Investing is very popular right now. People all over the world are struggling to support themselves financially, mainly due to the cost of living crisis. However, inflation is also up, and that’s not making things any easier. Investing gives individuals who’re struggling the opportunity to achieve financial independence and success, without having to work especially hard.
If you are somebody who has heard about REITs, a popular form of investment, and wants to know whether or not it’s sensible to invest in them, then this post is for you.
Here are the top reasons why you should invest in REITs.
What Are REITs?
Before explaining why you should be investing in them, let’s first cover what REITs actually are. REIT is an abbreviation for real estate investment trust, which is a publicly traded investment company that holds a sizable real estate portfolio. In the past, they have been overlooked by investors. However, many investors are now turning to them as a quick way to make money. If you do plan on trying out REIT investing, then you need to conduct extensive research into it. Researching REITs will help you to make the best decisions for you and your portfolio.
How To Start?
If you aren’t interested in the advantages of REIT investing (because you already know they are a sensible way to invest one’s money) then you may be wondering how to get started. The easiest way to get started is with a property fund manager, who will be able to handle your investments for you and advise you on what you should be investing in. Again, conduct as much research into property managers as you can so that you can find the one with the most experience, the best reviews, and a good attitude.
Long-term Performance
In terms of long-term performance, REITs tend to perform very well. When you are looking for something to invest in, long-term performance is always something that’s worth considering. A lot of people make the mistake of blindly investing, investing in things that have no future. When you invest, you should not view it as gambling. If you are not thinking about the future, then that’s exactly what you are doing. Unwise investments will probably lead you to the brink of bankruptcy, so avoid them.
Solid Returns
When you invest in REITs, you get to benefit from solid and stable returns. Other forms of investment tend to be unpredictable. With REITs, it’s very easy to predict how much you are going to earn. If property or rent values increase, then your profits will too. The property market very rarely (if ever) crashes, so you do not need to worry about your investment losing value. Another advantage is that you can sell your REITs very quickly if such an event were to take place, which is not possible when you own actual, physical real estate.
Stable Investment
Investment stability is another thing that you need to think about. Again, a lot of investors do not think about stability, and consequently, end up investing in things that lose them money. As mentioned in the previous market, the real estate market tends to appreciate. At the moment, property prices are achieving record highs. Now’s a fantastic time to invest in anything property related. If your investment does become unstable (or if the property market shows signs of nosediving) then again, you can sell your REITs immediately. If you own physical property, you would have to list it for sale, hire a realtor, and find a buyer.
Sizable Profits
REITs can bring back sizable profits. As an investor, profits should be one of your main priorities. While it is indeed important to look to the future and focus less on immediate profits, you should still be thinking about how much you’re going to make. Something else that’s worth noting is that REITs pay regular dividends. At the moment, most REITs have yields of more than 4%. If you are looking for stable, passive income, then REITs are again worth looking into. You do not have to manage properties yourself, you can just sit back and collect the profits, focusing on work.
Financial Liquidity
As has been mentioned several times already, one of the best things about REITs is that they are liquid. Real estate is illiquid, meaning you cannot sell it immediately, or swap it for cash. Instead, you have to list it, hire a realtor, find a buyer, and then pay all of the fees associated with the property sale process. When you hold REITs, you can sell your holdings immediately. If the property market crashes or the REIT market begins underperforming (which is unlikely, since it has actually outperformed the stock market by over 12% since the 1970s) then you can get rid of it straight away, with just a few clicks.
Total Transparency
When you work with a company that’s offering REITs, you benefit from total transparency. The same is not true when you are investing in stocks and shares. When you invest in stocks and shares, the companies you buy them from only tell you as much as they want to. Companies that offer REITs are a lot more transparent. It’s also worth noting that if you hire a fund manager to handle your investments for you (or to help you make investments) then they will tell you everything you need to know about the REITs you hold, investing in general, and help you to make better decisions.
Portfolio Diversification
If you are an investor, then diversification is something you always need to think about. A lot of investors pile their money into one single thing. However, doing this is a very bad idea. If you do not diversify your portfolio and the one thing you have invested in crashes, you will lose everything. When you diversify, you earn money in many different ways and are protected if one of your investments begins to lose its value.
REITs are a great investment. If you are somebody who’s interested in diversifying their portfolio or just getting into investing, then they are worth looking into. Make sure to work with a fund manager, especially if you know absolutely nothing about investing.
