The world of investments has expanded by leaps and bounds such that investors today are spoiled for choice — as to what securities they ought to invest in. Among the many securities on offer, you may wonder whether you even want to invest in the markets or whether buying an alternative asset would be more appropriate. It is within this space that the real estate investment vs mutual funds argument arises. Read on to understand covered the differences what’s the right investment for you. Also, learn about the best real estate mutual funds in India.
Mutual fund investments differ from real estate across the following categories that have each been explored in the table below.
Still can’t decide about real estate vs mutual funds? Try mutual funds that invest in real estate investment trusts (or REITs), and real estate operating companies. REITs exist in the form of associations, trusts or corporations and directly invest in real estate via properties or mortgages. These trusts take on three major forms i.e., hybrid REITs, mortgage REITs and equity REITs.
Get the benefit of liquidity, protection from inflation, and a stake in real estate without getting into the nitty gritty. Now that’s getting the best of both worlds!
Yes, real estate mutual funds invest in real estate via real estate operating companies and real estate investment trusts.
Beginners who do not have ample sums of money to invest in real estate on their own can begin by investing in real estate mutual funds or even real estate investment trusts. Smaller investments are permissible here. If mutual funds do not interest you, then it is advisable to first read up thoroughly about the real estate investment process before investing.
The 5 per cent rule states that investors shouldn’t direct more than 5 per cent of their portfolio’s funds into one investment.
As far as real estate investing goes, you should multiply the value of the property in question by 5 per cent and then divide the resultant number by 12 to understand the breakeven point. Should the monthly rent applicable to a property of the same kind fall below the breakeven point, it’s financially viable to rent it. Otherwise, if the rent surpasses the breakeven point, buying the property makes more financial sense.
Yes, some mutual funds pay dividends if the assets invested are in dividend-generating stocks.
The three best REIT mutual funds in India as of 2023 are -
2.PGIM India Global Select Real Estate Securities
3.Mahindra Manulife Asia Pacific REITs
Real estate investment trusts or REIT mutual funds let investors invest in large scale real estate projects. There are multiple REIT mutual funds in India for investors to hop on.