Investment is one of the simplest methods to get a passive income if you have a basic grasp of how to invest and what works best for you. Investing in real estate or mutual funds is essentially a personal decision that is influenced by your present financial circumstances, investing goals, and approach.
Investment is one of the easiest ways of generating a passive income, provided you have the basic knowledge of investing and an understanding of what works best for you. Investing in real estate or mutual funds is primarily a personal choice that can depend on your current financial situation, goals, and investment strategy. But still, we can say that the number of people investing in mutual funds is generally higher than real estate, this could be so because mutual fund investment is comparatively more affordable than real estate. And so if you are planning to make a real estate investment, you might have to set aside a large sum of money for a long time before you can invest.
But that doesn’t mean that the number of people investing in real estate is any less, as for a very long time people have associated real estate property, generally land and houses, as a good investment towards the future, and people can also invest all of their lifelong savings into purchasing a piece of land or property.
Land as an asset has always had unique importance in the history of India. Investing in such an important asset for the sake of personal use may require much of the market study. Since investments are concerned, here are the points to be considered for real estate:
Ever since the introduction of the Real Estate Regulation Act (RERA) in 2016, transparency and hold-on misconduct by the builders have been observed, opening a protected opportunity for the investors. India Brand Equity Foundation foresees investments in the housing sector of the country to be as extensive as the US $1.3 trillion by 2025. This fact is backed up by a robust increase in demands of commercial and residential realty in India with urbanization giving a new shape to the country. As a result of digitalization and transparency rising in the Indian economy, the private sectors are witnessing a surge in real estate investments.
In the aftermath of demonetization, the real estate sector has witnessed significant demand in affordable housing. It opens the gates of investments in properties to rent out spaces in the later stages. The booming money lender companies allow the home buyers to buy properties in installments with low EMIs and other freebie alternatives that can be availed from the current market. More properties and homes are an added advantage to the investors’ wealth report as the demands have shown a significant rise in the graphs of the realty sector.
What exactly are Mutual Funds?
Mutual funds investment facilitates pooling money from investors and then invests the larger amount in several investment assets such as equity & stock market, foreign securities, gold or other potential asset windows. Mutual funds are beneficial for investors who lack a larger monetary capacity for making investments or enough time for market research for other investment options.
In Mutual funds, the funds acquired from investors are managed by expert fund managers, assuring, safety under the capital market regulation of SEBI (Securities and Exchange Board of India) and AMFI (Association of Mutual Funds in India). Mutual funds are a dynamic set of opportunities for investors as it allows investment in all sizes with the lowest and highest possible investments. It also helps them become stakeholders of the investments in diverse portfolios.
Mutual funds give their investors the liberty to be actively or passively invest and manage their funds. It benefits its investors from the upper trends of capital markets. It is beneficial but the right choice of funds is a challenge. Although the market risks pertain to all the assets in the investments, the volatility in equity markets is higher than that of inflation risks. It is observed to be an aggressive but gradual process. Therefore, fluctuation in the stock market due to its volatile nature can land the stakeholders at risk of losing their value in no time.
Long-term and short-term performances
Some assets encourage long-term scenarios with bigger plans for investments. The others can achieve quick bucks in shorter spans but their risks and size of profitability may be a question. The real estate sector offers long-term assurance and higher returns in terms of investments. With the help of Non-Banking Finance Companies funding the developers, the supply-demand mismatch in the real estate sector has recovered eventually.
The study on trends of the residential real estate sector of India suggests that a realistic, mature, and steady graph has replaced the haphazard growth of real estate market growth in the country. With a span of 5 – 7 years the investors might be able to provide 10% of annual returns while perennial rental incomes from the properties will contribute much more in the long run.
Mutual funds offer opportunities for investors to invest in the long term as well as short-term investment plans. The returns from mutual funds depend on their holding periods. At times, capital gains may be obtained in only a few months. Conversely, funds invested and held for longer terms might have degraded their value owing to the volatility of the asset.