Investment in Real Estate vs Gold vs Bank – What’s The Best Option?

It is always a good idea to invest hard-earned money that will help you gain financial independence in the longer run. Fortunately, there are many investment opportunities in Pakistan through which you can grow your investment. In Pakistan, most commonly, people tend to invest in gold, banks, and real estate.

However, we see that people seem to be confused among these options. Some believe that gold is the best option whereas others believe that banking is the winner for sure. The same goes for the real estate investment in Pakistan.

In this article, we bring you a detailed comparison of all three options (gold, banks, and real estate) so that you can make a better and more informed decision about making an investment.

Comparing Investment in Gold, Bank and Real Estate

We have gathered some common factors that can be seen in all three options. However, the ratio and influence of each factor differ across the investment options.

Want to know more about these factors? Keep scrolling.

Capital RequiredModerateLittle (as low as Rs.500)High
ReturnsModerateLowHigh
TaxesNoYesYes
LiquidityHighDepends on the bank account typeModerate
VolatilityModerateLowModerate
SecurityModerateHigh

 

1. Capital Required

Capital requirement is the amount of money or financial resources you need to purchase a specific asset or an investment. Usually, higher capital yields higher financial gains.

Banks

When it comes to banks, you need less capital. Many saving accounts in Pakistan can be opened just with Rs. 500. Different saving accounts offer different interest rates in Pakistan. You can add little amounts of money every month in your savings account to get more returns.

Gold

For investment in gold, you need moderate capital. For instance, in Pakistan, the current price of 10 gm of 24K gold is around Rs. 89,000. In short, you need a fair amount of money to invest in gold.

Note: The price of gold fluctuates every day.

Real Estate

For real estate investment, you need high capital. But keep in mind that with high capital comes higher financial gains. To invest in good projects or any property in Pakistan you may require Rs. 1.5 million and above.

2. Returns

Returns are the additional amount that you earn from your investment. Every investment opportunity comes with its set ratio of return.

Banks

Banks usually pay lower returns to their customers because the risk involved in banks is low. Even if you are not making additional money, your original investment remains safe with the bank. The banks in Pakistan usually give returns of 6% to 8%.

Gold

Globally, gold funds offer 11.43% returns in the last one month and 18.51% in three months. However, this rate fluctuates every now and then.

Real Estate

Real estate is one of the most lucrative investment opportunities in Pakistan because it not only gives you a tangible asset but also offers a 20% and above ROI to you.

And the best part?

Land is one of the few assets whose value always appreciates over time. It means the overall value of your property will always increase.

3. Taxes

When you own an asset, you have to pay a certain amount to the government for holding it. Every investment opportunity comes with a specific tax bracket.

Gold

If you own gold, you do not have to pay any tax on it. However, if you are a Muslim and you meet the zakat criteria, then you will have to pay zakat on your gold.

Bank

The bank does not charge you on your principal amount. However, they do tax deductions on the profits that you make with them. For instance, for some of the banks in Pakistan, if the profit/return paid is less than Rs 500,000, the tax will be deducted at the rate of 10 percent.

Real Estate

When you own property, you have to pay the property tax in Pakistan. The rate of taxation is 10% for the first year, 7.5% if sold during the second year, and 5% if sold during the third year.

4. Liquidity

Liquidity is the ease of converting your investment into hard cash. Different investments come with different liquidity ratios. Some are easily convertible into cash whereas some require quite some time for conversion.

Gold

Gold has high liquidity. If you want to sell your gold, simply go to a goldsmith and he will convert your gold into cash according to the current rate.

Bank

The liquidity of bank deposits highly depends on bank account type. Certain accounts yield higher returns but you cannot withdraw the principal amount. However, if you have a simple savings account, you may withdraw cash anytime you want.

Real Estate

Real estate may have moderate to low liquidity, depending on the type of property you own and current market conditions.

5. Volatility

Volatility refers to the process by which a certain market changes its trends. Some investments come with abrupt changes, whereas some investments operate in steady markets.

For instance, the volatility of gold is moderate and changes with the price of the dollar. On the other hand, the volatility of bank profits and real estate is quite low. Both investment opportunities follow a steady and gradual trend.

6. Security

One of the most important factors of a good investment opportunity is that it is safe and secure. Always invest in opportunities that are 100% secure and legit.

Gold

The gold market is full of scammers. Always buy your gold from trustworthy sellers and do not forget to get the receipt of your purchase. Also, make sure that the gold is original. There have been many cases where people have sold fake gold to people.

Another drawback of owning gold is the high chances of robbery. Always keep your gold at a safe place and do not disclose the information to people.

Banks

Your money is safe with the bank, hence the level of security in banks is quite high.

Real Estate

Like gold, the real estate industry is also full of scams. Also, invest in companies that are renowned and trustworthy. Also, before making any kind of investment in any housing scheme, make sure the scheme is authorized by the development authorities of that area. Avoid the most common missteps while investing in real estate, and enjoy a financially lucrative yet stable and carefree life.

If you are looking for a transparent and reliable real estate company in Pakistan, visit Graana.com today.

These were some of the most common investment opportunities in Pakistan. You can see that each opportunity comes with rewards and risks. Many people prefer gold as an investment. It is convenient and manageable. The gold investment returns are satisfactory, making it one of the most common investment ideas in Pakistan.

Likewise, investment banking is highly popular among Pakistanis. Bank investments are feasible for people who want to invest small amounts in the market. Choose the investment that is best suited to your needs.

If you have more questions, please let us know in the comment section below. This article was originally published here.


  • Real estate investment is best for isb and rawalpindi due to the upcoming innaugration of ring road rwp-isb. Inshallah real estate market of rwp will flourish.
    main projects include blue world city, capital smart city,rudn enclave,faisal hills and mivida pakistan.

  • aby dhakkan, 1.5 million me sirf qubrustan ki real estate me jagha milti he. awain na phaiko. Karachi to ao zara khusboo laga k, pata lagay ga.


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