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Updated over 9 years ago on . Most recent reply

Account Closed
  • Registered Nurse (ICU)
  • San Jose, CA
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Crowd Funding VS Building Your Own Portfolio....OR BOTH?

Account Closed
  • Registered Nurse (ICU)
  • San Jose, CA
Posted

I have recently been looking into the possibility of investing in Crowdfunding.  I am still fairly new to investing but thought this may be an option to help diversify my portfolio in another way.  From what I can gather crowd funding is a simpler and more passive way to invest in a large portfolio by using an experienced expert that builds and manages the portfolio.  One of my main concerns is the lack of control you have over the portfolio.  The whole concept seems simple and easy but will simple an easy make me just as much, or more money, than building a portfolio of my own?  Or would it be a good idea to dabble in both options to increase diversification?  

Any insight on this topic is greatly appreciated.  

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Ian Ippolito
  • Investor
  • Tampa, FL
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Ian Ippolito
  • Investor
  • Tampa, FL
Replied

@Joey Noel, in my opinion, it's best to do both if you are able.

Crowdfunding is indeed a passive investment, so it requires less effort on your part. Since hundreds of investors share the cost, you can diversify your portfolio across property types, geography, and investment strategies… which generally isn't possible when you invest direct (unless you have a very large sum of money). This also lets you access higher returning and/or more stable and/or more scalable property types than most people would be able to afford when investing directly (such as downtown office buildings).

The downside of crowdfunding is that currently there are no buy-and-hold investments, which is an important income producing part of your portfolio. This is where direct investment has an advantage. Also, with direct investment you are in charge of your property which can be an advantage if you are experienced. With crowdfunding, you are trusting a manager to do the job well, and it may be difficult for you to determine if you can trust the person or not.

Good luck.

  • Ian Ippolito
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The Real Estate Crowdfunding Review

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