Reit or wrong.Q&A I am a 31-year-old accountant interested in investing in REITs. I've read a few articles on them but I still need help. Is this a good idea? --C. Ellis Via the Internet A real estate investment trust is broadly defined as a company that pools investor dollars for the purchase and management of real estate properties and/or mortgage loans. There are nearly 200 REITs you can invest in, and they specialize spe·cial·ize v. 1. To limit one's profession to a particular specialty or subject area for study, research, or treatment. 2. To adapt to a particular function or environment. in buying, selling, and developing different types of property--malls, apartments, office buildings, and hotels, for example. They have the diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. of mutual funds but can be traded like stocks. REITs are a very good investment to consider, even as there is concern over the housing bubble A bit in bubble memory or a symbol in a bubble chart. . Equity REITs Equity REIT A Real Estate Investment Trust that assumes ownership status in the property it invests in enabling investors of the REIT to earn dividends on rental income from the property and appreciation in property resale. Antithesis of a Mortgage REIT. have been among the best performing long-term investments, gaining 22.56% from 1999 to 2004, outperforming the S&P 500 Index and the Dow Jones Industrial Average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. . By law, REITs must pay at least 90% of their taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. to shareholders as dividends, which increase the total return investors receive. Since the housing market is cooling, you shouldn't expect the same level of performance from REITs in the short term. But over the Iong term, they are a solid investment. To find out more about REITs, go to the National Association of Real Estate Investment Trusts Website at www.nareit.com. Websites such as Morningstar.com and Yahoo! Finance also have articles about how REITs can fit into your portfolio. |
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