Did you know that the real estate market is expected to grow at 30% in the next ten years? That’s what the Indian Brand Equity Foundation (IBEF) suggests. Also, India is ranked ninth in the Global House Price Index with regards to real estate investing. These reports showcase the country’s real estate prowess. Even though this sector does go through cyclical peaks and troughs, Indian investors have largely relied on properties to fetch them high returns in the long run. So, why should you be in the dark about property investment? As a guide to real estate investing for beginners let’s look at some of the avenues that can help you as well:
✓ Plots: Investing in plots can be a decent and smart real estate investing for investors looking for capital appreciation. However, it’s vital to choose the location carefully as part of real estate investing. For instance, investing in a piece of land in a developing locality can be a good start. You can also give the land on lease for agricultural use or construct a commercial building on it.
✓ Residential properties: Houses and apartments are considered as residential properties. You can earn a steady income by letting them out for people to reside in on rent or lease. As the value increases, it offers you capital appreciation over the long-term. However, there is a vacancy risk associated to it. You may suffer losses if your house is not on rent for some time.
✓ Commercial properties: Basically, it refers to investing in buildings that are exclusively used for business activities. Investing in commercial properties can provide you both a regular income and capital appreciation over the long-term.
✓ Industrial properties: Warehouses, factories and distribution centres’ are a few examples. The key benefit of investing in industrial properties is that it can yield you a higher income with longer leases. Also, these properties are usually low-maintenance because most of the industrial tenants takes care of this part. However, the risk is high as they are more expensive and also vulnerable to economic conditions. Investor need to be prepared for long-term vacancies and higher loan rates.
✓ Real estate investment trust (REIT) funds: REITs gives you an opportunity to make securitised real estate investments. This fund invests ‘pooled money’ from various investors in completed real estate projects. This means that investing in REITs can help you invest in properties in smaller amounts. The income generated from fund investments are majorly distributed in the form of dividend to investors. REIT funds also offer easy and quick liquidation of investment. As they are regulated by SEBI, there is a fair degree transparency in the investment.
To sum up, in a developing country like India, there is always more focus on infrastructure development. Considering the scope of growth over the long-term, real estate investments can be a good option to invest in. Now that we know how to start investing in real estate, it is also important to consider regulatory reforms and the interest rates before you invest in a property or REIT funds.
Purchasing real estate is more than just locating a spot and making it one's place of residence. Almost every individual maybe called to conduct a real estate transaction at some point in their lives. The process of real estate investing can be an intriguing opportunity for some, while others find value in the capture and creation of a sale. Since, investing in real estate has become a common investment vehicle; it makes sense to know all about it. The above mentioned pointers can be your helpful guide in making the right decisions with regards to real estate investments.
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
Why Alternative Investments?
A portfolio with a right mix of stocks and bonds may not be enough to achieve your long-term goals. As an intelligent investor, it’s important to know why alternative investments can offer new opportunities. That’s because exploring investment options beyond the primary assets can spice up the returns column and diversify your investments further. So, here are a few reasons why you can opt to invest a part of your money in alternative investments.✓ Lowers volatility: Traditional assets like bonds and stocks show strong correlation with economic trends that answers why alternative investments make sense. Market risk for such traditional investments cannot be eliminated completely even after diversification across various sectors, avenues and geographies. In that regard, alternative investments depend less on big market trends due to its illiquid nature. Hence, knowing why invest in alternative investments can reduce the effect of market volatility. Let’s consider why use alternative investments such as private equity to understand this better. Since you are investing in companies that are not listed and traded publicly, your investment is not directly affected by stock market volatility. ✓ Higher return potential: The goal of alternative investments is to generate higher returns. Unlike traditional investments, there is no competition against a benchmark. Furthermore, since these investments involve moderate-to-high risk, they have a potential to deliver high returns. This is why it is a good idea to know why alternative investments in market can be a good choice in one’s portfolio. For example, venture capital funds invest in start-ups having high potential for growth. If the start-up starts growing, you can receive massive returns. Similarly, hedge funds can deliver higher returns with reduced risk by trading various strategies across different asset classes – commodities, currencies, equities, debts and derivatives (futures and options, forwards, swaps etc). ✓ Widens Portfolio Diversification: There is a wide range of products in alternative investment space. Investing in them can diversify your investments further. After all, a well-diversified portfolio can deliver better returns to achieve long-term goals. Hence, it makes good reason to know why use alternative investments in stocks as part of your portfolio. ✓ Tax benefits: Since most of the alternative investments are for the long-term, they can provide you certain tax benefits. Private equity and venture capital funds can help you avoid long-term capital gain tax as they invest in unlisted companies. However, it would be erroneous to suggest these investments provide 100% tax breaks. All these options do have certain tax obligations. To sum upAlternative investments can diversify your portfolio and provide you refuge from the volatility of stocks. So, if you have a sizeable kitty to invest and the patience to reap reward in the long run, putting it in an alternative investment can be an ideal choice. The world of alternative investments could also include more confined and niche sectors such as collectibles, fine art and other rarities. These non-conventional investments can play an exceptionally crucial role when conventional investments undergo substantial unpredictability. You may want to consider such options as a potent diversifier along with traditional investments. To know how to best understand alternate investments and make the right decision call, you may want to look into the services of a financial advisor. Investments experts employ progressive and established strategies that can help you to capture opportunities in the various sectors of alternative investments.Disclaimer: Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.
Know the difference between investing in property vs buying one
In India, people buy properties for personal use or for investment purposes. While the majority buy a property for their own use, a healthy portion of the population looks to put their money in properties in order to create wealth in the long run. And because the justification to buy a property is different in both cases, the common factors taken into account when investing in property vs buying property are viewed differently as well. So, let’s look at a few factors to understand the difference between investing in property vs buying property. ✓ Location: To understand whether to invest vs buy property, here’s a tip - if you are buying a property for investment purpose, you would take a look at various emerging localities which can be profitable over the next few years. Deciding the location would depend more on your investment objective, whether it is medium-term or long-term. On the other hand, if you are buying a property for end use, you would look at details like amenities, neighbourhood and proximity to various facilities. ✓ Stage of construction: As an investor, it usually makes more sense to buy a property that is yet to be constructed. That’s because investing in under-construction properties has the potential to deliver quick returns. If you are buying the property in order to live in it, you would usually look at properties that are already constructed. However, that may not be the case at all times. It also depends on your need, financial preparedness and tax implications. But largely, it is the ready-to-move-in properties that are usually preferred by buyers. That’s because a delay in completion of a housing project can skewer your financial plan. ✓ Type of property: As an investor, if you are looking for a regular income, you would choose to go with apartments. If your objective is capital growth, you would consider to invest in plots. On the other hand, if you are buying it for your own use, you would make a choice based on what your family needs. Buying a plot in such cases wouldn’t make any sense. Factors like security, finishing of the house and maintenance facility would come into play here. ✓ Time horizon: Time plays a major role in such decisions. If you are an investor, you would choose a property type based on the time you have set yourself to earn a certain amount of money. For instance, if you have three to fours’ time, investing in pre-launch and under-construction projects would be preferable because its value usually increases that time period. For long-term gains, you could explore the option of investing in commercial properties. Investing in a plot can also be fruitful in the long run. As for an end user of a property, these considerations matter little. What matters most is convenience and the property’s very long-term potential. ✓ Valuation of property: If you are an investor, return on investment matters the most. Investment decisions are based on expected price appreciation over time. But that’s not the case for for buyers. In most cases, end users do not buy homes based on expected appreciation in property prices. For them, the emotional quotient is more important. ✓ Size of the property: If you buy a residential property for investment purpose, you would prefer a cozier house. That’s because smaller units are easy to let out on rent or on lease. On the other hand, if you are buying for yourself, you would prefer to buy a bigger house, although it mostly depends on family needs. To sum up, there are basic differences between and buying and investing in properties. Although you are buying the same house, the factors that drive your choices may be viewed differently.Disclaimer: Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.
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