When you think of fintech companies, you probably think of PayPal Holdings (NASDAQ:PYPL), Block (NYSE:SQ) (formerly Square), or Robinhood (NASDAQ:HOOD). Over the past few years, we’ve seen a surge in other kinds of fintech companies, companies that are democratizing industries once inaccessible to the everyday investor.
Fine art, real estate, and farmland are three alternative investment options that are now easier to invest in than ever before. Here’s what makes each asset class an attractive addition to a diversified equities portfolio.
1. Fine art
Fine art is arguably the best-performing asset class of all time. However, it also has some of the highest barriers to entry of any asset class, let alone any luxury investment category. Buying, safely storing, and selling fine art is a complicated and capital-intensive business.
Founded in 2017 and launched in 2019, Masterworks is a company that is in the business of securitizing art. It buys blue-chip art from well-known contemporary artists like Basquiat, Calder, Warhol, and Rothko and creates shares in that art so that retail and accredited investors can invest. It’s a brilliant business model that is tearing down the barriers to entry into the art market. The fees are reasonable too, as Masterworks only charges an annual 1.5% management fee and takes a 20% cut of future profits. Fees go toward insurance, storage, regulatory costs, appraisals, and administrative expenses. Essentially, Masterworks is a hedge fund for the art market.
Masterworks has an expansive database that helps it select artists whose work it believes will appreciate over time. From there, the company purchases the art, stores it, securitizes it, and then holds it for three to 10 years or sells it on a secondary market. As an individual investor, you can pick from a pool of art pieces and build your customized portfolio.
2. Real estate
Investing in real estate is another specialized field with high barriers to entry. For many Americans, a home could be their only exposure to real estate. Although a home is likely to appreciate over time, it’s also illiquid if it’s a primary residence.
Like Masterworks, Fundrise has securitized real estate investing by making it possible for everyday Americans to invest in residential and commercial real estate. It’s another low-fee solution that can give you exposure to an asset class outside the stock market.
On Fundrise, users select an investment plan based on their investment preferences, such as long-term growth versus supplemental income. From there, Fundrise builds them a diversified portfolio of real estate investment trusts (REITs) with varying time horizons and …….