While mutual funds routinely invest across a bouquet of funds in order to diversify their portfolio, real estate mutual funds are more specialised. These types of mutual funds usually include within their portfolio, stocks of real estate companies. A large part of these types of investment funds are dedicated towards commercial and corporate properties, as well as residential properties. Real Estate mutual funds can either invest directly into properties or via Real Estate Investment Trusts (REITs) which are a more indirect way of investing into real estate properties.
Real estate mutual funds are generally a low involvement, high liquidity form of investment which can fetch steady returns over a period of time. They are usually the best investment plans for investors with a low budget and are looking for steady growth of their funds. These types of investment should ideally be handled by a fund manager who is experienced and can read the market very well. This is because the real estate sector can experience slumps, and it is ideal to have a fund manager who can read the signs well in advance and make provisions for the same.
India has several real estate mutual funds, which can be invested in via Finserv MARKETS which provides high and steady returns over a period of time. Investing in Finserv MARKETS allows investors to pay 0% commission fees if they invest in Direct Investment Plans which are not handled by investment managers. However, it is ideal to opt for fund managers if you required the expertise they provide.
Read on to learn about how real estate mutual funds can be the best type of investment for you.
1. Provide Great Flexibility:
Real estate mutual funds provide investors with a high amount of flexibility in deciding how much they wish to invest. This decision can be taken by investors on the basis of their financial goals and also the amount of money they wish to invest into the fund.
2. High Liquidity:
When you invest in real estate, the liquidity of the investment drops significantly as resale of property can depend on a lot of factors that are beyond your control. However, with real estate mutual funds, investors can benefit from the higher liquidity. These can ensure easy access to funds if ever investors face financial emergencies and are in quick need of funds.
3. Portfolio Stability:
Real estate mutual funds ensure higher stability in the portfolio, which could include riskier investments. Real estate mutual funds are beneficial in balancing the portfolio. Investing in mutual funds on Finserv MARKETS allows investors to switch funds based on their personal knowledge of the market, or via fund managers who study the market intimately and act upon this knowledge. Opening an account on the platform gives investors access to market insights along with summaries of their portfolio’s performance which can aid detailed decision making on the part of investors.
4. Act as a Hedge against Inflation:
Inflation leads to an increase in rent, and even property prices. As the cost of real estate increases, so does the value of the real estate mutual funds. As a result, investors can generate higher returns even during inflation, when other investments might not be performing too well.
5. Portfolio Diversification:
Real estate mutual funds are the best investment plans for investors with limited capital. Since you can invest in real estate mutual funds, whether focused or diversified, with a small amount of capital; it is possible to maintain a diversified portfolio through these funds even with very little capital.
6. An Alternative to Buying Property:
While buying property can require a significant investment, real estate mutual funds ensure that you can avail the benefits without investing such significant amounts. Not only are you investing a lesser amount, but investment in real estate mutual funds also lowers your involvement in the management of the fund.
While investing in real estate mutual funds has several benefits and is generally considered one of the best types of investment, it also has certain risks. These include market risks wherein a crisis in the real estate sector will affect the real estate mutual fund adversely as well. Rising interest rates can also impact real estate mutual funds negatively.
Investing in real estate mutual funds is among the best investment plans for investors who are not looking to invest a huge amount of capital and are expecting returns over a significant period of time. If you invest in mutual funds on Finserv MARKETS, you can easily stay updated with your fund and track its performance over a period of time very easily. You also get access to insight on the market and your fund, and can take decisions accordingly on managing your fund. By investing in a Direct Investment Plan, you can also pay 0% of your returns as commission fees and thereby enjoy maximum returns.
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