Login to Internet banking
AP Online AP Bank for individuals
Login More
Download from Google Play store Download from Apple App Store
AP Business Online AP Business Online for business
Login More


What is more profitable: investment in real estate or a bank deposit?

If you have a significant amount of free funds, then a logical question immediately arises in front of you - how to save and multiply them? We know that inflation is relentlessly reducing our money, and the more we have, the more we lose. So, in order for our savings not to depreciate, we have to invest them. Traditionally, in Ukraine, the most common and accessible investment tools for individuals are the purchase of real estate or a bank deposit. In this article, we will compare these two options for receiving passive income from the point of view of profitability, riskiness, simplicity of the process and associated costs.


Income from a deposit and from real estate

For example, let's take the fact that we have UAH 3 million and see which of the options will bring us a higher monthly income. In this article, we will consider UAH deposits, for which banks have much higher interest rates than USD or EUR deposits. As for real estate, we will not consider investments in objects that are still under construction and not put into operation, but we will focus on real estate built after 2000.

But first, let's calculate how much you can lose if you don't invest this amount anywhere, but simply keep it in a current account or at home. Inflation of the Ukrainian hryvnia in 2023 is forecasted at the level of 10.6%. That is, if you had UAH 3 million in your current account on January 1, 2023, you can assume that by the end of the year you will lose UAH 318,000 only due to inflation.

And now let's move on to profit calculations.

UAH deposit

As of the end of September 2023, the average interest rate on a one-year UAH deposit is 14.41%, and the highest rate on the market is 18% per annum. So, your deposit in the national currency for a year will bring you UAH 432,300-540,00 which is UAH 36,000-45,000 monthly before taxes.
If you subtract the tax amount of 18% + 1.5% of the military levy, then the highest rate on deposits in hryvnias for 1 year will be 14.5% of the annual net profit, so in 7 years you will be able to double the amount of the initial deposit. But here you need to understand that if you place a hryvnia deposit, the hryvnia will gradually depreciate due to inflation and devaluation, so it is worth diversifying risks, dividing funds and opening a dollar deposit in addition to the hryvnia deposit. Although banks pay very low interest on deposits in dollars, this way you will protect yourself from currency risks.

Investments in housing

Our capital allows you to purchase a two-room apartment in Kyiv from the housing stock of the 2000s. The average monthly rent of such an apartment is UAH 16,000 before taxes. As you can see, the income that a hryvnia deposit will bring is twice or even three times higher than the income from renting out an apartment.
If you subtract the tax, you will receive approximately UAH 13,000 per month or UAH 156,000 per year, which is a little more than 5% of the investment amount.
By investing in a modern housing stock built after 2000, you can count on the fact that your apartment or house will increase in value, which will bring you additional income. But for older buildings, the reverse situation is more likely, when the value of your home will gradually decrease.


Additional expenses

If we are talking about a deposit, then there are no additional costs. Placing funds on deposit in national or foreign currency, you do not pay any commissions or related payments.
Real estate is a bit more complicated. The process of buying a home involves paying for the services of a realtor, a notary, and state customs. When the apartment or house is already in your possession, most likely the question of repair, purchase of furniture and appliances will arise.
The income you get from the deposit and the income you get from renting out your home are subject to tax in the same way as any personal income. In the case of real estate, if the amount of square meters you own exceeds the norm, you must also pay an annual fee for the "excess" area.


And what about riskiness?

Bank deposit

A bank deposit is a risk-free decision. During martial law and three more months after its cancellation, the Deposit Guarantee Fund will pay you your entire deposit and accrued income regardless of the amount, and after that will reimburse up to UAH 600,000. Even if the bank goes bankrupt, you are guaranteed to get your money back. To be completely sure, you can immediately divide the deposits between different banks so that the funds in one bank do not exceed the limit amount. It is also possible to distribute the deposits according to the completion dates, so that, for example, every three months you have one of the deposits completed and you can withdraw part of the funds if you need it.

Real estate

In the case of real estate, there are many more risks: from an unreliable developer, seller or tenant, to the risk of damage to the property due to war or, for example, fire. That is, here you need to be vigilant at every stage so as not to fall for fraudsters: both during the selection and purchase of housing, and during the search for bona fide tenants. Unfortunately, you cannot reduce the risk of damage to the apartment due to shelling.


The investment process

Everything is clear with a bank deposit. Choose a bank, pick up a deposit, come to the branch, complete all the documents in 30 minutes and start earning. The income is paid to the card so clearly that even if you watch the clock.
As for confirmation of the source of funds when carrying out a transaction for large amounts, it can be requested both in the case of placing a deposit and in the case of purchasing real estate, there are no differences. Be prepared to present the necessary documents. Read more about how to confirm the source of funds in our article "Financial Monitoring of Individuals in 2023".

With real estate, again, everything is much more complicated. First, you need to very responsibly choose the optimal apartment or house, evaluate the reliability of the developer or seller of housing, check all the documents. This process takes much more time than selecting a bank. Likewise, the direct process of concluding an agreement will not be limited to 30 minutes. But your efforts will not end there. Now you need to prepare the apartment for rent and find responsible tenants. It is also not as simple as it seems, and it is possible that the apartment will be empty for some time.

Next, be prepared to expect monthly rent payments from your tenants, deal with ongoing housing issues that will inevitably arise, and pay for utilities. In short, your monthly rental income will require your monthly effort. And many different people will know about your additional income - both tenants and neighbors.



Bank deposit: advantages and disadvantages

A bank deposit requires minimal investment of time and is practically risk-free. Interest on deposits in hryvnia will allow you to save money from inflation and also earn money, besides, the income is accrued to you continuously and you receive it without delay. If you compare the monthly income from the investment, it is several times higher than the income from the rent.

Let's summarize:

  • There are no risks, there is a guarantee from the Deposit Guarantee Fund.
  • The process is easy, fast, without extra effort.
  • Profitability - guaranteed, 2-3 times higher
  • Associated costs – absent.
  • Possibility to get funds back - only after the end of the term of the deposit.


Buying real estate: advantages and disadvantages

Investing in real estate is a process that requires a significant investment of effort and time, and is also associated with certain risks, such as fraud by the seller or tenants, or damage to the property due to hostilities or careless residents. You still need to get your monthly income, things are not going as smoothly here as in the case of interest on deposits. At the same time, this income is quite low compared to deposits, and the process is accompanied by various additional costs - from a realtor and a notary to investments in repairs and furniture. But it is important to remember that the value of quality housing is constantly increasing, so you will get more benefit from this than from renting.

What we have as a result:

  • Risks are present.
  • Process – requires significant effort.
  • Profitability is lower, but the value of the object itself is increasing.
  • Associated costs are significant.
  • Ability to withdraw money – it is possible to sell an apartment within a few months, but this also entails additional costs.

We can conclude that a UAH deposit is a much more profitable and easier investment than buying real estate. If you have your own home and significant savings, it is more profitable to deposit them in a bank and receive a guaranteed passive income.

Oleksandra Topol Head of marketing

We use cookies for website operation and optimization of service. By using our site, you you consent to our use of cookies.