You don’t need to commit a million dollars to invest in these alternative assets
Do you feel clueless about the stock market? Already invested in equities but itching to diversify? Here are four companies that provide alternative investment opportunities that may pique your interest. These investments come with unusual risks, they’re not for everyone, and we’re certainly not endorsing or recommending any of them. Prospective investors should do their homework and even consult a financial advisor before thinking about getting into these.
Fundrise
Minimum investment: $1000
Don’t need to be an accredited investor (accredited investors need to have a net worth exceeding $1 million OR your income over each of the last two years must exceed $200,000)
Fundrise is a real estate crowdfunding platform that’s attempting to get rid of barriers to entry for those who want to invest in real estate but don’t have the know-how or capital to do it on their own. Fundrise focuses on midsize assets, which they claim provide opportunities better risk-adjusted returns (and is less competitive than large institutional properties). Last year, the company launched the first ever online real estate investment trusts (eREITs) — one focused on debt assets and the other on equity. A REIT is modeled after a mutual fund, which means the company is actively managing the properties, while you can lean back and take a passive role as investor. And so far, it’s paid off: the debt REIT has a return of 11% and equity has an 8% payout, according to Fundrise COO Brandon Jenkins. The huge upside? You don’t need to be a baller to invest in an eREIT because of the US Securities and Exchange Commission (SEC)’s Regulation A+, which allows small companies to offer and sell up to $50 million of securities over a year to non-accredited investors. But you do have to join the long line of investors wanting to take a piece of the pie — 70,000 people are on the waitlist to invest in one of Fundrise’s REITs, says Jenkins. “We are scaling up to meet the demand.” Fundrise’s eREITs have raised more than $70 million from individual investors and is planning to launch additional funds this fall.
Wunder Capital
Minimum investment: $1000
Must be an accredited investor
Wunder Capital develops and manages commercial solar projects across the country. They actively manage the underwriting, contracting, construction, operations and maintenance of each project. For those looking for a potentially lucrative yet socially conscious investment, solar investment funds like Wunder Capital could be a potential option. Despite being the generation to hold this value system, most millennials — even if they do have the $1000 — aren’t allowed on the platform because they aren’t rich enough. That’s because the SEC, under Regulation D, mandates that only those who are financially stable enough (accredited investors) can partake in these investments. “Right now we’re mainly seeing middle-aged folks, venture capitalists, lawyers, and doctors. Our demographic definitely skews a little older. That’s why we’re spending dollars to try and expand to all investors,” he told Yahoo Finance.
Neighborly
Minimum investment: $5000
Must be an accredited investor
Ever heard of municipal bonds? They’re essentially pieces of debt sold by states, cities, and counties to finance the day-to-day needs of the local government. Agreed, they aren’t the sexiest thing you’ve ever heard of, but Neighborly allows you to invest directly in an elementary school that your children might be attending, the highway that you take every day to work or the bridge you love to walk across — without having to invest in public bonds. The intention is that the investors buying muni bonds will eventually get rid of the need for investment banks to sell the debt to institutional investors. Like Wunder Capital, Neighborly is currently for accredited investors only, but if you have the money and you want to make an investment that has a visible impact in your own community, this could be the right platform for you.
Quire
Minimum investment: $2500
Must be an accredited investor
Ever wonder how you could invest in a private company without running a VC firm? Quire (formerly known as Alphaworks) is one such solution. The equity crowdfunding platform works with companies that have “engaged communities, great products, influential founders and important missions.” They specifically choose companies that are also backed by at least one reputable VC firm. They have crowdfunded parts of Gimlet Media and participated in Giphy’s Series A round. Quire CEO Erin Glenn told Crowdfund Insider that the definition of an accredited investor “should be revised to include professional expertise and financial sophistication, versus determined by income and net worth.” She notes that well educated and financially savvy tech insiders are unfairly being eliminated from the investor pool because they can’t meet the financial standards. Even if you are accredited, there is no guarantee that you’ll be able to invest in one of Quire’s companies. If a fundraising round is oversubscribed, Quire may refund some of your money.
When creating your personal profile on each of these platforms, you’ll be asked to specify the kind of risk you want to assume. Don’t take this lightly. And though the companies are passive investment vehicles, it doesn’t hurt to check your dashboard and updates as they come, whether monthly or quarterly. And remember — investing in general is not for the faint of heart.
Melody Hahm is a writer & reporter at Yahoo Finance, covering entrepreneurship, innovation and technology. Follow her on Twitter.
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