Asked on 02 Aug 2019
Hi! I have managed to save around $40k over the years to invest it. Do you think I should invest most of it in REITs? Or should I consider something else? Thanks.
Top Contributor (Jan)
James, $40K is probably best deployed after you look at your own objectives and decide what are you expecting from your investments. REITs are merely one of the many asset classes. As you have mentioned, you took years to save that $40K, so please ensure you manage the risk of your investment portfolio as well, and diversifying your asset classes is one of the ways. Your question is rather general, so it is hard to give a specific answer, but I hope you have some ideas now.
Why REITs though? Would love to hear your thoughts.
Do take a look at your risk appetite and time horizon. https://www.financialsamurai.com/the-best-asset-allocation-of-stocks-and-bonds-by-age/.
Don't be hasty to put all your eggs into one basket. Read up on different investment platforms after you have determine your risk profile and assess them.
Which Reits Sector?
or Trust mistaken as Reits?
If the above 3 points is unfamiliar or sounds new to you, $40k is best place in low risk vehicle with higher yield and principal guarantee compare to savings account until you have a retirement planning (not based on insurance products without prejudice).
IMHO you should NEVER ask if you should put $X amount into Y. Financial Advisors' biases or other personal agendas will most likely bite you where you least expect it.
Perhaps you should instead arm yourself with risks and downsides of the investment you are looking to do (in this case REITs) and make a judgement if you are willing to accept these risks continue with your investment.
You may have to top up your holdings (when the management decides to purchase new proerty/estate to add to their portfolio) or risk dilution.
REITs prices do not generally "grow".
REITs generally faces risk asscociated with the property market "boom and bust" too.
Depends on what your investment risk appetite is like!
I would split up my $40k into a more balanced portfolio.
Usually it's between Equity and Bonds.
Buying REITs are like Equity, which should weigh heavier for a longer time horizon and more risk profile.
Most risky: 80% Equity, 20% Bond 10 year time horizon
Balanced: 60% Equity, 40% Bond 5 year time horizon
Least risky: 20% Equity, 80% Bond 2 year time horizon