30K EMI vs 30K SIP...which is better?

Suppose I buy a flat for ₹40L in NCR region or in some similar city and my EMI comes to be 30K per month for a tenure of 15 years.
Now if I dont buy this property but start 30K SIP in diversified MF portfolio for the same tenure of 15 years, In which condition would I be better off after 15 years?
PS:- pls dont laugh if the qustion seems foolish to you😛

If you’re buying the flat for self-occupation, then both options may be considered.

However, if you’re buying the flat for investment and putting it on rent, then I think an investment into a low cost equity fund may be better.

EMIs are the opposite of financial freedom. You can always stop your SIPs but you can’t stop your EMIs.


Is this a hypothetical question or are you in this situation?

There is no straight answer to questions like this, as these are 2 different asset classes, real estate and equity, which generally has no correlation. And Indian real estate is not entirely governed, so I am not sure of the appreciation part, equity on the other hand is relatively predictable, as it has past data.

People who have invested in real estate and have seen their capital appreciate, or people who have purchased a house whose value got increased with time may say that real estate is the best bet, but people who don’t a property or land and have invested and profited in equity may say equity is best.

If you want to buy and rent it, that is another thing altogether. You can check the price appreciation of real estate in those areas and compare with equity returns, equity returns decrease with time, it is a natural process as the market matures, just like interest rates. So unless we have data for both, we cannot just say one is better over other.

Also on a different note, if the purchase is for living, then living in a house with your family is emotionally satisfying, we cannot put a price to it.

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A SIP of 30k pm for 15 years at moderate 8%(typical rate for mf, good funds might fetch you above 10%) will fetch you 1.04 crore. so you decide. still you could have searched in google and calculated yourself.

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If you can monetise the flat and beat the MF then Flat investment is better
If their are sentimental attachment still the flat investment is better
If neither of the two are fulfilled then MF is better
Just see it simply :cowboy_hat_face:


From an investment perspective, it would be sensible to do a cost-benefit analysis of both the opportunities. In case of rental property, you will have the advantage of getting a loan. In this case you need to see how much FREE CASH FLOW the rental property is generating for you plus any capital appreciation in the value of the flat. In case of SIPs, you can use any SIP calculator to calculate the value of your corpus after 15 years. The investment that gives a higher ROI should be selected.
Note that this is strictly from an investment POV and does not take into account any qualitative factors like property management, etc. The end decision should be taken as per your investment requirements.
If you already have a decent equity portfolio, then diversifying in real estate may be a good option. If not, then maybe you should first build up a decent equity portfolio and then look for real estate opportunities.
PS - If you want real estate in your portfolio, then REITs may be a better alternative than outright owning a property.

It should be 30k EMI vs 15k SIP.

Better to avoid real estate all together. You really don’t own the property till you finish with your loan. If you lost job or something happened to you , I am not sure if you are going to get property in hand or not based on insurance. That’s not same with SIP. plus they are gonna raise Interest rate which means EMI is going to increase, more chances to default, assuming you took floating rate of interest.

Having a flat does have expenses like maintenance , taxes. Expense ratio is relatively better. Renting is far worse. First yeilds are terrible. Second it can be a nightmare , tenants never value not really care. You would end up repainting , renovating your bathroom , kitchen again after they leave, deal with lot of drama over security deposit. Again expenses.

Lastly it’s way way easier to sell a MF than a flat . Real estate is not same everywhere. It’s the most illiquid asset, getting a buyer takes time, the spread is way high and no clear transparency, bribes all the way along with shady brokers. It’s not so straight like a mutual fund. Only plus point is black money but these days that’s a joke as they collect both buyer seller Pan card, aadhar card during purchasing & selling time.

Mutual fund is far better