Real estate investment or mutual funds? This question often arises in the minds of people who wish to invest their money in these two smart options. This is a common question even in the minds of most investment savvy people who you will find constantly tracking things like today’s gold rate for 22 carat in Mumbai.
Both real estate and mutual funds are among the popular investment choices with a long term horizon. Real estate is considered to be more tangible when compared to mutual fund investments which are intangible. However, real estate investments have their own set of issues such as maintenance costs, real estate brokerage fees and other expenses associated with it. Mutual fund investments on the other hand do not come with such issues and are more flexible when compared to real estate investments.
Real estate investments are considered to be safer as compared to mutual funds. It is because the real estate market is considered to have a degree of consistency, whereas the latter is volatile in nature. While it is not entirely true, many investors still prefer investing in real estate rather than opting for mutual funds. There are various factors that need to be considered before deciding what’s better for you; real estate or mutual funds. So let’s understand which one is better for you.
Buying a property is a long-term investment, and you can only sell it when the real estate prices are high. You may want to sell your property when the market is low. However, since this is a long-term investment, you may not find any buyers. Liquidity is one of the major drawbacks of investing in real estate.
Mutual funds, on the other hand, are liquid investments as they can be sold anytime based on the Net Asset Value (NAV). The mutual fund units can be sold at any time through online platforms. And you will get the returns instantly as well. Further, mutual funds have shown better consistency and provided inflation-beating returns over the last few years. Though mutual funds come with a risk, there are moderate risk funds such as debt funds or hybrid funds, which are relatively less volatile and offer steady returns.
Investing in mutual funds is a lot simpler than investing in real estate. It’s a lot like gold where you just need to search up the gold rate in Nagpur and then make the investments or ask a third party to do it for you. The investor does not need to worry about maintenance and repair costs, worry about tenants etc. All you need to do is select your preferred fund and invest in it. Also, mutual funds do not take up too much time for research and analysis as real estate does. Mutual funds also help you diversify your portfolio easily which is missing from real estate investments.
- High investment
When it comes to investment, the most crucial aspect to consider is the return on your investment. This is where mutual funds investments have an edge over real estate investments. The fact that you can invest in mutual funds online with a minimal amount of money and enjoy good returns on your investment makes it an attractive option. You can start by investing as little as Rs 500 and increase your investment at your own convenience. On the other hand, real estate investments require a considerable amount of money (which may be difficult to arrange) and if you are looking for high returns, you might have to wait longer than expected.