Note: We receive a commission for purchases made through the links on this site. Our sponsors, however, do not influence our editorial content in any way.
An REIT or Real Estate Investment Trust is an investment operated by businesses that own properties which produce income through various means. Properties such as hotels, shopping malls, warehouses, and even office buildings may be used as REITs by their owners. Instead of buying a rental property, renting it out, managing the property and collecting rent, you invest in a REIT and collect
Real estate as a whole is generally considered a good investment for most people, and REITs have certain advantages that should be explored. Online investing tools have also made it easier than ever for you to benefit from REITs. In fact, the best online investing sites let you experience complete control and management over where your money goes from the comfort of your own home.
Having some REITs in an investment portfolio is a great way to add diversification. Traditional corporate stocks, energy funds, index funds, commodities, and many other types of investments really have no overlap with real estate, so the performance of all of these sectors will all be dependent on different factors at any given time. That means one sector can take a hit without affecting the rest of your investments.
REITs and real estate in general tends to be a safe investment with consistent profit margins. REITs have outperformed the market over the last few decades, meaning they are one of the safest stocks you can buy with a great chance of good returns at any given time.
The fact that REITs are both fairly stable and profitable on a long timeline means that they work well both for those planning for retirement and those who are already retired. Many other investments with similar dividends also have higher risk.
When you invest in REITs online by yourself, you can avoid hefty broker fees. Broker fees can be as high as ten percent, which significantly cuts into the value of your REITs even when they perform well. By going at it online after some basic research and self-education, you can avoid these losses.