5 Benefits of Fractional Investments

Fractional Investments

1. It Solves the Money Problem

The main problem with investing it that few people can afford it. Stocks can be very expensive, even for just one share. Fractional investments change this. It lets you buy a $100 or $1,000, or whatever you feel comfortable with, portion of a single share, while entitling you to the benefits of your portion.

2. It Speeds Up the Process

Even if you could afford real estate, the process for making it happen is paved with bureaucracy. Fractional investments remove much of the bureaucracy and legwork from the equation. You simply buy the desired portion of the property, sign a document, and watch as the rental income arrives in your account each month.

3. It Makes Portfolio Diversification Easier

Art as an investment has long been considered an activity of the wealthy. Sure, you’d love to own a masterpiece and then sell it at an auction for a handsome sum, but how many of us have that kind of money lying around? Fractional investments give you access to assets that you wouldn’t normally have access to. You can expand your portfolio beyond stocks, bonds, and ETFs with minimal effort and at a price that is affordable.

4. It Turns Illiquid Investments Into Liquid Ones

Some assets, like real estate and art, can’t easily be converted into cash. To make these traditionally illiquid assets liquid, the assets are often tokenized so that they can be sold fractionally. Tokenization is a method that converts rights to an asset into a digital token. In real estate, for example, your ownership share is denominated in tokens that can easily be exchanged for cash. No real estate agents necessary.

5. It Provides More Passive Income Opportunities

You can park your money in fixed-income assets like bonds as access to passive income, but that’s about it. Your return on investment may not be that high, however. A 30-year US government bond, for example, yields a paltry 2.29%. Fractional investments give you access to higher-yield investments. Owning a portion of a rental property or blue chip share is a lot more lucrative than your typical bond or savings account. And you can reinvest the income for greater profit potential.