REIT index funds

7. REIT index funds

Overview: A real estate investment trust, or REIT, is one of the most attractive ways to invest in real estate. REITs pay out attractive dividends in exchange for not being taxed at the corporate level, and REIT index funds pass those dividends along to investors. Publicly traded REIT funds can include dozens of stocks and allow you to buy into many sub-sectors (lodging, apartments, office and many more) in a single fund. They’re a good way for investors to get diversified exposure to real estate without worrying about the headaches of managing the property yourself.

Who are they good for? REIT index funds pay out substantial dividends, making them an attractive place for income-focused investors, such as retirees. But REITs also tend to grow over time, so there’s some potential for capital appreciation, too. Prices of publicly traded REITs can fluctuate markedly, so investors need to take a long-term focus and be willing to deal with the volatility.

Risks: Owning a REIT index fund can take a lot of the risk out of owning individual REITs, because the fund offers diversification, allowing you to own many REITs inside a single fund. But the fund price will fluctuate, especially as interest rates rise. Watch out for REITs or REIT funds that aren’t publicly traded, however.

Rewards: Investors can win in two ways, with a growing stream of dividends and capital appreciation. Over time a good REIT fund could earn 10 to 12 percent annual returns, with a chunk of that as cash dividends.

Where to get them: You can purchase a REIT fund at any broker that allows you to trade ETFs or mutual funds. ETFs are typically commission-free, while mutual funds may charge a commission and require you to make a minimum purchase.

Below are the list of the 10 best investments in 2023: CLICK each link to read into details

1. High-yield savings accounts

2. Short-term certificates of deposit

3. Series I bonds

4. Short-term corporate bond funds

5. Dividend stock funds

6. Value stock funds

7. REIT index funds

8. S&P 500 index funds

9. Nasdaq-100 index funds

10. Rental housing

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top