Mutual Funds VS Real Estate Funds

Choosing between mutual funds and real estate funds have always been a conundrum. While both the kinds offer the same level of risk, one is more preferred than the other. The reason is people do not agree with the fact that they may lose money in the real estate business too. Unfortunately, they have somehow developed a high level of trust in the asset class and are not open to change.   

There is a certain amount of risk involved with mutual funds. People are scared about losing the money and do not want to take the chance. On the other hand, when it comes to real estate funds, people have the satisfaction of possessing an asset in a tangible form and the constant enhancement of demand created by the economy has also encouraged it.  

Both mutual funds and real estate funds are considered to comprise of the same amount of potential and are affected in the same way when there is a change in the economy. Which means, during the boom period, both will offer the same sky-high returns, and during the recession, a substantial declination in the returns will be reflected. Below mentioned are a few reasons that will tell us why real estate funds are more preferred than mutual funds.  

In contrary to the mutual funds, real estate funds have a lower liquidity which stops people from leaving in spite of their discretion. But when it comes to mutual funds, they have a high liquidity which freaks people out. When the market is going fine, the prices rise and people start buying, but as soon as the market witnesses a slump, the investors start redeeming their investments even at a loss.

Before making any investment, we first try to understand the various factors surrounding it. When it comes to real estate funds, people can fathom it. Whether it is a meeting or a gathering, people have the rates of per sq. feet on their fingertips. But mutual funds are a little complicated than that for people to comprehend. There can be times when interpreting the correct financial ratio will be very difficult and people may fail at mutual fund investing miserably.   

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