You're missing 20% of your investment portfolio — and it's costing you thousands

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Chances are your investment portfolio is built around the old fashioned rule of 60% stocks and 40% bonds, right? Well, if that's true you're off by about 20%.

If you compared your portfolio to those of the most successful investors in the world, you’d notice one big difference – real estate. Almost every famous investor has a significant portion of his or her portfolio in commercial real estate. This model has become famous thanks to the Yale Endowment, which outperformed traditional allocations 22.6% annually for decades by investing at least 20% of its portfolio in real estate.

Now Fundrise, an online real estate investing startup, is making these investments available to the average investor for the first time with the recent launch of the Fundrise eREIT™ — the first low-cost, diversified real estate investment portfolio available to everyone directly online

Why aren’t more people investing in real estate?

Many investors simply don’t know that commercial real estate has dramatically outperformed stock and bonds over the last few decades. And those who do recognize the potential have found it almost impossible to access quality real estate investments.

Traditionally commercial real estate investments have only been available one of two ways: 1) Be wealthy enough to invest in Wall Street private equity funds with required minimums in excess of $1 million or 2) Use a complex series of brokers and investment advisors that charge as much as 15 to 20% upfront in fees.

iStockBy using the power of the internet, Fundrise is able to make otherwise inaccessible investment opportunities available to the individual investor, for 1/10th of the fees.

“The idea is pretty straightforward,” says Fundrise CEO Ben Miller. “Technology should allow us to dramatically reduce the cost associated with making and managing high-quality real estate investments, which in turn allows us to provide our investors with better returns.”

Fundrise’s platform gives individuals the ability to add commercial real estate to their portfolios — as easily as buying stocks through an online brokerage. An investor can log in to Fundrise and invest $5,000 in the iconic 3 World Trade Center development — a $2.5 billion deal.

Fundrise believes its innovative approach to real estate investing will do the same thing to Wall Street investment banks that the internet did to travel agencies and taxis: Make them obsolete.

iStock“This isn’t just about cutting fees or reducing costs; it’s also about changing who gets to invest,” says Miller. “We’re opening up one of the best asset classes — one worth an estimated $9 trillion — to 100% of Americans. It’s revolutionary.”

Even high-net worth investors, who may otherwise invest with big name investment advisors, are drawn to Fundrise because of the company's ability to provide a diversified low-fee portfolio of high-yielding real estate directly online.

"Fundrise allows me to easily diversify into high-quality and high-yielding real estate from all across the country," says Mesh Lakhani, an investment allocator and founder of Future Investor, an online education portal for alternative investments. "My portfolio is much more well-rounded, which reduces my risk. Fundrise has become a core part of the income strategy for my overall portfolio."

Fundrise envisions a future where investing in properties around the country is as commonplace as owning stocks, one where investors can diversify 20% of their portfolio into real estate without leaving their living room.

With an investor base of 80,000 and growing, that future doesn’t seem so far away.

This post is sponsored by Fundrise.

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