Many of your will be aware that I like to dabble in many different types of investments, whether it be the stock market & penny stocks, Forex markets and more recently I have considered rental properties and opening an online shop. One thing that I haven’t spoken about previously is the option of investing in real estate investment trusts.
In Australia (not sure about other places around the world) a real estate investment trust is a portfolio of property assets is often controlled by a company in the form of a trust. The portfolio is normally listed on the stock market, and is an easy way for mum and dad investors to gain access to the potential increases in property prices. Note: Price fluctuations will largely depend on the quality and size of the real estate portfolio that the trust contains.
Why Invest in a Real Estate Trust?
Investing in a real estate trust can be a great alternative to buying an investment property. Why, I can hear you asking? Because you don’t need as much money up front to get started, and you still gain exposure to the broader property market where the portfolio is based. Property trusts can also be used as part of your superannuation portfolio and is great for investors who don’t have a very large super balance but want to get into property.
Over the last few years property prices have fallen in most places around the world, and so I can understand that many people reading this may be hesitant to jump back onto the property bandwagon. As a home owner I can sympathise, however I personally see this type of investment more like an opportunity to diversify my current investment portfolio. Currently I am very much overweight in my penny stocks, and as I mature and start seriously planning for retirement, I can see real estate taking up a bigger slice of my investment pie. Utilising a property investment trust might very well be the first step I take in expanding my property aspirations outside of our family home.
What do you guys think? Are you pro property trusts or against it as an investment option?