Gold Investment vs. Real Estate: Which is Better?

When you want to make your money grow, the first step is to decide what kind of investment sounds best. Investing in real estate can be quite profitable and a relatively reliable way to get significant returns. 

On the other hand, investing in gold could be slightly riskier, with the returns requiring some patience from the investors. With real estate, you get a somewhat steady income; with gold, the money is tied up unless you sell out. Then again, gold is passed through generations and has seen a substantial increase in value over the years. 

So, should you invest in gold or real estate? The answer isn’t straightforward; your location is an important factor, as is your specific investment aim. Let’s have a look at why we should consider investing in real estate or investing in gold for our future stability: 

Gold Investment vs. Real Estate

We will first look at the reasoning for investing in gold and real estate, and then, move onto the various influencing factors: 

Reasons to Invest in Gold

Here are the top reasons why investing in gold is a good idea today:

High liquidity

Gold is very liquid, which is why many look upon it as the safest kind of investment. Whenever you're in need, selling off your gold should never be much of an issue. You don’t have to sign any contracts, do any repairs, or stage anything in order to get your money. 

Beating inflation

When you invest in gold, it’s likely that you can beat inflation in the long run. For several years now, the price of gold has only increased. If there is any downturn, it’s very rare and doesn’t last too long. 

A safe investment

What really tempts investors to invest in gold is that it’s a tangible item. This makes it a relatively safe bet. Plus, we can easily go to any local jewelry shop and purchase some gold without much hassle. 

Helps in diversifying

Even if you’re already investing in real estate, it makes sense to diversify that investment portfolio. For this purpose, many investors also make sure to invest in at least some gold. Keeping it around 5 to 10 percent of your portfolio should create a nice buffer in case you need a quick liquidation of your investment assets. 

Reasons to Invest in Real Estate

Many investors also choose to invest in real estate if they have enough capital or can secure a loan for the required finances. Here are a few reasons why this choice is also a logical step: 

Strong alternative to gold

In case you don’t want to put all your investment into gold, investing in real estate is a decent alternative. Plus, owning a home means that you have some definite property where you can live if nothing else. 

Ability to expand value

While we can’t directly do much to increase the price of gold, it is possible to increase the value of your properties. A homeowner can think about making changes according to their comfort. 

If they’re looking for a higher price for their real estate, they can invest in some renovations, upgrades, and repairs as well. This will make the place easier to sell or rent at higher rates. The increased income will hopefully cover the costs incurred. 

Potential for personal use and earning

If you own a living space, it’s sometimes possible to live there yourself and also rent out a portion to some tenants. This way, you get to live rent-free, collect rent for income, and also be close by in case anything goes wrong. 

Apartment returns prove to be an especially great choice when we want to have a decent cash flow coming in on a regular basis. It may also be possible to lean your investment assets against a loan. 

Comparing Real Estate and Gold Investment

An investment in either gold or real estate is great, but different factors will influence what the best decision will be for any individual. Now, we will discuss these factors while discussing whether real estate or gold is the right investment for your needs and situation: 

The tenure of the investment

If you’re looking for an investment in the long run, there’s no need to stick with just gold in your portfolio. Real estate will tie up your money, but it will also give regular returns and slowly increase in value over time. 

However, gold will also work just as well if you want a long-term investment. If you don’t want to be tempted to sell off your investment assets, it might be better to go for real estate. 

If you’re looking to maximize your return and/or would like to liquify whenever you want, gold might be the best option. 

Level of liquidity

It’s evident that gold is the more liquid asset. If and when you decide to sell off your real estate, the process could take several months or years to go through. Plus, you'd have to do a large amount of paperwork, go through a lot of red tape, and several formalities such as stamp duty. The taxes are another matter, but all of this means that the selling will be long and arduous. 

These same difficulties can and will arise when you're buying property instead of selling. Either way, both parties have to pay for the process and also go through all the steps properly. 

Gold, on the other hand, is relatively easy to buy or sell. We can purchase it without any major paperwork. When it comes to selling, there’s no shortage of reliable buyers. 

Volatility

The volatility of an investment means the level of price security we have. The more volatile a market is, the more investors tend to stay away. The same goes of any investment asset; if its price is not stable, it won’t give investors an accurate idea of its value. 

The volatility of real estate is fairly low, especially when compared to gold or many other investment options. This makes it easier to have an idea of how much property value you own and how much you can expect to make when selling it in the future. An investor can start with looking for used mobile homes for sale and work their way up in a usually predictable manner.

Gold doesn't offer the same stability. While its price is steadily increasing, we can’t absolutely depend upon it. This is an especially volatile asset, as the value changes very frequently. The changes could be almost daily and are mostly dependent on the condition of the markets. 

Tax benefits

The structured tax benefits are what define investment in real estate. We have to consider the maintenance costs, repairs costs, loan tax deduction, depreciation, and the costs of legal services while calculating our taxes here. The tax benefits could be substantial, saving you a lot of money down the road. 

On the other side, investing in gold will incur capital gains tax. If you have gold deposit score certificates, the income you make is exempted from tax in most cases. Make sure you know the regulations in your state and town, as these may differ from one location to another. 

The Takeaway

Deciding to invest in gold or real estate means a commitment no matter what you choose. Checking out the pros and cons will hopefully help out in making a decision between the two. Start building up your investment portfolio with this in mind and take it all into account before buying!