Table of contents
4 reasons why real estate is better than Mutual funds investment:
· Better returns
· Less risk and tangible
· Immense growth on the principal investment
· Biggest taxer saver
Real Estate is a segment of assets that include land and buildings, and anything that is permanently attached to it. Real estate in India is regulated and controlled by the Real Estate Regulatory Authority (RERA). Whereas Mutual Fund is a professionally managed investment fund that pulls money from different investors (small and big) and invests the money in securities like stocks, bonds, etc. Mutual funds in India are regulated and controlled by the Securities and Exchange Board of India (SEBI). It is seen over a period by various researches that real estate has taken the upper hand when compared with mutual funds as an investment option due to various reasons. India along with the whole world is reeling under the economic sucker punch landed by covid-19. The full economy has taken a hit by this covid-19 and others; India checked a few facts and decided to shut six mutual funds overnight as they were just too risky. Since the crash, the lockdown has been hard and fast, which has made money go back to old trusted good real estate as the best option to invest their money in commercial or residential as this is the asset that never makes the people lose money from a safety point of view.
Reasons for the real estate to be a better option than mutual funds are as follows:
Real estate provides more return in comparison to mutual funds if we consider a long span of years. It is true because of urbanization around the country; people are convinced that in the long run, the cost of the investment property will grow. Though the returns of the mutual fund investment are much greater initially due to market volatility it is seen that it averages out and thus this directly affects the return generated by the mutual funds. Also, mutual funds are facing a tough time now.
Less risk and tangible
Investment in real estate is considered as less risky by the investors than mutual funds because it is a tangible asset the people can see, feel and touch the asset that you have invested in as opposed to an intangible asset i.e. mutual fund, which is an asset just on the documents. The COVID-19 economic crisis in the world has once again taught us the importance of owning a safe home or a real estate asset. Sometimes mutual funds are so risky that they by regulatory directives have to shut down immediately that we have seen a few days back in this covid period.
Immense growth on the principal investment
Due to economic slowdown the growth & return on any kind of investments are slowed down. But still, it is seen by research of the data of a few decades that the growth rate of investment in real estate is much higher than the growth rate of investment in mutual funds. Even if a person takes a home loan and pays EMI, by the time the tenure ends this asset will see at least four to five times price escalation. Real estate will never be an unsafe and bad investment. You have to wait for a certain period to get its benefits but with financial instruments like mutual funds, they are sold based on quick and easy profit generation. In fact, many people who could have afforded a small plot of land or a small home invested their money in things like bitcoin and mutual funds assume quick profit, and today, they will never get their money back. They probably lost their hard-earned money to gain quick profit. If we differentiate real estate with mutual funds in terms of return of investment it is just the opposite as real estate requires waiting time for it to become better and will provide some profit. Real estate gives the person a consistent return.
Biggest taxer saver
It, by default, is one of the biggest tax savers than any other investments. Generally it is seen that investment made in real estate is funded by taking home loans. Under income tax rules section 80C and section 24A provides deductions up to 3.5 lakhs maximum in total as tax deductions on Principal repayment and payment of interest.
Any real estate property purchased by a person beyond the first one-in which they stay, can be concluded as real estate investment for that person. Thus, if you are thinking & planning for investment it can be conclusively said that real estate is a better investment than mutual funds owing to better returns, less risk and immense growth on the principal investment. Real estate can provide the investor with safe and consistent return,which is the need of the hour at present mainly.