It’s very simple. For years at a stretch, you have nurtured the dream of investing in property and owning a piece of the elusive real estate investment action. You’ve always been thrilled at the phenomenal successes of people who went all in with their dreams, especially those who have turned a profit in the commercial real estate space with very little capital investment. Their secret? Forget saving up for cash windfalls and planning big ticket investments. Instead, fractional investment in commercial real estate is the new bullish adventure for millennials who are serious about wealth management. Thanks to frequent light-year leaps in consumer facing technology, early adopters are now both aware and excited to invest in fractionalized properties.
Today, it is remarkably easy for an Indian citizen to invest in commercial real estate and ventures that are focused on sustainability. In contrast, only a very few platforms offer real and tangible investment opportunities in fractionalized real estate.
Investment is understood better as an art form than an exact science. In this blog post we will take a stroll down the best practices that you need to adopt, in order to emerge a winner in the fractional shares & investment space.
Before we attempt to understand geographical distribution, we must first become familiar with the concept of fractional ownership. Fractional ownership indicates that you own a part of a property, and are entitled to a share of all derivative incomes and profits that are generated from that property in the free market. What makes the concept lucrative, is that it opens up investment opportunities across various new asset classes, across different geographies (locations), and with unmatched flexibility in terms of investment capacity.
Before fractionalized real estate investments became possible, the easiest path for new investors was to pick a property close to where they live, around the proverbial neighborhood watch. While the efficiency of returns in such a setup is debatable, we can say without doubt that it is much better to have the flexibility to explore new locations and invest in high net worth assets with affordable share prices. We are banking on the emergence of a new infrastructure economy in this day & age, and we must base this evolution on the active exploration of new and previously uncharted territories. Fractional property owners need not worry about trivial issues like monitoring or maintaining the commercial properties that they’re personally invested in. Tech-enabled instant communication systems ensure that people who aren’t “all that wealthy” can also bite into a lucrative piece of the pie without stretching their neck too much. In ways more than one, fractional ownership is the wisest way to own an asset in modern times.
How much can you invest overseas?
Overseas investment behavior bodes well for the Indian economy. As an increasing number of investors become familiar with bigger and more lucrative opportunities outside India, we see massive returns and sustainably big yields from foreign equity markets. It is a good idea, however, to be aware of the local taxation laws of any geography you’re committing to. The Liberalised Remittance Scheme (LRS) by the RBI allows resident Indian citizens to invest only up to $250,000 overseas annually, without requiring special permissions or attracting penalties.
Invest in US stocks
Indians can create a truly diversified portfolio by investing in blue-chip US stocks that are growing faster than other industries or market spaces. Some Silicon Valley firms are on a perpetual path towards unicorn growth, and with an explosion in the availability of digitised investment platforms, owning stock in the proverbial FANMAG League (Companies like Facebook, Amazon, Netflix, Microsoft, Apple, and Google) is a cakewalk.
Invest in fractional shares
- What is a fractional share?
A fractional share represents a less-than-whole share of the entire equity up for grabs. The concept is becoming increasingly relevant as it allows investors to participate in a round irrespective of the share price or ticket size. Fractional shares are created through stock splits, bonus shares, or dividend reinvestment plans (DRIPs). Mergers and acquisitions also result in the creation of fractional shares, which can be bought or sold via major brokerages. These stocks often do not trade in the free market.
● Why fractional shares?
Fractional shares are an easy answer when an investor is faced with the mammoth challenge of investing in a market that’s beyond their means. It solves the age-old “foot through the door” problem by reducing the burden of the initial buy-in. A fractional share costs way less than a single share of stock, and the arithmetic of compound growth makes the returns on these investments entirely too irresistible.
● Advantages of fractional shares
If one full share is prohibitively expensive, then an investor can still opt to purchase a fractional share, marking their entry into a space where they remain in total control of the money that they intend to spend on stocks. As opposed to the idea of one-off trades, fractional investments are actually better designed to provide long term returns & sustainable liquidity. For investors who want to enter the game in low-risk modefractional trading brings down costs and provides far more invasive access to exciting new markets.
If you’ve had a cash windfall recently, you’re probably wondering if real estate is the safest place to park your money. But if you’re really planning to invest and see that money grow in ways that people could have only imagined a few years ago, you should pay close attention to fractional ownership. It might just be that magic spell that breaks you out of the traditional cycles of profit, loss, and misery. Diversified portfolios are no longer the hallmark of institutional investors with deep pockets. You, too, can purchase sizable chunks of high net-worth assets without spilling over your budget. You can forget all about property maintenance and even the daily minutia of appreciating and depreciating rentals, and finally get time to focus on the bigger picture – creating a smarter investor within yourself.