• Tuesday, November 29, 2022


Real Estate Vs. Mutual Funds – Which is a Better Investment?

By: Eastern Eye Staff

If there is one platform of investment that lets you go far and beyond- that would definitely be the mutual fund platform. Yes, this is the one place where you can explore different sectors, industries, geographies, and so much more.

Should I put my money into real estate or mutual funds? This is the first question that every investor has before embarking on his or her financial adventure. The essay will teach you everything you need to know about real estate and mutual funds investments and will assist you in selecting the best investment option.

Real Estate or Mutual Funds

Real estate encompasses the land as well as any physical property or improvements attached to it, such as buildings, houses, landscaping, and natural resources. Real estate is regarded as the asset with the highest returns, which is unrivaled by any other asset type. We believe that real estate is less dangerous since it is a tangible asset over which we have complete control. The demand for real estate is constantly getting higher, and history demonstrates that prices have always risen quickly.

As a result – real estate is known to be one of the most popular investment options among many investors.

A mutual fund receives money from investors and invests it on their behalf. The resulting pool of funds is invested in a variety of asset classes, including debt funds and liquid assets. A mutual fund is an excellent investment instrument for those who are new to investing. It charges a nominal fee to manage the funds of its investors. Mutual funds are thought to be extremely hazardous. People feel that investing in mutual funds and equities is equivalent to gambling.

Aspects of Both Investment Options

Looking at the Returns

When discussing any financial instrument, the first item to examine is the return on investment.

An average 10 year return on real estate investment is 10%. This is based on reports from multiple real estate research organizations that compared returns from India’s nine largest cities. However – the rates may differ depending on the city.

In contrast, if we look at Mutual Funds returns over the last decade, the average returns ranged from 12% to 14%. Not all schemes provided the same returns; in fact, several provided considerably higher yields. Also, mutual funds also have some of the high dividend mutual funds, which will, in turn, give you returns.

Furthermore, when we merely calculate the post-tax returns, the disparity between real estate and mutual funds is considerably greater.

How Liquid are They?

We may have a lot of assets, but they are all useless if we can’t use them when we need them.

Mutual Fund assets are particularly liquid in this respect. The units could be redeemed at any moment by clicking a few buttons, and the funds will be sent to the selected bank account within two to three business days.

The same cannot be said for real estate. Finding a buyer might take months, and in our desire to sell the house as fast as possible, we frequently fail to sell the house at a fair price. Furthermore, even if the amount required is less than the value of the house, we will have to sell the entire property to obtain the funds.

The Associated Risks

All investors are concerned about the protection of their money.

In that instance, Equity Mutual Funds’ motto is to maximize profits while limiting risk. Mutual Fund managers do not want to put their money at risk by investing in a single share. Mutual funds construct a portfolio of several equities from various companies. As a result, while there is some risk, it is greatly reduced with time.

Real estate investments, on the other hand, can be extremely dangerous during an economic downturn. The risk is so great that the home price may actually decrease rather than appreciate.

To summarize, the risks in Mutual Funds are minimized over time. However, real estate investments do not come with such a guarantee.

The Amount You Need for the Investment

Before we decide to invest our money in something, we must first examine if we can afford to do so. For Rs 500, you can begin a SIP, in which you invest a certain amount each month in a mutual fund. In comparison, your financial commitment to real estate investing is substantially greater.


Real estate investments are sometimes regarded as dangerous due to the difficulty of monitoring their success. Failure to track your investments might also lead to long-term issues if you have invested in real estate with partners. Mutual fund investments – on the other side, can be tracked online from time to time, allowing you to follow the performance of your assets. This, in turn, reduces the likelihood of any conflict or litigation.

The Taxes

Tax breaks are available for both real estate and mutual fund investments. However, mutual funds have an advantage because they are also recognized as tax-saving investments by the majority of investors. Section 80C lets you claim tax benefits on mutual fund investments up to a maximum of Rs 1,50,000. This enables investors to save money on taxes. Real estate investments could assist you in saving on taxes as well, but only through indexation. Indexation reduces your taxes by taking into account the impact of inflation on the real estate value of your property. However, the tax benefits provided by real estate are lesser than those provided by mutual funds.


Well, the bottom line comes to what your risks, goals, and various other aspects are. Only based on this could you possibly know what the best investment choice for you is. So, whether it is real estate or mutual funds, you would have to know your own sets of boundaries when it comes to investment. This is because it is your hard-earned money that you are investing with, and whatever the benefits or risks are – it is associated with it.


Eastern Eye

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