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According to Arrived, when the Federal Reserve started cutting interest rates in September, interest in its equity investment products surged by 79% month-over-month.
The significant uptick underscores a growing investor sentiment that real estate equity investments are poised for substantial growth.
The Fed’s signal has sent ripples through financial markets, with many investors considering alternative investment opportunities. Real estate, particularly through platforms like Arrived, has emerged as an attractive option because of its potential for long-term returns and diversification benefits.
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Equity investments provide opportunities for capital appreciation and profit participation but often have higher risk and volatility than debt instruments.
Here’s a breakdown of the key points:
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Ownership stake: Equity investors gain ownership in a company or asset by purchasing shares. The number of shares owned determines their stake, giving them a proportional claim on the company’s assets and earnings.
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Capital appreciation: A primary objective of equity investing is capital appreciation. Investors aim for the value of their shares to rise over time, allowing them to sell at a profit.
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Dividends: Certain equity investments, such as stocks, may pay dividends – periodic distributions of the company’s profits to its shareholders.
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Voting rights: Equity investors often have voting rights depending on the type of equity and the company’s structure. This allows them to participate in key decisions, such as electing board members or approving major corporate actions.
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Risk and volatility: Equity investments carry greater risk and price volatility than debt instruments. Share values can fluctuate due to market conditions, economic factors and company performance. However, this higher risk offers the potential for greater returns.
Arrived’s equity products offer investors the chance to own fractional shares of income-generating properties, such as rental homes and commercial real estate. The Fed aims to stimulate economic activity by lowering interest rates, which can positively impact property values and rental income.
As interest rates decline, borrowing costs for real estate decrease, making it more affordable to acquire properties. This can increase demand for rental properties and higher rental income, benefiting both property owners and investors.
