10 Things You Should Know About REITS

Real estate investment trusts are a hands-off way to play the real estate market.

An illustration of a man pushing a shopping cart with office buildings inside.
(Image credit: Getty Images)

Real estate can create a more balanced investment portfolio. A portfolio with between 5% and 20% of real estate has better returns and less risk than a portfolio only of stocks and bonds, according to a meta-analysis of academic articles by Morningstar. But for most investors, that might not justify the headaches of managing tenants and repairs for a rental property. A real estate investment trust, a.k.a. a REIT, could be a more convenient solution.

“A REIT is a fund that buys real estate for investors,” says Lee Harbaugh, a real estate agent in Mansfield, Texas. “It’s a passive way to get real estate exposure where you don’t have to worry about buying or selling properties yourself.”

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David Rodeck
Contributing Writer, Kiplinger's Retirement Report