How has gold performed compared to real estate in the last 10-15 years?
When it comes to investing, individuals often face a dilemma between two popular options: gold and real estate. Both have their own set of benefits and risks, and it’s essential to understand how they have performed in the past to make informed decisions about your future investments. In this blog post, we’ll delve into the performance of gold and real estate over the last 10-15 years and explore which one has given better returns.
Gold’s Stellar Performance
According to a recent report by The Financial Express, gold has delivered annual returns of 11.3%-14% over the past 10-15 years. This impressive performance is attributed to the precious metal’s ability to hedge against inflation and market volatility. As Adhil Shetty, CEO of BankBazaar.com, notes, “Gold offers better long-term returns with less complexity.” This is because gold is a tangible asset that does not involve complex financial instruments or derivatives, making it a relatively simpler investment option.
To put gold’s performance into perspective, let’s consider an example. If you had invested ₹1 lakh in gold 15 years ago, your investment would be worth approximately ₹5 lakh today. This means that gold has provided a return of 400% over the past 15 years, making it an attractive option for long-term investors.
Real Estate’s Underwhelming Performance
Contrast this with the performance of real estate, which has delivered annual returns of 5.2%-6.4% over the same period. While real estate is often considered a stable investment option, its returns have been significantly lower than those of gold. According to Shetty, if you had invested ₹1 lakh in real estate 15 years ago, your investment would be worth approximately ₹2.5 lakh today.
There are several reasons why real estate has underperformed gold in recent years. One major factor is the impact of demonetization, which led to a decline in property prices and reduced demand. Additionally, the implementation of the Real Estate Regulatory Authority (RERA) has increased transparency and reduced the scope for speculative investments, leading to a slower growth rate for the real estate sector.
Why Gold is a Better Bet
So, why is gold a better bet than real estate? For one, gold is a more liquid asset than real estate, meaning that you can easily sell your gold holdings if you need to access your funds quickly. Real estate, on the other hand, is a relatively illiquid asset that can take months or even years to sell.
Another advantage of gold is its ability to hedge against inflation. As prices rise, the value of gold tends to increase, making it a valuable asset to hold in a portfolio. Real estate, on the other hand, is more sensitive to interest rates and economic cycles, making it a less reliable hedge against inflation.
Conclusion
In conclusion, gold has outperformed real estate over the last 10-15 years, delivering annual returns of 11.3%-14% compared to real estate’s 5.2%-6.4%. While real estate has its own set of benefits and advantages, gold’s performance suggests that it is a better bet for long-term investors. With its ability to hedge against inflation, provide liquidity, and offer relatively simple investment options, gold is an attractive option for those looking to diversify their portfolios.
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