Tuesday, March 10, 2009

Should I Invest in Stocks, Mutual Funds or REITs?

If you are compiling your investment portfolio, you likely have a lot of items that you are considering. Do you want stocks or mutual funds? Local or international? And have you considered real estate?

Often when people are asked if they have considered investments in real estate they envision having to plunk down a lot of money to purchase whole property. That's far outside of the budget of most people. They may have a few hundred or thousand dollars to spend, but not enough to purchase large pieces of commercial or residential property, which tend to be in the hundreds of thousands of dollars.

Likewise you may think of all the hassle that goes with purchasing property and wonder why anyone would ever consider buying real estate as an investment because it is such a nightmare. Well, it doesn’t have to be.

Instead of purchasing property outright, what if there was a way to invest in real estate without all of the hassle of purchasing the title and deed to a property and much less funds? There is. It's called a real estate investment fund or REIT. A REIT is essentially like a mutual fund of real estate.

Instead of buying a complete piece of property, you are buying shares in a real estate management group that will then purchase and maintain a property.

So, you may be wondering, how do you make a profit? Well the way REITs work is that as they make money, 90 % of that earning has to go to the shareholders. This is money you will get in the form of dividend payments.

Essentially, REITs are the best of all worlds. Not only are they secure real estate investment options, but also they are also just as liquid as the stocks and bonds you are used to.

Most financial advisors recommend having at least 10% of your portfolio be associated with real estate. The reason for this is that those investments are more secure than other stocks and mutual funds and just a swing of the market can wipe you out on all of the other investments, while the real estate should hold up through the tough times. This gives you a hedge for those other, more volatile investments.

Getting involved with REITs is also a lot easier than you would think. Begin with a real estate broker like REITBuyer.com. By working with REITBuyer.com, you will be able to start at the beginning and get everything you need.

Begin by doing your research. They have articles and research tools that will help you investigate the REITs you are interested in so you can get a feel for which ones best fit your portfolio.

When you are ready to buy, they can take care of that as well, as they are a complete real estate broker and can handle your investments in a professional manner.

Finally, once you have made the purchase, use their tools and analysis options to keep an eye on how your investments are doing and size them up to the rest of the market.

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