Many investors are often searching for alternatives to stocks, especially in times of turmoil. Today inflation has reached a 40-year-high, and the 30-year mortgage has climbed above 7%. The S&P 500 has also officially entered a bear market (a drop of over 20%).
One of the best places to search for opportunities is right in our backyard. Investments in local businesses are extremely appealing for many reasons. However, the challenge of investing in local businesses is that many investors don’t know how to invest in them.
Mainvest might have a solution to that problem.
Mainvest was founded in 2018 by its CEO and Co-Founder Nick Mathews. The company is in Salem, Massachusetts. Mainvest is an investment product that allows individual investors to invest in local businesses and diversify away from the stock market. Manifest’s mission is “that communities should control their local economic development and share in the wealth it creates”.
Mainvest’s goal is to allow investors with limited capital to get into businesses that have previously only been available to accredited investors. Now individual investors can purchase local businesses, real estate, and many other companies for as little as $100.
We performed a review of Mainvest which highlighted several benefits for individual investors. One of the main benefits of using Mainvest is that there are no fees to use Mainvest. This is a massive benefit to investors because fees ultimately eat up your returns over time and can significantly reduce your compound annual returns.
In addition to that, Mainvest also claims on its website that they generate between ten and twenty-five percent returns for investors.
It is common investment wisdom that the key to success over long periods comes down to one simple word: diversification. Individual investors can benefit a great deal from diversification for a few additional reasons.
First, diversification helps to keep you from selling your investments when the market takes a downturn. When an individual investor's portfolio starts to shrink, the temptation to sell can be overwhelming. However, if you diversify your portfolio well, it is much easier to keep your investments than if you only had a few focus investments.
Secondarily, diversification almost always leads to a reduced drawdown in well-diversified portfolios. For example, if you are invested in a single industry and that industry starts to experience a contraction in sales, your portfolio will likely go down much further than the overall stock market. When this happens, the pressure to sell can become unbearable, and many individual investors will sell at the exact time they should be buying more. This leads to poor performance and larger down years when bear markets arrive.
But if your portfolio is diversified with local investments, the pressure to sell during down years will likely be reduced.
We created a Mainvest review and what you should consider before diving head-first into the platform. One thing in this review is that Mainvest is best for risk-takers with long-time horizons for their portfolios. Startups and small businesses are prone to a high degree of volatility, and everyone who considers investing in these businesses should be aware of the risk.
Further, there are two types of accounts you can open at Mainvest. The first is a self-directed IRA and the second is a taxable account. In addition, it should be noted that you must create a third-party account to invest through your IRA.
Alternatively, here are a few other alternatives that you should consider when looking for this type of investing.
In addition to Fundrise, Clever, Worthy, and Roofstock, two other alternatives are worth considering when deciding how to diversify your investments.
We performed an in-depth review of First National Realty Partners. Their program offers accredited investors a way to receive quarterly cash flow with fractional in commercial real estate. In fact, First National Realty Partners is one of the fastest-growing commercial real estate private equity firms in the country. Their mission is to provide top-tier commercial real estate investments to their accredited investors. However, the account minimum is $50,000. They also charge a .5% to 1.5% Asset Management Fee per deal.
Further, we performed a review of AcreTrader, which allows the investor to profit from farmland. For anyone looking to invest in agriculture, this is a great way to diversify your investments. However, their minimum investment is $10,000 and their fees range from 0.75% to 1%.
In summary, this Mainvest review shows that using this service can be a great way for non-accredited individual investors to diversify their portfolios. However, like any other investment, everyone should do their homework before deciding to invest.
If you would like to sign up for Mainvest, use this link to get started.
