Many people, especially youngsters, stay confused about the best investment options. The primary issue is the availability of multiple choices. Two majorly considered by the investors are listed below:
- Buying a home or any other real estate property or
- Investing in mutual funds
Moreover, the most commonly asked a question by the investors is, which is better? Purchasing a home or mutual fund investing?
The answer is as complicated as answering, which is the be buying a home or any other real estate property st flavour of ice cream? Chocolate or Vanilla? Well, it all depends on your own goals to be achieved by the investment, plus, your preference and style.
In middle class and lower-class families, buying a house or any real estate property is considered as the best option because that’s what they have learnt from their family. Therefore the fact which says, having your own house is the best thing in the world. However, this is the reason the people working in companies that give handsome package often take a home loan to buy a house.
The upper-class people are more inclined towards stock and mutual fund investing as they used to hear their parents and other adults discussing these investment options.
Does it mean the investment in a house or mutual fund is a matter of class? Not at all! It is a matter of knowledge or the environment. Thus, it is imperative to perform a thorough home loan or mutual fund analysis to choose the best option for your investment portfolio. In this article, you will get educated about the pros and cons of both the investment as mentioned above options.
1. Buying A Home
Just like any investment option, there are some pros and cons when you are thinking to buy a house as an investment plan.
Pros Of Buying A Home:
- It is more comfortable for many people as there is a tangible item coming into their hands. One can see, touch, and feel the thing, he/she is buying.
- In some countries, the rates of real estate properties always increase. In India, the prices of real estate are rapidly growing, which allures many investors to buy a home.
- One can buy a home, even if he doesn’t have enough funds. Easy availability of home loans has made it possible for almost everyone to buy a house, also if one doesn’t have all the money to buy a house.
- The government gives some rebates and tax benefits to the people that buy a house. This, further, allures more investors.
- It is easy to assure the cost one is giving for the house is the right price. One can inspect the land or home physically to ensure value over the money.
- Buying a home assures you have something worth your investment.
- You can make money by leasing the property.
Cons Of Buying A Home:
- It is more of a commodity because once you buy a home, it is less likely to get sold too fast. A majority of people are interested in a first-hand property as they consider taking a loan and of course, boasting about their lavish house.
- The house is not a single time investment. You need to keep investing in the repair and maintenance of this physical property along with the cost involved in cleanliness.
- If “The Great Real Estate Myth” is believed, in inflation-adjusted terms, the value of home hardly ever increase. It means what gets increased is inflation, which gives a sense of increased real estate property rates. Thus, it doesn’t reap any monetarily benefits.
- The interest rates on home loans are way too much. People get under debt for 20-30 years.
- The rent or tax benefits gained after buying a home is as low as peanuts compared to the total cost and ongoing expenses related to the house.
2. Mutual Funds
As you are aware of the pros and cons of buying a home, it is now time to see the other investment option, mutual fund investment. Furthermore, read on to learn about its top benefits and disadvantages.
Pros Of Investing In Mutual Funds:
- As per the mutual fund investment analysis experts, for more than 100 years, mutual funds have proved their worth as a consistently good wealth generator. It means good returns are assured.
- The investment with the careful mutual fund analysis, lets investors hold some part of the company. Consider a feeling of owning a company or being a partner of a growing company along with other investment benefits. Indeed, it is fantastic.
- One can invest in mutual funds with as little as Rs.500. Unlike, buying a home, the investor doesn’t need to get under the debt or freeze a significant capital investment in a property.
- The investors that invest time in mutual fund analysis or take the benefit of an expert, they can grow the value of money over time.
- The mutual funds can be invested for a long or short term and can be sold as soon as one wants to. It means the money doesn’t get freeze until one receives a suitable buyer. By considering mutual fund analysis investment, one can increase the chances of profit regardless of the time of buying and selling them.
- Some mutual funds offer tax benefits to investors.
Cons Of Investing In Mutual Funds:
- It needs unbiased and practical investment approach. It is hard to find in a majority of investors.
- The mutual fund prices fluctuated in the short term, and this threatens new investors.
- Some mutual fund options give meagre cash benefits, and this makes it less effective.
- To make money, one needs knowledge of a thorough mutual fund investment analysis which a majority of investor lacks.
- An investor needs to pay the fees of the manager if he/she cannot manage the same personally.
By considering all facts, it can be found that investing in mutual funds is better than buying a home. In fact, by investing smartly in funds, you can earn money that can be used to buy a house without any debt. Hence what do you think? Leave your thoughts in the comment section.
Krisha Dave is a content creator and senior marketer at Intellinvest. She enjoys reading and writing to spread knowledge to the reader.