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Author: admin, 08.09.2014. Category: Small Goals 2016

Share to TwitterA real estate agent will always tell you that, property is the best thing to invest in.
In a bid to time the market, they may take a wrong call, resulting in losses for investors.
From stocks, bonds, shares, money market securities, to the right combination of two or more of these, however, every option presents its own set of challenges and benefits.
Also keep in mind that SIPC protects investors from the bankruptcy or insolvency of a brokerage firm. Both of them have convincing arguments telling you that their respective fields are the best to invest in. In such cases, it may not be easy to justify the extra fee paid in the form of fund management charges.
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However, the bottom line is, both kind of investments have their advantages & disadvantages. A better option could be the passive funds, which cut these costs and deliver returns in tandem with the market indices as they have securities in the same proportion as in the underlying index. Under no circumstances does this information represent a recommendation to buy or sell securities.
In this blog post, we will discuss five broad categories that you can use to compare these two investment options. It offers an array of innovative products like fund of funds, exchange-traded funds, Fixed Maturity Plans, Sectoral Funds and many more.

Index ETFs are more like stocks as they have a fixed amount of units and can be sold in the secondary market. While this might depend on the kind of Mutual funds you invest in but in general Mutual funds can guarantee an ROI in a fixed range (10-15%) over a few years of time.
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On the other hand ROI on real estate can be much higher but again over a longer period of time; ROI in real estate investments can also be a little difficult to calculate as it depends on a number of varied factors. It also saves on operative expenses, such as custody cost and account statement fee, which are present in the case of an index fund.
For instance, Birla Sun Life Index fund has an expense ratio of 1.5%, while Motilal Oswal MOSt Shares M50 ETF, an Index ETF, has an expense ratio of 1%.
It would take a good 2-3 months for any deal to close in peak selling season, 6-7 months in others. Mutual Funds provide an ideal investment option to place your savings for a long-term inflation adjusted growth, so that the purchasing power of your hard earned money does not plummet over the years. Mutual funds are synonymous with liquidity (easy to dispense); real estate properties are not. Experts say that ETFs have come a long way since their launch in 2002, but are yet to realise their full potential. With low investment amount alternatives, the ability to buy or sell them on any business day and a multitude of choices based on an individual's goal and investment need, investors are free to pursue their course of life while their investments earn for them. One reason for this is that an index fund deploys money from the investor the next day while allotting units on the same day, whereas an ETF deploys the money immediately on a real-time basis.

So, in the case of a gold ETF, if an investor (usually authorised participants) wants to create new units, he will have to give physical gold. Based on this uncertainty, many people tend to invest in mutual funds.Mutual funds might seem to be the best bet after reading the above-mentioned points.
However, mutual funds and stocks tend to be volatile when the company or the economy takes a hit. Similarly, when an investor wants to redeem the units, the fund will return the underlying asset in a defined proportion. In case your investment is close-ended, it can be traded in the stock exchange, as offered by some schemes. In the case of retail investors, they can buy or sell the units in the secondary market, a mechanism that ensures the secondary market prices are very close to the NAV of the fund," says Rajan Mehta, former executive director, Benchmark AMC. However, skilful management, selection of fundamentally sound securities and diversification can help reduce the risk, while increasing the chances of higher returns over time. So, you can take advantage of intra-day volatility and buy and sell it on the basis of its real-time NAV, unlike in an index fund, which is sold and bought like any other actively managed mutual fund.

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