Is Investing In Real Estate The Safest Bet?

Niall Ferguson in his famous book, Ascent of Money, says all forms of investment can fail. However, investments in real estate or any residential projects in India are considered the safest because even if you lose all other possessions, this form of investment can offer you a roof over the head. That makes real estate the best form of investment, not necessarily the returns on investment or increase in capital value.

Here are some reasons that make real estate the best form of investment:   

1.  Investment that you can enjoy A bank deposit or shares or bonds cannot match with real estate, and a home in and upcoming properties in India or in residential projects in India is a form of investment that you can stay in and enjoy while the value is appreciating. Though deposits, too, give returns in the form of interest, you cannot physically withdraw them as and when you wish, the interest always get added to the principal amount. Very rarely do you see people withdraw the interest on their deposit and spend it. A home, gives you the satisfaction that you are saving on the rental amount that you otherwise would have spent. Even if you buy a home to rent it out, the incoming cash will always be like an income and not savings. So, there is no comparison between home ownership and other forms of investment. Any other purchases you make like a car or electronic gadgets depreciate in value as you use them.

2. Value appreciation

The value of a home appreciates over time. Smart investments in upcoming properties in Delhi have proved to give very good returns. Manifold appreciation of value is possible only in real estate. No other investment can even give such returns except buying shares of companies. The latter, however brings volatility and changes your fortunes on a daily basis. It is also not advisable to put your family silver in shares.

3. Long shelf life

The life of a home is much longer than that of any other forms of investment. You cannot hold bank deposits or others for a very long time. A home, however, is almost forever. Even if it attains a certain age, a lot of opportunities in the form of redevelopment can ensure that it remains for generations together.

4. Tax breaks

While property and its income can add to the complexity of the tax returns that you file, it can save tax in the long run. A home loan offers the most advantageous tax deduction in your salary, thereby increasing the salary in hand. Even if you own a rental property, it can offer deductions in the form of repairs even as the increased income is taxed.

(The writer has been working as a business journalist for the last nine years, and has covered beats across banking, pharma, healthcare, telecom, technology, power, infrastructure, shipping and commodities)