Compound Real Estate Bonds Review


Bank banks don’t want your deposits. At least, that’s the conclusion I’ve drawn over the last year as savings account yields at Citibank, Wells Fargo, Bank of America, and other big banks have scarcely budged despite the most aggressive Federal Reserve rate-hiking cycle in memory.

Good thing big banks aren’t the only game in town for savers. You can earn a far better return — like 125 times better, based on average savings account yields tracked by the FDIC — with Compound Real Estate Bonds, a financial technology company that offers high-yield bonds backed by real estate assets and loans. 

Compound Real Estate Bonds is a potentially powerful source of passive income for everyday savers and an easy way to diversify your investment portfolio away from highly correlated stocks and ETFs. Find out what to expect from it and decide whether it’s right for you.


What Is Compound Real Estate Bonds?

Compound Real Estate Bonds is a financial technology company offering fixed-income real estate savings bonds. 

Known as Compound Bonds, these bonds are available for purchase by accredited and non-accredited investors in $10 increments. They pay fixed interest (currently 7.00% APY) that’s credited and compounded daily. They’re highly liquid and have no fixed maturity date, meaning you can withdraw your funds at any time or remain invested indefinitely and keep compounding your money.

Compound Bonds are backed by real assets — mostly direct real estate investments and real estate debt investments, with some cash and cash equivalents in the mix. The real estate portfolio spans multifamily (55%), commercial (30%), and industrial (15%), broken down regionally as follows:

U.S. South 40%
Canada 40%
U.S. West 10%
U.S. Northeast 10%

What Sets Compound Real Estate Bonds Apart?

If you’re familiar with banking and investing at all, you can probably tell already that Compound Real Estate Bonds is different. We’ll dive deeper into its features and selling points in a moment, but these distinctions are worth calling out right away:

  • Daily Interest Crediting and Compounding. Unlike most bond issuers, fund managers, and banks, Compound Real Estate Bonds credits and compounds interest daily. It sounds like a technicality, but it’s not — it gives your money more opportunities to grow and can make a significant difference over time.
  • Withdraw Principal at Any Time. Most bonds have fixed maturity dates, meaning you have to wait years to get back what you put in. (Sure, you can sell some types of bonds on the secondary market, but that may involve loss of principal.) Compound Real Estate Bonds allows you to cash out of your Compound Bond investments at any time, though you’ll of course earn more the longer you stay invested.
  • Low Correlation With Market-Traded Investments. Compound Bonds are backed by real estate assets and debt investments, not market-traded securities (or vaporware like NFTs and crypto). So when the stock market takes a dive, your Compound Bonds won’t necessarily follow — though the real estate market does have its own ups and downs.
  • Open to Non-Accredited Investors. The Compound Bond is the sort of investment that until quite recently would only be open to accredited investors: individuals who consistently earn more than $200,000 per year and/or have at least $1 million in total net worth. Needless to say, that’s not most people. Good thing non-accredited investors — ordinary folks — can buy Compound Bonds too.

Is Compound Real Estate Bonds Legit?

Yes, Compound Real Estate Bonds is legit

Compound Real Estate Bonds is a financial technology company that offers SEC-qualified bonds backed by real estate investments and real estate debt investments. 

That said, Compound Real Estate Bonds is not a bank, and Compound Bonds are not FDIC-insured bank accounts. They’re alternative investments that, like all other investment instruments, carry some risks and aren’t suitable for all investors. 

Compound Real Estate Bonds is not a licensed financial advisor or investment advisor. So before you make a decision to invest, read Compound Real Estate Bonds’s offering circular in full, and consult your financial advisor if you’re not sure how to evaluate the information you find there.


Key Features

Let’s take a closer look at how Compound Bonds work and what else you can expect from Compound Real Estate Bonds.

Investment Approach

Compound Real Estate Bonds’s website and real estate bonds fact sheet do a great job of describing its investment philosophy and approach in detail. I’m not going to repeat everything here — definitely check them out before you sign up — but I do want to call out some highlights here:

  • Focus on high-quality, income-producing real estate with growth potential
  • Value investing strategy (acquiring assets for less than what Compound Real Estate Bonds believes they’re worth)
  • Comprehensive asset diversification across geographic regions, real estate sectors, risk level, and time horizon
  • Applying proprietary technology and data insights to spot opportunities and manage risk effectively

Minimum Investment

Individual Compound Bonds have a face value of $10. That’s also the minimum investment amount. In other words, you can buy just one Compound Bond at a time if you wish.

Automatic Investments

Compound Real Estate Bonds makes it easy to set up automatic investments — as often as daily and as little as one bond at a time — from your linked bank account. You can also opt into round-up investments to round up each purchase in your linked external bank account to the nearest dollar, set aside the difference, and purchase a new Compound Bond when your saved balance hits $10.

Withdrawal Timing and Process

You can withdraw your bonds’ principal and accrued interest (which is added to the principal daily) at any time with no fees or restrictions. Simply initiate a withdrawal in the app and Compound Real Estate Bonds sends it to your linked external bank account.

Tax-Advantaged Investing Options

Compound Real Estate Bonds offers tax-advantaged investment options (Individual Retirement Accounts). You can open a fresh IRA with Compound Real Estate Bonds or roll over your balance from an existing IRA, depending on where you’re at in your retirement investing journey.


Advantages

Compound Real Estate Bonds and its core product, the Compound Bond, have some impressive advantages. These are definitely worth calling out.

  • No Fees, Period. Compound Real Estate Bonds has no user fees. You don’t have to worry about hidden charges eating into your returns or eroding your principal over time.
  • Yields Far Better Than Traditional Savings Accounts. Compound Bonds’ 7% annual yield is much better than traditional big-bank savings accounts, whose yields have been stuck near zero for years. It’s better than higher-yield online savings accounts too and should remain so for the foreseeable future.
  • Interest Credited and Compounded Daily. Compound Bonds credit and compound interest every day, giving your money more chances to grow. This is a big advantage over other passive investments, which typically pay interest or dividends annually, quarterly, or at most monthly.
  • Highly Liquid (Withdraw Funds at Any Time). Compound Real Estate Bonds offers real estate exposure without its Achilles heels: low liquidity and high selling costs. If you need your money back, no problem. You can cash out your Compound Bonds at any time.
  • Not Correlated With the Stock Market. Compound Bonds are backed by real estate, not stocks or government bonds. They’re not guaranteed never to lose value, of course, but they won’t decline just because the stock market has a bad day.
  • Backed by Real Assets (No NFTs or Crypto). Compound Bonds are backed by real assets — literally, real estate assets — rather than sketchy NFTs or cryptocurrencies. This is a big advantage over other financial technology companies promising better returns than banks. Real estate isn’t risk-free, but it’s a lot more legit than digital assets.
  • Open to Non-Accredited Investors. Compound Real Estate Bonds allows non-accredited investors to purchase Compound Bonds, subject to income- or net worth-based restrictions.

Disadvantages

Compound Bonds do have some downsides worth noting. Consider them before you sign up.

  • Not FDIC-Insured. Compound Bonds are not bank accounts, so they don’t come with FDIC deposit insurance. This means that if Compound Real Estate Bonds goes out of business — which seems unlikely right now, but you never know — you could lose your entire investment.
  • Purchase Limits for Non-Accredited Investors. It’s great that Compound Real Estate Bonds allows non-accredited investors to buy Compound Bonds, but there’s a limit that could put enthusiastic investors at a disadvantage: no more than 10% of your annual income or net worth if you don’t qualify as an accredited investor.
  • Tied to North American Real Estate. Compound Bonds are backed by U.S. and Canadian real estate assets and debt investments. This has some upsides, like low correlation with stocks and inflation resistance (based on historical performance), but we know that real estate investments can lose as well as gain value.

Final Word

Compound Real Estate Bonds’s Compound Bond is one of the most exciting alternative investments I’ve come across since 2020. 

Perhaps it’s a low bar after years of crypto hype, but it’s refreshing to find a high-yield instrument backed by real assets — literally, real estate. 

And with such low barriers to entry, it’s no stretch to say that Compound Bonds are within financial reach for ordinary savers and investors, from folks just starting out down the road to financial independence to people who’ve been doing this for decades.



Source link

Related post

    Leave a Comment