Should Salaried Professionals Bet On Home Ownership Over Mutual Funds In The Current Rate Cycle?

"Buy vs. Invest" is one of the most talked-about issues among salaried workers today, especially those who are dealing with growing living costs, unstable markets and changing financial aspirations. This topic has become more important now that home loan rates have stabilized and rental returns have gone up in big cities.

People have long thought that mutual fund SIPs were a smart way to create wealth, but real estate is getting a lot of attention again since it is stable and offers true security, especially in India's urban and suburban sectors.

Over the past few years, we've seen a generational shift in how salaried professionals view home ownership. Buying a home is no longer only about feeling safe for millennials and young families; it's also a smart financial move.

"When bought wisely, real estate can be both a lifestyle asset and a long-term way to protect against inflation. Property values in cities like Mumbai, Thane and Pune have steadily gone up, thanks to improvements to infrastructure, new construction prospects, and strong demand from end users. This is not the case with SIPs, which are affected by changes in the market," said Mr. Shankesh Sanghvi, Managing Director of Sanghvi Realty.

With home loan interest rates hovering between 8% and 8.5% and expected to remain stable through the next few quarters, salaried professionals now have a window of predictability. On the other hand, the returns on mutual funds have been very cyclical, going up and down with global economic conditions and market mood.

Putting some of their assets into a physical asset like real estate gives risk-averse investors a way to diversify and keep their money safe for a long time.

"At the same time, the rise in rental yields—especially in metros and micro-markets where supply is constrained—has made home ownership more financially viable. Rental yields in several parts of Mumbai's western suburbs have gone up from 2% to 3.5%," commented Shankesh Sanghvi.

This means that buying property is not just a way to live but also a way to make money on the side. This change is especially appealing to salaried workers who want to make money while still having a steady income flow.

"However, the decision shouldn't be viewed as an either-or scenario. The best way to invest is to mix the liquidity and compounding benefits of SIPs with the real estate's tangible and inflation-resistant worth. SIPs can help you reach short- to medium-term goals, including saving for an emergency or paying for your kids' education. Owning a property, on the other hand, is a long-term way to develop wealth and financial security," recommended Shankesh Sanghvi.

In today's world, where inflation is higher than deposit returns and global markets are still shaky, owning a home gives you something that financial instruments can't: emotional stability and ownership over a tangible, usable asset.

Shankesh Sanghvi says real estate also helps professionals establish wealth that lasts for generations giving them both a use and a financial benefit.

Owning a home confers some notable tax benefits, and there is plenty of evidence of the long term suitability of the implications of home ownership. For example, section 80C allows you to impute the amount of principal you pay on your home loan during the course of a single tax year up to Rs 1.5 lakh; the dead of interest incurred on self-occupied property under section 24(b) allows you to impute the amount of interest incurred on a self-occupied property totaling up to Rs 2 lakh per tax year.

"Presently, home loan monthly rates can fall somewhere in the range of 8.5 to 9.5 per cent with the respective repo rate in India as stated by the Reserve Bank of India remaining unchanged. By definition this means that your weekly or monthly EMI will not surpass the mortgage rate generally secured at the present moment which will likely grow again before seeing a decline in the market again, which lends to feeling comfortable about the rise," said Abhishek Bhilwaria, CEO at Bhilwaria MF.

On the other hand, investing in mutual funds via SIPs allows for flexibility and liquidity. You can invest a small amount, even starting with a few hundred rupees, regularly, allowing for compound growth over the years. Historically, mutual funds in the stock market average returns of 10% to 15% per year and often outpace real estate returns, but those returns are not guaranteed as they are dependent on market conditions.

SIPs are very low effort to manage. There are no maintenance fees, toner ink or paperwork to deal with, and no concern over tenants or managing the property. You can begin, stop or redirect your investments at any time there is a change in your finances. SIPs also diversify your investments across different companies and sectors, reducing the likelihood of loss—mitigated risks. If a cash need develops, it is much easier to liquidate mutual funds, receiving cash within a few days.

"Considering the current higher interest rates as an economic factor with higher borrowing costs, this tends to favor SIPs over real estate as a better investment if you can generate returns greater than the cost of the loan. If your principle motivation is a long-term purchase or stability, buying a property could still be a positive investment choice," recommended Abhishek Bhilwaria, CEO at Bhilwaria MF.

The right choice ultimately depends on the buyer's objectives, financial position, age, and risk appetite. Today there is no clear answer or guidance given interest rates and heightened property prices. Many financial planners suggest a two-fold investment approach to consider both a home purchase and SIPs.

Most working adults should try to find a balance between being flexible and being stable. If you invest in real estate at the correct time and organize your finances well, you can turn a liability into a performing asset over time. As the housing market matures and becomes more open, real estate is once again becoming a trusted part of personal finance in India.

In short, SIPs build wealth; homes build roots. For India's salaried class, the smartest investor may not choose between the two but rather use both to secure a financially resilient future.

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