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  • Brian
  • July 22, 2019 10:11:26 PM
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WhatToInvestIn.Today provides an in-depth discussion of alternative investment opportunities. Follow along as we take you off Wall St and explore real estate, startups, debt and equity investments.

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FOREX.com

FOREX Trading on FOREX.com: A look at the Standard Trading Account features and trading process FOREX Trading on a Simple Platform A quick FOREX, or foreign exchange, google search will return FOREX.com at the top of the list, sure that’s purposeful on FOREX.com’s part. So, since they’ve put in so much work to be the […] The post FOREX.com appeared first on What to Invest in...

FOREX Trading on FOREX.com: A look at the Standard Trading Account features and trading process

FOREX Trading on a Simple Platform

A quick FOREX, or foreign exchange, google search will return FOREX.com at the top of the list, sure that’s purposeful on FOREX.com’s part. So, since they’ve put in so much work to be the first google search result, I’ll dive into their platform and create a standard forex trading account. 

First, FOREX trading is not for the feint of heart. It is somewhat complex and is very risky. Macroeconomic factors, monetary policy, government and regional stability, as well as countless other variables all impact how currencies trade in relation to each other. You can quickly swing from a substantial profit to a complete loss in no time. 

FOREX trading on FOREX.com

For the most part, currency trading is used by companies, banks, and major investment firms to facilitate money movements or hedge against fluctuations in currency rates, which might impact their operations. That doesn’t mean you can’t make money trading currencies. So, if you’re sure FOREX trading is something you’re wanting to pursure, let’s get started. 

FOREX Trading Account Options

Like many platforms, FOREX.com offers multiple account types to cater to novice traders as well as active traders and everything in between. 

FOREX.com Account options

FOREX.com offers 3 tiers of accounts for users. The Standard Account offers a desktop trading platform or an online portal for trading forex. The Commission Account is for more active traders looking to reduce the costs of trading based on the spread. This account reduces the spread and adds a $5 commission per 100k traded, so a lot more activity than most users. Finally, the Pro Account is for professional traders transacting millions in trades per month. The minimum trade size for this account is 100k and commissions are based on monthly trading volume from $0 to $2 billion.

I’m not an active trader, and my forex trading is focused on opening another option to diversify my portfolio and gain exposure to changes in US monetary policy and macroeconomic changes. Because I’m not expecting to become a high volume trader, I’m going to stick to the Standard Account, deposit a small amount to get started and use their web portal to trade. 

Opening a FOREX Trading Account

Opening an account is easy and straightforward. FOREX.com requires name, address, social security number, date of birth and a few other pieces of information get started. The process takes about 5 minutes. 

Once you open your account, you’ll need to fund your account to start trading forex. FOREX.com offers several options to fund your account – ACH, wire transfer or debit card. I tried to use ACH, but PLAID was unable to access my bank account. So, I had to use my debit card. Not a huge deal since I depositing only a few hundred dollars. Might be a problem if I wanted to transfer a large amount of capital. 

Using my debit card to fund my account was easy. No issues with my bank or FOREX.com. The $500 deposit was immediately available for trading. 

FOREX Trading Account Features

The web portal for trading on FOREX.com’s Standard Account is not overly complex. It provides windows for news, market prices, current positions, and options for currency pair charts. The platform is customizable, so play with the windows and figure out what information is most important to you.  

For my trading, I don’t need much info. So, I trimmed my main screen down to news, positions, and market prices for currency pairs. If I want to see a chart, I create a new tab with the currency pair I’m interested in analyzing. 

Forex trading screen

Placing a Trade

Again, FOREX.com has made the FOREX trading process easy. Once you’ve identified a trade you want to make, simply click on the “Buy” or “Sell” button for the desired currency pair. 

Here, I’ve selected to buy the EUR/USD pair. This means I’m buying 10,000 Euros and selling USD. I’m expecting the Euro to strengthen which means I will get more USD when I sell it. I’ll get into this and other trades in future updates. 

Forex trading page after

After placing the trade, it appears in my Open Positions window and I can easily see the value of my trade. From this window, I can sell the currency pair to close the position, set a limit order and place a stop loss order. 

Get Started Trading FOREX

Think FOREX trading and FOREX.com are for you? That’s great, use the link below to get started. 

Disclosure Statement

The statements in this post are my opinion and reflect my personal experience investing through FOREX.com. I cannot, and do not, guarantee that your results will be similar. Please, invest carefully and understand that your investment may lose value. 

I do not receive compensation from FOREX.com for writing or maintaining this post. However, I do receive an affiliate fee if you use the link above to open an account. 

Questions? Contact Me

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End of Peer to Peer Lending?

The End of Peer to Peer Lending? LendingClub Signals a Major Shift Away from Peer to Peer Loans. LendingClub Decides to End Peer to Peer Lending My weekly updates are meant to provide insight into the weekly ebbs and flows of peer to peer lending through LendingClub. This week will provide some of the usual, […] The post End of Peer to Peer Lending? appeared first on What to Invest in...

The End of Peer to Peer Lending? LendingClub Signals a Major Shift Away from Peer to Peer Loans.

LendingClub Decides to End Peer to Peer Lending

My weekly updates are meant to provide insight into the weekly ebbs and flows of peer to peer lending through LendingClub. This week will provide some of the usual, but I have to address the news released by LendingClub this week. 

On October 7th, I received an email from LendingClub. It stated:

As we move towards becoming a full-spectrum fintech marketplace bank, we have looked closely at our current and future product suite and have started development of new products to help our members keep more of what they earn and earn more on what they keep. Unfortunately, under a prospective banking framework, it is not economically practical for LendingClub to continue to offer Notes. So, we had to make the difficult decision to retire the Notes platform effective December 31, 2020.

They also posted a notice on the investor account page. It’s pointed out on the right hand side of the screenshot here.

LendingClub ends peer to peer loans

What does this mean? Well, it’s the end of peer to peer investing through LendingClub. I have no idea what they have in mind, but as they merge with a regulated bank it’s unlikely that they will offer notes to individual investors. I imagine they are moving toward originating and holding loans to operate more like a traditional bank. Regardless, they’ve stopped accepting new investors. So, these posts aren’t much help unless you’re already a member.  

Peer to Peer Loans Continue to Payoff Early

Despite LendingClub’s decision to end their peer to peer lending program, I’m still actively investing and building a portfolio that will continue to pay for the next 5 years. This week’s cash flows were in line with expectations at $138.89.

Peer to peer loan activity

This screenshot shows the loan cash flows for my account this week. Most of them are typical daily payments, except the payments received on October 5th. This day’s $111.62 stands out as atypical. The majority of this came from a prepayment of $70.56, which almost fully paid off the principal balance of one of my loans. 

Another week, another prepayments – not necessarily ideal given LendingClub’s announcement. Prepayment risk just became a major concern since after December I will not be able to replace these loans. I’ll quickly reinvest this money in a 5-year loan. 

Investments Made This Week

As my account rose above $250 in cash available, I quickly identified a 5-year loan to invest in. 

LWhat I like:

  • Verified income
  • Monthly payment less than 4% of the gross income
  • Older individual – assuming 1st credit line at 18 so they should be mid-30s
  • 5-year loan – extends my portfolio’s life span with LendingClub
  • Loan amount almost equal to revolving credit balance
  • Director PMO with 5 years of employment

What I dislike

  • Lots of open credit lines, but that’s a small thing.
Investment: $250

Disclosure Statement

The statements in this post are my opinion and reflect my personal experience as an investor in peer to peer lending through LendingClub’s platform. I cannot, and do not, guarantee that your results will be similar. Please, invest carefully and understand that your investment may lose value. 

I do not receive compensation from LendingClub for writing or maintaining this post. However, I do receive an affiliate commission if you use the link below to open an account to invest or borrow. 

Since LendingClub is not accepting new investors, borrowing through them is the only option I can provide. If you close soon, maybe I’ll be able to invest in your loan. 

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Peer to Peer Lending Cash Flows

Do LendingClub borrowers repay their loans? A look at one week of cash flows from these peer to peer loans. Peer to Peer Loan Cash Flows As I mentioned in last weeks post, there are active weeks and off weeks. Lenders, including those facilitating peer to peer lending, work to match payments with borrower’s paycheck […] The post Peer to Peer Lending Cash Flows appeared first on What to Invest in...

Do LendingClub borrowers repay their loans? A look at one week of cash flows from these peer to peer loans.

Peer to Peer Loan Cash Flows

As I mentioned in last weeks post, there are active weeks and off weeks. Lenders, including those facilitating peer to peer lending, work to match payments with borrower’s paycheck cycles. The active weeks tend to be around the 1st and 15th of each month, which coincides with a lot of people’s pay schedules. The off weeks cover the rest of the month. This week was an active week with greater than expect loan cash flows. 

I expect to receive just over $400 in principal and interest payments every month. That fluctuates somewhat depending on early and late payments. However, this week, I received a surprising $373.08 in payments from borrowers. A significant portion of this cash flow came from one loan repaying early. 

LendingClub peer to peer lending cash flows

So, this week my portfolio performance was mixed. That’s somewhat typical of peer to peer lending. On the plus side, several loans that were late or in their grace period returned to a current status. The unexpected early payoff of a loan is good, but not necessarily great. A significant negative, I had one loan progress into default after several months of non-payment. I expect this $105 in principal to be charged off soon. 

Peer to Peer Loan Risks - Prepayments & Late Payments

Most investors recognize non-payments and late payments as significant risk factors. Prepayment risks are not necessarily an obvious risk to your portfolio and cash flow. While not as detrimental as defaulting loans, it is still something to be aware of and understand. 

:endingClub weekly loan cash flows

This screenshot shows the loan cash flows for my account this week. Most of them are typical daily payments, except the payments received on September 28th. This day’s $270.72 stands out as atypical and brought this weeks cash flow to almost 95% of my monthly expected cash flows. The majority of this came from a prepayment of $185, which paid off the principal balance of one of my loans. 

LendingClub prepayment

Are prepayments bad? Not necessarily. The prepayment risk primarily focuses on the risk of not being able invest in a new loan of equal quality and interest rate. LendingCLub originates a lot of loans, so you should be able to replace a prepaid loan with a new issuance similar to the one you lost. The bad part is that I only earned $17.47 in interest on this loan. That’s well below the $63 I was expecting to bring in this year from that loan. 

Investments Made This Week

Last week, I covered some of the main criteria I use to evaluate peer to peer loans. I won’t go into that kind of detail again. I’ll simply post the screen shot and break it down to what I like and dislike. I will mention a slight shift in my strategy. As the economy is struggling, I’m leaning more toward loans that are in the $10,000 range. The lower sized loans may be more manageable for the borrower in the event of a loss of employment or major life change, e.g. death or disability. 

With the added cash flow this week, I made 2 investments – one for $100 and another for $250. 

What I like:

  • Verified income
  • Monthly payment less than 5% of the gross income
  • Older individual – assuming 1st credit line at 18 they should be mid-40s

What I dislike:

  • No job title/length of work given, so its hard to guess how insulted they are from economic downturns
  • Lots of credit card debt and this loan does not wipe it all out. 
  • Delinquency within the past 18 months
  • 5-year loan – greater risk of default
Investment: $100

What I like:

  • Verified income
  • Monthly payment around 10% of the gross income
  • Older individual – assuming 1st credit line at 18 they should be mid-30s
  • 3-year loan – slightly lower risk of default
  • Loan amount almost equal to revolving credit balance

What I dislike:

  • District Manager – infers retail or food industry. Could be susceptible to an economic downturn  
  • Delinquency within the past 18 months
Investment: $250

Clearly, I find the 5-year loan more risky than the 3-year loan. While I can’t receive a higher interest rate for the 5-year loan, I can offset the risk by investing a lower amount than I normally would. Why not put all $350 into the 3-year loan? Well, I want to continue to diversify – just in case. 

Disclosure Statement

The statements in this post are my opinion and reflect my personal experience as an investor in peer to peer lending through LendingClub’s platform. I cannot, and do not, guarantee that your results will be similar. Please, invest carefully and understand that your investment may lose value. 

I do not receive compensation from LendingClub for writing or maintaining this post. However, I do receive an affiliate commission if you use the link below to open an account to invest or borrow. 

Unfortunately, as of October 8th, LendingClub is no longer accepting new investors. They will cease to offer notes to investors on December 31st, 2020. 

If you’re interested in borrowing from LendingClub, they are offering auto, personal and other loans as a regulated bank. 

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Robinhood

Are Stocks Bought Thru Robinhood’s App Really Free? A look at Robinhood’s platform and business model. Robinhood – Zero Commission Trading Robinhood is a pioneer is equity trading and opening the markets to more individual investors. They introduced zero commission trading and changed the industry. Their model forced industry giants like TD Ameritrade, Charles Schwab […] The post Robinhood appeared first on What to Invest in...

Are Stocks Bought Thru Robinhood's App Really Free? A look at Robinhood's platform and business model.

Robinhood - Zero Commission Trading

Robinhood is a pioneer is equity trading and opening the markets to more individual investors. They introduced zero commission trading and changed the industry. Their model forced industry giants like TD Ameritrade, Charles Schwab and more to alter their models to compete with this startup. 

Robinhood has become incredibly popular among younger investors. There are a lot of reasons for it’s popularity, but it’s certainly made its mark through the zero commissions on trades. They’re working to pioneer similar offerings in cryptocurrencies and more. 

In this post I’ll go through the platform and some of the features available. While zero commission trading is great, there is no such thing as a free lunch. So, I’ll also cover into some of the ways Robinhood makes money and what it means for investors. 

Investor Accounts

Robinhood Account Page

To be completely honest, I opened my Robinhood account prior to TD Ameritrade and others offering zero commission trades. Once the major platforms matched Robinhood, I moved back to TD Ameritrade, my preferred platform. To show all the features of Robinhood, I’ve deposited $1000. That will allow me to make some stocks and options trades to demonstrate some of the features. 

One of the best features of Robinhood, besides the zero commission trades, is the instant deposit.Your funds, up to $1000, are available instantly for trading. Most platforms provide instant availability for stock trades, but not for options. I typically wait about 5 business days to trade options on TD Ameritrade. While not a long time, it can be frustrating when the market is making large moves. 

Zero Commission Stock Trading

Robinhood stock trading is very simple. When you login to your account, you’ll see a search box at the top of the screen. Just enter the company name and select the stock symbol you are interested in buying. For our example, I selected a market favorite – Apple. 

After selecting Apple, I’m taken to the stock screen. Here, I can view stock price, a historical price chart, company info, news, analysts ratings and earnings info. This is far less than the information available on older brokerage sites, but it works for what we need.

Robinhood Stock buying

Once I’ve decided to buy Apple, all I need to do is enter the amount I would like to invest. Here, I’ve input $500. Notice that Robinhood has calculated a partial stock amount. This is because they allow for fractional stock purchases. To verify this, I invested $100 in Apple at $114.45. I received 0.873591 of Apple stock in my account. Pretty easy.

Zero Commission Option Trading

Most retail investors dabble in stocks, especially the popular ones like Apple, Microsoft, Tesla and so on. For those interested in hedging against losses, generating revenue or taking high risk positions, options trading provides an avenue to accomplish some of these goals. 

Robinhood Options

When you navigate to the stock screen, you’ll see a box below the stock information that says “Trade AAPL Options.” Select this box to open the options screen. The image above is the Call option section for Apple. It provides the current stock price and the prices for call options at different strikes for the expiration selected. The buttons at the top allow you to switch between calls and puts. 

Robinhood Options

Besides the type of option and the strike prices, the expiration is another important option. To view expiration dates available, simply click the box and select the expiration from the drop down. The options prices will change based upon your selection. 

Robinhood Option Order

Once you’ve decided on the type of option, the strike price and the expiration date, click the + symbol to add the option to your order screen. Unlike the stock purchase screen, fraction purchases are not available for option. So, enter the number of contracts you’d like to buy. Remember, each contract is worth 100 shares so the cost will be the option price * 100. 

Zero Commission Trading - How Can Robinhood Do it?

Robinhood is a very successful early stage company. The have multiple companies tied to a parent company. Here, I’ll quickly cover the financials for Robinhood Securities, LLC the registered broker/dealer arm of Robinhood. This is the entity that process all of your orders.

First, note that Robinhood Securities has over $3 BILLION in assets. A large portion of that ($2.4B) is cash held for users and other broker/dealers. So, it’s not really Robinhood’s. But, once it’s removed the still have around $1 billion in assets. Safe to say, they’re doing well.

Next, let’s look at receivable from users. The receivable from users represents “margin” loans provided by Robinhood to users. This allows users to buy stock and options on credit in return for a pre-determined interest rate. Robinhood currently has $658 million in loans to users. 

Now, let’s turn to the Securities Loaned. It is common practice for brokerages to lend stock held by clients to other institutions. This is primarily so that the second firm’s clients can “short” the stock. That is, they borrow from Robinhood, sell it in the market and hope to buy it back cheaper to return to Robinhood. Some brokerages share this income with their clients, Robinhood does not. They are essentially helping you buy stocks to then lend to other firms to bet against your position. 

The last major piece is the Receivable from Brokers… This represents the amount due from brokers for routing users’ orders for execution, receivables for securities not delivered by the Company to the counterparties by the settlement date (“securities failed to deliver”), and interest receivable on securities borrowed. This is the income Robinhood generates. It’s difficult to know how much exactly, but a portion of this $20 million is a fee paid by brokers to have access to users orders. Other firms are paying Robinhood for the right to fill orders placed by their users. It could be that they need the volume, or that they are prefer Robinhood’s typically unsophisticated users over more experienced traders. Robinhood says these fees are not taken into account when routing orders, but who knows for sure.  

Do Your Homework

My blog is a great place to start, but I encourage you to conduct thorough due diligence prior to investing through Robinhood. To help you get started, I provided the links below to connect you to the Delaware Division of Corporations website, the SEC and CFPB. 

Ready to Join Robinhood?

That’s great! There’s no reason to be turned off by Robinhood’s business model. After all, they are in business to make money and they do so by providing you and I with something of value. In this case, it’s simple, zero commission trading. 

Us the “Open Account” button to get started. As a bonus for using this link, you get a free share of stock and I get a free share of stock. It’s a win-win!

Disclosure Statement

The statements in this post are my opinion and reflect my personal experience investing through Robinhood. I cannot, and do not, guarantee that your results will be similar. Please, invest carefully and understand that your investment may lose value. 

I do not receive compensation from Robinhood for writing or maintaining this post. However, I do receive a free stock if you use the link above to open an account to invest or borrow. 

Questions? Contact Me

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There’s a Chance

Peer to Peer Loans on the Edge of Default: So there’s a chance… Teetering on the Edge of Default This week was good week with $52.43 in payments coming in from my peer to peer loan portfolio on LendingClub. That’s a respectable weekly cashflow considering it was the 3rd week of the month, which is […] The post There’s a Chance appeared first on What to Invest in...

Peer to Peer Loans on the Edge of Default: So there's a chance...

Teetering on the Edge of Default

This week was good week with $52.43 in payments coming in from my peer to peer loan portfolio on LendingClub. That’s a respectable weekly cashflow considering it was the 3rd week of the month, which is typically less active. A bonus is that two loans, one late and one in it’s grace period, became current. Always a relief to see borrowers bring their loans current rather than allowing the loan to default.

The highlight of the week was undoubtedly the rebound of a single loan. I purchased this loan for $85 with over $100 in outstanding principal. Since I purchased it at the end of May, the borrower had made 3 interest only payments. I was sure this one was headed for the charge-off pile. Surprisingly, the borrower paid 4 months of past due payments, which brought their loan current and saved it from default.

LendingClub Rebound Sep

Peer to peer loans are risky, so I’m excited to receive the payment. But, I’m also happy for the borrower. I hope this is an indication that the borrower is overcoming any issues he/she was facing and they’re able to stay on track to full repayment. 

LendingClub Repayments Received & Fees Paid

The takeaway this week is – bring a loan back from the brink of default is expensive, for the lender.

LendingClub Rebounds Fees

As I mentioned, this week provided a little unusual to receive about an 8th of my expected monthly cashflow during this part of the month. The majority of payments are received around the 1st and 15th. So, an off week with just over $50 coming in is a little bit of a surprise. The cash combined with what I was holding from the previous week takes me over $100, which I will use to invest in one more peer to peer loan this month. 

Fees are part of the game. It’s a small price to have LendingClub process payments. The unfortunate part is that sometimes, ok a lot of time, peer to peer loan borrowers don’t pay on time. That requires LendingClub to contact the borrower via email, mail and phone. All that takes money, and they pass some of that expense on to the investors. As you can see above, the loan rebound cost me $3.45, or 18% of the principal and interest payment received – ouch. 

Investments Made this Week

After the 15th of the month, I typically have between $200 and $250 in cash to invest in new peer to peer loans. This month was no different, so I searched for a new Grade C loan to invest in.

The screenshot here breaks down the loan details. So why did I chose this one?

  •  First, I look for verified income. This mean the borrower has provided proof of monthly income – pay-stubs, taxes, etc. This one is verified, so check that off. 
  •  Second, what’s the monthly payment – can they afford it? I like to see a payment less than 10% of their gross monthly income. This loan is at 6.7%, so good there.
  •  Does it make sense? The borrower is asking for $10,000 to consolidate debt. They have just over $10k in credit cards debt, so seems reasonable.

Peer to Peer Lending Risks

As with all loans, you never know the borrowers intentions to repay the loan or not – information asymmetry. The best you can do is look at the request and try to find red flags. 

  • The low time of employment and job title give me a little pause. The borrower has been a sales and leasing consultant for 1 year. Sales jobs are unpredictable and have a high turnover rate. There’s a risk this borrower will become unemployed. 
  • Delinquencies and public records. I’d prefer to have a borrower with no public records, but sometimes that’s not realistic with Grade C notes. The good news here is that it’s been almost 2 years since the public record and 1.5 years since their last delinquency. I take that as a positive sign – we’ll see.  

Disclosure Statement

The statements in this post are my opinion and reflect my personal experience investing in peer to peer loans through LendingClub. I cannot, and do not, guarantee that your results will be similar. Please, invest carefully and understand that your investment may lose value. 

I do not receive compensation from LendingClub for writing or maintaining this post. However, I do receive an affiliate commission if you use the link below to open an account to invest or borrow. 

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Fundrise

Are Fundrise eREITs a Good Investment? A review of Fundrise’s platform, investment options and returns. Fundrise – Private Real Estate Investing through eREITs Fundrise is a decade old company focused on opening the commercial real estate market to everyday investors through electronic Real Estate Investment Trusts, or eREITs. REITs are not a new concept. They’re […] The post Fundrise appeared first on What to Invest in...

Are Fundrise eREITs a Good Investment? A review of Fundrise's platform, investment options and returns.

Fundrise - Private Real Estate Investing through eREITs

Fundrise is a decade old company focused on opening the commercial real estate market to everyday investors through electronic Real Estate Investment Trusts, or eREITs. REITs are not a new concept. They’re one of the oldest investment vehicles out there. Fundrise has opened private REITs to the general public by lowering investment limits and offering a wide variety of investment options to meet investor’s needs.  

In this post, I cover the website, features for investors, investing process, my experience so far, and provide links to get started selling shares or investing through Fundrise. 

Want to skip the blog and get started in eREITs? Start Here!

Fundrise eREITs Home

Getting Started with Fundrise eREITs

First, real estate investing should be seen as a long-term investment. REITs and eREITs are legal companies established to use investor capital to buy and hold real estate properties. This means that you should be prepared to hold your position for years, if not decades. If that matches your investment time horizon and your looking for simplified real estate investing, then Fundrise eREITs might be a good option for you. 

Opening and funding an account with Fundrise is pretty straight forward. Simply create your account, select your investment level and transfer funds via Plaid. Unlike many of the platforms I cover, you are not required to be an accredited investor to invest through Fundrise, which allows more investors to take advantage of their offerings. 

They were offering a starter level at $500, but it appears they have removed that option. Now, the lowest investment level available is $1,000 – the Core Level. This is the level I am currently invested in. I’m in the long-term growth plan, but they also offer income generating and a balance between growth and income. Your selection depends on your overall goals – growth or income. 

For those making larger investments, Fundrise offers more benefits. The 2nd level, is the Advanced investment plan. Like the Core plan, this plan offers 3 options between growth, income, or a balance between the two. The main benefit is the ability to select from a larger variety of funds. While the core funds focus on multi-family and industrial properties, Advanced investors have access to single-family homes and more.

Finally, for those looking to invest $100,000 or more, there is the Premium plan. Fundrise doesn’t offer a lot of details, but it appears to be private funds focused on large investment opportunities. Investors have to inquire about this level and talk to their sales team to determine if it a right fit or not. I don’t think I’ll be at this level any time soon. 

What am I buying and how has it performed?

Like a lot of alternative investment vehicles, you are not investing in the underlying asset. You are, in fact, investing in a fund – typically an LLC – that acts as the purchaser and manager of the assets. For real estate, this is the common REIT. With Fundrise, your investment is spread across multiple eREITs, focused on growth and income, depending on the plan you select.

Lets look at some of the performance info.

Fundrise Performance

The graph above shows the total returns from Fundrise investment funds. At first glance, this chart looks like the funds are providing exponential returns. In actuality, as the investment pool has increased, you would expect the total returns to increase. The important part is the Average Annualized Returns. As expected, their returns range between 9% and 12.5% over the past 6 years. 

My account

So, how has my portfolio performed? My initial investment came in June of 2019 in the amount of $500. Then, that was the minimum investment for the Starter plan. After a year, my investment had grown to $546.02 or 9.2%. In June of 2020, I invested an additional $475 to switch to the Core Plan. To date, my $975 total investment has returned $61.48.

Investor Account

Investing in real estate is complicated. Investing across numerous REITs is even more complicated. The investor account section provides an overview of your account and breaks down the returns into somewhat simpler and easier to understand sections. 

Fundrise eREITs performance

Returns are arguably the most important aspect of your investment. I have goals, and I am interested in how my investment is performing with respect to my goals. The account section allow me to dive into performance per year and understand where my returns are coming from – dividends or appreciation. 

Fundrise eREITs Dividends

Dividends are representative of cashflow from properties. This can be income generated from rents or from selling properties. Fundrise calculates dividends on a quarterly basis and distributes them the month following the quarter’s close – January, April, July, and October. 

Fundrise eREITs

The most difficult aspect of investing through Fundrise is understanding the tax implications. I have invested the minimum amount, $1000, and my investments are spread across 12 different eREITs. Therefore, I will receive 12 different K-1s from Fundrise at the end of the year. That means including the information for all 12 K-1s in my 2020 income tax filing – a little extra paperwork. 

Fundrise Financials

As with any investment, it is important to understand the underlying financial situation of the company you are investing with or through. Luckily, companies as mature as Fundrise are easy to find and research. 

The screenshot here is the semi-annual report filed with the SEC by Fundrise’s parent company – Rise Companies Corp. It provides an overview of the companies revenue, expenses and net income for period ending June 30, 2020. The entire filing is available on the sec.gov website. 

Overall, Fundrise is performing like many early stage startup companies. They brought in over $6.2M in operating revenue and spent over $15.3M on maintaining their website, sale & marketing, conducting business, facilities and so on. It’s not unusual for startups to burn through cash like this. Since 2017, Rise Companies Corp has conducted 10 capital raises totaling just under $60M – they’re doing fine. 

Fundrise financials

If you read through their semi-annual report, you’ll find a dizzying array of LLCs, funds, REITs, general partnerships and so on. This creates a high level of legal complexity that carries some risk. Ideally, this structure provides insulation from risk and limits potential legal problems to one entity. It’s not important to understand the inner workings of the company. But, you should be aware that the company runs a complex business model, which adds some risk. 

Withdrawing Funds from Fundrise

Like most real estate investments, you should view Fundrise as a long-term investment. Your money is invested in real property and that is, understandably, very illiquid. Any capital that Fundrise holds for redemptions, adversely affects the eREITs returns because that capital is idle rather than invested in property and earning returns. However, if you need yoursome or all of your capital returned, you must submit a request to Fundrise. If they approve your request, expect it to take up to 60 days to receive your capital and you’ll likely be charged fees for the withdrawal. 

Do Your Homework

My blog is a great place to start, but I encourage you to conduct thorough due diligence prior to investing through Fundrise. Research REITs, real estate and Fundrise itself. To help you get started, I provided the links below to connect you to the Delaware Division of Corporations website, the SEC and CFPB. Make sure you search by Rise Companies Corp – that’s the parent for Fundrise. 

Join me on Fundrise

Interested in joining me in invetsing through Fundrise eREITs? That’s great! The link here will get you started.

Real Estate can be an engaging and lucrative investment option. As discussed above, Fundrise is a unique platform providing easy access to this industry and helping you navigate the complexities. I’m looking forward to investing along side you.

No account fees for you and me! If you use the link above to create your account, we both get a few months of investing without having to pay advisory fees. Not a bad deal!

Disclosure Statement

The statements in this post are my opinion and reflect my personal experience investing thru Fundrise. I cannot, and do not, guarantee that your results will be similar. Please, invest carefully and understand that your investment may lose value. 

I do not receive compensation from Fundrise for writing or maintaining this post. However, they do waive my advisory fees if you use the link above to create an account. 

Question? Contact Me

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