20180811 Property vs Mutual Fund Part 1

20180811 (Sat)

Taking the average annualized return in Equity Market (7.16%), how would property fare compared to equity (mutual fund)?

Let say every month, you deposit into a mutual fund saving of RM3,176 at a 7.16% annualized return, how much do you have in 20 years?

{(1+i)^n} – 1 / i; i = 7.16%, n = 20 x 12 = 240, monthly interest = 7.16/1200 = 0.00597

(1.00597)^240 -1 / 0.00597 = 531.4

RM3,000 x 531.4 = RM1,594,273

Therefore, putting money in Mutual Fund on equity for 20 years would have the below return compared to Property:

RM1.6 mio (Mutual Fund) versus RM1.76 mio (House) or RM1.3 mio (Condo) or RM1.0 mio (Saving)

From the illustration above, saving money in property versus mutual fund, investment into property on face value is about the same as mutual fund, depending on the type and location of property. Similarly, it also depends on the type of fund the money is invested.

BUT, again property investment (apart from land) will earn you rental income. If these rental income is also taken into consideration?

We will discuss that tomorrow.

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