Summary:
- The Indian investment market is flooded with opportunities for investors
- Real estate and forex trading are the top investment choices among investors
- Pros and cons of real estate and forex trading.
When it comes to making investments in India, the choices are abundant. However, with every type of investment, there is risk involved. This is what keeps the investors, particularly the first-timers, away from the market as no one would like to see their hard-earned money go down the drain.
Despite the risk factor, there are some sectors that are favored by investors. Real estate sector and forex trading rank at the top among them. Those seeking real estate investment opportunities can easily find the best residential projects in Mumbai Similarly, there are plenty of trading platforms available for forex traders as well.
Mal Fletcher
Although extremely different in nature, potentials, and expected ROI, both these markets have one thing in common. They require the investors to have ample knowledge, expertise and, of course, money.
In this post, we have discussed both these investment markets in detail. This in-depth comparison will help you decide whether you should invest in real estate or forex trading. Continue reading!
What is Forex Trading
Forex trading, too, is a common form of investment that has garnered a lot of interest from investors in this region. New investors, too, are showing their keenness in this form of investment. As stated above, you need to be fully aware of trading terminologies, methods and other vital details before venturing into this market. Also, it is important to be aware of financial and economic developments not only in India but worldwide as well.
It is the biggest financial market globally, as it is quite evident from the increase in daily activity from USD $1.2 trillion (2001) to USD $6.6 (2019). Statistics show that its worth is $2.4 quadrillion. More than 170 currencies are used in this market.
And among them, the US Dollar is most widely used. It is also called greenback. Trading is mostly done in 7 currency pairs including EUR/USD, USD/CAD, USD/JPY, AUD/USD, GBP/USB, USD/CHF and NZD/USD.
Pros and Cons of Forex Trading
Pros of Forex Trading
Easily Accessible
You do not need a huge sum of investment, as is the case with the real estate sector, to start forex trading. Furthermore, it isn’t tough to create a forex trading account as well. This is why it is often termed as one of the most accessible sectors for traders.
Another factor that goes in favour of this market is that traders can have easy access to real-time data, including market price, price charts and other vital tools and strategies. And they can trade through online platforms, making it easy for them to trade remotely, irrespective of where they are located.
No Additional Cost
As stated above, forex trading doesn’t need a lot of money. Transaction cost is also on the lower side. Furthermore, there’s no middleman required. This is another place where you can save expenses.
Highly Liquid
Unlike real estate, forex trading is highly liquid. You can convert your assets into cash, at any given time. There is also a reduced risk of price anomalies and price manipulation.
Cons of Forex Trading
- High Risk
The market in forex trading is very unpredictable. Furthermore, the risk of losses is great as well. One wrong move can cost you a lot. This is why it is said that forex trading must only be done when one is fully confident of their skills.
- Low Transparency
Forex market is dominated by brokers. Therefore, it lacks transparency. You have no idea what’s going on behind the curtains.
Real Estate Sector
On paper, investing in the real estate market may seem like an easy task. Some people believe that all they have to do is to buy property from the best real estate developers in Mumbai or in any other metropolitan city and they are good to go.
However, this isn’t always the case. There’s a lot to consider when making an investment. From finding the right location to ensuring there’s no fraud or scam, the process is a detailed one that requires a lot of homework, due diligence, and, of course, the capital.
Furthermore, one shouldn’t think of investing in real estate when they have a pending debt and unsettled finances. A solid emergency fund is necessary so that the investor can fall back on something if the need arises.
Pros of Real Estate Investment
Abundant Options
If you are looking to invest in the real estate sector, you will have plenty of options at your disposal. For example, in the residential sector, you can invest in an apartment building, a villa or duplex. Similarly, you can find numerous opportunities in the commercial sector as well. There’s also an option to buy off-plan property if you do not have sufficient funds.
A Continuous Flow of Income
You can have a continuous flow of income by investing in the real sector. For instance, you can buy a ready property, be it commercial or residential, in a prime location and put it on rent. You will be getting a fixed amount every month until the property is occupied by the tenant.
Better Prospects
It goes without saying that real estate in India is growing. Latest projects are being launched in every part of the country by top, internationally recognised developers like Piramal Realty. This has opened up an array of opportunities for those seeking investment opportunities in India. These projects have grabbed the attention of international investors as well.
Cons of Real Estate Investment
- Can be Illiquid
Bear in mind that real estate investment can be illiquid. At times, it can take years for a property to be sold out at good rates. Therefore, your investment can be blocked during this period. This is why it is recommended to have an emergency fund that you can use at the time of need.
- Difficult for Foreigners
Although the real estate sector in India is attracting foreigners, it can be tough for them to manage their investments. For this, they will have to hire property management companies, which can be an added expense for them.
- Uncertainty
There’s a factor of uncertainty when it comes to real estate investment in India. With changing times, market conditions can also change. This can impact the profitability of your investment.
The Verdict
In a nutshell, it all comes down to your requirements, budget, and of course, learning. No matter which market you are choosing, be very mindful that there is risk involved in both of them. So, do a lot of research, study the market, evaluate your funds, and then make an informed decision that can prove to be fruitful for you in the long run. If you are planning for long-term investments, go for the real estate market. You can even start from buying a plot and then get it constructed later on. For a quick experience, consider creating a forex trading account and experiment a little.