FD or Real Estate – Which One Should You Choose For Investment?

Both fixed deposit and real estate are high-yield investments. In both, the longer you stay invested, the higher returns you may expect. Choosing the best investment mode depends on your investment objective, financial goals, and risk-taking ability.

Read this article to determine which option is the best for you to park your savings – FD or real estate.

Ease of Investment

Investing in a fixed deposit scheme with the best interest rates is as easy as 1-2-3. You can choose any bank, non-banking financial company, or housing finance company and deposit the money for getting assured returns. If you invest in a corporate FD, there is no need to open a savings account. Also, you do not need to submit any other document than the PAN card, Aadhar card, and cheque.

Real estate investment, on the other hand, is time-consuming and document-intensive. You have to enter into an agreement with the seller of the property and get the property registered by paying registration charges, stamp duty, etc.

When the withdrawal time arrives, you can simply submit the FD certificate and get the money in your account. In contrast, if you want to sell a property, you have to find a buyer first and then fulfil the formalities required to sell the property.

Hence, it is easy to get in and move out of an FD compared to real estate.

Assured Returns

If a fixed deposit scheme offers you the best interest rates, you can expect the same returns for the FD term.

The returns from real estate investments are not guaranteed. If you are lucky to buy a property at a prime location, you can expect much higher returns than an FD. But, the real estate industry also witnesses a slump in demand. If, unfortunately, your investments go through such a lean period, your capital will rarely grow faster than an FD.

Hence, while FD schemes provide assured returns on the capital you invest, there is no assurance about real estate investments’ returns.

Real Returns From Investment

The real returns from real estate investment may be considerably lower than the returns from a fixed deposit with the best interest rates.

You may create an FD account for an amount of INR 10,000. The interest you earn from an FD is TDS-exempt up to a limit of INR 5,000 per financial year.

However, to invest in a prime real estate property that can fetch you higher returns, you may have to apply for a high-interest loan, the repayment of which can bring down the real returns.

Hence, the real returns from an FD may be higher than real estate investment if you are investing in the latter with a loan.

Availability of Information

In the case of real estate, information available in the public domain might not be enough to make an investment decision. For instance, if you wish to invest in a property at a distant location, you may have to trust the seller’s opinion about the property. Additionally, getting details from the government land department may also be time-consuming.

In contrast, before investing in an FD scheme, you can get all information about the financial institution from their website. Corporate FDs get ratings from credit rating agencies like CRISIL and CARE. Usually, CRISIL FAA+ and CARE AA ratings are considered the best.

Hence, getting information about an FD is much easier than getting information about a property.


The aforementioned differences between FD and real estate make it clear that FD investments are a lot simpler and cost-effective than real estate. Companies like PNB Housing Finance offer non-cumulative FDs, where you can get monthly interest, something which real estate investments can never give you. Hence, before choosing the right investment, consider your investment goal and risk-taking ability, and choose the right one.

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