5 Reasons Why Every Investor Should Own REITs

If you don’t have real estate investment trusts, or REITs, as a permanent asset class in your allocation, you should. And if you do own REITs, you should probably own more. These are bold statements, but I’m here to back them up with facts. REITs are a fantastic asset class and are appropriate for every investor—from the youngest and most aggressive to those already decades into retirement. Today, we’re going to count five reasons why REITs belong in your portfolio:

1. Diversification - The alchemy of modern finance is that you can improve returns and reduce risk simply by holding the right mix of securities and rebalancing regularly. 2. Returns - Over time, REITs have generated total returns that were very competitive with mainstream stocks. 3. Income - Before they were embraced by the wider investing public, REITs were popular with retirees because of the income they throw off. 4. Tax Efficiency - dividends are non-taxable at the company level so long as the REIT pays out at least 90% of its taxable income as dividends. 5. REITs Are Very Democratic - Because REITs are required to constantly pay out their profits as dividends, they generally have to raise funds for new projects via new debt or equity offerings. This requires discipline that most companies simply do not have.

Source: InvestorPlace

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