Nifty99000 100%

Sensex99000 100%


Real estate v/s equity – The long term story

Author: Balaji Rao/Wednesday, January 2, 2019/Categories: Exclusive

Rate this article:
Real estate v/s equity – The long term story

It’s appalling that Indian investors have by and large ignored the long term wealth creation possibilities of staying invested in equities, both stocks and mutual funds, by displaying utmost (and blind) faith towards real estate as a long term asset.

For most families it has been centuries old tradition to invest in real estate as an investment (other than self-dwelling property) and stay invested for decades; it maybe redoubtable that real estate can offer good return on investment, but should equities be ignored at the cost of ignorance?

Let’s see the performance of equity mutual funds over a period ranging from 20 years onwards; assuming Rs.10 lakh was invested and the wealth it would have created in these years.






Franklin India Prima Fund



Rs.10 lakh

Rs.8.94 crore

Franklin India Bluechip Fund



Rs.10 lakh

Rs.4.37 crore

Franklin India Equity Fund



Rs.10 lakh

Rs.5.56 crore

HDFC Equity Fund



Rs.10 lakh

Rs.6.17 crore

Aditya Birla SL Equity Hybrid '95 Fund



Rs.10 lakh

Rs.7.18 crore

Reliance Growth Fund



Rs.10 lakh

Rs.10.28 crore

Reliance Vision Fund



Rs.10 lakh

Rs.5.08 crore

HDFC Tax Saver Fund



Rs.10 lakh

Rs.4.96 crore

HDFC Top 100 Fund



Rs.10 lakh

Rs.4.55 crore

ICICI Pru Large & Mid Cap Fund



Rs.10 lakh

Rs.3.11 crore

Aditya Birla SL Equity Fund



Rs.10 lakh

Rs.6.80 crore

Note: Schemes have been mentioned in order of launch; NAV to NAV lump sum performance considered on CAGR basis since the launch of the respective mutual fund schemes; valuation as on 02.11.2018

These dozen equity mutual fund schemes are a mirror to the possibilities of equity as an asset class over long term. 

Significant differences between real estate and equities are – (a) liquidity (real estate is illiquid while equities are highly liquid asset); (b) entry level investment amount (real estate requires huge initial investment while equities requires very small entry level investing); (c) ease of disposing (real estate cannot be disposed-off in small portions while equities can be sold in small quantities); (d) taxation (real estate is high on taxes and takes time for actual realization of gains after all the formalities as prescribed by the Income Tax department while the same is simple and easy to understand with equities); (e) legal aspects (real estate requires a lot of legal hassles while equity has none of those hassles).

One should believe in real estate, but it is also wrong not to understand the power of equity as well. While we have been taught (?) to stay for very long durations with traditional asset classes such as gold, post office instruments and real estate, equities has been relegated for short term and/or no actual duration of staying invested.

With direct stocks too the returns over longer duration has been phenomenon with stocks such as Infosys, TCS, Wipro, MRF, Page Industries, Havells, Pidilite, Asian Paints, HUL, ITC, Maruti, Cipla and the likes that have created infinite wealth. While picking such stocks is quite challenging for common investors the ideal option is to choose equity mutual funds instead. The real game changer would be to stay invested with similar durations just like traditional asset classes.

The young creed of investors should definitely consider equities for really long term of staying invested and reap the power of compounding benefits.

(The author has written six books on investing and personal finance. He has 23 years of industry experience and six years in academics.) 


Number of views (417)/Comments (0)

Leave a comment

Add comment



Ask the Finapolis.

I'm not a robot
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above



The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free