Though most of the people tend to earn money out of different investment avenues each of these has their own pros and cons which one must analyze before venturing into it. While at times due to negligence people tend to lose their money or end up with meagre returns.
Thus, simply investing does not help rather a thorough research and analysis before the investment is a must for getting good yields. While we have multiple options in terms of investing such as Mutual funds, Real Estate, Gold etc.
Investing in Mutual funds over Real Estate or Gold
Let us have a look at the comparison between investing in mutual funds over real estate or gold and how investing in Mutual funds is more beneficial in terms of returns over others:
- Returns beat Inflation:
- Mutual Funds: Mutual Funds yields, in general, are able to beat the inflation with their promising nature and performance. All you require to do so is to choose a good portfolio of investment.
- Real Estate: Real Estate yields often are not able to beat the inflation significantly as it depends upon the location of the property primarily. The real estate returns being able to beat inflation happens only at selective places and mostly it fails to do so in general.
- Gold: Although Gold yields are able to beat the inflation, it is not effective if the time horizon is elongated. So, in long-term Gold yields also fails to beat the inflation effectively.
- Diversification of Portfolio:
- Mutual Funds: Yes, diversification of the portfolio is possible with investment in different types of securities.
- Real Estate: No, diversification of the portfolio is not possible in this type of investment.
- Gold: No, diversification of the portfolio is not possible upon investment in Gold.
- Taxation on Returns:
- Mutual Funds: Mutual funds investment has tax benefits if you remain in the same portfolio over a year.
- Real Estate: Yields from Real Estate is taxable after indexation.
- Gold: Gold investments have the tax benefit of 3 years for physical gold and 1 year for ETFs (Exchange Traded Funds). But since Gold is very volatile keeping a long-term investment is difficult.
- Mutual Funds: Mutual funds are liquid.
- Real Estate: It takes at least a few weeks to liquidate a Real Estate investment.
- Gold: Gold investments are highly liquid.
- Hidden Charges:
- Mutual Funds: Mutual Funds don’t have any hidden charges apart from the transaction fees.
- Real Estate: Real Estate has several hidden charges such as maintenance of the property, registry and stamping charges etc.
- Gold: Gold too, have hidden charges in its maintenance in physical forms such as locker fees and security.
- Systematic Investment:
- Mutual Funds: Mutual Funds have the option of Systematic investment in the form of SIPs (Systematic Investment Plans).
- Real Estate: Real Estate investments have no such provision.
- Gold: Gold investments also have no such provision.
Conclusion: Above are the benefits of investing in Mutual Funds over Real Estate or Gold. Happy Investing!!!