Are you ready to diversify your portfolio in the easiest way possible, while also securing a dependable stream of extra income for yourself?
Of course you are!
And the best part is, you don’t need any existing knowledge or experience of the $235 billion real estate industry whatsoever.
So, what is this easy, no-hassle investment that requires little to no effort on your part?
Read on to find out!
Diversifying your portfolio is a goal for all strong investors.
However, when it comes to the actual process of diversifying, it can be overwhelming.
While the real estate market has traditionally been a good way to diversify your portfolio, it also tends to require some serious effort and time.
For many investors, managing real estate properties is like a second job, and most don’t want the responsibilities associated with it.
For those folks, Real Estate Investment Trusts are an excellent option to guarantee a steady stream of income without having to put forth much time or money.
A Real Estate Investment Trust, or REIT, is a corporation or association that owns and manages a portfolio of real estate properties and/ or mortgages.
Shareholders are then able to invest in larger-scale, income-producing real estate.
Investing in REITs allows investors to get a piece of the real estate market at less cost and risk to them, as well as putting in next to no effort, which would be impossible with traditional real estate investing.
There are two types of REITs:
1.) Equity REITs, which own and manage physical properties. Equity REITs are usually specialized in the type of real estate they invest in (apartment buildings office buildings, single-family homes, shopping malls, etc.)
2.) Mortgage REITs, which may invest in agency or non-agency mortgages, or commercial mortgages.
In addition to the differences in what the REITs invest in, mortgage REITs are typically much more volatile than equity REITs, which are usually considered more stable, long-term investments.
So, why invest in REITs as opposed to other investments?
One reason investors choose REITs is for the dependability of dividends.
Like income stocks, REITs pay out dividends to investors, on either a yearly or monthly basis depending on the rate of return.
This is incredibly appealing to many investors, as it is a reliable stream of income that doesn’t require any work from them other than the initial investment.
You don’t have to monitor the real estate market, or constantly be checking up on a property and finding tenants to make money off your investment.
It’s all automated, and the money will keep pouring in.
Additionally, investing in REITs offers more predictability than you would get with traditional real estate investments, or even stock market investments.
In the past, you could only invest through private REIT firms which required you to be an accredited investor (meaning you make over $300,000/ year or your net worth is at least $1 million).
Nowadays, though, there are plenty of public REITs for anyone to invest in, and you can easily choose which ones to invest in through existing brokerage accounts.
We already know how valuable real estate holdings are for investors.
The real estate market is a $235 BILLION industry!
Investing in REITs allows you to take a piece of that $235 billion every month, at the cheapest possible cost to you.
If you find REITs appealing but prefer more liquid assets, you can always invest in REIT ETFs instead.
ETF stands for exchange traded fund, and is basically a bundle of stocks, in this case a bundle of REITs, that you invest in the same way you would invest in any stock.
Investing in REIT ETFs is more similar to regular stock market trading and allows you to diversify with real estate holdings while maintaining more liquid assets.
Some REIT ETFs for you to look into are Vanguard REIT ETF (VNQ), which offers broad and diversified options at reasonable prices, or Schwab U. S. REIT ETF (SCHH), which primarily invests in REITs from the Dow Jones U. S.
Select REIT index.
The strength of your investment portfolio is determined by its diversity, and REITs are an excellent option for adding real estate investments without the risk or hassle.
So, what are you waiting for??
It doesn’t get any easier than this!