From the GameStop saga of 2021 to the massive cryptocurrency price volatility during the pandemic, the first half of the decade saw the emergence of retail investors as a powerful force within financial markets.
Non-professional traders make up a large percentage of speculative investors in almost every country in the world. According to Jefferies, retail transactions have nearly doubled over the past 12 years, with him accounting for 44% of transactions, up from 25% in 2009.
Retail investment has been growing for decades, but government-issued stimulus packages and free money at the height of Covid-19 lockdowns have pushed retail trade to new heights .
But retail trends are also gaining momentum from another unexpected source: split investments. In recent years, new platforms have emerged that allow ordinary people to purchase previously inaccessible assets.
From real estate to digital assets to art, segmented transactions are reshaping entire industries and revolutionizing how the world invests.
What is Fractional Investing?
Partial ownership is the process by which an investor can purchase a portion of an asset. These assets are typically physical objects, but can also be extended to non-physical items such as NFTs and stocks.
Through fractional ownership, unrelated parties can share the benefits of high-value items such as usage rights, income sharing, priority access, and discount rates (for real estate).
Ultimately, partial investments are more affordable and less risky, but also less rewarding.
Partial investment in real estate
Partial ownership of real estate has been practiced for the past 30 years, fueled by the development of timeshares in the 1970s.
A timeshare, also known as vacation ownership, allows prospective buyers to use a property for a preselected period of time by paying a single upfront payment (plus an annual maintenance fee).
Since then, new technology has revived the practice of fractional ownership of real estate. In 2021, a new real estate investment platform was launched. Arrived homewhich allows buyers to purchase shares of rental homes and vacation rentals.
When these shares are purchased (minimum investment of $100), investors can earn rental income and a valuation from the property. Actual landlord responsibilities are handled by the Arrived property management team.
Arrived differs from timeshares in that the buyer owns the share. real estate A deed of property is issued, not a deed. time that they can use the house;
When the time is right, Arrived will sell the property and distribute the proceeds to the fractional owners.
So far, Jeff Bezos-backed Arrived Homes has currently fully funded 179 properties worth an estimated $65 million.
Partial investment in NFT
Non-fungible tokens (NFTs) have also benefited from the rise of fractional investments. Around 2020, when the NFT market first started to take off, many of his NFT enthusiasts felt the prices of their top collections went up.
Everything changed in early 2021. Fractional.art It was founded with the aim of democratizing the NFT process and allowing small and medium-sized investors to enter the high-profile NFT series.
Fractional currently serves as a protocol that enables joint ownership and governance of NFTs ranging from CryptoPunks to Bored Ape Yacht Club.
One of the most famous examples of fragmented NFTs occurred after a buyer named PleasrDAO purchased the iconic “Doge” meme, creating the meme cryptocurrency Dogecoin.
After purchasing NFT for $4 million in June 2021, the buyer immediately split the work on Fractional.art, splitting the original 17 billion times.
Today, NFTs are cherished For hundreds of millions of dollars, individual slices sell for pennies.
Cryptocurrencies such as Bitcoin and Ethereum can also be fractionated. While these assets are fungible, meaning that each token is the same and therefore interchangeable, major cryptocurrency exchanges such as Kraken and Coinbase allow investors to purchase individual coins.
partial investment in art
For centuries, the art world has seemed unwilling to accept partial investment due to the exclusivity of space, the low rate of resale of purchased artwork, and the lack of technology capable of accomplishing the process. I came.
In fact, my investment in art was primarily entertainment. high net worth An individual who can afford to take massive risks, most experts advise retail investors to stay away from that space.
Like Arrived Homes, these sites have an acquisition team that finds and selects the best examples of artwork to offer to their members.
After paying the site an administration fee (usually around 1.5%), users are free to buy and sell shares of artworks just like on stock trading platforms.
Partial investment in stocks
Historically, investing in the traditional stock market has been limited to all shares of a company. Blue chip stocks such as Google, Apple, and Microsoft have been off limits to individual traders as individual stock prices for these companies often run into the thousands of dollars.
Today, many online brokerage platforms sell fractional shares, including Fidelity, Charles Schwab, and Robinhood. Other investment apps such as Stash, Cash App Investing and SoFi Invest also offer fractional shares.
Even a few robo-advisors, such as Acorns and Betterment, let you buy fractional shares for your portfolio.
Stock fraction trading has become widely available, but most sites have a minimum purchase amount for stocks to be rounded. Depending on the brokerage firm, you may be required to purchase at least $1 or up to $5 worth of split stock to complete the transaction.