What is fractional ownership or let us begin with a much simpler question, do you invest at all? If you haven’t heard before, millennials are not investing at the rate they should probably be investing at.

But what is stopping them from investing? The data speaks, that most millennials don’t have enough money, followed by a lack of education about investments — either they are not aware of how to invest or where to invest. Lastly, they don’t have time to invest.

No matter how we put up the case, the trend showcases how disincentivized millennials feel towards investments and financial talks. The real estate is off-reach to most, stocks are not child’s play, bonds have peanuts to pay, savings accounts — no point to discuss.

The problem of high-value of investments, inaccessibility to multiple asset classes, and lower or risker returns have led to fractional investments. This is simple: rather than buying the complete asset, just buy a portion of the asset.

Fractional Ownership is the future of investments.

1. Passive Income: One can access high-yield assets or blue-chip investments which offer stable and higher returns on a monthly frequency, which is at any point greater than the returns offered by the conventional investment instruments. A conventional bond might offer 5% to 7%, whereas owning Grade A commercial real estate may offer 11% annually with greater capital appreciations.
2. Diversification: With a given amount of money in hand, one has limited asset classes to invest in, largely due to the ticket size of the investment. Fractional ownership offers a portion of a high-valued asset which makes it possible for one to invest in multiple assets with limited investment budgets and thereby reduce the risk associated with a particular asset class.
3. Liquidity: Assets like Real Estate, Vertical Farming are not easily convertible into cash. Investing into small ticket size fractions of high-valued assets makes it easier to transfer the assets, making the conventional illiquid assets into liquid ones.
4. Accessibility: Fractional ownership allows people to invest in multiple asset classes that have been restricted to only HNIs due to their capital requirements. This model will enable you to buy a portion of an asset worth ₹5 crores by just investing ₹5000, while you enjoy the benefits of a high-values Grade-A asset.

How to start with Fraction Investments?

Similar to other investment instruments, you must do the required due diligence and ask yourself if the investment aligns with your financial goals. The other check-points to look at would be if the investment is legal, what is the risk-reward ratio, what are the expected returns, and how long does it require your commitment among others.

About Me

I’m Saarthak Sakar Mehrotra, co-founder of SterlCent, a fintech startup that is making alternative investments accessible to retail investors by fractionalizing assets. These days, I’m working around building a strong demand network for alts assets.