Real Estate vs Mutual Funds vs Stock Market

Posted in Personal Finance - 28 June 2010 - 1 comment -

Question: I am confused with investment and returns of Real Estate, Mutual Funds and Stock Market.

I am looking for 3-5 Years Investment option, I would like to get suggestion where shall I investment money? I stay in Mumbai

For example, If I want to invest 10-12k per/month. What is the best option from following?
1. Take a loan and buy some property of 12-18 Lacs at mira-road or say in virar? And Pay EMI of 10-12k per/mo?
2. Gradually invest in Mutual funds through SIP? say 10-12k /mo?
3. Gradually buy stocks of good companies like reliance, and some other top FMCG companies?

What is the expected return from all of these in next 5 years, which is best?
Answer:

One Response to “Real Estate vs Mutual Funds vs Stock Market”

  1. admin on June 28th, 2010 5:14 pm

    I think a well balanced mutual fund SIP would be the right option for you. You will find funds that have 50% debt and 50% equity and invest in them monthly. Going by averages, you should be able to make about 10-12% annually, if not more. Again, since this is linked to the market, there are no guarantees.

    The other option of investing in real estate: If you get a fixed loan for say 9% and you are “reasonably optimistic” about making more than 9% from your surplus 10-12K per month, then this could be a good option. Plus, when you take a home loan, you can avail of the tax benefits on the interest for your loan amount. Assuming the real estate prices would keep going northwards, you should be in a good position in a few years.

    Your third question about direct investment in stocks: if you are not a real analyst, you may want to leave the decision of investing in Reliance or HLL or Tata Motors to the “experts”. I am not saying they are any better than you, but they do have the data and experience required to take such decisions. They are paid to do that. If the stock values go down, you at least have someone to blame :)

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