The stock market's roller coaster ride earlier this year
suggests that 2018 is going to be bumpier than previous years. If
volatility makes you nervous, it is important to maintain a
diversified portfolio that will not plummet in value every time the
Dow drops or interest rates tick up. One way to diversify your
portfolio is with real estate.
This does not mean you need to go out and buy several apartment
buildings or commercial properties and become a landlord. There is
an easier, less risky way to gain real estate exposure through real
estate investment trusts (REITs).
Special entities
It is important to note that REITs do not provide a direct
investment in real estate. Instead, a REIT is a special kind of
corporation that buys, sells and rents real estate on behalf of its
investors. To qualify as a REIT, at least 75% of the company's
income must come from real estate. Unlike normal corporations,
REITs are not required to pay taxes at the corporate level.
