Anyone invest in REIT?

[RYCeT]

Hi guys, I need to help my parents to do some investing option for their saving. They don't like to take any risk, unlike me

. I don't think they agree to made me manage their money through stock trading eventhough I'm doing allright with my own money. I'm thinking to put their money through reit since I assumed it's quite safe compare to stock trading yet it provide much better gain than mutual funds or timed deposit. I'm a noob for reit so any input/advice/opinion for reit investing is much appreciated.

Things that I want to know,
is this time the right time to put money into reit (since house price is cooling off)?
What is reit invest in actually? (I know it has something to do with Real estate

)
Where to find a good one and what factor should I look into?
How is the process of buying reit?
and probably many more that I haven't think of yet.

 

[Nick Dangerous]

No idea on REIT's. I've yet to investigate them myself.

You could always buy some Citigroup and Altria stock in the meantime. Reasonable prices and good dividend yields that are taxable at only 15%. Gotta love that.

Russian and Brazilian markets have been going like mad. How much longer... I'm not sure.

 

[Gigabomber]

The American market is fishtailing considerably over the past couple weeks, but Altria is a decent choice in a bullish market (if you don't mind investing in cancerous and addictive products, of course - if you do - that bars just about everything

)
With the American Market fishtailing the world's market won't do quite as well either, the best advice at the moment is to invest in individual "value" stocks which are in the body of companies which won't fold in an unstable market and are also not overbought (people will pull out if the stock is inflated, take a look at EWJ over the past couple months - finance.yahoo.com - for an idea of overbought as the stock tumbled much more than the index, nikkea225, dropped because everyone bought into it at a good time and sold big when it started falling) so Altria might not be a bad buy, but it is a huge company. At this point you may invest in bills which will produce around four and a half percent which is state tax exempt, but certainly don't have the potential of stocks.
And to be honest, I don't know enough and REITs to give much advice in that area.

Good freakin' luck

 

[1911]

i would be wary of investing your parents money for them...nothing is sadder when family fights over money..it seems they are more interested in preserving capital than taking a risk to grow it. as with all investments diversification is key. reits are good plays on real estate but shouldnt be the sole investment....also i am assuming your parents older so they probably need investments that are more stable.

 

[SennFan]

I would hesitate investing your parents money. A predominately fixed income strategy may be the best way to go. Subtract the older of the two's age from 100 and that is the percentage they should be holding in terms of equity (stock). This is a general rule of thumb and is simply a rough, intial guideline to work with.

i.e. You're 35...100-35=65% in stock the remaining 35% in bonds or some other low risk fixed income portfolio or tax free mutual fund(s).

I have no idea what your parent's ages are but usually later in life the recommended goal is wealth preservation. Keep this in mind, as in if you do make investment decisions for them and F up (which can happen despite your investing acumen), they will not have a large window of opportunity to reaccumulate that lost wealth.

Proceed carefully and consult with a financial planner before you do anything.

 

[TenaciousO]

I'm taking a course called real estate finance, and we talked a little bit about REITs. Here are some tidbits from my notes:

- Analogous to a mutual fund
- Publicly-traded
- Has built in diversification and liquidity
- Has been a very good investment for the last several years
- Fairly-high cash flow (10-12%) but tends to be riskier than stocks
- Our professor said that REITs won't remain attractive investments because interest rates are bound to go up, which will mean higher debt service, and thus cash payouts will go down

 

[AlanY]

Quote:

Originally Posted by TenaciousO - Fairly-high cash flow (10-12%) but tends to be riskier than stocks - Our professor said that REITs won't remain attractive investments because interest rates are bound to go up, which will mean higher debt service, and thus cash payouts will go down

These two points are important.

REITs have done well in the last couple of years, but past performance is no guarantee of future results, especially when interest rates are rising and the housing bubble is teetering on the edge. Real estate is a cyclical investment. If you don't understand the concept of "reversion to the mean", read up on it before investing your parents' money blindly in REITs or any cyclical investment vehicle. That's not to say they're a bad investment, but it would be prudent to diversify unless you're a contrarian and believe real estate will remain hot forever.

 

[xlEnt]

anyone have some usefull links book recomendations about investing?

 

[Nick Dangerous]

www.mymoneyblog.com

Start there. It's a fun way to get into it. Keep it fun, and you'll naturally want to learn more.

 

[crazyfrenchman27]

I say go for the sin stocks:

Tobacco and gambling.

Note to all potential investors: I am a major shareholder of Altria Group (MO).

-Matt

 

[Scrith]

Morningstar.com is a great place to do research on mutual funds. Go here and click on Specialty-Real Estate for a list from them of Real Estate-related Mutual Funds (click on the 5-year heading to sort by performance over the past five years).

Personally, I've been trimming my real estate fund investments over the past year or so. Currently the only ones I have left are Third Avenue's real estate value fund (TAREX) and Vanguard's REIT index (VGSIX), which I've had since around 2002.