FD vs Mutual Fund vs Real Estate Investment has its advantages in terms of how much you invest and your investing period. Longer the period, higher the returns.
Here is a post based on a similar question on Quora on investing money in a house versus deploying money in a fixed deposit or Mutual funds etc.
Before we get into specifics here are General Principles to follow :
So on day 1 your cash flow is -40 lacs and you have an equivalent asset. Lets analyze what have you got.
At 10 years you calculate the total value of your investment. Use a SIP Calculator to calculate value if it was only 5k standard investment it came to around 10.33 lacs all through but your investment will change as your rental income increases you can do an excel to calculate it will be let's say close 13 lacs.
So at the end of 10 years, you have 13 lacs in liquid cash + house which is possibly worth 65 lacs.
Now let's say the house is not that liquid so you want to discount the gains by 10 % as liquidity premium which essentially means the market rate is X but if you are ready to sell the asset for 0.9 X its liquidity improves multifold, so we are left with total value of 73 lacs
Here is the best way to get
Now, you can do your calculations and decide which is better Fixed Deposits, Mutual funds or real estate investments.
Yes, I too agree with your point. Real estate involves lumpsum money that one can afford only if he has surplus amount. While mutual funds allow you to invest smaller amounts as per convenience. FDs these days give very low returns after tax. So, I would also prefer to go with Mutual funds only. At least I can withdraw my money when needed. There's a hope to get better returns as well.
I'd personally choose mutual fund investments over investing in an FD, because mutual funds tend provide better returns on investment over the long return. So if an investor is willing to take some amount of a risk, they should definitely choose mutual fund investments over fixed deposits according to me. If you surplus amount of money with you, then you can choose real estate investment, but for periodic investments SIP investments in mutual funds are preferred over real estate investments.