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Fixed Deposit Vs Real Estates

Fixed Deposit Vs Real Estates

Your investment portfolio should be a good mix of low risk and medium risk investments. Usually low risk investment is low yielding investments and high risk investments can give you high returns. Both fixed deposit and property investments have been on the list of India’s favourite investment options since time immemorial. However, they are both very different and offer investors dissimilar gains. Let’s take a look at how FD stacks up against real estate.

Whether you’re planning a short-term or long-term investment, these considerations can help you choose between FDs and real estate. Your investment portfolio should be a good mix of low risk and medium risk investments. Usually low risk investment is low yielding investments and high risk investments can give you high returns. Both fixed deposit and property investments have been on the list of India’s favourite investment options since time immemorial. However, they are both very different and offer investors dissimilar gains. Let’s take a look at how fixed deposits stack up against real estate.

Whether you’re planning a short-term or long-term investment, these considerations can help you choose between FDs and real estate.

If you are trying to choose one over the other, here are some factors to consider:

Think About the Guaranteed Returns:

People often fall prey to misconceptions that are hard to dispel. One such myth is that property prices are always on a rise. While property prices in India did reach dizzying heights once, it is possible that the market will stagnate or that prices will drop. In fact, this has happened on various occasions. If you are investing with large gains in mind, real estate has more to offer you. However, if want guaranteed returns, then choose FDs. Fixed deposits are not impacted by market fluctuations and offer a steady rate of interest over time. Even with the help of FD Calculator, you can check your final maturity amount.

Think About Whether You Can Afford It:

People often take a loan or use all their savings to buy property. While this isn't wrong, you should be certain that you will be able to sell it for a profit. So, it is important to factor in the imbalance between purchasing power and the skyrocketing prices of real estate across India. For example, the price tag for a 1 BHK flat in Mumbai is between Rs.1.8 to Rs.2 crore. Even if you take a 20-year loan to buy this flat, you will have to pay EMIs that are over a lakh. This means that you would need to earn a salary of Rs.3.3–4 lakh per month. So, when it comes to a real estate investment, the question to ask is if you can afford it. When it comes to fix deposits, you don’t have to worry about making these calculations. You can open a fixed deposit account with as less as Rs. 25,000 and earn returns from 7% to more than 8%.

Think About the Other Costs Involved in Your Investment:

Apart from the payment for the apartment or property, you have bear other costs when you invest in real estate. From ownership titles to stamp duty cost and registration charges, there is a lot to factor in. There have been instances where the rate of return generated from renting real estate has worked out to a meagre 2.5 % annually.
Fixed Deposits are more beneficial, as you can earn better interest rates. Using a simple FD calculator will help you understand the amount of money you stand to make in the long run.
 
Think About the Process Involved:

When it comes to investing in real estate, you need to do your due diligence and devote time to finding out all you can about the property itself, the neighbourhood and the infrastructure around it. It is also advisable to get your property valued by an architect or other professional to know if the price you are paying is justified. Property search also takes a significant amount of time. Understand if you can spare the time required to invest in the right piece of real estate. When it comes to opening a fixed deposit account, the process is simple. You can apply with ease online and get started.

Think About Transparency:

The real estate system features information asymmetry where the sellers have all the information and buyers can't always verify it. If you don't want to go through the hassle of verifying each claim, choose a hassle-free investment option instead. An FD is transparent and the claims made can be easily verified. You can study the approval rating on a high-interest company FD and apply, knowing that your investment is in safe hands.

Now that you know what is best for you, it’s time to plan your current and future portfolio. Ensure that an FD is part of it and apply for a Fixed Deposit with Bajaj Finance. It offers an excellent FD interest rates as well as a flexible tenor to suit your financial needs.

Want to open FD Account now? Read How to Open Fixed Deposit Account


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