Both mutual funds and real estate are popular investment options and should be a part of your investment portfolio. Both these asset classes can yield good returns, provided you make informed choices and remain patient.
Returns on mutual funds or real estate aren’t guaranteed. While real estate yielded profitable returns between 2000 and 2010, they slumped in 2011. To ensure good returns on your real estate investment, the property's location and repute of builder plays an important role.
For instance, if you invest in a property such as Provident Square Park in Bangalore, you can expect decent returns in the long run. On the other hand, mutual fund returns depend on the chosen fund and your risk appetite. Also, the longer you stay invested, the higher are the chances of making profits.
In terms of liquidity, mutual funds hold an edge over real estate. You can redeem your mutual fund units anytime you want to, which is not the case with real estate. You might need to wait for an extended period to find the fair value for your property. Here again, the property's repute and amenities play a crucial role.
When it comes to tax benefits, only Equity-Linked Savings Scheme (ELSS) qualify for tax exemption. Investments up to Rs. 1.5 lakh in a fiscal in an equity fund can be claimed as deductions. On the other hand, real estate investments give you home loan tax benefit if you have purchased a property by availing a home loan from Bajaj Housing Finance. You can claim a deduction on both the principal and the interest.
