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Real Estate vs Mutual fund – Find the winner

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Real estate vs Mutual fund

The investors must understand the essential characteristics of real estate and mutual fund investing. Before choosing the right investment, it is necessary to remove the myths about both of these options. The differentiating factors may relate to returns earned and the risks involved. Read more about Real estate vs Mutual fund and find the winner.

Real estate vs Mutual fund

People are familiar with the benefits of real estate investment. We have full control on these investments, and the return is higher than other form of investment like stocks and gold. The real estate is also termed as less risky assuming that the value of the property goes on increasing with the development process.  A property purchased at Rs.15 lacs in 2000 can be sold for Rs. 70 lacs in 2015. This has happened lately! The prices of properties are rising on continuous basis.

On the other hand, people are not copletely familiar with mutual funds and working. Mutual funds are considered to be as risky, are a sort of gambling activity and less returns are obtained from such investment. Investment in mutual funds is done only by the business executives or elite class of people. The middle-class people are not aware about the operation of mutual funds. As these people observe others, they tend to invest more in real estate investing and not in mutual funds.

Remember, ‘Ignorance is not an excuse.’ Hence, you must be familiar with the operation of mutual funds before jumping to a conclusion. Instead of going with the crowd, analyze the current scenario and eliminate the existing myths about real estate investment and mutual funds.

Difference with respect to returns earned

We will take the previously discussed example. It will appear to be fascinating to know that you have earned approximately Rs. 60 lacs within a period 15 years’ period. Now, assume that you are investing the same amount of Rs. 15 lacs in 2000 in a mutual fund. You can make profit of Rs. 1.29 crores by 2015. Doesn’t it sound extra-fascinating to you? Thus, equity funds are estimated to provide higher returns when compared with those of real estate.

Difference with respect to risks involved

If you are not aware about the existing economic scenario, then you will definitely make a mistake of remarking real estate as not being risky. Both of these investment options depend largely on the progress of the entire economy. Studies have shown that with the growth in GDP, mutual fund investments tend to grow more as compared with that of real estate business. So, now you decide, which one is risky if economic inflation is considered?

Difference with respect to planning of investment portfolio

The investment portfolio of investments differs from person to person. If you have substantial amount of financial resources, then you can surely invest in both, real estate and mutual funds. If you are earning salary per month, then you need not take a home loan for investing in property. You are just shifting your resources. Instead, go for a mutual fund plan.

Thus, if better investment option is to be identified, then mutual funds are more beneficial.

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4 COMMENTS

  1. This article is a big help to those who have been in a fix, as to where to invest their money.
    mutual funds v/s the real estate funds, though both are not much different but are different w.r.t the different situations in people’s life. The differences written in the form of “w.r.t ” scenario are easy to be manipulated and are thus evident that their usage depends on every person’s situation or as per their need.

  2. A nice article which sheds light on real estate and mutual fund options. The article really helps in choosing the right option for investment. Both real estate and mutual funds have their pros and cons like any other investment options. The only thing which an investor can do is consulting a professional and designing a balanced portfolio which will be in-line with the current market scenario and hence will give optimum returns. No investment can be greater than the other as it all depends on market situations and a good investors always invests accordingly.

  3. Article advocates mutual funds to real estate investment.But we have to understand that the person investing in real estate (more than one) have excess funds.I personally think that the person having excess funds will go for real estate investment as compared to mutual Funds, as it effectively yields higher returns.But the main hurdle would be gestation period for high magnitude returns.

  4. Mutual fund or real estate? Both involves huge sum of money for getting good returns. Real estate might look safe and less attractive as compared to mutual funds. Mutual funds on the other hand look risky but returns are on the higher side of the scale. To invest in what depends upon individual preferences and needs.

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