Updated: May 30, 2019
In the show 30 Rock, Liz Lemon (played by Tina Fey) says to Jack Donaghy (played by Alec Baldwin) “I need to do that thing that rich people do where they turn money into more money.”
It’s a funny line, but it’s true. If you are fortunate enough to have capital, you can make it work for you by investing and turning it into more money. This can be the start of a beautiful positive cycle, where your investments continue to grow and grow.
Real estate investing is one of the best ways of doing this.
There are so many ways that you can invest in real estate - from house flipping to rentals to vacation property to funding a property and fractional ownership. With a strong, diverse portfolio you can create multiple streams of income, which will help you establish financial freedom.
Making Your Money Work For You
Investing is all about making your money work for you, rather than simply leaving it there to do nothing.
When you have savings in your bank account, the money is “out of sight, out of mind.” It’s not really in danger of going anywhere - a bank account is a pretty stable place to keep it. But while the risk of losing your money is low , here is also no chance that it could grow into anything bigger.
In fact, unless you have a savings account with a good interest rate, your savings might even decrease year on year with inflation. So, instead of standing still, your nest egg is slowly shrinking.
However, if you invest your money wisely there is a better chance your capital will grow into more than you ever started with. Rather than keeping your money locked away, it can be a smart move to invest it so it has the potential to grow.
What About the Risk?
Many people are hesitant when getting started with real estate investing, as they are focused on the risk. You might be wondering, what if I make the wrong decision or the market changes? What if I lose the money I have invested?
Of course, whenever you invest your money into anything there is always a level of risk involved. The market can be unpredictable and you never know what might happen. It’s up to you to determine the risk level you are comfortable with in an investment.
Some investments are quite risky yet offer high potential rewards if things go well. Others are more secure, but they don’t offer as much of a return. You should only make an investment if you feel 100% comfortable with the risk you are taking.
An Additional Source of Income
According to a 5 year long study by Tom Corley, author of “Rich Habits” 65% of self-made millionaires had a minimum of three streams of income.
This is not surprising. When you have multiple streams of income, you’re able to maximise your earnings and enjoy more financial independence. You’ll have more control and flexibility over your finances, as you won’t be reliant on a single source of income.
Even if one income stream is negatively affected, the other streams will keep you going without dramatically decreasing your earnings. Investing in real estate is a great way to avoid “having all your eggs in one basket” when it comes to income. This not only helps you grow your wealth, but it also really helps you sleep at night!
Also, when you diversify your real estate portfolio by investing in a number of different types of properties, you’ll ensure a better overall return. The real estate market can be unpredictable and you never know what will happen.
With diverse investments, you’ll protect yourself from risk. It really is the smartest investing strategy. To learn more about why we recommend diversifying your portfolio, check out this blog post.
Accredited Investors Have an Advantage
An accredited investor is someone who meets a minimum income and net worth requirement as defined by financial regulation laws. The laws are different for each country, you can see them outlined here.
There are a lot of advantages to being an accredited investor.
If you meet these requirements, you’ll have access to better investments, higher rates of return and much more.
Because accredited investors meet these criteria, they will automatically get the green light to invest in a number of different types of investments, including start-ups, venture capital and small businesses.
If you qualify to be an accredited investor and you’d like to become one, check out this blog post for more information on the process. There is no specific agency or body to review your credentials, nor any exam or piece of paper. Instead, you will go through a screening process by investment managers to verify your accredited investor status.
Partbnb: Low Risk Yet High Returns
If you’re considering investing in real estate - Partbnb is an ideal option. If you’re an accredited investor, you can create an account and buy a small fraction of a vacation property in a stunning Caribbean location. Each property is divided into 10,000 parts, starting from $34 each.
The property is taken care of by a property management company and rented out to visitors. Thanks to this rental income, you’ll receive monthly dividends paid directly into your digital wallet.
The major advantage of this type of investment is that it offers low risk, yet high returns. It is low risk because you won’t have to invest all your money into an entire property. However, the monthly dividends offer a great return.
Plus, after owning your fraction of the property for 6 months, you’ll have complete freedom to sell your parts on the platform to other investors. This makes PartBnB a very liquid option as well.
To find out more about how Partbnb works, click here.