When it comes to growing your money, most people default to traditional options like savings accounts or certificates of deposit (CDs). While these tools can provide a safe place to store your cash, they often offer minimal returns — especially in today’s economic climate where inflation can erode the purchasing power of your money. If you're looking for a smarter and secure way to grow your wealth, it might be time to consider alternative investment options like real estate debt.
The Problem with Traditional Savings Options
Savings accounts and CDs are often touted as low-risk financial tools, but that stability comes at a cost: low returns. According to recent data, the average interest rate on savings accounts hovers around 0.4%, while high-yield savings accounts might offer rates closer to 5%. Even so, these returns often fail to outpace inflation, which means your money might actually lose value over time.
For those who want their money to work harder without taking on excessive risk, traditional savings accounts may not be the best choice. This is where alternative investment options like real estate debt can step in.
What Is Real Estate Debt?
Real estate debt refers to investments in loans secured by real estate properties. Essentially, you’re acting as the lender, providing funds for borrowers to purchase, renovate, or refinance real estate. In return, you earn interest on the loan—much like a bank would.
Platforms like Flywheel, Groundfloor’s innovative real estate debt portfolio, make it easier than ever to invest in this asset class. With low minimum investment requirements and transparent reporting tools, real estate debt is becoming increasingly accessible to everyday investors.
Why Real Estate Debt Is a Smarter Choice
- Attractive Returns
Real estate debt often offers higher yields compared to savings accounts or CDs. Depending on the platform and the specific investment, annual returns can range from 7% to 12%, making it a compelling option for those looking to grow their wealth.
- Lower Risk Compared to Equity Investments
Unlike investing directly in real estate properties, where you’re exposed to market fluctuations and property management challenges, real estate debt prioritizes the lender. If a borrower defaults, the real estate asset backing the loan can often be sold to recoup the investment.
- Steady Income Stream
Investments in real estate debt typically generate consistent interest payments, providing a steady income stream. This makes it an appealing option for individuals looking to supplement their earnings or create a passive income source.
- Portfolio Diversification
Adding real estate debt to your investment portfolio can help diversify your assets, reducing overall risk. Because real estate debt isn’t directly tied to the stock market, it can act as a stabilizing force during periods of market volatility.
How to Get Started
Getting started with real estate debt is easier than you might think. Here are the basic steps:
Choose a Platform
Look for platforms like Groundfloor that specialize in real estate debt investments. These platforms often provide detailed project information, allowing you to make informed decisions.
Start Small
Many platforms allow you to start with just $100, making it easy to dip your toes into the world of real estate debt without committing large sums of money upfront.
Diversify Your Investments
Spread your investments across multiple loans or projects to minimize risk. Diversification ensures that if one loan underperforms, the others in your portfolio can help balance it out.
Monitor Your Portfolio
Use the reporting tools provided by your chosen platform to track your investments. Staying informed will help you make adjustments as needed to optimize your returns.
Is Real Estate Debt Right for You?
Real estate debt investing has traditionally been an opportunity reserved for high-net-worth individuals. But at Groundfloor, we believe that building wealth through real estate shouldn’t just be for the wealthy — it should be accessible to everyone. That’s why we’ve made it easy for everyday investors to take part.
By investing in real estate debt through Groundfloor, you can earn attractive returns without taking on the extreme risks often associated with stocks or direct real estate ownership. Whether you’re an experienced investor looking to diversify your portfolio or someone just getting started on your wealth-building journey, real estate debt offers a smart way to grow your money.
It’s particularly appealing for:
- Individuals seeking passive income: Earn steady returns from short-term loans backed by real estate, without the hassle of managing properties.
- Investors looking to diversify: Real estate debt can complement your other investments, helping to balance risk while providing solid yields.
- People aiming to outpace inflation: With returns designed to beat inflation, your money can grow while maintaining its value over time.
Groundfloor makes it simple: low minimums, a user-friendly platform, and detailed reporting tools help you stay in control of your investments every step of the way. With Groundfloor, you don’t need to be wealthy to benefit from real estate’s wealth-building potential — we’ve opened the door for everyone.
While savings accounts and CDs serve their purpose, they may not be enough if you’re serious about growing your wealth. Real estate debt offers an opportunity to achieve higher returns, diversify your portfolio, and enjoy a steady income stream — all while keeping risk levels manageable.
Products like our innovative Flywheel Portfolio are making it easier than ever to get started with real estate debt investing. By taking a closer look at this often-overlooked asset class, you can put your money to work in smarter, more rewarding ways.