Real Estate or Mutual Fund : Which is Better Investment ?
Investment in Real Estate
Real estate is a tangible asset that has the potential to appreciate in value over time and can provide a regular income stream through rental income. However, it also comes with certain risks, such as property damage, vacancies, and changes in the real estate market that can affect the property’s value and rental income.
Investment in Mutual Funds
On the other hand, mutual funds are professionally managed investment portfolios that can invest in various asset classes such as stocks, bonds, and real estate investment trusts (REITs). They offer diversification and potentially higher returns, with some market risk involved.
Real Estate vs Mutual Funds
The above image clearly depicts a real life example. Let’s understand this.
Suppose you are looking for an investment in flat worth Rs 80 Lakhs.
Option 1: Real Estate Investment
You make a down payment of Rs 12 Lakhs & take a Home Loan for Rs 68 Lakhs
The Total EMI which you need to pay in 20 years will amount to Rs 1.44 Cr
And, the value of flat after 20 years (at an appreciation rate of 5%) will be 2.1 Cr
Option 2: Mutual Fund Investment
Now, suppose you invest this money in Mutual Funds through SIP mode
If you invest the amount for 20 years, then your investment value will be 7.24 Cr
Ultimately, the decision between investing in real estate or mutual funds should be based on your investment goals, risk tolerance, and personal preferences.
It’s always advisable to consult with a financial advisor before making any investment decisions.