Real Estate Investment Trusts, commonly referred to as REITs, are special types of corporations that are federally obligated to invest only in real estate. As long as REITs pay out at least 90% of their earnings in the form of dividends, the companies are not required to pay income taxes. Generally, REITs can be divided into two categories: equity (which own physical properties) and mortgage (which invest in mortgages).
If you’re looking to invest in REITs, another great way is through REIT exchange-traded funds. REIT ETFs offer a diversified basket of REIT holdings. They trade on stock exchanges similarly to equities.
3 Reasons to Invest in REIT ETFs:
- Gaining exposure to many REITs is really easy with just one vehicle (ETF), which saves investors time and commissions compared to investing in each REIT separately.
- ETFs are efficient and offer lower fees when compared to other investment vehicles, such as mutual funds.
- These funds rebalance regularly to their appropriate asset allocation.
Whereas, if you’re interested in investing in individual REITs, the table below lists them all: