If I invest $100,000 in?

mutual funds and how much will I get in return in the next 10 to 20 years compared with investing in real estate properties? Will I become a millioniare in 10 to 20 years? Just wanted to know the estimation so I can make an investment decision. I know about the investment scams out there on the Internet and thats not for me.

Thanks!

You can do both - via real estate mutual funds. There are many good ones out there, but I'm in the T. Rowe Price Real Estate fund (TRREX).

I'm not a big fan of investing in RE directly. There are too many downsides - maintenance costs, property taxes, poor liquidity, too hard to diversify (type of property, geographic location, etc.), and if you're thinking about rental properties, I've heard more horror stories than I can count about nightmare tenants.

Real estate funds give you diversification, easy liquidity, and professional management. They are MUCH easier to deal with. AND, they're on the cheap now - TRREX is down from a peak of around $28/share, and closed yesterday under $22 (after today's rout it will probably be even cheaper)!

Over the long term, stock market mutual funds have averaged about 10% per year. If you never added any more to your account (which you should, by the way), that would put you in millionaire-territory in about 25 years. Real estate funds have averaged much higher in the last 5 years (18-20%), but I don't think they will maintain that lofty performance over the long term - I think they'll probably do approximately the same over the coming 20 years.

I hope that helps. Good luck!

Invest wisely and Beware of Investment Scams.
http://www.sec.gov/investor/pubs/cyberfr...

Real estate is good if you can afford to maintain. I'm not sure where you live but 100k really won't buy a house . . . Even if it did you'd be subject to taxes, repairs, insurance, and other fees . . . It gets expensive. If you invest 100k in mutual funds, your only talking about tax and brokerage charges.

There are mutual funds and there are mutual funds, if you know what I mean. Mutual funds suffer from one very big disadvantage over real estate investments. TAXES. With real estate investment there is depreciation allowance, expense write offs, and capital gains that accumulate tax free. On the flip side of the coin there is property taxes to contend with.

Mutual funds have to by law distribute annually their realized capital gains which are then taxed. That can be a real detriment to achieving execellent returns. Index funds do not suffer so much from this problem because they are un managed. That means there is little or no realized capital gains.

Can you reach 1 million in 20 years investing in mutual funds? Maybe. The best funds return about 15% annually That would gross out to 1.6 million. So even after taxes you should still be better than 1 million. But the average mutual fund only returns about 9 to 10% annually. That grosses out to only $670,000.

With real estate you will not buy a lot with $100,000 but you do have leverage working on your side. You may need only 10%. That will allow you to buy $1,000,000 worth of apartments. Depending where you live, maybe ten rental units. But you will have to maintain them and baby sit the tennents. I have know both people who did very well with their rental units and people who managed to loose everything by over leveraging in a down rental market.

Time to break out the corny "Rule of 72". If you expect to make, say 10% yearly on your investment of $100k, you would double that within 72/10=7.2 years to $200k. And so it goes:

Year 0 = $100k (startup).
Year 7.2 = $200k.
Year 14.4 = $400k.
Year 21.6 = $800k
Year 28.8 = $1.6m ... congrats you're a millionaire!

Of course, this isn't reality, but it's a ballpark. If you can find an investment vehicle that has returns above 13%, you can be a millionaire within 20 years. :) That, of course, is the challenge. You *could* do a little of both - mutual funds (IRA, ETFs) as well as real estate. This way, you don't have all your eggs in one basket. Over time, if you become more proficient in one of them, you can shift your money over.

Best of luck. (And always do due diligence.)

You can expect a long-term return of 10-12% from stocks, so your $100K will about double about every seven years. (In twenty years you'll have ~$400,000 without having to think about it.)

Real estate is cyclical and somewhat unpredictable in a nation as large as the US....If you buy real estate on an ISLAND (think Britain or Japan), they have run out of space, so 20 years from now you are all but guaranteed you will have made a bundle of profit, but in America, when prices get overheated, buyers go somewhere else and "build" a new city.

The AVERAGE annual increase in Real Estate value in California since 1968 has been 8.9%, which obviously is less than the AVERAGE compounded stock market return for the same period of closer to 12%

If you are not an expert in investments, then you need to consider investing in both real estate and equities. In fact you should add some bonds to that as well so that your portfolio is split between the 3 asset classes.