Investing in Property Vs Investing in a Fixed Deposit; What Gives You the Most Gains

Among investors in Sri Lanka, fixed deposits (FD) and real estate investments have been the best and most popular investment options in their portfolios. For a risk-averse or a moderate investor, FD may be a favourable investment option with a stable guaranteed return at the end of the period. However, an FD investment can also be vulnerable if you deposit your money in the wrong place. 

Depending on your risk appetite (how much risk you are willing to take) and the flexibility you want, you must choose an investment option that suits you best. 


With the right advice at the right time, investing in the property market may give you stability and a better return than an FD. However, to invest in the property market, you need to have sufficient capital. But if you don’t, you can always source it as a loan from a financial institution (such as a bank) against the property. This is called a mortgage loan.

Let’s compare an FD against a property market investment;

Mr. A has LKR 30Mn in hand and wants to find the best option for investing in the current market context in Sri Lanka. He has two choices; either save his money in an FD in a stable bank with a return at maturity for 5 years or invest in residential land as suggested by LankaPropertyWeb advisors. 

Fixed depositProperty investment
Investment (LKR)30Mn30Mn
FD interest rate P.A/ Average land price appreciation (YoY) based on Q3 2020 data6.75% 26.24%
After 5Y – FD interest income / property return value appreciation (LKR)11,924,96054,863,546

By choosing to invest in the property market, Mr. A receives a better return than saving in an FD.

Now let’s look at how the mortgage loan would work if the investor has a barrier to enter the property market.

Investment (LKR)50Mn
Source of financeCash in handBank loan
Amount to invest (LKR)30Mn20Mn
Bank interest charged for 5Y at 9%4,910,020
Average land price appreciation (YoY)26.24%
Property value appreciation in 5Y (LKR)91,439,244
Net property return to Mr.A in 5Y (LKR)86,529,224

Mr. A would like to invest in a residential land which requires LKR 50Mn of initial investment. But he has only LKR 30Mn in hand and decides to fund the balance of LKR 20Mn through a financial institution. Mr. A used the LankaPropertyWeb buyer assistance service and LankaPropertyWeb guided Mr. A to a partner bank and helped him to obtain the loan without further hassle.

Further, Mr. A finds a tenant through LankaPropertyWeb to earn an additional income, which will help him in financing his monthly loan repayment. 

If Mr. A had invested in an FD, that is a low-risk investment, he will earn a guaranteed interest over a fixed period. And all he would have to do is to deposit his money in the bank. But by forgoing this and investing in property with the help of a property advisor Mr. A’s wealth multiplied.

Among the investment opportunities in Sri Lanka, land investment is the safest as the value rarely depreciates like with vehicles, currency, stocks, etc. In fact, our stats show land prices have always increased throughout the years and the best is that the land will always be yours.

Yes, FD may be more liquidable than a property that might take longer to sell and varies based on the prevailing market conditions. But, if you select the right property advisor when buying the property, you don’t need to struggle with selling it. 

When investing in a property, you may have to spend more time finding out about it and knowing that the price you are paying is in line with the market. However, with the right property advisor, you would save time and money. You could also use LankaPropertyWeb’s ROI Calculator to determine your investment plan and find the best property to invest in.

To know more about the Sri Lankan property market and price information, visit LankaPropertyWeb.

Posted Date: 30th November 2020

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  • lpw_md

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