Investment and trade existed in civilized society long before banks. People will buy land/property and then sell or rent it for a profit. Even after banks and other investment options became open, most customers actually prefer real estate investing as a great way to earn a consistent income and construct wealth. Consider this: if you make an investment in real estate and lease it out, you can begin receiving rental income every month. When you sell the house after 10 or 15 years, the price would have risen, offering you a lump sum pay-out. Let’s take a closer look at why investing in residential properties is a good idea.
Fixed deposits only offer simple returns with interest rates ranging from 8% to 9% over a period of three to five years. Thanks to the sudden condition of the Indian economy, real estate investments have a high-risk-high-return situation. When it comes to long-term income, though, real estate has a far higher profit margin.
The average return on real estate over the last five years has been between 15% and 20% per year. Real estate can be more costly, but you can almost certainly recoup your investment due to high inflation rates.
Affordability & Profits
Inflation is one aspect that several people ignore when deciding the right investment strategy. Because of the economy’s inflation, taking returns on your investment at face value would yield misleading results. Your investment ideas can generate more capital than the existing rate of inflation in order to generate real income. Fixed deposits deliver returns that are barely higher than inflation when adjusted for inflation.
Real estate, on the other hand, will provide revenues that are up to 3% higher than current inflation rates. When adjusted for inflation, this implies that real estate is a much more attractive investment than fixed deposits.
Additional Investment Benefits
Another factor that makes investment in real estate appealing is the related tax cuts. In terms of tax rates, the tax owed on fixed deposits largely depends on the applicant’s income tax bracket. One can avail a deduction of up to Rs. 1.5 lakhs for investments in Fixed Deposits under section 80C of the Income Tax Act. Real estate transactions, on the other hand, are taxed differently. Individuals may also subtract up to Rs. 1.5 lakhs from the principal sum of their home loan under Section 80C of the Income Tax Act.
Section 80EE provides a special opportunity to first-time home buyers by allowing them to demand an additional Rs. 50,000 deduction in addition to the current Rs. 1.5 lakhs. When a couple takes out a joint home loan, the tax advantages of buying real estate are much greater. In this situation, each of them can assert a tax deduction of Rs. 1.5 lakhs on their home loan.
Because of the higher security and lower risk, implementing your investment ideas in real estate is a much better choice than fixed deposits. After the implementation of RERA, the real estate market has matured to the point where it is suitable for both domestic and non-resident Indian investment in Indian real estate. Invest in property that has been designed by a reputable developer for a risk-free purchase. If you are looking for flats in Hyderabad, Aurobindo Realty in Hitech City is a good place to start.
Finally, note that as an investor, you must spend time evaluating your financial goals, risk tolerance, and investment time period. These three considerations will assist you in determining the assets in which you can invest and achieve your objectives.