Lately, it seems as if every newscast brings a story of either Donald Trump’s controversial comments or Greece’s economic woes and subsequent restructuring of debt. While Mr. Trump’s situation hasn’t affected global markets, Greece’s certainly has.
On the day Greek citizens woke to the news that their banks had been closed, the Dow Jones industrial index closed down 2%, the Standard & Poor’s was down 2.1%, and Nasdaq fell 2.4%. What this meant for John Q Investor was that some of his year-to-date gains suffered a loss that he may have made with the Dow and S&P 500 indexes. Had he invested in collateralized assets, his worries would have been less or non-existent. The reason is because investing in collateralized assets brings the peace of mind that his money would have been invested in a tangible asset of concrete value–which brings us back to Donald Trump.
Mr Trump, like him or leave him, is an iconic reminder of the power of investing in collateralized assets like real estate. At one time, only the ultra wealthy could afford to invest in collateralized assets but thanks to the JOBS Act, they are no longer the exclusive territory of the moneyed class.
Collateralized assets can bring significant benefits to John Q’s investment portfolio because they diversify his risk exposure from traditional fixed income and equity assets. Since no one sounds a whistle to alert us that it’s time to get in or get out of the stock market, the greatest risk to anyone’s portfolio is to have all one’s investments plummet at the same time.
An optimally-managed portfolio should hold investments that are non-correlated, meaning they can go up or down regardless of what the stock market is doing. History dictates that holding alternative investments over five and ten year rolling periods smooth out the returns on a diversified portfolio and lowers the risk level.
Collateralized assets, because they are illiquid, with longer lockup periods, are just that type of investment and thus tend to bring more consistent, and sometimes higher returns to the investor. The key to investing in collateralized assets is to understand that, within the sector, there are many different types and strategies to choose from. At Sharestates, our intuitive crowdfunding platform makes it easy for individual investors to research any of the quality multi-family, mixed-use, retail, etc building projects listed on the website.
Projects are assessed using the Sharestates 34-point underwriting and risk assessment system. They are then rated from A+ to D-, measuring the relative risk-related return of the project. Thus, an investor who goes with a B- rated project should generally expect a higher rate of return that she’d get with one rated A+. Since each offering stands on its own, Sharestates advises that funders read each offering memorandum in its whole since the terms may differ from project to project. When they find one or more with which they are comfortable, they can pool their money with like-minded individual funders and institutional investors, secure in the knowledge that each project has been thoroughly assessed.
The founders of Sharestates combined their 30 years of experience in real estate and started developing the Sharestates concept in 2012. Drawing upon their contacts through the years, they built a well-rounded data base of developers, attorneys, speculators, and lenders. Two years later, they formally launched operations in July, 2014 with a team that has collectively overseen over $4 billion dollars worth of real estate transactions. With their knowledge & experience of the real estate market, mixed with their expertise in underwriting, Sharestates is set up to take the real estate crowdfunding industry by storm.
Whether you’re interested in earning 10%+ on your hard earned dollars by investing in a collateralized asset or you’re looking to raise capital for a real estate project, feel free to contact us today.