Real Estate Investment Trust (REIT) - An Interesting or Boring Investment?

How do you think when we are talking about REIT? Most of the people think that investing in REIT is slow and boring. It may be true, if you are those risk taker, impatient investor or wish to make some fast money in the market.

REIT is considered as defensive investment. The REITs price is actually very stable & its fluctuation is not much, no matter hos's the economy doing. Besides, REITs are generating very good distribution yield for this moment, ranging from 5%-7.5% per annual, which is quite encouraging if compare with FD. Performance wise, currently the REITs are performing very well, most of the prices shut up 10-20% year-to-date (YTD), compare to the KLCI Index which is just up about 7% YTD.

Why investing in REIT? REIT can be a flexible player in managing your portfolio structure. You may consider of buying REIT if you want to diversify your portfolio or lower the market risk exposure of your portfolio. Also, if you feel uncomfortable with the current market, eg. uncertainty of global economy, the up coming general election, you can park some of your money into REIT first, wait for good timing & prices, then you may cash out from REIT & buy back some good stocks.

On the other hand, if you wish to become a property owner & make some return by renting out your property, but you don't have enough money to buy a property, maybe you can consider of buying REIT, because both the concepts are almost the same. The main income of REIT is from rental collected from tenants. With the distribution policy of at least 90% payout, most of the rental goes into your pocket, and you don't need to bother of problems, like marketing to get tenants, renovation, etc.

I believe it is worth to hold some REITs due to its defensive nature & good distribution yield although REITs' performance is doing strong this year. AMFIRST, TWRREIT, ATRIUM, & ALAQAR are among the REITs that I like most.

Note: The above content is just a blogging activity that purely share my investment thoughts & ideas and should not be used as recommendation to buy or sell any securities. I may already have position in the above securities. Any action that you take from the opinions or information of this blog is solely on your own responsibility. Please consult your investment advisor before you make any investment decision.