The best investment is an investment that will keep providing us sufficient outcomes/funds in the future. It may include lots of strategies as well as efforts. 

Nowadays there are different options of investments but today we are going to read how Real Estate is better than Mutual funds. Before that let’s clear the basic concept of Real Estate investment and Mutual Funds investment.  

-Real Estate Investment

Real estate investment is nothing but the purchase, ownership, management, rental, and/or sale of real estate for profit rather than using it as a primary residence.

Example: office building, agricultural land, commercial plot, etc. These are considered to be a secured form of investment.

investment

-Mutual Funds Investment

A mutual fund is an open-end professionally managed investment fund that pools money from many investors to purchase securities.

Fixed income funds, Equity funds, Balanced funds are the different types of mutual funds.

With mutual funds, you may lose some or all of the money you invest because the securities held by a fund can go down in value. So before entering mutual funds, you should be prepared with the needed knowledge. 

 

Although market analyst talks about mutual funds giving a higher output, if you look at from a point of view where you want to achieve maximum results with bare minimum efforts real estate investments are your best shot.

In mutual funds, without a good knowledge of the stock market, it is very tough to manage it.

Why is Real Estate investment better than Mutual Funds1

Why is Real Estate investment better than Mutual Funds?

  • Benefits & Advantages

benefits

Rental Income

The steady flow of cash in the form of rental income. Depending on the property type as well as your locations, income will vary. 

According to a popular rule of thumb, it’s said that your property should ideally generate at least 3{67ce74ea29cb3842281e10a17b6bc9b0a76f5186003460eea2ff96ae3842e2c1} of its current value in a year. That means, if the current value of your property is Rs 1 crore, it should earn at least Rs 3 lakh in a year (i.e., Rs 25,000 in a month).

Appreciation of Property Value– 

Usually, the value of property keeps on increasing even in the situation of inflation in the economy, therefore investing in real estate is a wise decision.

Saving Tax– 

The government offers tax breaks for property depreciation, insurance, maintenance repairs, travel expenses, legal fees, and property taxes. Real estate investors are also entitled to lower tax rates for their long term investments.

Self Decision Making- 

A real estate investor is free to make his or her own decision, as in mutual funds, you have to be dependent on funds managed by others.

  • Comfort

comfort

Comfort is always the first priority for anyone. In real estate investment, there is the mental comfort of buying physical assets that one can feel, wherein mutual funds, we will be investing in funds which one common man will not be comfortable to manage without any prior knowledge.

There will be one more kind of comfort of doing mental accounting about tax saving in real estate investments. The happiness of not deducting taxes from Salary due to loan funded real estate investment.

  • Facts about Real Estate Investing

The real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13{67ce74ea29cb3842281e10a17b6bc9b0a76f5186003460eea2ff96ae3842e2c1} to the country’s GDP by 2025.

facts

Indian real estate sector has witnessed high growth in recent times with rising in demand for office as well as residential spaces. Real estate attracted around Rs 43,780 crore (US$ 6.26 billion) in investment in 2019.

Housing sales reached 2.61 lakh units in 2019 across seven major cities.

Reference: ibef.org

 

  • Risks in Mutual Funds investing 

Market Risks:

In simpler terms, it is the risk you take by investing in the stock market. In market risk, your investment may suffer due to unfavorable market conditions.

Risk of Lower Liquidity:

This could happen due to many reasons, such as interest rates increase, changes in currency value, etc. In financial sectors, liquidity refers to the ability to sell the asset quickly to arrange funds.

Interest Rate Risk:

Interest rate risk is the potential for investment losses that result from a change in interest rates.  As both are inversely related to each other, If interest rates rise, for instance, the value of a bond or other fixed-income investment will decline.

After reading these simple points will surely clear the concept of real estate investing. 

Real estate investments are typically safer than other investments, but that doesn’t mean they are totally risk-free. You should have expert advice before making any big decisions.

Reach to OwnersTown on +91 96202 46980 for more details and expert advice or simply connect with us on WhatsApp for more details. We will be always there to assist you.