Real Estate Vs Mutual Fund Investment: Which one gives better returns?

There are many of us in the market who feel very comfortable with the investment idea in the form of buying a tangible asset on which you can have a full control. There are many of us who take it as less risky and hoping for the unmatched and higher returns on any asset class. There are many of us who personally seen dramatic growth on real estate investment. The demand of properties of real estate Durham is always growing up in the market because the value is substantially growing up. The rate of properties can hardly been dropped drastically. Mostly real estate always witnesses appreciation on its value. Hence, real estate has become an obvious investment idea. But lack of funds is the only problem one cannot invest in real estate.

On the other hand, there are different beliefs for mutual funds among people. They think mutual fund investment as gambling because returns from mutual funds are comparatively lesser than real estate. So, what is the truth? Is mutual fund actually a best option than real estate? In this article, we will focus on these two parameters to know about the returns, risks and fact behind the scene of investment.

Returns from real estate and mutual fund investment

Let us clear it on the basis of an example. Suppose a property bought at $27450 in the year 2000 and the same property is worth around $137000 today. It means it has given the growth of around $110000 in just 12 years. Isn’t that fantastic idea? To be clear, let’s check the total rate grown mathematically. As we all know, the usual bank deposits only give @9% per annum. Hence, in order to find the rate of property rise every year, it can be calculated on Compound Annual Growth Rate (CAGR).

                                                                                    

On the basis of this formula, the overall growth of property is at the rate of around 13% per year during the period from 2000 to 2013.

When it comes to return on mutual fund investment, suppose one had invested around $25000 in any plan for the same period, than the return he would get around $236000 at the rate of around 18%.  

In this way, the equity funds may give higher rate of returns as compared to real estate when it comes to compare both of them in long term.

Risks with real estate and mutual funds

Well, a matter of perception is that real estate investment has less risk as compared to equity mutual funds. As a matter of fact, both mutual funds and real estate mainly depend upon the overall economy as the category of asset. Suppose the GDP has been grown up by 8%, then you may expect the overall growth in real estate would be 13 to 14 percent and growth in equity funds is around 15 to 17 percent in the long run.

How to plan investments?

When it comes to invest in real estate, you may ask your local Real estate agents Toronto. If you are rich, then you can try both of them. But if you are a salaried employee, you should not take loan for real estate investment.

Visit markten-pow.ca to know more about real estate agents Toronto and investment opportunities in real estate Durham.