Real Estate Investment Trusts (REITs) are new investment instruments that have not been widely eyed by the public or property developers. What are REITs actually? REITs are a place for investors to collect their money through the Collective Investment Contract, most of which will be invested in property assets such as buying malls, office buildings, hospitals, hotels and even warehouses. Meanwhile, you can check out Daniel Ballerini to learn more about real estate businesses.
Like other investment instruments, REITs also offer profits and risks. When compared with stocks, which one is more profitable?
Are REITs more profitable than stocks? Depends on If the risk takers dare to lose money prefer to buy shares. High risk and high return. Well, those who want low risks such as bonds can be fixed income every month suitable for investment in REITs.
We will give an example: Investors collectively raise large funds. Half of it must be fixed asset buying malls for example. Then a small portion of the funds can be used to buy shares of real estate developers. SPC gets funds from REITs to be paid to the building owner. REITs can bid and be traded on the stock exchange. That’s interesting.
Wilijadi explained, although the risk of investing in REITs is low, profit or return offered is quite attractive compared to other low-risk investment options.
Return REITs can be up to 20% per year, I check it at Bloomberg. Distributed every 3 months. It could be fixed income right. Suitable for retired investor profiles.
The next advantage is to invest in REITs, namely, dividends distributed are tax-free. Dividends are not tax objects.
Through REITs, small investors can join large investors such as property developers to buy an office building or mall. Even the buildings that are purchased are only physical assets that have generated income.
So there’s no selling pictures or selling designs.
If buying shares there is a risk that the company will lose or go bankrupt, what about REITs? Because REITs are not risk-free. Buying a mall or office building also has risks such as fire or natural disasters.