Different investment alternatives for investors

With the evolution of the financial market, investment options have diversified significantly, ranging from digital assets to the direct purchase of real estate. Within this scenario, the tokenized investment in real estate projects has emerged as an innovative and accessible option, especially attractive to small investors. This article will analyze how the tokenization of real estate compares to traditional investments and will provide a detailed guide to help readers decide which option is best for them.

An Overview of Investment Options

Before we dive into the investment options that are emerging today, it's important to understand the existing traditional investment options. These options provide us with a reference point for understanding the advantages and disadvantages of tokenization.

Invest in buying real estate personally

Investing in a flat directly has long been a solid strategy for building wealth. This approach involves buying properties with the objective of renting or selling them at a higher price in the future.

Buying property for rent requires significant initial capital. In addition, landlords must manage maintenance, find suitable tenants, and handle legal and management issues that may arise. This process can be complex and demanding, especially for those who have no previous experience in property management.

In this first option, we talk about a return that could be between 7% and 14% approximately, taking into account all the time and stress that one spends on this source of income.

Stocks and Bonds

Stocks and bonds are traditional financial instruments that offer different risk and return profiles. This option is commonly taken by several investors and a cumulative return of +10% is estimated on an annual basis if you have a long-term view, now we will see why.

Stocks are known for their high volatility, which can lead to significant returns but also to large losses. Bonds, on the other hand, are generally safer and provide a stable income stream, albeit with a lower return.

While stocks can offer high returns, their associated risk is considerable. Bonds tend to be less risky but have a lower return, making them more suitable for conservative investors.

Gold and Paid Accounts

Here we find a more stable option with little volatility but a much lower return. Gold and remunerated accounts represent the most common investments for people who are just looking to protect their savings.

Gold is seen as a safe haven in times of economic uncertainty, maintaining its value or even appreciating when markets are volatile. Paid accounts offer modest interest rates and are designed to be a safe short-term investment option.

While these options are safe, they don't provide the high returns that other types of investments can offer, which may not be enough for those looking to grow their capital more aggressively.

Tokenization of real estate and its new paradigm

La tokenized investment in real estate such as the one offered by Reental is an emerging methodology that allows investors to enter smaller positions in different real estate projects through the use of digital tokens.

Instead of buying an entire property, investors can buy tokens that reflect the real world value of the property. These tokens are issued on a blockchain network, ensuring transparency and facilitating the trading of these assets.

Tokenization allows investors to participate in the real estate market with minimal investment, providing access to investment opportunities that were previously reserved for large capitals.

Tokenization has revolutionized access to the real estate market, allowing small investors to participate without the need for large capital. We will list some of the main advantages offered by tokenization

• Accessibility: It is now possible to invest in the real estate sector with much smaller amounts, for example, starting at 100€ on platforms such as Reental. This democratizes investment and opens up the market to a wider investor base.
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• Diversification: Investors can diversify their real estate portfolios by buying tokens in multiple types of properties and countries, thus reducing the risk associated with having all the capital in a single property.
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• 24/7 liquidation: Real estate tokens can be bought and sold at any time, offering liquidity that the traditional real estate market cannot match.
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• Transaction Facility: Tokenization simplifies the transaction process, eliminating the need for lengthy legal and administrative processes that often accompany the purchase and sale of traditional properties.

Benefits of Tokenization Compared to Other Financial Assets

Real estate tokens feature a significantly lower risk and volatility profile compared to other financial assets such as stocks or cryptocurrencies

• Stability: The value of real estate tokens is backed by tangible assets, providing a more stable and predictable base. This contrasts with the high volatility of cryptocurrencies or stocks, which can fluctuate dramatically over a short period of time.
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• Ideal for Conservative Investors: For those looking to minimize risk and preserve their capital, real estate tokens offer a safer alternative compared to more volatile investments.

Real estate tokens offer attractive returns, often higher than those of traditional real estate investments and other types of assets.

• Performance Comparison: With Reental, investors can expect annual returns of between 13-30%, compared to 7-14% for traditional real estate. This higher profitability is due to the efficiency and lower operating costs associated with tokenization.
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• Capital Gains and Dividends: In addition to rental returns, investors can also benefit from the appreciation of the value of the underlying property.

Tokenization makes it easier to invest in real estate with lower amounts and It offers liquidity unprecedented.

• Minimum Investments: The possibility of investing from small amounts allows more people to participate in the real estate market, something that is not feasible with direct investment in properties.
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• Ease of Selling Tokens: The ability to trade tokens in secondary markets offers investors flexibility that doesn't exist in the traditional real estate market, where selling a property can take months.

Real estate tokens are presented as an attractive option due to their lower volatility compared to stocks and cryptocurrencies. In addition, real estate markets tend to be more stable and predictable than financial markets, reducing the risk associated with investing in real estate tokens.

In terms of profitability and terms, real estate tokens can offer both short and long term returns, thanks to rental income that provides regular cash flow and the appreciation of the value of the property that offers potential long-term gains. Unlike investments in gold or remunerated accounts that offer low returns, real estate tokens can provide significantly higher returns, making them a more attractive option for those looking to maximize their investment return.

Finally, evaluating accessibility and initial capital requirements is essential to choosing the right investment option. Tokenization offers a significant advantage in this regard, since it allows you to start with a low investment, which is especially beneficial for those with limited capital or who prefer not to commit large sums to a single investment. In addition, tokenization removes many of the traditional barriers to entering the real estate market, allowing investors to participate without the challenges of buying and managing properties.

Why is it more profitable to invest in tokenized products?

Tokenization transforms real estate projects into financial products, combining the security of tangible assets with the benefits of blockchain technology.

• The integration of DeFi (Decentralized Finance) technologies): Improves access to financial benefits, this may include collateralization and reinvestment, which increases the potential for profitability without sacrificing the security of the underlying.
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  • Reinvestment: DeFi platforms allow the reinvestment of income generated, maximizing capital growth by applying compound interest.
  • Collateralization of Tokens: Tokens can be used as collateral to obtain loans or other forms of financing, allowing investors to leverage their investment to increase their returns.
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• Reducing operating costs: The management and transaction of tokens are more efficient and less expensive than those of physical properties, which translates into higher net returns for investors.

Conclusion

Tokenization represents a significant evolution in the investment world, offering a unique combination of accessibility, liquidity and profitability. For small investors, this methodology offers a gateway to the lucrative real estate market without the traditional challenges associated with buying and managing properties.

With Reental, you can participate in real estate projects with minimal investment, enjoying attractive returns and unparalleled flexibility. Whether you're looking to diversify your portfolio, protect yourself against inflation, or simply explore new investment opportunities, tokenization may be the ideal alternative for you.