Investments in Equity Or Real Estate?

Investments in Equity Or Real Estate?
Updated At: 2024-02-11 09:27

Investments in Equity or Real Estate?


Wondering If you should invest in equity or real estate? This blog will at least get you one step closer to making a sound decision. This topic is one that has been a real show stopper, after all being in the world where you see big players dealing in shares would you if you were in the corporate game invest in real estate?

Let me tell you something I heard at this investment-based conference. The product being discussed was in the game of real estate and the prices being about 24 Lacs. A very reasonable Investment for a matter dealing with the real estate market and also apart from this they give the buyer a grace period of 30 months after you pay a 10% value of the property. After which technically, you own a pretty luxurious chunk of land which again is expected to be appreciated at a very minimal rate of 3.5%. Keeping in mind that there is an EMI-FREE period of 2.5 Years. Which after calculating the mere appreciation gives you a good boost on your purchased property by about 2 lacs and even before you can consider paying the first EMI you can be freed of the burden of EMI by selling it whomever is willing to buy and get your capital with a reasonable number of returns as well. The property being discussed over here is a Project by a Builder Group caller “SHRIRAM”. Although, it is a must to keep in mind the thorough evaluation of the property and the factors affecting it.


 Now investing in equity? Good idea? There are numerous sources that are very pro-equity like investing, opinions that people have and what they mean by that is that buying equity is more like investing in the future of the country’s economy. That can be said because as we know it with a growing economy there are better opportunities for the growing corporate companies. I say that it is a way of staying ahead of the inflation trends these days. The reason being it gives you an average return of 10% per annum. Of course, the risks are much higher in these investment areas. Hence all investments must be made with utmost caution.


To summarize both the investment options have their own kinds of risks. It all comes down to the investor! Where He must choose what is the kind of risk, he is willing to take. Now while the stock market is an index that allows us to scientifically measure the rate of the return, the job is a lot harder for real estate. Specific cases in certain locations have generated far higher returns that others across land, residential, retail and commercial spaces across the country. According to a study by Cians Analytics on the returns from various asset classes in India during 1991-2013, real estate and equity have given maximum returns to investors. Looking at the overall returns, the study stated that real estate outperformed all other asset classes during the 23-year period with an annualized rate of 20% while equity generated an annualized return of 15.5% on a nominal basis during the past 23 years. This was given by a source called Times Now. Real estate is something that you can physically touch and feel – it's a tangible good and, therefore, for many investors, feels more real. Maybe this partially accounts for the high return on the investment, as from 1978-2004, real estate has had an average return of 8.6%. For many decades this investment has generated consistent wealth and long-term appreciation for millions of people.

Generally, there are two main types of real estate: commercial and residential. While other types exist (mobile home parks, strip malls, apartment buildings, office buildings, store fronts and single-family homes), they generally fall into those two categories. Making money in real estate isn't as cut-and-dry. Some people take the "home flipping" route – searching for distressed properties, refurbishing them and selling them for a profit at a higher market value. Others look for properties that can be rented in order to generate a consistent income. 

Generally, a down payment of up to 20% of the purchase price can be made, and the rest can be financed. This gives you leverage, meaning that you can invest in different types of properties with less money down, helping to build your net worth or income that you could make off the properties. While this can be a positive, if this leverage is used incorrectly, you may owe more on the properties than they are actually worth.

While talking about stocks the aspects taken into consideration change. Here’s how we look at investment in stock... With a stock, you receive ownership in a company. When times are good, you will profit. During times of economic challenges, you may see diminishing funds as the earnings of the company drop. Taking a long-term approach and being balanced in many areas can help build your net worth at a much greater rate, compared with real estate. 

As with real estate, financing in stocks allows you to use margin as leverage to increase the overall number of shares that you own. The downside is that, if the stock position falls, you could have what is known as margin call. This is where the equity, in relation to the amount borrowed, has fallen below a certain level and money must be added to your account to bring that amount back up. If you fail to do this, the brokerage firm can sell the stock to recover the amount loaned to you.


Now, it all comes down to one fact. What kind risk is the individual willing to take? And also, how long is willing to wait to see the tree bear fruits.  Taking these two factors will help him narrow down the kind of commitment each investment requires. 

Hope, this blog helped you get a step closer to what you desire. Happy Buying!

roperty prices fluctuate due to a complex interplay of economic, demographic, governmental, and social factors. Understanding these dynamics can help stakeholders make more informed decisions.