First, Investors have several options for investing in a REIT, including purchasing shares on a major stock exchange, investing through a REIT mutual fund or ETF, or using their workplace retirement plan if available.
- Opening a brokerage account is the first step to take in order to invest in a REIT. This involves providing basic personal information and contact details.
- Before buying, investors should use the broker’s research tools to familiarize themselves with potential investments and make an educated decision.
- Fees associated with both the broker and investment should be taken into consideration before proceeding to purchase it online.
- A successful outcome can be achieved by periodically monitoring your REIT investment. Staying informed of market trends may help investors make wise decisions when it comes to their investments.
- As well as monitoring your investments, diversifying them is also important when investing in real estate investment trusts – this will help protect against any losses related to an individual asset or market sector.
In addition to these steps, understanding the risks involved with investing in a REIT is essential; factors such as changing interest rates, economic uncertainty and supply/demand of housing can all influence their performance.
The Bottom Line on REITs
- Investing in REITs is a great way to diversify portfolios and can be attractive for their strong dividends and long-term capital appreciation.
- Different types of REITs come with different risks depending on the state of the economy, but investing through a REIT ETF is an easy way to engage without needing to personally contend with its complexities.
- Since they are required by the IRS to pay out 90% of taxable income, dividend yields from these investments can be much higher than average stocks
- During recessions certain types such as hotel properties should not be invested in; however healthcare facilities or retail have longer lease structures making them less cyclical and thus better hedges against economic downturns.
Since 1960, the federal government has made real estate investments possible to ordinary Americans. However, since 2008’s real estate crash, many Americans have become interested in investing in this sector because of low-interest rates and exchange traded funds.
