When your bank balance piles up and you have a neat little nest egg looking you in the face, you wonder whether keeping it in the bank is really worth it or if you should invest it somewhere more lucrative. The three options that come to mind are the traditional investment choice of real estate (which every relative will endorse!), the high-profile gambling with the stock market or your wife’s favourite word – jewellery. A conventional Indian investor usually has jewellery and real estate in his investment portfolio. However, with every investor having his own appetite for risk, you need to know the nitty-gritty of investments before playing around with your hard-earned money.

It all boils down to choosing between investing in physical assets or virtual assets. Research data shows that investments made in real estate and stock market have given the highest returns of around 20%. To get a better idea of where to invest, let’s take a closer look at the pros and cons of investing in stocks and jewellery or real estate.

Stocks

When it comes to investing in stocks, you have to go in when the market is down and redeem only when your goals have been met, and not because the market is swinging and could crash any time. You have to be ready for the long-haul when you invest in the stock market. There is the potential to earn relatively high returns, but for that, you need to invest equally large capitals as well. You also get to avail of efficient tax returns with long-term capital gains being tax exempt too. Though your funds are managed by professional managers, the biggest drawback could be with you choosing the wrong stocks. Another drawback is the high risk and volatility in short-term investments.

Jewellery

The key benefits to investing in gold are that it’s easy and simple, no Einstein brains required here. Gold has always given returns over the long haul and can easily be converted into jewellery for personal use. And when there is a financial crunch, gold can easily be mortgaged for availing loans or even sold off. The drawbacks to investing in gold, however, are that gold rates are coupled with several macroeconomic factors; additionally, there are no tax breaks for investing in gold and neither does it make a regular source of income like dividends or rent. And storing gold is always a high-risk factor.

Real estate

Finally, when we compare stocks and gold against property, you find that this form of investment has the least volatility, along with a guaranteed gradual increase in market price, lending stability to this form of investment and making it the most reliable. You can live in it or rent it out, or just leave it to fallow, and you will still make money on it! Just remember that before investing, you should have enough money on the side to use in case of emergencies, so you don’t have to go sell the property without reaching your target. In case of a real financial emergency, you can even mortgage the property against cash. The best part is that you can keep the property in the family and only sell when needed.

To wind up, there should be a judicious mix of both physical and financial assets, though physical assets always give a better sense of security….and as Mark Twain said, “Buy land, they aren’t making it anymore”.