Trade and investment were aspects of the civilized world prior to the advent of banks. The majority of people would purchase land or property, then lease or sell it to earn profits. In spite of the fact that the advent of banks and other investment options emerged, the majority of people choose to Invest in Real Estate because it is a fantastic opportunity to earn a steady income and generate wealth. Imagine this scenario: If you purchase a house that you lease out to others, you begin making a monthly rental. After about 10 or 15, when you decide to sell the property, the cost will have risen, giving you the opportunity to receive a lump sum.

A bank generally takes deposits from customers at a particular rate of interest. They also offer credit to prospective clients at higher rates and thereby earning them a margin. It doesn’t make investments with its own money. It takes the money of clients of fixed deposits and then lends it to the borrowers. As time passed, fixed deposits were a popular investment choice for many because they were easy to use and the return was assured by the bank.

Some basic understanding

The term “real estate” refers to a tangible property that includes land as well as everything that is fixed or permanently attached to it. These can include fences, buildings, trees, roads, etc. In simple terms, buying real estate properties involves purchasing land, along with all the natural and artificial structures that it has. If you decide to make an investment in real estate, you can purchase residential, commercial as well as industrial buildings. It is also possible to purchase an area of land that has no buildings on it. However you could also put your money in fixed deposit options offered by banks. Each bank offers these kinds of investment products, with a fixed rate of return available for a certain period of time. When you make a deposit into these instruments and receive return as per the terms you agreed to when you make the deposit.

Real Estate Investing vs Fixed Deposit

Both fixed and real estate deposits have been the preferred choice of investors for years. It is vital to be aware that both investments are geared towards the various requirements of investors. Let’s examine some of the main distinctions between the two.

Assured Returns

If you are an investor it’s crucial to not be a victim of misconceptions regarding the return. Many think that the value of property will always increase. However, the market for property is subject to changes and fluctuations that aren’t always predictable because they are dependent on a vast range of variables. In the long run you are sure to get decent returns. But if the market is falling, you might need to wait a bit longer. Real estate investments can give the opportunity to earn some impressive yields. However, if you’re looking for guaranteed or secure returns that are guaranteed, a fixed-deposit is the best option for you. If the bank does not close and you are not eligible for the interest that was promised.

Minimum Amount of Investment

But using Real Estate Investment Trusts (REITs) and Real Estate Crowdfunding Platform, you can take part with the property market without having to purchase an investment property, and thus not putting your finances in a bind.

Post-investment expenses

A lot of people think the investment in property is an ongoing cost. In the beginning, you must pay a substantial amount of money and pay back the loan in order to purchase the property. In addition, you have to continue spending money on the property to keep it in good condition. It as an investor, you must recognize it is your sole investment option that gives you the possibility of increasing an investment’s value through improving it. Instead of just waiting for your property to need repairs, if you look after it on a regular basis and strive to improve it the value of your investment will grow dramatically.

Easy to invest

What can you do when you wish to open a fixed-deposit? You sign in to your bank account on the internet and make a deposit. It’s easy.

What should you do if you are looking to invest in real property? You study the market, the neighborhood infrastructure, the area, and numerous other factors before you decide to purchase the property to invest in it. Doesn’t that sound like a lot of work? It is indeed. But, as we said previously, all these efforts pay dividends. When you invest in real estate you have the chance of earning rental income each month, while your property increases in value. It’s an ideal win-win scenario.

Thus, it is possible to conclude the investment in fixed deposit and real estate come with each their own pros and cons. Therefore, it is essential that you are working on your financial plan prior to exploring investing options. Fixed deposit options offer the security of a guaranteed return, but the return rates are usually low and are not in line with inflation rates, too. If you want to build wealth, investing in real estate is an excellent option. If your financial goals demand that you play it prudent even though the rewards aren’t great, then you should stick with fixed-interest deposits. If you are on the agenda and you want to invest in real estate properties is a must.

Conclusion

Be aware that as an investor, you should be aware of your goals in terms of financial planning along with your risk tolerance and the time-frame for investing. These three elements will assist you in determining the types of assets you could invest in and help you achieve your objectives. Consult with an investment advisor and seek his assistance in creating an investment plan. Your financial stability is contingent on the speed at which you develop and execute your plan for financial success.