From the GameStop saga of 2021 to the massive cryptocurrency price swings during the pandemic, the early part of the decade has seen the emergence of retail investors as a powerful force within financial markets.
In nearly every country across the globe, nonprofessional traders are making up a larger share of speculative investors. According to Jefferies, retail trading has nearly doubled over the past 12 years, accounting for 44% of trades – up from 25% in 2009.
While retail investing had been growing for decades, the stimulus checks and free money issued by governments during the height of the Covid-19 lockdowns drove retail trading to new heights.
But the retail trend has also gained traction from another unlikely source – fractionalized investing. In recent years, new platforms have sprung up that allow ordinary people to buy pieces of assets that in the past would seem unreachable.
From real estate, to digital assets, to art, fractionalized trading is reshaping entire industries and revolutionizing the way the world invests.
What is Fractional Investing?
Fractional ownership is a process whereby investors can buy a percentage of an asset. While these assets are usually physical objects, they can also extend to non-physical items such as NFTs or stock shares.
Through fractional ownership, unrelated parties can share the benefits of high-value items such as usage rights, income sharing, priority access, and reduced rates (in the case of real estate).
In the end, fractional investing is more affordable and allows for less risk, but also comes with less reward.
Fractional Investing In Real Estate
Fractional ownership in real estate has been in place for the last 30 years, propped up by the development of timeshares in the 1970s.
With a timeshare, also known as a vacation ownership, willing buyers can pay a lump sum upfront (plus annual maintenance fees) to use a property for a preselected time of their…
