Why Tokenizing Debt Securities Leads to Success
Use Tokenized Debt Securities To Balance Your Portfolio
Diversifying your investments in both stocks and bonds is one of the first pieces of advice a financial advisor will give their client. Unfortunately, traditional bond-based mutual funds have meager yields, and purchasing a corporate bond with compound interest requires a more significant investment than desired for a typical person’s portfolio balance. Luckily, individual investors can buy a portion of a corporate bond through a product called tokenized debt securities. Tokenized debt securities are based on blockchain technology and offer the benefits of full corporate bond ownership for smaller investors in a safe and regulated environment.
Here are the top five benefits of owning tokenized debt securities:
1. Lower Fees And Quicker Settlement
Since tokenized debt securities take out the middleman (typically banks) from the transaction, they can run more efficiently and offer lower fees. In essence, an investor can purchase a tokenized debt security directly from the owner. Also, when companies like Viva use smart contracts in conjunction with tokenized debt securities they run even more efficiently by lowering the need for lawyer fees.
2. Access To Global Investors
Tokenized debt securities are by their nature more accessible across borders. With tokenized debt securities, nearly any person with an internet connection will be able to invest in the product. This expanded investor base is good for a healthy supply and demand for the product.
3. Smaller Investments Options
People looking to spend smaller amounts can still take advantage of owning a fraction of a corporate bond or other lucrative bonds through tokenized debt securities. This fractional ownership is perfect for someone looking to stay diversified but also wants to invest in bonds that typically would require more significant investments.
4. Protection In A Strong Investor Base
Since tokenized debt securities are accessible to investors all over the world, there will be a healthy demand for the product. This allows investors to feel at ease that it will be no problem to sell the product when needed.
5. Tokenized Debt Securities Beat Typical Bond Ownership
Investors are looking for an investment that is backed by real-world assets as part of a balanced investment strategy. Often the average investor is priced out of corporate bonds and forced to swallow the hefty fees associated with bond-based mutual funds. Through tokenized debt securities, investors have access to the benefits of owning a corporate bond like compound interest and low costs, with the added value of purchasing in smaller quantities, faster transaction speeds and strong global resale market.
