According to a recent survey by Gallup, almost half, or 36%, of people in the United States believe real estate is the best way to grow their money over a long time.
That’s more popular than stocks, bonds, or even savings accounts! Let’s find out why so many people like real estate and how you can quickly jump in, especially with a REIT.
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- Nearly half of Americans surveyed believe real estate is the best choice for long-term investments.
- REITs (Real Estate Investment Trusts) allow you to invest in real estate without the hassle of property management or a significant upfront investment.
- Experts recommend keeping your REIT investments to about 25% of your total portfolio and considering other asset classes like stocks, bonds, and mutual funds to spread your risk and achieve your financial goals.
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Half of Americans Think Real Estate is a Great Investment That Lets You Get In with as Little as $25!
Why Real Estate Feels Like a Perfect Investment?
So many people choose real estate as a long-term investment for a few reasons. First, you can see and touch something, like a house or an apartment building. This makes it feel more secure than stocks or bonds, which are just pieces of paper. Some people even imagine passing down real estate to their family someday, like a special gift. Real estate can feel more connected to your life than stocks and bonds.
REITs – The Easiest Way to Invest In Real Estate
If you’d like to invest in real estate but don’t have a lot of money saved up yet (maybe not enough for a down payment on a house), or you don’t want to deal with fixing leaky faucets and grumpy tenants, there’s another option: REITs.
Think of a REIT as a company that owns many different buildings like shopping malls or apartment buildings. You can invest in a REIT by buying shares, just like a piece of a company on the stock market.
The good news is that some REITs allow you to start with as little as $25! That’s much cheaper than buying a whole house or building. You don’t have to worry about being a landlord – the REIT company takes care of everything.
One of the best things about REITs is something called diversification. This means that your investment is in multiple places. If one building isn’t doing well, it won’t affect your entire investment as much. REITs also often pay out dividends, which is like a regular allowance from your investment.
Things to Consider with REITs
There are a few things to keep in mind with REITs. The money you get from dividends is usually taxed like regular income. You can invest in REITs inside a particular account. Also, REITs are connected to the ret, so if the market decreases, your REIT’s value might also decrease.
Getting Started with REITs
If you’re interested in REITs, do your research first! There are different kinds of REITs; some focus on certain types of buildings, like offices or stores, while others own a variety. Look into the REIT’s history, who runs it, and what kind of buildings it invests in.
Once you’ve chosen a REIT, you can buy shares through a brokerage account. Like stocks, many REITs are bought and sold on the stock market. There are also REIT mutual funds and ETFs, allowing you to invest in many REITs simultaneously.
Balancing Your Investments with REITs
REITs can be a great way to grow your money, but they shouldn’t be your only investment. Experts recommend keeping your REIT investments to about 25% of your total assets. This helps diversify your investments and protects you if the real estate market drops. Consider other investments like stocks, bonds, and mutual funds to create a well-rounded portfolio.
The Emotional Side of Real Estate
One of the exciting things about real estate is that people can feel strongly about it, unlike stocks or bonds. It can feel more accurate because you can see and touch it. This can be a good thing because it can make you want to invest in real estate for your family’s future. But it can also be bad because you might make decisions based on your feelings instead of what’s a good investment.
For example, someone might hold onto a property for too long because it belonged to their family, even if it’s not making them much money. It is crucial to balance your feelings with logic as an investor.
Owning Property vs. REITs
While REITs are a convenient way to invest in real estate, some prefer owning properties. This can give you more control over your investment and make you feel accomplished. But it also comes with responsibilities, like fixing things and dealing with tenants.
Buying a property also requires a lot of money upfront, which only some have. If you choose to own property, be prepared for the financial commitment and the time it takes to manage it. While it can be rewarding, owning property can be challenging. There can be unexpected costs, like repairs or vacancies between tenants. You’ll also need to deal with the day-to-day tasks of being a landlord, which can take time.
Why Diversification Matters
Diversification remains critical regardless of how you invest in real estate, whether through REITs, owning property, or combining both. Diversification means spreading out your investments across different types of assets. This helps manage risk because if one investment goes down, the others might not. There are many different asset classes you can invest in besides real estate. Here are a few examples:
- Stocks: These represent ownership in a company. If the company does well, the value of your stock could go up.
- Bonds are like loans you make to a company or government. You pay regular interest payments and get your money back at the end of the loan term.
- Mutual Funds and ETFs: These are baskets that hold various investments, such as stocks or bonds. They can be an excellent way to diversify your portfolio without picking individual investments.
Investing in various asset classes can reduce your overall risk and increase your chances of achieving your financial goals.
Conclusion
Real estate investing can feel like a dream home for your money – and the door is wide open with REITs! This easy way to invest lets you start small and potentially watch your money grow. So, do your research and unlock the possibilities of real estate!
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