Mutual Funds Investment Vs Real Estate Investment – Which one is better?

Most of the people nowadays are habitual of investing their money in different forms so as to make their saved money work hard to make more money. Two of the most commonly used arenas of investing money are mutual funds and real estate. Today we are going to compare the two options in terms of risks and returns.

Real Estate Investment: An Overview

Real Estate investments are like assets that give you a number of properties under your name in the long run. These are considered to be less risky and are believed to offer the highest possible returns over time.

  • Real estate investments often grow exponentially. A real estate property bought for Rs.15 lakhs in the year 2000 can be priced around Rs.75 lakhs today. This is the amount by which you can expect your money to grow when you invest in real estate.
  • There are very less chances of property prices dropping down drastically. Though, this is still a possibility which makes it very risky if the prices drop. But the chances are very less.
  • If the money is likely to grow so exponentially by investing in real estate, then why don’t all people in the world start investing in properties today?
  • One reason for not investing in real estate is the lack of funds. For investing in real estate, you need to have a lot of saved funds in hand because properties don’t come for small amount. But the thing is that not many people have such big amounts saved in their accounts that they could invest lakhs in a property that will take years to get heavily priced.

Mutual Funds Investment: An Overview

Coming to mutual funds investment, most people consider them to be very risky. It is said that investing in mutual funds or stocks is no less than gambling with your hard-earned money. Also, the returns you get with mutual funds are less when compared to what you get with real estate.

So, which one is a better option?


We perceive that real estate is less risky than mutual funds but the fact is that both real estate and mutual funds belong to the growth asset category. Their performance majorly depends on the performance of the overall GDP growth.

There are various mutual fund portals available to the public which helps them invest and build a strong portfolio.

How much amount you have to invest?

It is important to note how much saved funds do you have to invest. If you have surplus amount then you can invest in both – buy yourself a property and also buy a mutual fund.

If you are a person who lives on his salary and wants to save little amounts every month, then take an SIP in equity mutual funds.

You can also take a home loan and invest in property so that you will get a home to live in and you can pay EMIs from your monthly salary to pay off the loan. This way you will also save money on the rent you pay.

If you already have a home to live in, you can lease out your newly bought property to another family to live in or let a family live in the house on rent. In this case, you can use the money you get as rent to pay the EMIs for your home loan along with a small portion of your monthly salary (if required). In a few years the home will be yours and you can start using the rent amount for investing in a mutual fund or buying another property in the town.

Systematic investment can help your money grow over the years to come.