Gold or Real Estate: what is the right investment for you?

The sheen of gold has always been irresistible to Indians. We’ve been historically inclined to acquire gold jewellery in the belief that it is symbolic of high economic status. It was also considered prudent, at one time, to invest in gold. However, with recent fluctuations in gold prices, it is natural to wonder if the hallowed yellow metal is still a good choice for investors.

The ideal alternative to investing in gold is real estate investment. Take a look at how they compare across various parameters to see how the two compare.

ParameterReal EstateGold
Size of investmentRelatively large investment requiredSmaller amounts of investment are possible
TenureIdeal for long-term investmentsBest suited for short-term investments
Earning potentialCan generate regular monthly income through rentReturns fluctuate with the market
LiquidityNot easy to liquidateEasy liquidity
VolatilityLow volatilityHigh volatility
Pre-investment understandingRequires research and understanding of marketQuality and valuation are transparent
TaxStructured tax benefitsAttracts capital gains tax
Economic impactGood for growth of economyAdverse impact on economy

Available capital

One fundamental factor to decide where you should invest is the amount of capital available.

Investing in land requires a significantly larger amount. The general practice is to fund the down payment (20% of the total price) with savings and take a home loan for the remaining. Even purchasing a small apartment requires a few lakhs in rupees.

Investing in gold, on the other hand, can be carried out with relatively smaller amounts of money.


When it comes to returns, property can translate to regular returns in the form of rent.

Investing in gold can yield fluctuating returns based on market situations.

Nature of investment

Volatility can be a major concern for existing and potential investors. Real estate investment is considered relatively stable whereas gold has proved to be rather volatile.

Investment horizon

Investors seeking long-term options will find a better match with real estate. Property typically yields returns over longer periods rather than shorter terms.

For those who seek short-term investment avenues, gold is a good option.


One of the factors to consider when investing is how easy it is to liquidate if the requirement arises. In the case of real estate, it is relatively illiquid.

Physical gold and ETFs have fairly high liquidity.

Tax benefits

Real estate investment offers people structured tax benefits. As for investing in gold, it attracts capital gains tax.

Impact on economy

Gold is imported from other countries. Importing at more expensive currencies reduces the valuation of the Indian rupee, which then leads to a spike in prices of commodities such as capital goods and fuel. This makes investing in gold detrimental for the Indian economy.

Investing in real estate does the exact opposite and facilitates the growth of the economy.

Overall, experts believe that gold works best as a hedge against economic uncertainty rather than a long-term investment option. It’s time we shed old patterns of thought and embraced the option that is clearly the rational choice.