RETURN POTENTIAL
Despite the short term challenges due to pandemic, real estate is still considered almost similar to fixed deposit. On the other hand, a mutual fund investment is way riskier. While mutual funds expose your money to the equity market. The volatility and risk of losing money are higher. On the other hand, an investment in land is considered safer despite modest returns.
The mutual funds investment have given a return of anywhere between 10-15% over the period of the last 20 years, but it is also true that the prolonged recession and slow down in the economy can adversely affect the returns. From a longer-term investment perspective, one ust prefer real estate over an MF.
CONSISTENT PERFORMER
The general perception has been that an investment in real estate remains a consistent performer over the years, and it is not a false notion. Barring a few period of slow down, property price across the cities have sky rocketed. Although consistency is very much dependent on the factors such as connectivity, physical infrastructure, social amenities, road network, neighbour-hood, planned projects, it is considered safer than a volatile mutual fund/Equity market.
On the other hand, mutual fund investments are exposed to the equity share of different companies. Being a bucket of option, the risk is distributed, and the collective return in good over a long period. Despite this, the risk is always high, and one might lose huge money if not invested intelligently.
QUANTUM OF INVESTMENT
Both real estate and mutual fund investments are popular investment instruments.
However the key difference between both investments is the quantum of investment. While an investment in the mutual fund can be started with an amount as low as Rs.100 per month, such is not the case with the property market. You must have a significant amount to invest in the property of any type, be it residential or commercial.
The investment in the mutual fund can be increased or decreased with the income potential of the investor, but there is no such ' Top-up' facility in real estate. A large chunk of money is a must have.
RISK QUOTIENT
Both mutual fund and real estate starkly differ in term of liquidity. Although it seems that the mutual funds are more liquid, the risk quotient and the market exposer make liquidity a challenge.
However such is not the case in property assets. It might take a few months to get a customer and seal a deal, but the value remains intact, and the money cannot vanish over night, unlike mutual funds. However, it must be noted that people have to sacrifice a fair share of money in brokerage. Investors must also beware of panic selling as it reduce the value of asset.
REGULAR MONITORING
As real estate investment are physical assets, they might require regular monitoring and vigil. The instances of land grabbing and illegal encroachments have exacerbated and the insecurity quotient.
Therefore, an investor must weigh in the factor or regular monitoring of real estate assets. Despite this, a land asset is for the long term, and maintenance factor must not deter the investor rom buying real estate.
In mutual funds, although physical security is not an issue, a careful choice of funds is a given, and you must invest only the Securities and Exchange Board of India (SEBI) registered brokers only.
Conclusively, from a long term perspective, real estate and property investments are still preferred
and will continue to be favoured by the investors
Mutual fund is the best way for small scale investment
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