Real Estate Vs Mutual Funds? Detailed Analysis

 

Real Estate or Mutual Fund, Where Will You Make More Money Faster?

When you plan an investment, keep in mind all the things so that you can earn maximum money for you There is some confusion about real estate investment, people save money and buy a plot or property, but Is real estate investing the best option? If yes, than how does it perform compared to mutual funds. In this article we will take a deep dive look in to the earning potential in these different avenues.

 

1.    The real issue of investing... where will the returns be higher?

Research and published data from major real estate firms from top cities in India show that real estate has been generating 10 percent annual returns for the past 10 years. However, in many other cities this return may be slightly higher or lower.

On the other hand, mutual fund schemes have been consistently delivering an average return of 14% for the past decade, which is a normal return as many funds have delivered much higher returns. So you can see there is differential of 4% in case of Mutual funds. There are times when property rises to multifold but it will remain for few years but mutual funds are consistent performers.

 

2.    Liquidity

Just imagine that you have a lot of property, but in case of an emergency, you cannot use that property, in which case that property is worthless. Second, selling real estate in an emergency can require a lot of work, from finding a client to getting the right price.

On the other hand, mutual funds provide you complete liquidity, you can redeem your investments whenever you want and the money will reach your account within 2 days.

3.    Ease of investment

It can be a big issue that how much money will be required for investment, mutual fund can be started with just Rs 500 monthly SIP, while real estate will require you to have a lot of money.

Now lets have a look -

• 3BHK Apartment in Noida – 1 Crore to 1.25 crores

• 3BHK Apartment in Gurgaon – 1.5 to 2.5 Cr

If you take a home loan, you will have to make a down payment of 20 percent, apart from registration fees etc., thus you will have to invest 20 to 30 lakh rupees in the beginning.

4.    Protection of capital

 

Mutual function gives you complete diversification. Equity function gives you portfolio,  fund buys shares of different companies. This type of risk is minimized and better in long term investment Returns are received.

On the other hand, in the case of economic growth, the value of real may increase, long-term investment in real estate often does not yield returns, mutual function performs better in long-term investment.

5.    Taxes

In equity mutual function if you make a profit of more than Rs.1 lakh in 1 year then 10 percent launch term capital gain tax was to be paid, returns below this amount were not taxed. If you invest in the same ELSS fund you can get tax benefit up to Rs.1.50 lakh.

You can claim additional rebate of 2.5 to 3 lakh rupees on home loan in real estate, stamp duty, LTCG while buying property.

 

It doesn’t means one should not invest in real estate. You have to analyse the various aspects before making investment either in Mutual funds or real estate.