Real Estate Or Mutual Funds: Which One Should You Invest In?


hardik, April 19, 2019

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Belonging to the asset class, real estate and mutual funds are two important investment options you can choose from. Both come with their own USPs and so you should make a choice after comparing them thoroughly.

By and large, mutual funds are popular investments as they give good returns and can be made even with a small amount. Real estate investments, on the other hand, are location-specific and require larger capital. For example, a property in Hyderabad will cost you anything between Rs.20 lakh and Rs.2 crore. However, increased transparency brought in by RERA and the fact that it is a tangible asset makes real estate an attractive investment option.

So, which option will make for the best investment? Take a look at how the two compare and decide accordingly.

Ease of investment

Mutual fund investments can be initiated and managed from the convenience of your smartphone app or internet browser. By going in for a Systematic Investment Plan (SIP), you can space out your investments and reduce your lump sum capital needs.

On the other hand, real estate investments require time and effort. Say you are interested in real estate in Hyderabad and are zeroing in on a flat in PBEL City, you would have to meet the builder, examine details and finally secure the necessary finances. However, once you have made your investment, you can earn regular and stable income in the form of rent. Additionally, if you are purchasing a home to stay in, you need not spend on rent.

Risks involved

Both investments carry risk as they are market-linked and are dependent on the economy. Mutual funds come in different types and allow you to have a diverse portfolio, however, they all carry some degree of risk.

With a real estate property, the worst it can get is to a point that it gives you very low returns. However, being a tangible asset, you are in control of it. You can always renovate it, tweak the interiors and switch to plan B: make it a holiday home or save it for a family member. Memories cherished at the property will more than compensate for a marginal deficit in returns!

Additional Read: Is Hyderabad The Next Best City To Buy a House In?

Easy Returns

Mutual funds generally offer returns between 8% and 14%. Meanwhile, renting a property generates returns at rates ranging from 1% to 3% in cities like Mumbai, Delhi, Kolkata, Hyderabad, and Bangalore. However, the returns you get on your real estate investment cannot be limited to cut and dry figures.

For instance, if you invest in a location that has scope for infrastructural development and is witnessing a surge in prices, you can generate much higher returns. Based on these factors, you can easily understand how both investments have their own pros and cons and form a vital part of any portfolio. However, if you choose real estate, finance and finding the right property are key to the success of your investment.

Fortunately, you can get both when you take a easy home loans by Bajaj Finserv Homes & Loans. Here, you not only get finances up to Rs.3.5 crore but also benefit from property search assistance. This way you’re abreast of the best and most credible properties like PBEL City Hyderabad, Prestige High Fields and Vertex Panache, if you’re keen on investing in Hyderabad, for example.

What’s more, Bajaj Finserv Homes & Loans offers you this home loan at affordable interest rates and at a flexible tenor that can go up to 20 years. With nil foreclosure and prepayment fees, this is a cost-effective solution to making a smart investment. So, start today by checking your pre-approved home loan offer. Doing so will give you instant approval and access to a range of customised deals.