Smartest investment and life plans in UAE

Real Estate vs. Gold Which one is the right choice for you?

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  | Published: 10 January 2020 | Last Updated On: 15 January 2021

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Smartest investment and life plans in UAE

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Investments in Dubai particularly within the UAE can reap huge, profitable returns if planned and executed correctly. While no investment option proves to be ideal, the right choice of investment depends entirely on purpose and goals behind the investment in Dubai. Every investment in UAE comes with some degree of risk and volatility. Dubai is one of the most important city in the UAE that has emerged into a major business hub bridging the gap between the east and the west.

Any form of financial investment should be chosen depending upon the requirements of the investor along with analyzing the appetite for risk and volatility.

Before diving into the discussion of a better choice of investment amongst real estate and gold, we’ll share things that both forms of investment have in common, their pros and cons, their rarity, durability and their scarcity. The article will cover various factors that will help you to decide out of real estate and gold which one is the right choice for you.

Real Estate

Investing your hard earned money into real estate must be approached with the correct knowledge of the market situation along with the type of property you’re investing in. Carried out with precision and correct knowledge, investing in real estate provides reliable and profitable returns in the long run. A major contributing factor that makes real estate a potentially strong form of financial investment is its low volatility. Investment in real estate is a stable option when compared to gold and other investment tools. Moreover, owning a house provides scope for a secured and better future.

The price of property keeps on increasing with time, this means the longer you hold the property the more will be its returns. Proper renovations and repairs help the investor in Dubai to maintain the price of the property. If you own a property that you aren’t using you always have the option to lease it to generate a steady flow of income in the form of rent. Returns as rentals are quite reliable options to maintain a positive flow of cash. Apart from renting, an investor in Dubai can mortgage their property against debt or loan.

Real estate is not only a secure investment but helps investors to generate returns over time during your economically productive years if you use it as a rental property. Investing in real estate provides multiple opportunities to create wealth and secure your future.

Gold

Gold has been the oldest form of financial investment. Our ancestors in the olden times purchased and stored gold as it was considered a status symbol. Many cultures believe that gold is the carrier of good luck and fortune therefore they pass it on to the next generations as a family asset. Investment in Dubai in the form of gold is a good option because of its flexibility. Gold in its physical forms like coins, bars and bullions is a portable and highly liquid form of investment. The high liquidity of gold makes it a suitable option for expats in the UAE.

Gold as a commodity has managed to maintain its value since times immemorial. People in countries like UAE and China consider gold as an important way of maintaining and passing their wealth to the upcoming generations. Gold is a unique asset that has an inverse relationship with inflation and downfall in the value of the currency. Gold provides a hedge against inflation by safeguarding the financial needs of the investor during the phases of financial instability.

Another reason that makes gold a good form of financial investment is its ability to diversify an individual’s financial portfolio. Diversification of financial portfolio means to invest in tools and products that are not closely related to each other. The co-relation between gold, mutual funds and stocks is negative so investing in gold diversifies one’s financial portfolio and mitigates the risk financial losses.

Unlike property/real estate, gold requires no maintenance cost this enhances the strength of gold as an investment.

Statistical Comparison of Returns between Real Estate and Gold

According to statistics from major financial institutions globally, it is evident that real estate on an average yields returns in the range of 8% to 15% or more. Irrespective of the growth in the rentals the yield in rent lies somewhere around 7% to 9% which is lower when compared.

Investing in real estate produces a regular flow of income which gold investments cannot. Real estate can turn out to be profitable in the long term because the value of the real estate increases gradually with time. Real estate provides higher returns with less scope of volatility. Gold investments are worth considering as they diversify your financial portfolio and provide inflation-beating results.

Real Estate vs. Gold

The table below considers and evaluates various potential parameters to compare both the forms of financial investments.

Parameters Real Estate Gold

Investment Size

Investment size is huge. Investment requires lump sum amount.

Investment size is smaller and solely dependent on the investor. One can start with 1 gram.

Tenure

Suitable for long term planning and investment in Dubai

Suitable for both short and term planning.

Liquidity

Less liquid when compared to gold.

Gold is highly liquid asset.

Returns

One of the best ways to ensure a steady flow of returns.

Returns fluctuate with the market situation. With drop in prices, returns are also affected.

Transparency in Prices

Prices are not as transparent as in case of gold.

Highly transparent prices.

Conclusion

Real estate or gold- the right choice depends on your financial situation, the purpose of investment and the frame of time you are willing to invest for.

Both the forms of investments have their respective pros & cons and therefore, it is always advisable to choose your ideal investment tool after thorough research & analysis that fulfills all your needs and requirements.