Menu

REIT vs Bonds for fixed income investments – newbie questions

Home General Investing REIT vs Bonds for fixed income investments – newbie questions

  •  tintin 
    Participant
    Status: Spouse
    Posts: 19
    Joined: 01/07/2019

    What are the pros and cons of investing in REITs vs bonds for the fixed income portion of a portfolio?

    A REIT’s return can be higher and the money is in theory invested in real estate which allows you to diversify.

    I understand that a REIT can loose value if real estate market goes down or if the REIT does a poor job in buying good properties or is not able to manage/find good tenants etc.

    Please help me understand the pros and cons.

    #179562 Reply
     JBME 
    Participant
    Status: Spouse
    Posts: 226
    Joined: 03/26/2018

    you should treat an REIT as an equity, not as a bond. it fluctuates much more like an equity than a bond. An REIT’s returns can be higher is what you bolded, but yes, the return can also be lower. Also, REITs pay out a lot of dividends. Not sure what your retirement status is but if you’re still working, REITs are best in a Roth IRA and certainly not taxable account. Bonds are best in a 401k/tax-deferred account unless you’re closer to retirement.

     

    Others I’m sure will discuss the details of what an REIT is. There are several articles on this site that discuss them

    #179567 Reply
    Liked by Zaphod, tintin
     jhwkr542 
    Participant
    Status: Physician
    Posts: 850
    Joined: 02/15/2016

    I don’t consider real estate an option for FI.  Both tend to be not correlated as much with the stock market although a total market index fund will have some REITs included.  Bonds will be more stable and less correlated with stocks.  Many people including myself add a little more REITs to their portfolios, but I put it in the equity portion of my allocation (or consider it a separate class altogether).

    #179571 Reply
    Liked by tintin
     Peds 
    Participant
    Status: Physician
    Posts: 2374
    Joined: 01/08/2016

    They are not the same thing so should not be considered together.

    #179601 Reply
     momentumstocks 
    Participant
    Status: Other Professional
    Posts: 7
    Joined: 10/31/2018

    what % are you getting on your bonds?

    The best i came across was 10% on a 5 year fixed

    #180762 Reply

Reply To: REIT vs Bonds for fixed income investments – newbie questions

In case of a glitch or error, please save your text elsewhere, clear browser cache, close browser, open browser and refresh the page.

you're currently offline

Notifications Mark all as read  |  Clear