Real Estate or Stock Market: Choose Investment Portfolio Wisely Real Estate investment is taking over the traditional investment route of the Stock market. Interestingly, not only the young, but even elders prefer to bet on immovable assets to plan lifetime profitability. The stock market has been the major investment option for people, as capital fund requirement for the same is ideally low. However, with income growth and dual-income options in families, real estate garners popularity.
Real estate vs Stock Market, the comparison is good. It unfolds the pros and cons and offers clarity before putting hard-earned money at stake. An investment strategy vividly depends upon budget and requirements. One can invest in the property to experience lifelong passive income. While someone can invest in the immovable asset for future happenings. Like kid's higher education, their wedding, and rendering a financially secure future to them.
Whatever the thought, it is ideal to understand distinct features of real estate investment and the Stock Market. As both ask for massive monetary investment to chase potential returns after a certain timeframe.
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Despite not being given the long-asked-for industry status, real estate in India holds a disciplined line of work. RERA (Real Estate Regulatory Authority) board was formed in 2017 after it was passed as a bill by Lok Sabha in 2016. There are RERA boards equivalent to number states in the country, to uphold the sovereignty of real estate. Also, it implies developers and promoters to abide by certain laws to build and offer possession of concrete structures.
The RERA Act 2017, is the biggest move by then PM Narendra Modi-led NDA Government to introduce transparent working in Indian real estate. With these rules, each real estate project must be registered with RERA with defined information. Like project commencement date, location, total land parcel it covers, and possession date.
It is one of the prominent reasons for real estate investment having an edge over the stock market. Because investors find correct information on the RERA website about projects that interest him or her. No matter what friends, family, or any other well-wisher says, real estate development with a RERA registration number holds authenticity for investment.
Another reason to choose property as the best investment option in India is legacy creation and capital value appreciation. With ownership of an apartment, plot, or land parcel, you weight the asset side of the balance sheet heftier. The continuous development shaping the city with sturdy facilities, and quality of life ascends. Thus, the circle rates across the country raise on a timely basis. Hence, property prices appreciate especially after five, or ten years.
It is mandatory to carryout stock market activities only with brokers registered with SEBI (Security Exchange Board of India). As they offer clarity on scheme/product along with investment objectives and risk probability.
Also, it is ideal to monitor your Demat account daily and secure transaction slips for all purchase/sale orders. Followed by checking brokerage, fees, charges, and other applicable taxes on the trading account along with their receipts. Not to forget review your account periodically to check if activities approach towards goal accomplishments.
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Property or funds, which is the best investment option? If you are in a doubtful situation, read this. REIT i.e. Real Estate Investment Trust formed in 2019. The aim to induct this type of portfolio in the property market was to create better investment opportunities for the middle-class.
This segment of investors usually prefers safe options, and by far found the stock market as a top investment option. But, REITs, eliminate the chance of stock market bets, as investors don't need to have a huge corpus for such a real estate investment.
These are the stock-market listed investment options that offer investors an opportunity to invest in commercial properties available under REIT. Like Blackstone Embassy formulated India's maiden REIT in Bengaluru for which it was registered with SEBI as a real estate investment trust under Regulation 3(1) of the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 ("REIT Regulations").
Legal bidding ensures the safety of invested money, unlike the stock market which holds the chance of crashing down anytime.
Another reason for non-liquid assets gaining popularity against stock market is the high returns on investment. Under REIT, only commercial properties are listed and such portfolios hold 9-11 percent return rates. Which is 2x of what the stock market or even residential real estate offers.
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Ownership Experience - The purchase of an immovable asset elevates your financial status with this valuable asset. Thus, your social quo also ascends and legacy building for your family begins automatically.
Income Tax Rebate - A real estate investment in India lets investors enjoy multiple rebate options under distinguished sections. Interest rate deduction and percentage of IT, rebate differ between men and women property owners.
Rental Income - In India, footfall in almost every city is rising on a daily basis, thus residential accommodation is a fundamental need. Hence, you can rent the property to students, professionals, and families. The rental value keeps on increasing as the development in the locality and nearby areas takes place. Thus, your real estate investment can buy back monetary gains for a lifetime on a constant basis.
Diverse Portfolio - Indian real estate offers diverse portfolios like studio apartments, retail shops, food courts, 1BHK, 2BHK, 3BHK, 4BHK, and penthouses. Also, you can invest in Villas, independent homes, duplexes, and service apartments. In fact, the list is too long.
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Increased Liquidity - Liquidity refers to easy accessibility to buy and sell stocks. In India, there are two major stock exchanges. One is the NSE (National Stock Exchange) and the second is the BSE (Bombay Stock Exchange). Lakhs of companies are listed with these two and every day many new companies join the list. Thus, investors hold a better chance to trade. Hence, the stock market has become one of the top investment options in the country.
Diverse Options - Intraday trading isn't the only option for investors as the stock market holds an array of portfolios. Like shares, bonds, mutual funds, and derivatives, weave the risk factors involved with them. Also, the availability of portfolios even based on geographic locations, curbs the risk of losing out money.
Timely Dividend - The profit revenue reaped by the company is distributed among shareholders and it is called a dividend. The amount is paid to all investors aka shareholders with value totally to their invested capital or the number of shares they hold. The payment of dividends is paid by companies either annually or quarterly.
Acquired Ownership - An investor with even a single share holds the ownership stake in the company and has the right to vote. The investor can express agreement or disagreement with the company's strategy, upcoming plans, execution policy, or whichever issue is laid on the voting table. Thus, an investor or the shareholder has all right to act as an owner of the company in his/her shareholding capacity.
Online trading applications and the availability of knowledge about trading on the internet, offer better chances to exploit the stock market. Thus, you can discover investment options according to a monthly budget and can add or subtract portfolios as and when required. With easy EMI options, RERA registration for projects, and strategic locations together reap a perfect recipe for investment. The lucrative and safe return possibility inclines the majority of people to real estate investment.
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