Should you consider REITs for retirement portfolio?

2 min read | July 23, 2022 10:00 AM AEST | By Aditi Sarkar

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Should you consider REITs for retirement portfolio? — Image source: © Webking | Megapixl.com

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Highlights

Real estate investment trusts (REITs) buy and develop properties to manage them as one of their asset groups

REITs provide access to large-scale real estate assets and a dual source of income

They are a source of earnings from a share of the income delivered through the ownership of commercial real estate without the need to buy them

Real estate investment trusts (REITs) are the companies that own and operate real estate or related assets that can earn income. The major difference between a REIT and a real estate company is that real estate companies develop or build real estate properties to resell, while a REIT buys and develops properties to build its own asset group.

Features of REITs
REITs are a source of earnings from a share of income delivered through the ownership of commercial real estate without the need to buy them.

REITs for retirement
People nowadays plan for their future smartly and strategically. Many people invest in stock markets, mutual funds or pension schemes for retirement. However, stock trading is complex and volatile, which is not so attractive for people with no/less knowledge of finance. They look for different paths to build a varied portfolio.

Investment in real estate has been a secure way of future savings for a long time. However, it requires a hefty sum of money and due diligence before investing. In this regard, REITs are a good source of exposing your wealth to real estate and locking it for growth. Besides, the dual source of income can also meet your short-term needs in addition to savings for the future.

Investors can diversify their holdings with the aid of REITs. They reduce risks and provide greater profits. In addition to lower risks and greater returns, REITs also offer lock-in period flexibility. The investors have quick access to their assets for liquidation.

Australian real estate investment trusts (A-REITs)
In the ASX, a broad range of Australian real estate investment trusts (A-REITs) provide both Australian and global exposure.

A-REITs are listed investment assets that are managed like funds. A professional manager looks upon them; since they are listed on the ASX, they can be traded as shares through your broker.

Let us quickly look at some of the A-REITs from the ASX that have provided modest price returns in last three years.

^{Data source: EODHD/Others as of 22 July 2022}

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