What Are REITs and Should You Invest in Them?

Investing can feel overwhelming at first, especially if you're looking for something more stable and lower-maintenance than buying individual stocks. One option is something called a REIT.

Whether you’re trying to build passive income, diversify your portfolio, or just grow your savings outside of a traditional bank account, REITs may offer a nice balance of simplicity and return potential.

🏠 What Is a REIT?

REIT stands for Real Estate Investment Trust. Think of it like this:

Instead of buying a rental property yourself, you invest in a company that owns income-producing real estate like office buildings, apartment complexes, shopping centers, or even data centers. The REIT collects rent or lease income from these properties and pays a portion of the profits to shareholders (people like you or me).

REITs are required by law to return at least 90 percent of their taxable income to investors through dividends, which can make them appealing for people who want steady income from their investments.

📊 Pros and Cons of REITs

Here’s a quick look at the benefits and possible drawbacks of investing in REITs.

Pros Cons
Provides exposure to real estate without owning property Dividends are taxed as ordinary income
High dividend yields compared to many stocks REITs can be sensitive to interest rate changes
Can be bought and sold easily like stocks Market risk and real estate sector risk
Diversifies your investment portfolio Some REITs may charge management or transaction fees
Great for passive income Not all REITs perform equally; research is important

🏦 Where Can You Invest in REITs?

You don’t need a special account or a financial advisor to get started. Many user-friendly platforms offer access to publicly traded REITs and even REIT-focused funds.

Here’s a quick comparison table of a few popular options:

Platform Best For Fees Minimum Investment Features
Fidelity Beginners and long-term investors $0 stock commissions None Wide selection of REIT ETFs and stocks
Vanguard Long-term, low-cost investing $0 for Vanguard funds $1 for ETFs REIT mutual funds and ETFs available
Charles Schwab All-around investing $0 stock commissions None Educational tools and REIT screening
Public.com Social investing focus $0 commissions $1 Invest in REITs with social insights
Fundrise Private REITs (not stock-based) 1% annually $10 Invests in private real estate deals directly

💭 Should You Invest in REITs?

If you're looking for a way to generate income while keeping your investment approach relatively simple, REITs are worth considering. They’re especially useful if you:

  • Want to invest in real estate without owning property

  • Are looking for passive income through dividends

  • Prefer something less volatile than individual stocks

That said, they aren’t right for everyone. If you need fast access to your money or want rapid growth, other investments may be better. But for many people, especially those who like a sensible and simple approach, REITs can be a nice addition to a long-term strategy.

📝 Simple Wrap-Up

Real estate investing doesn’t always mean owning buildings or dealing with tenants. REITs offer a beginner-friendly way to get into the world of real estate without the headaches. As always, do your research or speak with a financial advisor before making investment decisions.

If you’re interested, platforms like Fidelity, Vanguard, or Fundrise make it very easy to get started, even with just a few dollars.

Looking for more ways to grow your money passively? Learn about investing in High-Yield Savings Accounts for another hands-off income strategy. You can also find more posts like this under money, including practical savings tips and passive income ideas.

What has your experience been with REITs? I would love to hear from you in the comments.

Sensibly and simply yours,
Kat

👉 Enjoyed this post? Subscribe here to get weekly updates straight to your inbox.

Location: Michigan, USA

Comments

Post a Comment

Popular posts from this blog

Polish Cucumber Salad Recipe (Mizeria) | Easy Creamy Dill Side Dish

Image
This Polish cucumber salad recipe (called Mizeria in Poland) has been one of the simplest and most refreshing dishes in my kitchen. It's a traditional creamy cucumber salad with sour cream and fresh dill that my mom used to make. It’s cool, creamy, and lightly tangy. It is just perfect for hot afternoons or as a side for grilled meats or hearty casseroles. This recipe is very close to the one my mom used to make, and it always brings back warm memories with every bite. 🥒 What is Mizeria? (Traditional Polish Cucumber Salad) Mizeria is a classic Polish side dish made with thinly sliced cucumbers in a creamy sour cream dressing with fresh dill. It's served cold and pairs perfectly with grilled meats, pierogi, or hearty summer meals. This easy cucumber salad takes less than 20 minutes to prepare and tastes even better after chilling in the fridge. 📋 Recipe Info: Prep Time: 10 minutes Chill Time: 30 minutes   Total Time: 40 minutes Servings: 4-6 people Difficulty: Easy 🧂 Polis...
Read more

Best High-Yield Savings Accounts 2025 | HYSA Rates Compared

Image
Looking for the best high-yield savings accounts in 2025? This guide compares the top FDIC-insured HYSAs with rates up to 4.66% APY. I've researched the best high-interest savings accounts to help you find safe, flexible options that earn more than traditional banks offer. 📘What is a High-Yield Savings Account? A high-yield savings account is an FDIC-insured savings account that pays significantly higher interest rates than traditional bank savings accounts. While traditional savings accounts might pay 0.01%-0.50% APY, the best HYSAs currently offer 3.5%-4.66% APY. These accounts are typically offered by online banks with lower overhead costs, allowing them to pass savings to customers through better rates. 🥇Quick Comparison: Top 3 HYSAs Best Overall Rate: Axos ONE® Savings (up to 4.66% APY)  Best for Goal-Tracking: SmartyPig (3.90% APY + visual savings tools)  Best for Easy Access: EverBank Performance Savings (4.30% APY, no minimum) 🐖 SmartyPig High-Yield Savings Acc...
Read more

Growing Herbs in Michigan: Beginner's Guide to a Simple Herb Garden

Image
When I started my first herb garden two years ago as a complete beginner, I knew next to nothing about growing herbs. Now, after two seasons of trial and error in my Michigan (Zone 6) garden, I've learned which herbs are easiest to grow, which ones struggle in our climate, and practical tips for beginners starting their own herb garden. This post is all about herbs, specifically the ones I’ve grown myself and how I’m learning to make the most of them, one season at a time. 🌿 Best Herbs for Beginners to Grow Based on my experience growing herbs in Michigan, here are the easiest herbs for beginner gardeners: Easiest (Nearly Impossible to Kill): Peppermint - Grows aggressively, thrives in most conditions Chives - Hardy perennial, comes back year after year Thyme - Drought-tolerant, low maintenance Moderate (Pretty Easy): Basil - Easy to grow but sensitive to cold Parsley - Grows well but needs consistent moisture Challenging: Cilantro - Bolts quickly in heat, prefers coo...
Read more