Long-Term Benefits of Collateralization

One of the main long-term benefits of collateralization is continued access to capital without the need to sell assets. This allows you to take advantage of new investment opportunities while maintaining your current positions. The ability to reinvest funds obtained through collateralized loans is an effective strategy for maximizing wealth growth.

Wealth growth and income generation

Collateralization allows investors to increase their wealth and generate additional income efficiently. By reinvesting funds obtained through collateralized loans, you can take advantage of compound interest and significantly increase your returns. This strategy is especially valuable in the area of tokenized real estate investments, where assets can generate passive income through rentals.

Diversifying your investments using collateralization is another key advantage, as it allows you to reduce the risk associated with the concentration of assets. By having a variety of collateralized assets, you can mitigate the negative impacts of any drop in the value of a single asset and protect your portfolio from market fluctuations.

Practical example of diversification: An investor can use real estate tokens as collateral to obtain loans and diversify their portfolio into different assets, such as cryptocurrencies, bonds and other properties. This strategy reduces total risk and increases return opportunities, because if a particular asset experiences a decline, the impact is offset by the performance of the other assets in the portfolio.

The perfect real estate tokens to collateralize

Reental offers an innovative platform for investing in tokenized properties. Investors can use property tokens as collateral to obtain loans and increase their available capital for new investments. This option allows investors to hold their assets and benefit from long-term appreciation while accessing immediate liquidity.

• Capital Efficiency: By using DeFi lending with real estate tokens, you can invest more than you would originally have, accelerating the growth of your capital.
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• Compound interest: The interest generated by investments can be reinvested, further increasing capital and, therefore, the future interest generated.
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• Diversification of risks: The ability to borrow against assets allows investments to be diversified without the need to sell core assets.

Imagine that you have €10,000 to invest and you decide to use it in real estate tokens through a platform like Reental. These tokens represent a fraction of a property, and in addition, you can use them as collateral to obtain loans. Let's explore how you can grow your capital using this tool.

Let's say you invest €10,000 in real estate tokens. With your €10,000 invested, you can borrow up to 80% of the value of your investment. This means that you can get a loan of €8,000.

The loan has an annual interest rate of 6%. So, out of the €8,000 you borrowed, you'll pay €480 a year in interest. Meanwhile, your investment of €10,000 in real estate tokens generates an annual interest of 10%, equivalent to €1,000 per year.

Year 1 Results:

• Interests generated: €1,000
• Interest paid: €480
• Net profit: €1,000 - €480 = €520

Now, let's see how this strategy is applied and amplified with greater capital. Here we use a breakdown of what this might look like in the first five investment levels:

This example illustrates how you can use DeFi loans backed by real estate tokens to grow your capital significantly. By understanding and taking advantage of these tools, you not only increase your wealth, but you also open the door to new investment opportunities. It's a powerful strategy that can transform your approach to investing and take you to new levels of financial success!

Long investment strategies

Imagine that you are at a fruit market. You know that apple prices rise and fall depending on the season. You can use this information to decide when to buy and sell for the best benefit. Short and long investment strategies work in a similar way.

Long Strategy

The long strategy is like buying apples in the off-season with the expectation that their price will rise in the high season. You buy and hold the asset expecting its value to increase.

Process:

1. Purchase of the Asset: You buy apples (or cryptocurrency) when they're cheap.
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2. Keep the Asset: You keep apples (or cryptocurrencies) waiting for their value to increase.
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3. Selling the Asset at a Higher Price: You sell the apples (or cryptocurrency) when the price has risen enough, making a profit.

Practical example

Suppose an investor anticipates that the price of a cryptocurrency will fall, such as predicting that apples will be cheaper after harvest. Use the short strategy by borrowing 1 BTC when the price is $50,000 and you sell it immediately. Then, when the price drops to $40,000, the investor buys 1 BTC again and returns it, earning $10,000 in the process.

In contrast, if the investor believes that the price of BTC will rise, it's like buying apples in the fall expecting them to be more expensive in winter. Buy 1 BTC at $50,000 and wait for the price to rise to $60,000. By selling the BTC at this new price, the investor makes a profit of $10,000.

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