Hands-off investing is the holy grail. You put your money to work and then, like magic, dividends pay your bills forever more. But how do you make that financial goal a reality? If you buy stocks like Google or Netflix, you won’t enjoy any dividend payments. You could look to purchase them and sell call options to produce cash flow regularly or simply purchase a covered call fund, such as the Recon Capital NASDAQ-100 Covered Call ETF, QYLD. But do alternative investing channels exist that require even less work?
Over the past decade, real estate crowdfunding has experienced tremendous growth. In the past if you wanted to invest in commercial real estate, you would have had to pony up some serious cha-ching!
You would also have needed to source deals yourself, approach a bank for financing, manage the legal process, and collect rent payments. It’s no mean feat for the ordinary Joe or Jane investor which is why commercial real estate investing remained the domain of the large investors, such as institutions and accredited investors, until recently.
These days regulatory changes have made it possible to invest in commercial real estate without burning a hole in your pocket. A company like Rich Uncles is one of the many crowdfunded real estate investment opportunities available to ordinary investors. For a comparatively small amount of money, you can get on the real estate ladder. Plus, you don’t need the deep expertise in real estate investing to get started.
Other companies, such as RealtyShares, have come to market too and each of them has their own way to slice and dice the real estate investment play. Some require you to be an accredited investor while others, like Roofstock, require you to actually own property outright – yet they will do all the hard work for you when it comes to due diligence.
If the idea of getting on the real estate ladder doesn’t appeal to you but you still want a hands-off approach to investing, you could look to a robo-advisor. Like real estate crowdfunding, the robo-advisor industry is saturated these days with all sorts of offerings.
Some robo-advisors will manage your portfolio for very low fees and are purely automated, while others like Personal Capital will charge a higher fee but in return will connect you to financial advisors as part of their core service.
Most of them do a pretty good job with tax loss harvesting so you can optimize your gains and losses to lower your tax bill during tax filing season.
Of the most recent crop of robo-advisors that has shot up recently, Ellevest stands out because it is the first robo-advisor to have a laser focus on attracting women. Sallie Krawcheck, the founder of Ellevest, has a distinguished background in the financial industry, and the company has already gone on to raise a bunch of money in venture capital and attracted tens of millions in client assets.
Still, it’s hard to beat the proven method of investing in stocks for the long-term and by doing so you get to avoid paying fees from intermediaries that can add up over time. But if rolling up your sleeves seems cumbersome and you want the opportunity to earn money without doing the homework, then real estate crowdfunding and robo-advisors might be worth exploring.