Why Property for Investment

Property is perceived to be one of the best investments that can be made and inevitably almost every earning individual invests in property at some stage in his life, be it for residential purposes, speculation or investment. It also happens to be among the first asset acquisitions after individuals pick up a job and find that they can put away some of their earnings for alternative uses. Property, of course, is an expensive proposition since it requires a larger amount of money and is a capital-intensive asset.

Reasons why property is better for investment than other assets

Property is one of the various options open to individuals on the threshold of making investments. While it is largely a personal choice in which individuals’ personalities play a role since it reflects their risk taking abilities, property is considered to be “safe” and everyone does invest in at least one property in a lifetime. Some of the reasons why property is preferred over other instruments are:

  1. Property is less volatile- As compared to an investment in stocks and shares property is not as volatile, that is, its price does not react as sharply to market changes and other developments. Its value will not crash as is the case of many stocks. The promise of high and quick returns of the stock market tempts many, but exposes them to the risks of losses as well.
  2. Fluctuating rates as seen in exchange rates in forex markets are not seen in property markets. They show a gradual steady increase or even a marginal decline.
  3. Generates capital growth- Property prices appreciate over time and the capital invested grows at a steady pace. Thus it becomes an asset that promises returns in the long run.
  4. Serves as an income supplement- Property can become a source of additional income when it is rented out, or save rental payments if owners opt to live in their own property. Though initially, the rent may be used for mortgage payments or loans taken to purchase the property, once the debts have been cleared, the rent is additional income to take care of some expenses, or be saved and accumulated for another investment.
  5. Better than fixed deposits and bonds since these also are subject to changing interest rates and their long term returns are unpredictable.
  6. Reasonable returns- Financial analysts widely agree that the value of property doubles every seven years. If an investor is not greedy, this is a fair rate of return. Returns can also be earned by buying low and selling high, which just requires patience while the property value escalates.
  7. Helps to raise loans for emergencies- Property is also the most acceptable form of collateral against which any bank or financial institution will be willing to give a loan whenever there is an urgent need to raise funds.
  8. Property provides tax benefits- Owners of property enjoy tax benefits that convert into savings.

The bottom line is that property is an investment that can be seen and touched and not just a paper asset. It is there as a roof over your head when all other doors have closed to you. It should be the first big investment made and subsequent additions to the property portfolio can be done when surplus funds are available.


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