Adding real estate to your investment portfolio can be an excellent way to generate strong returns and hedge against market downturns or inflation. If you’re not interested in purchasing and managing a property on your own, though, there are alternatives. Both REITs and platforms like Fundrise make real estate investing easier and more accessible to investors. However, while Fundrise may seem very similar to basic REITs, these two investment options have important differences to note. Here’s what you need to know.
With all the options you have to invest in real estate assets, it’s only makes sense to work with a financial advisor as you pick such securities.
What Is Fundrise?
Fundrise, which is a type of REIT, is an online platform that allows investors to purchase shares of real estate interests. Through Fundrise, investors are able to diversify their portfolio, adding low-cost real estate investments without the hassle of buying, renovating or managing those properties.
This also makes real estate investing possible for more people. Rather than requiring the full capital necessary to purchase a property, Fundrise has lower minimums that make real estate investing accessible to newer or lower-budget investors.
Fundrise operates as a crowdfunded business model. Investors purchase shares of preset portfolio strategies; their funds are then diversified across various funds within that strategy. Fundrise uses this capital to purchase, renovate, market and occupy a range of property types, while charging investors an annual advisory fee and a management fee.
Over time, the investment properties held within Fundrise’s portfolios may gain value and provide income. In turn, investors may see their own portfolio’s value grow, and may even receive quarterly dividends as a result.
How eREITs Work
One of the simplest ways for investors to add real estate to their portfolio is through a real estate investment trust, or REIT. Buying shares of a REIT is similar to buying shares of other investments such as mutual funds, exchange-traded funds (ETFs) or even individual stocks.
When investing through Fundrise, investors are purchasing shares of private equity REITs, or “eREITs,” which is a trademarked term. These investments provide capital for various residential and commercial real estate projects, offering investors a return on the property as it increases in value.
Equity REITs can be privately or publicly traded; in the case of Fundrise, their eREITs are open to all investors but are not traded on an exchange. There are no brokers and no sales commission for investors who buy eREITS; they are sold directly by Fundrise.
Fundrise vs. REIT Investing
Investing in REITs – especially publicly traded REITs – is a lucrative option for many investors. Not only do these investments traditionally perform well, but the majority of the time they even boast a higher return yield than the S&P 500. The eREITs offered through Fundrise are privately traded investments, however. This means that they may not boast the same returns or have the same benefits as public REITs purchased through a brokerage account.
With that said, Fundrise REITs usually cover a wide range of investment types. Because of this, they may help hedge against market downturns better than some specialized REITs or individual real estate purchases.
Which is Better?
So, between investing through Fundrise or investing in public REITs, which is better? Well, the difference will really depend on your goals and priorities as an investor.
Here’s a look at some of the important differences between the two REIT investment methods:
Fundrise offers low investment minimums. To get started investing through Fundrise, investors are only required to make a minimum investment of $10. Other REITs may have significantly higher requirements – sometimes in the four- or five-figure range – especially when it comes to non-exchange traded or private REITs.
Fees may be higher with Fundrise eREITs. Fundrise charges investors a total of 1% in annual fees. This includes a 0.15% advisory fee and a 0.85% asset management fee. The typical publicly traded REIT charges fees around 50 basis points, or 0.50%, annually. This makes Fundrise two times more expensive than public REITs, on average.
Private REITs don’t offer the same liquidity as public REITs. Generally, REITs operate best as a long-term investment. However, if you ever need to liquidate public exchange-traded REITs, you can often do so fairly quickly through your brokerage platform. Fundrise REITs, however, are private and non-traded, which means that your shares could take much longer to sell.
The Fundrise platform can be simpler to use. There are many different REITs to choose from, but finding the one that works best for your goals and investment timeline can be tricky, depending on where and how you invest. Fundrise offers preset investment portfolios, enabling investors to pick the one that suits their goals. Any funds invested will be disbursed according to that portfolio’s allocation, without the need to shop around or do much digging.
All REITs are required by the IRS to pay out at least 90% of their taxable income to investors. These are disbursed in the form of dividends. While dividends (and overall returns) are never guaranteed, this requirement can make REITs an excellent choice for investors seeking passive income streams.
The Bottom Line
Standard REITs can be publicly traded, privately traded or public non-traded. Fundrise REITs are private, and thus may be somewhat illiquid, may be simpler for some investors and only require an initial investment of $10. Investors can just choose the preset portfolio that best matches their goals. Fundrise platform fees are 1% annually, which is higher than the average public REIT fee. While the Fundrise investment model is pretty simple, return yields may be lower than public REITs, depending on the portfolio you choose.
Tips for Investing
Consider working with a financial advisor as you weigh the pros and cons of various real estate assests. Finding a financial advisor doesn’t have to be hard. SmartAsset matching tool matches you, in just a few minutes, with professionals in your area. If you’re ready, get started now.
REITs can make a key part of your retirement nest egg. Planning for retirement requires knowing how much you’ll need to sustain your lifestyle once you’re done working. SmartAsset’s free retirement calculator can give you an idea of how much money you need to save.
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Doug Ford promises ‘huge’ investment in Windsor, Ont., auto plant after shift cuts – Global News
TECUMSEH, Ont. — Ontario Premier Doug Ford says the province and federal governments will be making a “huge” investment in a Windsor, Ont., auto assembly plant to help ramp up production after the company announced a shift cut.
Stellantis, formerly known as Fiat Chrysler Automobiles, announced last week that it will cut its Windsor Assembly Plant down to one shift next spring in a move that will mean about 1,800 lost jobs.
The company says the move comes as the automotive industry faces significant headwinds including the semiconductor shortage and the effects of COVID-19.
The cut from two shifts comes after Stellantis cut the third shift at the minivan plant in 2020 at a loss of about 1,500 jobs.
Ford, speaking near Windsor on Monday, says he wants to see three shifts again at the plant, and he will be speaking with Stellantis leadership on Tuesday.
The premier was not able to offer details on the investment, but said between both levels of government it’s “hundreds of millions” of dollars.
Stellantis has reaffirmed its commitment in a 2020 collective agreement with the local Unifor union to spend upwards of $1.5 billion at the plant.
The Windsor plant produces the Chrysler Pacifica, Chrysler Voyager and Chrysler Grand Caravan.
Ford also spoke of his interest in having a battery facility in Windsor.
“We have all the natural resources, we have the lithium, we have the nickel, we have the cobalt, folks, everything is here,” he said.
“We don’t need to bring these batteries in from overseas. We have everything here. On top of that we have the best workforce anywhere in the world … Any people out there that are listening that want to expand in Ontario, especially the battery business, we’ll be at your front doorstep and we’ll be ready to make a deal with you.”
© 2021 The Canadian Press
Boris Johnson Says UK Doesn't Want to Turn Away Chinese Investment – BNN
(Bloomberg) — Prime Minister Boris Johnson said he is not about to “pitchfork away” offers of Chinese investment despite the concerns of some of his own lawmakers.
Decisions to bar Chinese companies from Britain’s fifth-generation communication networks and nuclear power, and condemnation of China’s human-rights record have soured relations with Beijing over the last few years, but Johnson maintains he is pro-China.
“I am no Sinophobe — very far from it,” Johnson said in an interview with Bloomberg Editor-in-Chief John Micklethwait on Monday. “I’m not going to tell you that the U.K. government is going to pitchfork away every overture from China.”
Read More: Johnson Hosts Business Leaders’ Dinner Amid U.K. Investment Push
Johnson was speaking ahead of an investment conference in London on Tuesday designed to boost investment into the U.K. and just a fortnight before he hosts the Cop-26 climate summit in Scotland. With Chinese President Xi Jinping likely to be absent from the summit, concerns are growing China may refuse to set new climate change goals and deprive Johnson of a clear win on tackling global warming.
U.K. imports from China amounted to 67.6 billion pounds ($92.8 billion) in the year through June, according to U.K. statistics, a rise of nearly 40% from the previous year. That makes China the U.K.’s third largest trading partner.
“China is a gigantic part of our economic life and will be for a long time — for our lifetimes,” Johnson said. “But that does not mean that we should be naive in the way that we look at our critical national infrastructure.”
The government has said that Chinese firms are welcome to invest in non-strategic parts of the economy but Johnson refused to spell out exactly where he would draw the line. “You’d have to look at what you’re defining as strategic,” he said.
As part of the investment conference, Huaneng will invest in a 50-megawatt battery project.
The U.K. has already introduced legislation making it harder for foreign investors to take significant stakes in critical national infrastructure.
Read More: China Blasts ‘Despicable’ U.K. Move to Ban Envoy From Parliament
Last month, China’s ambassador to London, Zheng Zeguang, was prevented from participating in a meeting in the U.K. Parliament in a case that crystallized the conflicting attitudes among Tory MPs.
Zheng had been asked to attend by Conservative member Richard Graham, who chairs a group of lawmakers seeking to foster good relations with China. But the invitation drew outrage from others who have been sanctioned by Beijing for speaking out over alleged human rights abuses and the invitation was canceled by Parliamentary Speaker Lindsay Hoyle.
Beijing has repeatedly denied any mistreatment of its Muslim Uyghur minority and insists crackdowns in Hong Kong are to prevent insurrection.
Johnson insisted that the relationship can prosper “in spite of all the difficult conversations about the Dalai Lama or Hong Kong or the Uyghurs.”
“Actually trade with China has continued to expand for a very long time and I think probably will continue to expand for the rest of our lives,” he said.
©2021 Bloomberg L.P.
Morrisons investors set to rubber stamp $10 billion CD&R takeover
Shareholders in supermarket group Morrisons are expected on Tuesday to approve a 7 billion pound ($9.6 billion) offer by U.S. private equity firm Clayton, Dubilier & Rice (CD&R), bringing the curtain down on Britain’s most fiercely contested takeover this year.
CD&R, which has former Tesco boss Terry Leahy as a senior adviser, won an auction for Morrisons on Oct. 2, bidding a penny a share more than a consortium led by Softbank owned Fortress Investment Group.
Investor approval for the deal will conclude a six-month battle to buy Morrisons, Britain’s fourth-biggest grocer and one of the country’s biggest food producers.
It will end Morrisons’ 54-year run as a publicly listed company and see the ultimate decisions on the group’s future shift from its Bradford, northern England, base to the New York home of CD&R.
Morrisons, which started out as an egg and butter merchant in 1899, trails market leader Tesco, Sainsbury’s and Asda in annual revenue.
The battle for Morrisons has been the most high-profile amid a raft of bids for British companies this year, reflecting private equity’s appetite for cash-generating UK assets.
With the winning bid representing a hefty 61% premium on Morrisons’ share price before takeover interest publicly emerged in mid-June, analysts expect little or no dissent.
To go through CD&R’s offer needs the support of shareholders representing at least 75% in value of voting investors at the meeting, which is being held both physically and virtually.
CD&R has committed to retaining Morrisons’ Bradford headquarters and its existing management team, led by CEO David Potts.
It has also said it will execute the supermarket chain’s existing strategy, not sell its freehold store estate and maintain staff pay rates.
These commitments are not legally binding, however.
If, as expected, shareholders approve the offer, CD&R could complete its takeover by the end of the month, making Morrisons the second UK supermarket chain in a year to be acquired by private equity after a buyout of No. 3 player Asda, by the Issa brothers and TDR Capital, completed in February.
($1 = 0.7284 pounds)
(Reporting by James Davey; Editing by Susan Fenton)
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