Worked Example
Real-estate vs Equity-MF: which builds more wealth over 15 years?
Scenario
Suresh, age 40, business analyst in Bengaluru, ₹22 lakh annual income, supporting wife + 2 kids + parents, ₹1 lakh monthly expenses
Inputs
- Years
- 15
- Amount INR
- 50,00,000
- Equity-MF tax %
- 12.5
- Real-estate tax %
- 30
- Equity-MF return %
- 12
- Real-estate return %
- 8
Calculation
- 1.
Real-estate effective post-tax rate
8% × (1 − 30% tax) → 5.6%
- 2.
Equity-MF effective post-tax rate
12% × (1 − 12.5% tax) → 10.5%
- 3.
Real-estate corpus at year 15
₹50L × (1+0.056)^15 → ₹1.13 Cr
- 4.
Equity-MF corpus at year 15
₹50L × (1+0.105)^15 → ₹2.24 Cr
- 5.
Wealth difference
|11322147 − 22356519| → ₹1.10 Cr
Conclusion
Equity-MF wins by approximately ₹110.3 lakh over 15 years — driven by return rate.
Tradeoffs
Post-tax real returns matter more than nominal headline rates. Real-estate loses more to taxation. Risk profiles differ too — guaranteed vs market-linked. Adjust for risk tolerance.