I don’t think most people know about investing in REITs. First, what is a REIT? A REIT is a Real Estate Investment Trust. But what is that? REITs are companys that invest in real estate. So by investing in a REIT, you are essentially investing in real estate. But unlike buying real estate, REITs trade on the stock exchanges. So investing in REITs is as easy as buying shares of stock. So you can can buy and sell shares of a REIT anytime you want, unlike investing in actual real estate. REITs tend to invest in things like shopping malls, appartment buildings, and even self-storage. REITs get certain tax considerations as long as they pass on most of their earnings to their shareholder in the form of dividends. So REITs have high yields.
But investing in REITs can be a little risky because eash has their own specialties. The types of things that a particular REIT invests in may go down, while others go up. So a good method for investing in REITs is investing in a REIT index fund (the one I own is stock symbol IYR). So instead of owning a small number of REITs, you can invest in a broad range of them. That way you are diversified within your REIT investments. So if one REIT sector goes down, and another goes up, you are okay.
And investing in REITs is a good diversification tactic. REITs have a low correlation to the stocks. So while stocks may go down, the REITs may not. It all comes down to investing in REITs is a great way to invest in real estate. And REIT index funds are a great way to invest in REITs!