ETF vs Fractional Property: What's Better for Long-term Investing?

Two Paths to Wealth

You have money to invest and are considering: ETF funds or property? Both options have their advantages and disadvantages.

"I use or know about ETFs, Crypto, fractional ownership, and portfolio diversification."

What Are ETFs?

ETF (Exchange-Traded Fund) is a fund traded on stock exchanges that tracks an index (e.g., S&P 500). You buy a "piece" of hundreds or thousands of stocks at once.

Popular ETFs:

• iShares Core MSCI World (global)
• Vanguard S&P 500 (USA)
• iShares MSCI Emerging Markets

ETF Advantages:

• High liquidity — sell anytime
• Low fees — typically 0.1-0.3% per year
• Easy diversification — one ETF = hundreds of companies
• Low entry barrier — start with €50

ETF Disadvantages:

• High volatility — can drop 30-50% in a crisis
• No control — you own a tiny fraction of huge corporations
• No tangible asset — just numbers on a screen
• Market correlation — when everything falls, ETFs fall too

What Is Fractional Property?

Fractional ownership means you own a portion (fraction) of a property together with other investors. You don't have to buy an entire apartment — you can own, say, 5% or 10%.

How It Works:

1. A €200,000 apartment is divided into 1000 shares
2. Each share costs €200
3. You buy 50 shares for €10,000 (5% of apartment)
4. You receive 5% of the property income

Advantages:

• Low entry barrier — no need for €40,000 down payment
• Diversification — invest €30,000 across 5-6 properties instead of one
• Passive — no tenant management, repairs, administration
• Real asset — you know exactly which property you own

Disadvantages:

• Lower liquidity — can't sell as fast as ETF
• Platform dependency — if platform fails, could affect investment
• Regulatory uncertainty — relatively new concept

Head-to-Head Comparison

When to Choose ETF?

• You're young (20-35) with high risk tolerance
• You want maximum liquidity
• You're building long-term portfolio (20+ years)
• You're comfortable with volatility
• You're investing small amounts regularly (DCA)

When to Choose Fractional Property?

• You want stable, predictable returns
• You prefer real, tangible assets
• You're looking for diversification beyond stocks
• You want higher passive income (rent vs. dividends)
• You're approaching retirement and reducing risk

The Ideal Portfolio: Both

The smartest investors don't choose one OR the other — they combine both:

Example Balanced Portfolio:

• 60% Global ETF (MSCI World) — growth engine
• 20% Fractional property (HomeGrif) — stability + income
• 15% Bonds/Cash — safety buffer
• 5% Alternative (crypto, commodities) — high risk/reward

Why This Works:

• Property and stocks have low correlation — when stocks crash, property often holds value
• ETF provides growth, property provides income
• Both protect against inflation differently

Real Numbers: 10-Year Projection

Scenario: €10,000 invested, held 10 years

ETF has higher expected return but also higher variance. Property is more predictable.

Key insight: There's no "better" investment — only the right fit for your goals, timeline, and risk tolerance. The best portfolios include both asset classes.