How do you define an investment purpose?
You’ve made an investment, but what do you intend to do with it once your gains materialize? Are you saving up for your children’s education? Or do you plan to take that trip to Italy as you’ve always wanted? Your investment is only as good as your investment purpose.
Choosing ‘why’ you’re investing in something may be deemed to be just as important as selecting the investment class itself. This piece discusses what factors you need to consider while choosing why you invest in something. We’ll specifically be focusing on real estate investing. However, these ideas may be generally applicable.
When investing in real estate, the ‘why’ generally boils down to four main categories. They are:
1• To own and use the property
This is perhaps the most common reason why people invest in real estate. Are you looking for a place of your own? Are you looking to start a commercial venture? Having possession of the property is the way to go about it.
2• To earn profits
This reason comes down to those looking to park their wealth in real estate, investing in its ‘truest’ form. You’re only investing for a specific period of time to recognize your gains, and once recognized, you can exit the market and take home all the profits.
This channel may offer phenomenal gains, with developmental real estate offering returns of up to 200%. This is the ideal way to build a fortune of wealth for your future by maximizing your capital gains, hence, your profits.
3• To establish a passive income stream
If you want to establish a retirement plan for yourself or are just looking for another passive income stream, real estate allows it without continuous, active involvement. Enjoy rentals coming in from your owned properties.
Residential, developed (mature) real estate offers annual rental returns of up to 5%, which means that if you buy a property worth PKR 1 million, you’ll be raking in PKR 50,000 a year, just as rent.
4• Save your money from losing its value
Inflation eats away your money’s worth. A thousand rupees do not buy the same commodities as they did ten years ago. To save your money’s worth from being eaten away by inflation, you can invest in a chunk of real estate. On average, real estate appreciates at 12%, whereas the average KIBOR lies at nearly around 9%. Outpace inflation by saving your wealth, not in the form of physical cash but in real estate. Read here to see how inflation is eating away your money’s worth.
DAO PropTech offers these categories in the form of real estate investment plans. You can view and create your own customized plan here.
What factors may affect your decision?
Choosing the best plan for yourself depends on several factors:
The younger you are, the more risk you might be willing to take. You might also be inclined towards generating wealth rather than creating a passive income stream. As people age, their risk tolerance tends to fall, resulting in them opting for less risky investments.
2. Risk tolerance
People with a higher risk appetite tend to invest in more risky assets such as stocks or cryptocurrencies (in today’s day and age). These assets tend to be more volatile, you may even lose your entire investment in just a few hours! Or even double it. Your tolerance for risk defines what kind of asset you invest in.
3. Investment amount available
Some investment classes require huge amounts of capital, such as traditional real estate, while others can be bought with just a few hundred rupees (stocks).
4. Investment duration
If you’re willing to stack away your investment over a more extended period of time, you might be inclined to invest in stocks or real estate, as these two classes are almost always positive over longer periods of time. The longer duration of investment rubs away all short-term shocks.
How does DAO PropTech help you?
DAO PropTech’s flexible business model helps you invest the way you like. Don’t have a lot of capital? No problem. Looking for a higher risk? No problem. Want to invest for longer durations? No problem. We have you covered.
Offering diverse kinds of properties, ranging from hospitality to residential, and consisting of both mature and developmental real estate, you are free to carve your own way to financial freedom with us!
Sign up today and create your own personalized. journey
Digital & Communications Specialist