When it comes to investments, both real estate and mutual funds are good options and may sometimes complement each other. However, it’s imperative to analyse the risks and benefits attached to each of them, which will help you make the right choice. My brother has been investing in mutual funds and he has also recently invested in some real estate properties. I have heard a great deal about both of them from him, so let me share everything I know.
Real Estate Vs Mutual Funds: Which is Better?
One thing I learned about mutual funds is that it offers automatic diversification by investing in a wide range of assets, which reduces the risk of any single investment negatively affecting your portfolio. Real estate, on the other hand, can offer significant returns on investment, especially in growing markets. Let me also share some significant differences between mutual funds and real estate to help you comprehend better.
Real-Estate | Mutual Funds |
It is a physical asset | It is market based (stocks, bonds, etc) |
It takes time to sell (low liquidity) | It sells quickly ( high liquidity) |
The initial investment is higher | The initial investment can be as low as Rs. 500 |
The diversification is low (concentrated in single property) | High diversification (spreads risks across assets) |
As you can see, mutual funds are more subject to market risks because you have less control over the management of your funds. The performance significantly depends on the fund manager’s skills and market conditions. The real-estate market, on the other hand, is impacted by factors like economic downturns or changes in interest rates.
Thus, the choice between the both will be based on how they align with your financial goals and risk appetite. If you’re looking for a steady and regular income with some tax benefits, real estate is the right investment for you. However, someone looking for diversification and liquidity might choose mutual funds over real estate.
I hope this helps.
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Authors Of The Question
Should I go for Real Estate Investing or Mutual Fund
Kiranreddy
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1 Answers
4 Year
2020-08-29T11:41:50+00:00 2024-12-30T10:09:13+00:00Comment
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