investors weren’t already cognizant of the need for a
diversified investment portfolio, after the recent “great
correction” they most certainly are now. The most common
way people diversify their portfolios is between equities (stocks)
and fixed income (bonds), two asset classes that generally move
in opposite directions.
However, astute investors seek additional diversification by
further dividing their fixed income portfolio. This is where
trust deeds play a critical role. While traditional bonds are
considered “fixed income,” prices vary and sometimes
dramatically so. However, if you place some or all of your fixed
income investment in trust deeds – the returns for which
are truly fixed – you add an element of stability, thereby
lowering the volatility of your entire portfolio.
Diversification aside, investors should not overlook the investment
opportunities in the real estate market itself. It’s a
large and vital aspect of the economy and no portfolio should
be without it. You include real estate in your portfolio for
the same reason you include energy stocks, or retail or technology.
Overlooking key economic sectors will create gaps in your portfolio,
resulting in missed opportunities and lowered diversification.
Trust deeds are a convenient and sensible way to take advantage
of the opportunities of real estate investing, with much less
risk and volatility than just purchasing the underlying asset.
The current income feature of trust deed investing is often
a big part of what attracts investors. Although some choose
to reinvest their income back into principal, many others rejoice
in receiving monthly interest payments in the mail.
While trust deed investing is a more niche investment segment
than many of its alternatives, Rama Capital Partners bridges
that gap for its investors by managing all aspects of the process
– from loan origination to payoff, providing a true seamless
investment experience for our investors.