For a long time there were two different sets of rules when it came to investing. Regular everyday people only got to invest in publicly traded assets like stocks and bonds, while rich people and institutional investors got to add real diversity to their portfolios with things like private real estate, which offered more stability and greater returns. Luckily, things are different now. Advancements in technology and subsequent changes to SEC regulations have democratized the financial services industry in recent years. Now, innovative online investing platforms like Fundrise let anyone invest in private market real estate like a billionaire.
Modern portfolio theory says diversification is the key to long term investing. It’s supposed to limit your exposure to risk by balancing the poor performance of one type of asset against the better performance of another. The problem, of course, is that “diversification” is a relative term. When the only assets in your portfolio are publicly traded stocks and bonds, you really don’t have that much protection from major fluctuations in the economy.
Wealthy people have always understood this. That’s why they have historically allocated up to 30 percent of their portfolios to private real estate. However, private real estate was not an option for smaller investors. The technology required to break billion-dollar real estate investments up into smaller pieces did not exist, which meant you had to be able to write some pretty big checks to get in the game.
But now things have changed. And companies like Fundrise are giving people new options they never thought possible.
Investing with Fundrise is similar to investing in traditional pooled funds. However, instead of putting your money in a portfolio of public stocks and bonds, you’re putting it into eREITs (real estate investment trusts) or eFunds, which are simply portfolios of privately held real estate assets. These diversified 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 four 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.
Once you place your initial investment, it will immediately be invested in a series of different investment funds that are suited to your strategy. And everything can be managed online. Fundrise has a proprietary auto-invest tool that helps you fine-tune your portfolio, and their mobile app allows you to track your investments in real-time.
As a Fundrise investor, you will see returns in the form of long term property appreciation as well as quarterly dividends from revenue-generating properties in your portfolio. The result is annual returns between 8.7 and 12.4 percent, with an annualized dividend yield of 7.75 percent.
The best part about Fundrise is that it’s specifically designed to make private market real estate investing an option for anyone. Their proprietary software keeps the fees incredibly low at just 1 percent, which means you actually keep the money you earn. Plus you don’t have to be accredited to invest with Fundrise. There’s no credit check, no minimum income, no minimum net wealth. If you can afford the minimum investment of $500, you’re in.
Whether you are a first-time investor, or you’ve been slowly building your portfolio for years, Fundrise has an account level that’s right for you. So don’t miss out. Read more about Fundrise and see what private market real estate can do for you.
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