The two physical asset classes of real estate and gold have for long been considered safe havens by Indian investors, and are usually a very large chunk of portfolios. But over the past few years, returns from them have been poor to negative. While financial products are gaining ground with investors, real estate and gold continue to hold strong. In fact, to unlock the value from the physical gold that many Indians hold and to reduce gold import, the government has launched the Sovereign Gold Bonds and Gold Monetisation Scheme. Read more about them here and here.
In the past few years, real estate investments too have witnessed a steady decline as capital values have either remained stagnant. To give a fillip to the sector, the government has reduced the period after which a real estate holding will be considered a long-term asset, from 3 years to 2 years.
But given current valuations in the metros apart from the one house for self-use, real estate investments don’t make economic sense. Read more here. If you choose to reduce exposure to gold and real estate, do pay attention to the tax rules that will apply. Here is a look at the taxes that apply to short-term and long-term gains from these two asset classes.
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