Real Estate vs Equity Mutual Fund Investment

Be aware of little expenses, a small leak will sink a great ship.

-Benjamin Franklin

When you think of investing your money, your parents would suggest investing in gold or real estate. But slowly people are getting to know what equity investment is and they select it as a good tool to invest in. Earlier people used to see equity as a risky tool to invest in because they used to consider real estate as a safe investment. But the fact is both investments give gains in the long term. But nowadays due to the instability in the market, equity is the preferred option.

For decades real estate has generated consistent wealth and long-term appreciation.

By investing in stock you can receive ownership in a company. When market conditions are good, you can earn a profit.
A good compromise to choose between investing in the stock market or investing in real estate is in the hands of investors, so be wise when you invest.

Demerits of Real Estate:

1. Low liquidity: Real estate involves risk because in case of emergency one can’t sell the property immediately. Real estate requires time to liquidate the property.
2. The market is unpredictable: Market changes every now and then, where you can sell your property more than 10 times its original price. But that could go vise versa also. So think twice when you invest in real estate.
3. Fear factor: There may be chances of property disputes, your property can be seized, so buying property has a fear factor.
4. Ancillary expenses: Expenses such as maintenance cost, tax to pay, brokerage charges, and many more have to be paid.

Real estate vs. Mutual funds.

• The risk:

We all know that both mutual fund and real estate belongs to the growth asset category, and in both risks is involved. The performance highly depends on the economy of the country. Where in comparison with real estate equity funds are less risky because equity mutual funds are diversified in nature. Where if there is a sudden change in the stock market the entire portfolio will not affect. One can switch from one stock to another and can also modify if some of the stocks are not performing well. Where diversification and switching are not possible when it comes to real estate.

• Unpredictability:

Real estate investments are very unpredictable. We have the wrong notion that real estate is always safe to invest in but sometimes the investor may not get the expected returns as per expected him.

Mutual funds seem risky by nature but that is not true. Because there is the various category you get when you start investing in mutual funds.

• Tracking investment is not feasible:

Unlike a mutual fund, the investor cannot track their investment in real estate.

In mutual fund tracking investments online could be an option where the growth and decline of the investment could be known by the investor.
In real estate, such tracking is not possible. This creates a risk in investment as the investor cannot track the investment.

• Real estate needs large funds:

Real estate requires an investment of large amounts.

Where one can start with the SIP option while he is investing in mutual funds.

• Compounding power:

In mutual funds, you have the benefit of compounding. Where this gives very good returns to the investor.

The benefit of the compounding effect will not be there if they invest in real estate. Even today real estate is considered by people as a symbol of security. And this could be debatable. As the above points suggest, that mutual funds are a better option if you consider diversifying your portfolio.

When one invests in equity mutual funds they do get benefits to tax efficiency as compared to other investment types. Investing in a mutual fund required a very small amount of money. Where in the SIP plan, money gets automated debit from one’s account. As all mutual fund companies come under SEBI, the investment made in a mutual fund is safe and transparent.

Start investment into Equity Mutual funds, where Fisdom is the best platform to invest your funds.

Think investment!! Think Fisdom .