Diversifying your investments internationally is important. You’ll protect yourself against the local market and currency fluctuations, as well as declines in one asset class. Real estate crowdfunding is a great way to get started with diversifying your assets globally.
Savvy investors know the importance of diversifying their portfolios globally. Spreading your investments across different assets and regions can protect you against the unknown. If one market suddenly collapses, you may still be able to achieve a healthy return on investment through your other international assets.
Crowdfunding – especially real estate crowdfunding – is an excellent way to start diversifying into different markets. Unlike real estate investment trusts or funds (REITs or REIFs), which tend to give you access to local property only, you only need to invest small amounts of capital through crowdfunding to become a property investor in some of the most lucrative overseas markets.
Here’s how to start diversifying your assets globally, with a focus on property.
Choose different asset classes
Investing always comes with risk, so the best way to protect your money is to diversify. Putting your life savings into one property, index fund or REIT means you risk losing everything if your investment doesn’t do well. The key to clever investing is to spread your funds out, both by region and investment type.
Try to diversify your portfolio by investing in different asset classes, such as bonds, stocks and funds. Property can be a lucrative place to invest, particularly if you’re open to alternative investment methods like crowdfunding. You’ll have a tangible asset that can protect you from inflation (as property prices typically grow with it). Property is also always needed, especially if you invest in areas with a booming property market and high levels of demand.
Invest in different regions
While it’s possible to diversify your investments in your home market, branching out across the globe will give you greater security. If your local economy, or even your region’s economy, goes into decline, investments in other areas may still be safe.
Again, property is an excellent way to diversify internationally, even if you have little knowledge of foreign investments, as you won’t have to navigate the stock market.
Try to invest in markets that are considered relatively safe havens. A survey by AFIRE (Association of Foreign Investors in Real Estate) found that 58% of people believe the US is the most stable place for real estate investment. Choosing properties in cities that have high levels of demand will make it easier to either rent your property out or increase the likelihood of an increase in value when you come to sell it.
Invest in other currencies
The only way to invest directly in other currencies is through the forex market. To do so, you’ll need the right brokerage account and a good knowledge of this fast-paced trading environment. However, international property investment is a more beginner-friendly way of indirectly investing in other currencies.
Historically stable currencies like the US Dollar could potentially safeguard your investment more. The value of your property will not be prone to as much fluctuation, meaning you’ll have a better chance of growing or protecting your investment.
When you invest with Bricksave, you’ll have access to properties in stable currencies, including the US Dollar and UK Pound, through our simple investment platform.
Mix residential and commercial property investments
Another diversification strategy is to invest in a mixture of commercial and residential properties. While both options can be rewarding, commercial property owners tend to get tied into longer-term rental contracts than residential investors. As a result, commercial properties are often an investment for the long-term, rather than a reliable mid-term option.
What’s more, consumer and office occupant behaviour is now shifting towards virtual solutions, such as e-commerce and remote working, leaving many commercial properties unoccupied. Residential property may be a safer investment, as people will always need a roof over their heads regardless of external circumstances.
You can explore residential property investment using a real estate crowdfunding platform like Bricksave. You’ll buy a stake in your chosen property, become a part-owner and enjoy regular rental income for at least four years, before receiving your share of the property’s sale price.
Different types of income
Investing in property to diversify your investments gives you more than one type of return. Purchasing a property or investing with crowdfunding gives your investment a chance to grow. When you sell the property, the capital you invested in could be returned with a healthy amount on top if market prices have increased.
Even if property prices are stagnant or decrease, your investment can still pay off. Renting out property will give you a regular income, which can be lucrative if your property is in a sought-after location. At Bricksave, we’ll fill your property with tenants and give you a regular income for an average of four years, before selling the property on and dividing returns between the investors.
It’s easy to diversify your assets through Bricksave’s global real estate crowdfunding platform. Learn more about how it works and get ready to explore this alternative investment option.
October 30, 2020
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