Real Estate vs Mutual Fund: Which one to choose as an Investment

Real Estate vs Mutual Fund Which one to choose as an Investment Option?

19 Nov 2019

In today’s time, it is important to make smart investments. By investing your hard-earned money wisely, you can not only achieve financial goals but also secure your future to a certain extent. Nowadays, there are several investment options available in the market. However, as an investor, it is your responsibility to study the investment option wisely and make a choice that proves beneficial in the long run. It is always advisable to settle for an investment option that yields maximum returns and has low-risk associated with it. Below, we are going to have a look at the nuances of two of the most common investment options, i.e. real estate and mutual funds.

Real estate investment

Investing in real estate promises long term financial security. In addition to that, real estate investment also ensures a steady cash flow in the form of rental income. Depending upon your property’s location you could earn a significant amount of income on a monthly basis to cover your expenses. This passive source of income has further encouraged many people to buy a property and rent it for investment purposes.

Mutual Fund investment

Mutual funds are one of the best investment options in today’s time. Mutual fund investments are also known as goal-based investment. Mutual funds are categorized into four different types, namely, equity funds, debt funds, hybrid funds and fixed-income funds (bonds). Depending upon your risk appetite, you can opt for a mutual fund investment that best suits your requirements. At different stages of life, you may have different financial goals such as buying a house, a vehicle, managing wedding expenses, saving for post-retirement, etc. Investing in mutual funds can help you meet your financial goals successfully.

Now that you have a better understanding of both these investment options, let us evaluate both of them on the basis of different parameters. This will give you a better understanding as to which investment option best suits your needs.


Real Estate

Mutual Fund


It is often presumed that real estate investments are always consistent. However, this isn’t the truth. In many cases, the value of the property witnesses a steady decline. This significantly impacts the returns obtained through real estate investment

On the other hand, in recent years, mutual fund investments have shown comparatively better consistency and provided inflation-beating returns. If you have a low-risk appetite, you can consider investing in debt funds and hybrid funds. Unlike equity funds, debt and hybrid funds are involatile and offer steady returns in the long run.


The returns obtained through real estate investment can range from 7% p.a. to 11% p.a.

Whereas, in case of mutual funds, the returns may range between 14% p.a. and 19% p.a depending on the type of fund.

Tax Exemptions

In case of real estate investments, you can save on taxes through indexation. Indexation helps in lowering your taxes by taking into account the impact of inflation on the value of your property. However, it is to be noted that the tax exemptions offered on real estate is comparatively lower than that of mutual funds.

Both the investment options are eligible for tax exemptions. Under Section 80C of the Income Tax, investors can avail a tax benefit of up to a maximum of Rs 1,50,000 on investments made towards mutual funds.

Ways to Invest

If you wish to invest in real estate, you will have to shell a large amount of money. In order to purchase an investment property, you may also have to avail a loan

On the other hand, in case of mutual funds, you can invest small amounts or lump sum amounts depending on our financial stability.


In case of real estate, liquidity is often a time-consuming process.

On the other hand, in case of mutual funds, you can liquidate your funds and sell them through an online market through a hassle-free process.


On the other hand, mutual fund investments can be monitored online in a hassle-free manner.

Monitoring the investment can be a tedious process in case of real estate


On the other hand, the probability of a real estate investment being caught up in a legal dispute is comparatively higher. Any sort of legal dispute may hamper the returns generated from real estate investment significantly.

Mutual funds are regulated and controlled by the Securities Exchange Board of India (SEBI). Therefore, the chance of litigation is very low.

Now that you have a better understanding of both the investment option, ensure that you make the most of it and select an investment option that best suits your needs. However, it has been observed that mutual funds are a better option if you wish to diversify your portfolio and obtain optimum returns with minimum risk.

If you wish to invest in mutual funds, you can choose Finserv MARKETS for mutual funds. Free and fast account opening, easy set-up and exclusive offers based on your investment goals and risk appetite, are some of the attractive features offered by Finserv MARKETS. Online application process is yet another advantage of choosing Finserv MARKETS for mutual funds. Proper investment planning at every stage of your life can help you lead a financially stable life. Lastly, it is advisable to conduct proper research before investing in mutual funds. In case of any query, you must consider taking the help of your financial advisor to make a well-informed final decision. This can help you avoid any inconvenience in the later stage.


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