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Real Estate Investment vs SIP: Which One Should You Choose?

Buying an elite property in a posh area, or piggy banking your money via systematic investment plans? Which one is a better deal? While both seem to be feasible options, it would be wiser to first understand the nature of such financial instruments and then match them with your financial goals.
April 18, 2024

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To endure growth and financial stability in the long term, investment is imperative. Setting aside a proportion of our savings into a financial instrument helps us prepare for future expenses. It can act as a saviour in any unforeseen circumstances. A majority of public deals in some or the other kind of investment mediums. Out of these gold, real estate, mutual funds, and the share market are some of the prime investment modes. However, the real struggle is how to ensure which type of investment is worthy!  You can consult a Cube Wealth Coach or download the Cube Wealth App.

Is it Real Estate or SIP?

Let’s compare the two most popular modes of investments i.e. Real Estate and SIP.

It is important to consider some facts before choosing the medium of investment. Firstly, before investing anywhere one should always consider the purpose behind the investment. Depending upon the reason, the type of investment should be selected. The next vital aspect falling in line is ‘inflation,’ which is certain to rise at its own pace. Hence, one should invest in such a mode that can eventually beat inflation and still fetch good results. This implies that the financial instrument selected for investment should perhaps yield above 6-7% of annual returns.

SIPs vs Real Estate  

  • The attribute of compounding is only possible with mutual funds where the investor can get interest over interest. This is difficult in the case of real estate investment. 
  • It is much easier to manage and track mutual fund investments with a single click.
  • Tracking and management are not so simple in the case of real estate investments. It requires multiple stages of management and more physical records than digital ones. 
  • Additional expenses on real estate investments sum up to be higher than the original amount. This happens because of the additional expenses paid for stamp duty charges, maintenance charges, registration fees, etc.
  •  Mutual funds do not have any such extra charges. 
  • The investments in SIP can be quite systematic. The investor is free to choose the time period for depositing money in terms of weekly, monthly, or quarterly basis. 
  • In real estate investments, it is either a complete down payment or else, it can be according to numerous instalment payment procedures. 

Is Real Estate Not A Worthy Investment Choice?

The above comparison does not infer that real estate investments are a bad choice. It is to be noted that real estate investment has its own merits. Investing in any commercial/residential property is a solid investment asset that provides a high rental income. Also, according to the nature of the property, it may be used for self-consumption as well in the future. In addition to this, property rates have gone skyrocketing in the past decade. Hence, it is wiser to invest in property at a prime location to receive multiple benefits from it. Apart from receiving a regular income in the present, there is a future assurance of having a property in the owner’s name that can either be used or sold out at higher rates.  You can consult a Cube Wealth Coach or download the Cube Wealth App.


  • While both investment instruments have their own advantages and disadvantages, investing in a mutual fund is a lot more secure. 
  • Mutual funds are a worthy investment source currently that cultivates a healthy habit of making regular savings through SIP. Though investing in mutual funds has its own limitations subjecting to market and other risks, the level is minimum.
  •  SIP is a budget-friendly investment feature that is open to every customer. It is financially flexible for the customers as the investment cycle starts with a minimum amount of 500 rupees on a monthly basis. 
  • In the case of real estate investment, you need to have a bigger bank balance. Despite that, investing in real estate helps in the diversification of the investor’s portfolio. 
  • If the property is located in a prime area, the rental income would be even higher.
  • Taking a home loan for purchasing a house/property is easy these days. 

Therefore, investment choices should be made wisely by considering individual requirements. 

Frequently Asked Questions - 

1. Is Real Estate investment a good decision?

If you want to stay in a place for longer than a decade, investing in real estate is an ideal option. Additionally, it will relieve you of the rent payment obligation.

2. Which SIP is ideal for a three-year investment?

For a three-year period, Equity Linked Savings Scheme is a great investing choice.

3. Real estate or mutual funds: which is better?

In comparison to investments in real estate, mutual fund investments produce larger returns.  You can consult a Cube Wealth Coach or download the Cube Wealth App.

Real estate returns can range from 7% to 11% annually, but mutual funds give returns that can range from 14% to 19% annually, depending on the type of investment.

4. What does the real estate 2% rule mean?

According to the "2% rule," an investment property's monthly rent should be 2% of the purchase price or more.

Image source - Quora 

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When making this decision, it's essential to consider factors like your financial goals (e.g., wealth accumulation, regular income), investment horizon (short-term or long-term), and risk tolerance. A balanced approach might involve combining both real estate and SIP in mutual funds to create a diversified portfolio that aligns with your objectives.

Ultimately, there is no one-size-fits-all answer. It's advisable to consult with a financial advisor who can provide personalized guidance based on your unique financial situation. By carefully assessing your goals and preferences, you can make an informed choice that suits your investment strategy and helps you achieve your financial aspirations.

Team Cube

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