PERSONAL FINANCE DIARY ENTRY — DEC 5, 2021
How my Fundrise account performed since Dec 2019 — Passive Income Plan
A while back in the Silicon Valley Investor Club, someone was asking about the real estate platform, Fundrise. While I rarely log in to check it, I thought I’d share this “Annual returns” screenshot which shows my experience with them since December 2019, right before COVID-19.
NOTE: My goal of investing in Fundrise was to build a passive income stream, and so I selected Supplemental Income as my Investment Plan. They have 3 plan types: Supplemental Income, Balanced, and Long-Term Growth. My results may differ from others using more aggressive investment strategies.
TL;DR: My account returned ~12.1% since Dec 2019 and earned me a >4% dividend
Here are a couple observations:
- My Investment Plan was Supplemental Income when I set it up back in 2019. I was going for passive income rather than NAV growth. That said, 4% dividend with 12% NAV growth in 2 years seems pretty ok for a totally passive investment that optimizes for dividends and weathered Covid-19.
- Their annual advisory fee is ~1%, which is significantly more than Vanguard ETFs. A detailed breakdown of Fundrise fees are on this person’s website: https://www.investingsimple.com/fundrise-fees/
- Putting 100% of this money into the SP500 definitely would have outperformed this.
- Putting 100% of this money into Vanguard Real Estate ETF (VNQ) would have performed similarly or better and I would have paid less in fees. That said, VNQ pays a dividend of 3.1% whereas I am getting a dividend of >4% on the Supplemental Income Plan.
- 😷 I started my account a few months before Covid-19 and did small additional contributions after my initial buy-in. Below you can see a screenshot of my account’s growth and dollar-cost-averaging over time. The graph seems to indicate that my account was mostly unaffected by the Covid-19 recession, but maybe that’s because they’ll block you from selling and/or people can’t just buy/sell Fundrise eREITs on the open market like VNQ:
Bonus: Fundrise iPO
- In August 2021, I was invited to buy some of the Fundrise iPO shares. I purchased the cash equivalent of ~10% of my portfolio. Since these are illiquid, they don’t count this towards my portfolio’s performance but it’s up 25% since then
- That said, they may also never IPO so 🤷
How did it do in 2021?
What Projects Were Invested In?
As you can see from image 1, I was invested in about 104 projects. That’s a lot of diversity, but I saw a lot of projects in Texas, South Carolina, and Arizona (hot markets in the last few years), spanning everything from SFHs to stabilizing apartments to commercial as well.
Conclusion
- As a user, Fundrise is pretty simple which I like. It’s “set it and forget it” and you get to diversity your portfolio with large real estate deals. It’s also really interesting to see where Fundrise is investing in real estate. They email me about their projects every time they acquire a new one.
- For REIT Investments, VNQ might get me better returns overall because of lower fees, but VNQ pays a dividend of 3.1% whereas I am getting a dividend of >4% here with Fundrise.
- After looking at my performance, I’m thinking about switching to the Long-Term Growth Investment Plan to see what funds get chosen in 2022 and how the dividends will change.
Want to try Fundrise?
- First, do your own research (DYOR) on Fundrise if you’re thinking about investing! Since their projects are real estate projects, your investment will be less liquid than say crypto or stocks.
- Use my referral link, and we’ll both get 90–270 days managed for free (waving the advisory fee up to that amount)
Hope this helps! To read more of my personal finance articles, check out the Dan Pham Personal Finance Articles Index and follow me :) https://danphamx.medium.com/index-of-dan-phams-personal-finance-articles-290f7a3fad98
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.
