Investment is often something that makes us a little more conundrum. Where should we invest our hard-earned money? How should we grow our wealth? These can be described as the most prevalent problems in society. Among investors, fixed deposits (FDs) and real estate investments are the most popular investment options in their ministries. This article addresses the pros and cons of fixed deposits and real estate investments to help you decide what works best for you.
Fixed deposits are low-risk investments that earn you interest over a fixed period of time – all you have to do is park your money with a bank. Even so, an FD investment can be risky if you put your money in the wrong place.
Advantages Of Fixed Deposits
1. Guaranteed Returns
Unlike the real estate market, fixed deposits are volatile.
2. Higher Interest Rates Than Savings
The other advantage of fixed deposits is that they offer higher interest rates to investors than average savings.
3. Make Use Of Fixed Deposit Promotions
Most banks offer good promotional interest rates on fixed deposits. So, before choosing where to put your money, make sure you have done some in-depth research on the space and have a full understanding of its different rates.
Disadvantages Of Fixed Deposits
1. Fixed Deposit Rates Are Steady But Not Always Attractive
One major disadvantage of fixed deposit interest rates is that they are significantly lower than other investments, such as real estate and stock market trading.
2. Cannot Easily Access Your Funds
Since your money has been locked with the bank for years, you do not have the flexibility to access your funds easily. Moreover, if you decide to withdraw your money before the due date, you end up paying a penalty or defaulting on the interest earned.
With the right advice at the right time, investing in the property market may give you stability and a better return than a FD. However, to invest in the property market, you need to have sufficient capital. Buying real estate can be a good move if you do it right. If done right, they can create tremendous wealth in the long run.
Advantages Of Property Investment
1. It Offers Stability
Like fixed deposits, real estate investment is a relatively stable investment compared to more volatile investment options such as the stock market. A steady monthly rental income helps homeowners cover their expenses when looking for prospective buyers.
2. Your Property Value Can Rise
Unlike fixed deposits where you earn a fixed interest rate over a period of time, the value of your real estate investment may increase depending on the market situation.
3. Taking Advantage Of Tax Benefits
Another thing that makes real estate investment attractive is the associated tax breaks.
Disadvantages Of Property Investment
1. Cannot Sell It Off Quickly
With fixed deposits, stocks, and other types of investments, it is easy to liquidate your assets quickly. Property, on the other hand, takes longer to sell and also depends on existing market conditions.
2. More Unsteady Than Fixed Deposits
Even if fixed deposits receive a fixed interest rate, property investment may vary in price depending on the area in which it is located.