Real Estate vs Mutual Funds: One Man’s Journey from Bengaluru to Pune

In 2011, a Bengaluru man made a bold move by purchasing a flat that many considered overpriced. A decade later, the sale of that same property not only funded a high-end, debt-free apartment in Pune but also left him with additional capital for further investments. This story reignites a timeless Indian debate: should one invest in real estate or mutual funds?

Akhil Agarwal, a chartered accountant, shared this intriguing story on LinkedIn. He recounted how a neighbor bought a flat in Bengaluru during what many saw as a market peak in 2011. The decision drew skepticism, but it proved to be a wise investment. Over the years, the property not only provided a stable home for his growing family but also appreciated significantly.

When the time came to move to Pune, the proceeds from selling the Bengaluru flat were enough to buy a premium apartment outright, with surplus capital still on hand. “Real estate is about stability for family and peace of mind,” Agarwal notes, challenging the often binary argument between mutual funds (MFs) and home ownership.

The real math, according to Agarwal, lies in what many miss: the rent saved. While a ₹1 crore flat may require an EMI of ₹60,000–₹70,000 per month, renting the same place might only cost ₹20,000–₹25,000. Over 20–30 years, the rent saved by owning could exceed ₹90 lakh. Add to that the asset’s appreciation, which can often be 3–4 times in metros, and the numbers start stacking up in favor of ownership.

Agarwal emphasizes that most MF vs house comparisons rest on narrow assumptions. They rarely factor in rent escalation, emotional stability, or the variability of MF returns based on timing and selection. However, the financial picture isn’t always so clear-cut. In cities with very low rental yields (where the price-to-rent ratio exceeds 20x), renting can be more economical. If the rent saved is aggressively invested in mutual funds at, say, a 12% CAGR, it could outperform modest property gains, particularly in Tier-2 or Tier-3 markets.

Still, the long-term payoff of owning goes beyond numbers. With a fully paid-off home, there’s no rent, no EMI — just a tangible asset and the peace of permanence. This story highlights the potential benefits of strategic real estate investments and the importance of considering all factors, including personal and financial goals, before making a decision.