Real Estate vs FD which is better for investment?
Investment experts advise that your investment portfolio must be a balanced mix of low risk and medium risk investment options. The rule of thumb in investments are lower risk investments get you lower returns and you are likely to get high returns from high risk investments. Nevertheless, most of the time low risk investments provide you stability and guaranteed returns. Depending on how much risk you are willing to take and what kind of flexibility you want, you must choose the investment option that is right for you.
For quite long, fixed deposits (FD) and real estate have been among the most popular investment vehicles. However, they are dissimilar products and cater to different kinds of needs of the investors. Depending on whether you are planning for a short term or a long term investment, you must choose between these two options. Here are the considerations you must note while choosing between FDs and Real Estate.
Assured returns in FD
Most people imagine that property prices will always be on the rise. Once upon a time, property prices in India did shoot up dramatically. It is highly possible that the market will stagnate or prices might drop at some times. At the same time, if you wish to invest with large gains in mind, real estate has more to give you. If guaranteed results and a risk free investment combined with high levels of liquidity is your expectation, it is better to invest in a FD scheme.
Profit and affordability
People sometimes use all their savings or even take a loan to buy property. This is quite understandable. But, make sure you will be able to sell the property for a profit. It is important to figure out the imbalance between the purchasing power and the skyrocketing rates of real estate in the country. For instance, the price of a 1BHK flats in a top city in India is around 2 crore. If you need to take a 20 year loan to buy this flat, you have to pay EMIs that will be more than a lakh per month. This will mean you must earn between 3 to 4 lakhs per month. Hence when trying to invest in real estate, ask yourself if you can afford it. In case of FD, you need not ask these questions. You can open up a FD account with as less as Rs 20,000 and earn stable returns on it.
Additional expenses in Real Estate
Besides the payment for the apartment or property, you will have to manage the other expenses while investing in real estate, namely the stamp duty, ownership titles, registration charges, maintenance charges for the property and others. In some cases, the rate of returns guaranteed from
Conclusion between FD vs Real Estate
Comparing between real estate and
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