Real Estate Investment Trusts (REITs)

Welcome back to the Dollars to Scholars blog! Continuing on from where we left off with futures and ETFs, we’re going to talk about another type of complex investment: REITs. Buckle up, because this one is a doozy!

REIT stands for Real Estate Investment Trust. A REIT is a company that invests in a specific type of real estate, such as homes, apartment buildings , or even commercial malls! Investing in a REIT is similar to investing in a mutual fund, as you and other investors pool money together. The REIT then uses that money to buy assets such as houses and apartments. Then, from the rent it charges its tenants, it pays a dividend, or a share of its profits, to its investors. These dividends are often high as the law requires that at least 90% of profits made by REITs must be paid out to investors as dividends.

REITs are publicly traded on major exchanges, making them easy to buy and sell. Unlike physical real estate, REITs have high liquidity, meaning they are easily tradable.

That’s all for REITs! Thank you for reading the Dollars to Scholars blog, and see you next time.