Perks of investing in Real Estate

Real Estate And Mutual Fund Investments Make A Foolproof Portfolio.

Adding real estate to your portfolio offers key diversification and inflation hedging benefits, potentially enhancing the portfolio’s risk-adjusted returns. “Real estate is a low-risk, high-return investment when held long-term (minimum five years). It also hedges against inflation and shows much greater stability in comparison to bonds and stocks. It also offers tax breaks and deductions that mitigate the costs of owning and managing properties. As an investor, you also have the option of renting the property. This way, you can earn an additional regular return while the value of the property appreciates over time. One must also not forget that property is a ‘real asset’, which means it has intrinsic value. The structure has value, as well as the land upon which the asset resides. Therefore, a well-chosen property can benefit from favorable demand and supply dynamics, and infrastructure developments in the surrounding area. In short, the value of a tangible asset can rise and fall, but will not fully disappear,” mentions Vineet Chellani, founder and CEO of a real estate advisory firm.

However, like any other investment, there are risks attached to real estate as well. Hence, it’s essential to keep certain aspects in mind. “Real estate has a high entry cost and has lesser liquidity as compared to mutual funds.

Some of the properties come with underlying legal or structural issues that could prove to be expensive for the investors. Hence, for those who want to invest in real estate, especially residential assets, it is best to stick to high-quality support, which is constructed by established builders, and is close to completion,” adds Goenka.?

In a nutshell, “Plan your taxes, understand the portfolio that you are investing in, and last but not least, start early and think about your long-term horizon. Also, do not be misguided and always check the credit rating of an instrument before investing. Most importantly, consult a professional wealth management firm as they can help you build a tailor-made plan as per your risk appetite,” concludes Ramchandran.

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