What to choose for investment: gold or real estate?
Once you have managed to earn a certain amount of money, the next task is to maintain its purchasing power.
On average, over ten years, your capital depreciates by half, meaning you can purchase far fewer goods and services with your accumulated money.
In order to avoid losing your accumulated money, you need to invest it in assets that show stable growth and increase their price faster than inflation .
The most popular investments among our citizens are investments in real estate and gold bars.
But which asset will be more profitable in the long term and will bring less worries to its investor?
Profitability of real estate investments
In 2019, I purchased a 50-square-meter apartment in Poland for $100,000. I believed that investing in real estate abroad would be more secure than in Ukraine.
The Polish zloty exchange rate is quite unstable, so the price analysis will be conducted in US dollars.
The apartment is currently listed for around $140,000, meaning the price has increased by approximately 40% in five years.
For a number of reasons, I didn't rent out this property, so utility costs should also be deducted from the profit. Over five years, they amounted to $5,000, with another $1,000 going toward property taxes.
That is, the net profit from selling the apartment today would be $140,000 - $100,000 - $5,000 - $1,000 = $34,000, or 34% of the investment. If the apartment were rented out, taking all expenses into account and in a best-case scenario, the profit would be $18,000, for a profit of $52,000, or 52% over five years.
Profitability of investing in gold
The price of 999.9 fine gold five years ago was $1,300 per troy ounce or $41.80 per gram.
Over the past period, the price of the precious metal has skyrocketed, and now gold, including commission, can be sold for 2250 per troy ounce .
As a result, the profit over the past five years amounted to $950 per ounce, or 73% . Moreover, there were no additional investment servicing costs.
What is more profitable: gold or real estate?
The conclusion here is obvious: it is much more profitable to invest in gold bars than in real estate.
Over the five years analyzed, real estate investments returned 34%, while gold investments increased the initial capital by 73%. Even taking into account rental income, the ratio is 52% to 73%, still not in favor of real estate.
After this experience, I am more inclined to invest in gold, since in addition to higher profits, this option is also less hassle.
Gold bars do not require constant monitoring like an apartment, and if necessary, you can always sell part of the purchased bars, while the real estate is sold in its entirety.
Moreover, today it is not at all necessary to buy physical gold; it is more rational to buy gold on the exchange:
- Instructions for buying gold on the exchange - https://time-forex.com/vopros/pokupka-zolota-na-birzhe
- Gold trading brokers - https://time-forex.com/vsebrokery/brokery-zoloto-serebro
