Real estate generates high returns on being sold at a time when markets are high. Highly unpredictable market conditions make it a challenge to estimate future returns in the real estate sector. However, purchasing a property at a low price and selling it when the prices of the location have skyrocketed makes it one of the best investments. For property investments, timing it right is the key to enjoying high returns. It requires planning your finances well in advance because the initial payment is in the form of a lump sum.
Mutual funds, on the other hand, offer a wide variety in terms of market caps, sectors that they invest in, market risks, etc. This enables investors to invest according to their risk appetites and financial goals. Investors can start with a small amount of Rs. 500 or pay in lump sum, making it a suitable investment tool for everyone. Besides, the returns can be roughly estimated because the interest rates and overhead charges are transparent. Mutual funds are a better tax-saving investment option than investing in properties.
These are apt for planning for life goals which range from children’s education and marriage to planning for their post retirement years.
Mutual fund investment is suitable for everyone across risk appetites and investment objectives. For instance, equity investments are best suited for short term investments and, therefore, expose the portfolio to high market risks to generate high returns within a short span of time. As opposed to this, balanced mutual funds are recommended for healthy returns over the long term. Hence, they are not as risky as equities.
Investors can invest in lump sum or through easy installments or a combination of both. Besides, there are other options as well systematic transfer plans, switching between funds, systematic withdrawal plans, etc.
Risks like market risk, sector risk and company risk are typical for mutual fund investments. This can be controlled through portfolio diversification. Not all risks like inflation may be foreseen. But when they are, selling mutual fund schemes or switching between funds enables investors to avert risks.
Saving a lump sum from our monthly income is a challenging task for everyone. Systematic Investment Plans (SIPs) in mutual funds encourage you to start small and inculcate a disciplined approach towards savings and investments. This enables you to take small steps towards building a robust corpus over the long term.
Mutual fund investments involve purchasing and selling securities in large volumes. This reduces the cost per unit of a mutual fund scheme as compared to purchasing and selling stocks by stock brokers.
Here are the factors that make real estate and property a suitable investment option:
Investing in property helps meet the wealth creation or buying a home life goal of the investor.
Property can be sold off whenever you want, but does not always guarantee good returns. As discussed earlier, this is because it is completely dependent on the prevailing market price for the location of your property.
If you want to sell your property within 3 years of it being purchased, the returns will attract Short Term Capital Gains (STCG), reducing your share of the return. If your annual income exceeds Rs. 10 lakhs, you will have to pay 30% as property tax. Selling the property after 3 years, it will be liable for Long Term Capital Gain (LTCG) at the rate of 20% after indexation.
Property investments have to be paid in lump sum as down payment. You may end up taking a bank loan and repay it along with high rate of interest. Alternatively, you can build a corpus over a few years and then invest in property.
Cases of fraud are not unheard of in the real estate business. In fact, there has been an increased spurt of such incidents in the recent past. Investors need to invest in properties of well recognized real estate companies or undertake a thorough background check of the company that they are investing in.
Is it worth it to invest in mutual funds?
Yes, here are some factors that make mutual funds a suitable investment option
Is real estate or the mutual fund a better investment?
Both investment options have their own set of merits and demerits as they meet a set parameter of investors goals.
Real estate generates high returns on being sold at a time when its market prices are high. Highly unpredictable market conditions make it a challenge to estimate the future returns. However, purchasing a property at a low price and selling it when the prices of the location have skyrocketed makes it one of the best investments. For property investments, it is vital to time it right so as to enjoy high returns. It requires for you to plan your finances well in advance because the initial payment is in the form of a lump sum. Mutual funds, on the other hand, offer a wide variety in terms of market caps, sectors that they invest in, market risks, etc. This enables investors to invest according to their risk appetites and financial goals. Investors can smart with a small amount of Rs. 500 or pay in lump sum, making it a suitable investment tool for everyone. Besides, the returns can be roughly estimated because the interest rates and overhead charges are transparent. Mutual funds are a better tax-saving investment than investing in properties.
Which is the best mutual fund over the long term?
Some of the popular mutual fund schemes over the long term are:
Which is the best mutual fund for SIP?
The best mutual funds for SIP are-
Which mutual fund is best for 1 year investment?
Here are some of the best mutual fund 1-year investments:
Which mutual funds are better to invest?
Here are some of the best mutual fund schemes to invest in-
