Real Estate Vs. Fixed Deposits As Investments

Real Estate Vs. Fixed Deposits: For long-term capital growth, an investment portfolio should contain a balanced blend of low-risk, medium-risk, and high-risk assets. To assist you in deciding which investment strategy is ideal for you, compares fixed savings (FDs) and real estate investments.

Are you looking into alternatives to maximize your financial returns? So, if you have the patience and desire a safe financial option, a fixed deposit (FD) is a desirable choice. On the other hand, investing in the real estate market should be taken into consideration if you want to own a commodity that will also increase in value over time. presents a comparison of fixed savings investments and real estate financing.

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Real Estate Vs. Fixed Deposits: Here is a comparison between real estate investment and fixed bank investments.


Permanent Deposits

Financial instruments known as fixed deposits typically give an interest rate that is greater than a typical savings account. A set rate of interest is paid on the invested amount in an FD, and the money is sealed in for a specific amount of time. Because an FD has limited liquidity and a lock-in time, banks give a high rate of interest.

A somewhat more recent product called Flexi-FD, however, enables individuals to choose between the interest rate of an FD and the cash of a savings account.

In India, public sector banks typically charge interest rates on FDs in the range of 4 to 7 percent. Some institutions in the private sector and abroad offer greater interest rates of up to 8% annually. An FD can last anywhere from seven days to ten years.

For many people, a regular stream of interest from an FD is preferable to an investment in stocks and mutual funds because it ensures a regular and set rate of interest. However, the legislation requires that income from FDs be taxed.


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FDs’ taxability

If a client receives interest that surpasses Rs 10,000 in a fiscal year, the bank will charge a 10% tax on the total sum of interest. It’s referred to as “Tax Deducted at Source.” (TDS). However, the tax is genuinely imposed based on the FD holder’s income tax bracket.

FDs offer a steady interest rate on the money placed with the bank, but it also relies on the investor’s risk tolerance and financial objectives. Let’s examine the possibilities for business and profit in the real estate industry.


Fixed Deposits: Real estate as a potential business

Up until a few years ago, real estate investment yields were skyrocketing, and it was widely believed that property values would rise steadily. The recent drop in demand, however, has shattered the bubble and made it one of the industries with the slowest present growth rates.


Fixed Deposits : The following are things to keep in mind if you plan to engage in real estate:

Compared to an investment in FDs, purchasing a home or a piece of land requires a comparatively bigger amount of money.

  • In addition to the price of the property or apartment, additional costs like stamp tax, registration fees, and upkeep fees raise the overall cost.
  • Prices may increase more slowly than anticipated, particularly during periods of general economic decline.
  • Before making the purchase, you must have the property assessed in line with market prices.
  • Other elements, including location, accessibility, and facilities, among others, also significantly influence the price growth of the property.
  • You can earn money by investing in a business or renting property.
  • Sometimes, only 2–3 percent of the rental revenue is produced.
  • A house cannot be swiftly sold because it requires a significant sum of money.


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Fixed Deposits : Choosing between a set investment and real estate

Let’s use an illustration to better comprehend. You must pay an EMI of Rs 1 lakh per month for the next ten years in order to purchase a piece of property or condominium worth Rs 1 crore. You must make between Rs 2 and Rs 3 lakh per month to qualify for that. This translates into extensive financial preparation and a high possibility for income.

However, you do not require a sizable sum of money to establish an FD. It is possible to do it for as little as Rs 20,000. FDs also have a consistent rate of return.

Investment potential of both financial instruments. “Traditionally, individuals with less risk potential tended to choose FDs over everything else. With the advent of “Flexi FDs,” individuals can now profit from FDs and savings accounts simultaneously. However, after a certain point, people become hesitant to engage in real estate due to the dire real estate market circumstances. People shy away from the real estate sector due to its slow development and abundance of fringe variables. However, FDs offer a consistent interest rate and are suitable for almost every revenue category.

To put it simply, picking between the two instruments can be a little challenging. The investor may choose real estate business if both the investment and risk possibilities are significant. However, FDs are a superior choice if a low but consistent interest rate is sought.


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Disclaimer: The views of this expressed above are for informational purposes only based on the industry reports & related news stories. does not guarantee the accuracy of this article, completeness, or reliability of the information & shall not be held responsible for any action taken based on the published information.
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