Gold Silver Reports – Historically, physical assets such as real estate and gold have been popular investment avenues in India. But that changed in the past few years.
A Dose of Reality for Realty and Gold
This is evident from data that shows a decline in gold import and the low number of property transactions. Till 2011, India used to be the largest importer of gold. In 2016, the demand for gold demand fell 22% to 666 tonnes, from 857 tonnes in 2015, according to data from the World Gold Council. In the year 2017, it further declined to 454 tonnes in first three quarters and is expected to remain below last year’s import volume. Similarly, in last few years, real estate investment too witnessed a steady decline, as capital values either remained stagnant or increased marginally across the country.
These two asset classes were used by many people to park their unaccounted, or black, money. The curbs on black money, along with the low returns, also contributed to the decline of investor interest. As an invest avenue, neither real estate nor gold make much sense. Low returns and high transaction costs are the reasons for not over investing in gold and real estate.
Realising the gains from these assets is also more cumbersome. Liquidating a real estate investment can take from months to years. And most experts expect these conditions to continue.
However, if one does want to invest in gold, financial planners advise that one should not invest more than 5% of their portfolio. Moreover, investment in physical gold should be done largely for purposes such as jewellery.
Read More: Gold Price Predictions For 2018 By Neal Bhai
And when it comes to real estate, apart from the one house for self-use, one should restrict the real estate investments to no more than 25%. This will be possible once the real estate mutual funds come into existence.
Even if a person wishes to have higher exposure to gold, it is better to go for gold exchange traded funds (ETFs) or the Sovereign Gold Bond scheme. While these schemes do not provide higher return than physical gold would, they significantly bring down the transaction costs, such as making charges, risk of impurity and storage expenses. Plus, the Sovereign Gold Bonds also provide an additional 2.5% annual interest.
Intro to the story changed to say that outlook for gold and realty is unlikely to change much in 2018. – Neal Bhai Reports
