Among the three asset classes – property, stocks and equity mutual funds – which will give the maximum returns if held for a long-term period of 15 years?
-Jitendra
There isn’t much of a difference between equities and equity mutual funds; they are two different mechanisms of holding the same underlying asset. So basically, what you are asking is equity versus property. Both of these asset classes basically have the same character, they generate income if held in productive assets and they appreciate in value. The big difference between the two is that you can have equity in small lots. Investing in property requires bigger amounts, as well as higher maintenance and carrying costs. The other big difference, which as a behavioural impact, is that when people buy property, they see that it has grown in value substantially over the past 15 years; and while equity does the same, it is very difficult to find someone who holds onto equity for such a long period. You will be surprised to know that on a 15-20 year basis, if you compute the returns on Sensex and the returns on property, the value will not be very different. The problem is that everybody holds property for many years, but they hold stocks for only a few months or years. So both are real estates, investments in either of them depend on your time, flair, inclination and likings.
This article was originally published on February 23, 2012.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
