When It Comes to Investing in Real Estate, It’s Time to Stop Living in the Past
Online investing platforms like Fundrise are opening up profitable new asset classes to the masses.
Everybody knows the key to a good long term investment portfolio is diversification. Unfortunately, for well over half a century, the only thing regular everyday people could do to “diversify” their portfolios was find the right balance between publicly traded stocks and bonds, while investing in real estate was restricted. Why? Because those were the only assets in which they were legally allowed to invest. However, that is not the case anymore. Thanks to technological advancements and subsequent changes in FCC regulations, cutting edge companies like Fundrise are giving regular people access to the private real estate market, which only billionaires had access to before.
Of course, right now you might be thinking, wait a minute, regular people have always been able to invest in real estate. Anyone can buy a property and flip it, or rent it out and become a landlord to let the value appreciate over the long term. That’s the premise of almost half the reality shows on basic cable!
While all this is true, that is not the kind of real estate investing we’re talking about here. What we’re talking about here is a kind of pooled fund investing.
Pooled fund investing is when money is collected from a large number of investors and used to create one massive investment portfolio, which is managed by professional money managers. The most common types are mutual funds, hedge funds, pension funds, and exchange-traded funds, or ETFs. All of them allow individual investors to achieve greater growth and stability than they would be able to achieve on their own, which is good. However, these types of funds are only allowed to invest in publicly traded securities like stocks and bonds. Thus, the average investor could only diversify so much.
That was not the case for institutional investors and high net worth individuals. Because they can afford to write huge checks, in addition to regular stocks and bonds, they’ve also had access to things like Real Estate Investment Trusts, or REITs. These are pooled funds that invest in income-generating private real estate, which offers higher and more consistent returns than publicly traded securities.
But here’s the good news. Recent advancements in computer technology and data science have led to the development of highly advanced crowdfunding platforms that are democratizing 21st century investing. As a result, the SEC has loosened restrictions and opened private real estate investing to everybody.
That brings us to Fundrise.
Fundrise is a simple online investing platform that allows you to truly diversify your portfolio by investing in the private real estate market. Investing with Fundrise is a lot like investing in a traditional ETF, only instead of putting your money in a portfolio of public stocks and bonds you’re putting it into REITs or eFunds, which are simply portfolios of private real estate assets. These portfolios are handpicked by Fundrise’s real estate experts for their ability to produce revenue, and they include everything from single family rental houses to multi-building apartment complexes.
Fundrise offers three types of accounts based on the amount of money you want to invest and your investing experience. They also offer three different investment strategies. The Supplemental Income strategy is designed to maximize quarterly dividends; the Long-Term Growth strategy is designed to maximize total return over many years; and the Balanced Investing strategy splits the difference.
With Fundrise, you can expect annual returns between 8.7 and 12.4 percent, with an annualized dividend yield of 7.75 percent. Yet the minimum investment is just $500, and the platform is open to absolutely anyone, regardless of income or credit score.
Whether you’re just starting to think about setting up an investment portfolio, or you’re looking to update your existing portfolio, you need to take a good long look at Fundrise. They just might have the piece of the investment pie you never knew was missing.
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