based on different parameters like risks, tax benefits, volatility, and profit?
You can only move ahead with your investment plan when you can confidently answer all the above questions. Two of the most popular investment options are Gold and Property. If you are confused between these two options, then you must be well-informed about the pros and cons of the two in order to pick the right one. In some cases, you need to have a mix of both.
But before analysing the various aspects of gold and property investments, you must know about the impact of technology on financial services and how digitisation has been revolutionising the business operations of the financial industry. Fin-Tech is the amalgamation of the term financial technology that is upgrading the potential of the financial sectors. The Fin-Tech market in India is projected to reach $140 billion by 2023 against $65 billion in the year 2019.
Here are a few significant functions that are reshaping the financial industry:
1. Safe and simplified payments
The payment systems are becoming more flexible, quick, secure, and authenticated. Real-time gross settlement (RTGS) for example, is an instant process of money transfer generally used by businesses for transferring sizeable sums securely. In India, the RTGS transactions grew to approximately 150 million in 2020 from 136 million in the year 2019. Not only domestic but cross-border transactions are also likely to simplify in the near future with the blockchain-enabled Visa b2b connect system. This will help various NRIs and foreign business entities to transact securely.
2. Chatbots & Intelligent Search Platforms
Artificial technology has been revolutionising industrial sectors. The real estate industry is no different. Real estate firms and brokerage houses are leveraging chatbots and intelligent search platforms integrated into their websites. These chatbots are helping customers to find their dream home and properties by directly sharing their requirements on the websites without the need to interact with any human.
3. Machine Learning & Analytics
These are, day by day, gaining entry into the real-estate market as people understand the power of machines to help them achieve their investment goals. In real-estate, assessing the risks is critical. Machine learning algorithms and analytical tools can determine the investor risk profile, investment objectives, and long-term goals and can guide the investors to achieve their financial goals. On the other hand, machine learning algorithms also come to help banks and financial institutions to forecast and calibrate the risk associated with loan defaults related to real-estate investments.
4. Dematerialised investment-related platforms
Recently, buying of physical gold has taken a back seat. E-gold is something that is glittering more than ever before. Physical gold often comes with risks associated with securely storing the gold in lockers, chances of fraud, and difficulty to fetch the right value when a sudden requirement arises. Buying dematerialised gold in the form of sovereign gold bonds (SGBs) that are backed by the government and issued by RBI, gold mutual funds, and gold exchange-traded funds (ETFs) has become the new norm. We can easily perform transactions through trading interfaces and bank websites, and there is no risk related to storing the gold in this case, as this is not in physical form.
If you can invest in real estate with proper knowledge about the market risk and market situation, it can provide highly profitable and reliable returns in the long term. You should be prepared to invest a huge amount in order to buy a property. It is a long-term investment; hence if you have chosen the right kind of property, you can expect a steady flow of regular income through rent. Although real estate investment is low on liquidity as the buying or selling of property is not at all hassle-free still, it offers various tax benefits like maintenance and cost of repair, depreciation, and legal services.
Gold investments are one of the most popular investment options due to the Indian culture and rituals where gold is considered auspicious and is passed on to the other generation as an asset. The gold investment provides greater flexibility, as you may buy according to your investment amount and sell whenever you may wish. You can either go for short-term investment or long-term target plans; whatever it is, the amount you will earn will depend on the situation of the market at that particular time. Apart from liquidity benefits, gold investments are completely tax exempted.
Comparison Between Gold and Property Investment
As mentioned above, there are various factors based on which you can choose between gold and property investments. You should examine each of these parameters before making investment choices. Here is a comparative analysis based on these factors:
Finance Related Tips for Business Owners
- Be future-ready - Even after-tax deductions on business expenses, you must be prepared for any uncertain situation that might occur. Having an emergency fund handy will not only prevent you from unplanned credits but will also provide mental peace to carry on with your business operations actively.
- Efficient credit management - Keep your handbook updated by jotting down all the expenses incurred on various business dealings. Be punctual in paying bills so you can have a smooth monthly target set beforehand.
- Invest aptly - Analyse your risk tolerance before investing. Research and compare the investment options according to your long-term goal. Keep yourself updated with the latest technological changes to make better decisions. Also, based on your investment horizon and goals, you might need to divide your investment corpus for both gold and property investments.
Investing in property or gold should be decided based on your personal and professional suitability. While gold is more flexible, the property provides scope for long-term and regular income. The diversified investments should be analysed appropriately according to your needs.