June 28, 2019 Last updated June 29th, 2019 1,884 Reads share

Diversifying Your Portfolio Through Fintech

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Technology has played a huge role in bringing financial inclusion closer to reality- there are no two ways about it. However, the rise of fintech industry which is also driving financial services innovation, has also changed the face of investments in today’s world.   

As financial products are becoming more accessible and flexible, new ways of investments are gaining traction. For instance, the following are some of the best ways you can diversify your portfolio with fintech products:

1. REITs

If you are averse to the volatile nature of stock markets and want to diversify your portfolio in a way that you can enjoy maximum ROI, then you can consider REITs.

REITs stands for Real Estate Investment Trusts that are companies that operate or finance real estate. The reason why these are so popular among investors is that you can invest in expensive commercial properties even when the investment amount is small. In fact, a large number of people invest only a few hundred dollars but get impressive returns of up to 12% or even higher.

Thanks to digitization in the banking and investment sector, it’s possible for investors to put their money in REITs online. For instance, Fundrise is one of the few companies that offer online REITs or eREITs, and according to one of the best Fundrise reviews– it’s one of the best platforms to use for online REIT investments and diversity your portfolio in an easy manner.

2. Cryptocurrencies

Despite the fact that popular virtual currency Bitcoin spiked the interest of investors around the world only to go through its share of ups and downs, and that many countries imposed restrictions or complete bans on the same, the fact is that it gave us a revolutionary technology- blockchain.

The underlying technology of Bitcoin i.e. blockchain gave a new level of security to IoT, made it possible to create watertight contracts for real-estate, business agreements, etc. in which third parties are unnecessary, and now looks to bolster the banking industry by offering cheaper, faster, and more secure payment solutions. This is why cryptocurrencies that are based on the technology are also good options for modern investors. There are many mobile apps and websites through which you can invest any amount of money in popular virtual currencies like Bitcoin, Ethereum, Litecoin, etc.

3. Peer-to-Peer Lending

Gone are the days when people had to go from one bank to another in search of personal loans. Thanks to the popularity of online lending platforms, borrowers can now easily apply for loans through mobile apps from any location and of any amount.

One of the most common ways to get a loan online is through a Peer-to-Peer lending platform. In this, borrowers can submit their documents online and raise their loan requirements. There are individuals who are also the lenders on the platforms who can review the loan applications and disburse funds to earn interest on the amount just like a standard bank. The borrowers get the funds rather fast and easily, and the lenders can invest their money in a non-traditional manner to diversify their portfolios.  That said, if you are new to P2P, then be sure to read about smart tips for investing in P2P lending before you get started.

4. Virtual Bonds

Virtual bonds are also something that is becoming quite popular in the fintech industry. For instance, sovereign gold bonds (SGBs) are considered much safer than investing in real gold that comes with certain risks and costs.

Individuals who invest in SGBs get assured interest of 2.5% per year and they can trade the bonds on the top stock exchanges, keep them in demat accounts, or even use them as collateral when applying for loans. However, there are a few things you need to know before you invest in them which are:

  • SGBs are not available for investments all the time. The government opens a window for the sale of SGBs from time to time. You can expect it to happen every few months and the window to remain open for a week or so.
  • The tenure of SGBs is 8 years, although the lock-in period is 5 years. When the five years are completed, the exit option can be availed based on the interest payment date. So, if you are investing for a specific purpose, then be sure that your goal is at least 5 years away.
  • Returns on SGBs depend on gold prices at the time of maturity, or prematurity in case you exit sooner. That said, you do get a fixed interest of 2.5% which is not compounded.

So, there you have it- some of the best investment options in the current market that can be considered for good returns. That said, whatever option you decide to pick, make sure you research first. Good luck!

Tom Holmes

Tom Holmes

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