#realestate #reits

Categories: WealthBy Published On: February17 min read373 words0 Comments

We are nearing the end of this financial bootcamp and if you have taken anything away with you, I hope it’s to realise that cash investments can have negative yields due to inflation and investing in equities and bonds should be long term. For example I recently invested in an S&P 500 index tracker and it was down yesterday. But that’s ok. I have invested in it via my pension plan and so the investment is long term. The market may be down today but it will rebound and in the long term it will deliver me a solid return. I will hold it for at least 15 years. I am not offering financial advice here. I am just showing you one of my investments and how it will go up and down over the next 15 years but I will still hold it.

Today we look at real estate or REITS. This could be classed as an alternative asset class but I will deal with the other alternatives tomorrow.

You can invest in real estate in its physical form (ie buy a house, buy a buy-to-let) etc and this can form part of your retirement plan. It’s something I personally do as I enjoy renovating and like the diversification but it is cash intensive and unless you have a decent deposit on each property, it can be tough to get a decent rate on each mortgage, get good tenants, can be time consuming etc.

The alternative is investing in REITS or real estate investment trusts. Again this is a fund which itself invests in real estate, usually large commercial properties, large housing developments, shopping complexes and office blocks. So by investing in a REIT you will have access to a diversified investment and you will effectively be investing in these office blocks which you would otherwise not have access to. When looking at REITS, check what they invest in, what experience the firm has in real estate investment, what countries the REIT invests in, how much they are changing in fees, what rate of return they are looking for and so on.

Tomorrow our final asset class.

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