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REITs vs. Stocks: Investment Guide – Yahoo Finance

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There are many different investments that can make up a strong, diversified portfolio. Buying shares of publicly traded securities – such as stocks or real estate investment trusts (REITs) – can be a good way to build growth over time and help protect against risk. But when considering REITs vs. stocks, which is the better investment? There are many similarities between the two securities, but also some differences that investors need to keep in mind. Working with a financial advisor can help you determine what allocation of stocks and REITs fit your goals, timeline and risk profile.

What Are REITs?

A real estate investment trust, or REIT, is a company that holds – and often manages – various real estate investments. REITs are funded by investors’ pooled funds, who are able to buy into the REIT by purchasing shares.

As the real estate investments held by the REIT appreciate or bring in revenue (through things like rent payments from tenants), investors are rewarded. Growth can be both immediate and long-term, making REITs a simple way to invest in real estate and bolster one’s portfolio.

How REITs and Stocks Are Similar

For some investors, REITs may represent the best of both worlds, as these investments combine the simplicity of stocks with the growth potential of real estate. In fact, REITs behave very similarly to stocks in many ways.

Both are sold as shares to investors

Investors who want to buy into a specific company do so by purchasing shares, which is simply a small portion of that company’s ownership. The capital generated by investors can be used by the company for a variety of purchases. With REITs, investors also buy in by purchasing shares. The capital generated is used to fund that company’s real estate portfolio. This may mean purchasing, renovating, managing or maintaining those properties.

Both can be publicly or privately traded

Companies can choose to remain privately held or trade their stocks on a public exchange. The same goes for REITs, which can be publicly-traded, privately-traded or even non-traded. The risk and liquidity for each investment varies depending on whether the stock is privately or publicly traded.

Both can be key parts of your portfolio

Though a more volatile (and risky) investment, stocks can play an important role in an investment portfolio’s success, potentially encouraging portfolio growth and boosting its value. They also allow investors to put their money to work within companies and industries that are important to them personally. REITs do the same thing. They enable investors to invest in real estate while also mitigating loss, allowing them to put their money to work in real estate without shouldering all of the risk. By adding REITs to a portfolio, investors are also able to diversify their investments, helping to hedge against market downturns and inflation.

How They Differ

Of course, there are also some key differences for investors to keep in mind when it comes to investing in REITs or investing in stocks.

REITs focus on real estate

Real estate developmentReal estate development

Real estate development

As the name states, REITs are real estate-based investments. This may make them an attractive option for investors looking to put their money in the real estate market, without the risk of buying and managing property. Individual stocks, however, can fall into a wide range of categories. Stocks allow investors to choose certain industries – and even specific companies – which may or may not relate to real estate.

Stocks offer more personalization and control

Because stocks enable investors to buy shares of any publicly-traded company, they are a very personalizable investment. You can buy shares of your favorite apparel brand, your favorite social media platform or even your favorite movie theater company … whenever you want. REITs, on the other hand, represent a collection of real estate investments. Investors don’t have a say in the investments held within the REIT or how they are managed. And while some REITs may focus on, say, apartment buildings or commercial complexes, they don’t offer specific personalization beyond that.

REITs must pay dividends

Investors may receive periodic payouts, called dividends, after certain investments recognize growth. Dividends may be offered by stocks, mutual funds or even exchange-traded funds (ETFs). These bonus funds can be withdrawn and used for other purposes or even reinvested back into the investor’s portfolio. Not all investment stocks pay out dividends, and the value of the dividends received may vary. Dividends are required of REITs, though. According to the IRS, REITs must pay out at least 90% of their taxable income as dividends to investors. These dividends can boost your portfolio or even provide a passive income stream

REITs vs. Stocks: Which is Better?

As with most financial topics, choosing between REITs and stocks is a very personal decision.

If you are interested in a real estate investment that is reliable, hands-off and offers dividends, REITs could be the answer. If you’re looking for a higher-risk – but high-potential – investment or want to be able to invest in specific companies you admire, buying individual stocks could be the answer.

With that said, it’s always wise to diversify your portfolio; in many cases, this might mean purchasing both stocks and REITs.

A well-diversified portfolio helps investors personalize the experience and find the investments that pique their interest the most. It also helps to invest in a variety of different industries, investment types and risk tolerances. This enables investors to mitigate risk, hedge against market downturns and even help balance out future inflation losses.

The Bottom Line

Investor holding a graph displayInvestor holding a graph display

Investor holding a graph display

Stocks and REITs both let investors buy shares of a company for growth potential and portfolio diversification. They can be publicly or privately traded and may be accessible to investors of any experience level. REITs may be focused on commercial, residential or other types of property. Stocks offer a wide variety of industries and companies. REITs can be an excellent source for passive income because of their consistent dividends. While many stocks also offer dividends, this isn’t always the case. Both REITs and stocks can be tailored to fit your investment style. REITs offer a more hands-off approach for investors who only want to consider adding real estate investments, while stocks allow for direct control of securities.

Tips for Investing in REITs vs. Stocks

  • Choosing between stocks and REITs or choosing how much of each to buy, isn’t the only decision investors face. And sometimes you need perspective, advice and expertise. We can help. SmartAsset’s matching tool can pair you with a financial advisor in your area who can help you think through your goals and make sure they’re specific, measured, achievable, relevant and timely. If you’re ready, get started now.

  • Be sure to take periodic advantage of a calculator to determine an ideal asset allocation and then engaging in passive investing strategies.

Photo credit: ©iStock.com/Zinkevych, ©iStock.com/Bim, ©iStock.com/ipopba

The post REITs vs. Stocks: Investment Guide appeared first on SmartAsset Blog.

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Turkey's Erdogan says U.S. proposed F-16 sales in return for its F-35 investment – Reuters

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A U.S. Air Force F-16 jet fighter takes off from an airbase during CRUZEX, a multinational air exercise hosted by the Brazilian Air Force, in Natal, Brazil November 21, 2018. REUTERS/Paulo Whitaker

ISTANBUL, Oct 17 (Reuters) – President Tayyip Erdogan said on Sunday that the United States had proposed the sale of F-16 fighter jets to Turkey in return for its investment in the F-35 programme, from which Ankara was removed after purchasing missile defence systems from Russia.

Reuters reported earlier this month that Turkey made a request to the United States to buy 40 Lockheed Martin-made F-16 fighter jets and nearly 80 modernization kits for its existing warplanes. read more

Speaking to reporters before departing for a trip to West Africa, Erdogan said Turkey wants a return for its investment in the F-35 programme and that talks on the issue are ongoing.

“There is the payment of $1.4 billion we have made for the F-35s and the U.S. had such a proposal in return for these payments,” Erdogan said.

“And regarding this, we said let’s take whatever steps are needed to be taken to meet the defence needs of our country,” he said, adding that the new F-16 jets would help develop its fleet.

Ankara had ordered more than 100 F-35 jets, made by Lockheed Martin Corp (LMT.N), but the U.S. removed Turkey from the programme in 2019 after it acquired Russian S-400 missile defence systems.

The decades-old partnership between the NATO allies has gone through unprecedented tumult in the past five years over disagreements on Syria policy, Ankara’s closer ties with Moscow, its naval ambitions in the eastern Mediterranean, U.S. charges against a state-owned Turkish bank and erosion of rights and freedoms in Turkey.

Ankara’s purchase of the S-400s has also triggered U.S. sanctions. In December 2020, Washington blacklisted Turkey’s Defence Industry Directorate, its chief, Ismail Demir, and three other employees.

Since then the U.S. has repeatedly warned Turkey against buying further Russian weaponry. But Erdogan has indicated Ankara still intends to buy a second batch of S-400s from Russia, a move that could deepen the rift with Washington.

The request for the jets will likely have a difficult time getting approval from the U.S. Congress, where sentiment towards Turkey has soured deeply over recent years.

There is bipartisan support in U.S. Congress to push the Biden administration to put further pressure on Ankara, primarily over its purchase of Russian weapons and its human rights track record.

Ankara has said it hopes for better ties under U.S. President Joe Biden.

Reporting by Ali Kucukgocmen
Editing by Raissa Kasolowsky;

Our Standards: The Thomson Reuters Trust Principles.

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Guest column: Long-term investment only way to resolve homeless and needy crisis – Windsor Star

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Have you ever found yourself walking along a walkway in Montreal, Toronto, Windsor or any city in Canada, where you come face to face with a person holding their hands out or a cup hoping for some change?

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How did you react? Ignore them, stare in disgust, feel sorry for them, but not donate to their cause of survival?

Don’t feel bad about your response. I believe ignoring those before you is often the top option taken by people, perhaps next followed by a limited drop of change that may buy them a coffee.

Feeling bad about what you do or did not do is both naturally human and conscience driven.

But I believe our Canadian cities have not done very well for the homeless and destitute of our society.

I do not mean Canadians have not spent large amounts of money to help these individuals because all levels of our governments have spent hundreds of millions of dollars doing just that.

I suggest the empathy we have for these individuals has not been thought out very well — or at least not expanded to where support should have gone.

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We naturally react to problems before us. We recognize a challenge, possibly study it, then go to our experts and ask what should we do.

Well, we have reacted on this issue many times, gone to the “specialists” to be directed towards a quick, temporary “make us feel good” solution.

But what I feel is needed is a planned long-term response to this challenge.

The homeless, destitute, mentally ill and transient often make tent cities in our urban centres. We try to do much to assist them and dissuade them from staying in these areas.

After every attempt to assist them, almost inevitably our police are directed by political leaders to empty those parks. Sometimes violence and misunderstandings abound. Then the rich versus the poor becomes a rallying cry for the sector that cares for these people.

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Years ago, the Ontario government closed many mental health institutions throughout the province I feel creating part of the problem. Services and shelters are offered to people, but often not used by many.

I believe our governments either totally misunderstand these individuals or just don’t care enough. Shelters can be very crowded places to live, rules impossible to follow and violence happens often among clients.

The very stresses and mishaps that lead individuals to homelessness and mental problems becomes more pronounced.

The problem I feel is nearly every effort made by a government is intended to be temporary.

These issues need to be better thought out and then act. Long-term strategies are usually more effective and less costly over time. Let’s invest in people, don’t coddle them and offer trinkets of consolation.

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When it comes to homelessness, a multi-governmental effort must be made with direct ownership investments by municipal, provincial and federal governments to develop and build real affordable housing.

We have seen what private developers have to offer us — solutions that are never really affordable, always centred upon immediate profitability.

We must instead focus efforts upon our neighbours first and possible long-term profits later. Call upon our “specialists” to offer how and what affordable housing should look like for young, old, disadvantaged and disabled clients. Then find pre-existing governmental properties where building housing is an immediate asset.

When it comes to those mentally challenged I feel the most pronounced question has been what can we do for these clients?

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What indeed. First off we need to get many of these people off the street. In freezing winters staying outside can be suicidal. Police and medical teams should have powers to “arrest” if necessary those individuals truly in need of assistance. A firm protocol must be established where clients enter our programs.

Next steps should include an initial evaluation of the person’s situation, full evaluation of their medical and mental health, then placement to respectful accommodation with supervision.

If needed, a three-month program to assist initial addiction, mental and associated conditions. Then provide follow-up evaluations to each individual’s progress.

If more help is needed it should be provided. Multiple hiring of therapists, psychologists, specialty teachers, social workers and trades personnel newly graduating from our colleges and universities will be required. But instead of putting bandages upon each individual’s life we will put full investments into each and every one.

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Pathways to further education, personal development will be encouraged. Many of those without homes I feel will respond well to affordable housing that can be rented or owned in time.

Those that are unemployable due to their physical, developmental state in life can be given opportunities not based upon stereotypes. A person’s offered gifts and abilities will be used to our societal benefit.

If you were to compare the costs of maintaining these people as we have been doing for multiple generations and what the cost would be should we invest in long-term solutions for our neighbours in need, I believe there will be no doubt how we should proceed.

For those asking how are we going to afford these services and investments, I’d like to believe most Canadians would prefer investing in community/persons before investing in a thing. Governmental or public corporate bonds with good returns could also possibly be offered.

All these acts I believe could show the world that Canadians can and will stand above the rest as empathic innovators of what is humanly excellent.

Steven Kaszab is a resident in Bradford, Ontario, a community north of Toronto.

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Nicholas Kyriacopoulos: How to invest properly in 2021 and beyond – mtltimes.ca

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Entrepreneurs like Nicholas Kyriacopoulos know the importance of how to invest during uncertain times, and it would be fair to say that the last year or so has had a few surprises for everyone following investment markets. While this change and volatility can be very profitable for those who make the right decisions, it also makes those right decisions harder to discern.

Nicholas Kyriacopoulos

The fundamentals of good investment have not changed, however, and will continue to help investors in the future:

Keep it simple

Keeping it simple is a good rule for many areas in life, and investment is definitely one of them.

How much time do you really want to spend managing your investment portfolio, and what kind of returns would make that commitment worth it to you?

If your investment portfolio takes careful attention and management to work, you need to be prepared to give it the time it needs. Keeping a simpler portfolio that doesn’t need as much attention paid to it can be a better option for people who have limited time to spend on their investment decisions.

That doesn’t mean you should necessarily take a ‘set it and forget it’ approach to investment, but absolutely consider the additional time commitment and stress of each potential investment and whether it is worth your time.

Diversify

Diversification improves reliability and reduces the risk of just about every investment portfolio. Your investments should always be varied enough that even when a few of your investments are in a slump, you will still have enough winners to make a minimum return.

Many entrepreneurs like Nicholas Kyriacopoulos from Toronto recommend holding a variety of asset types as well as stocks. For example, consider bonds and real estate as part of your overall portfolio; make sure you have stocks associated with several different industries.

Rebalance

According to Nicholas Kyriacopoulos, be open to the concept of rebalancing. As market conditions changes, look to shift your portfolio away from investments that with less promising prospects and up your investments in markets that look ready to rise. 

Nicholas Kyriacopoulos gives a simple example of rebalancing from the latter half of 2020. While oil prices were not looking great for most of the year, there were signs of incoming change. As a result, some investors sold oil assets over the summer and later purchase oil stocks. They then saw great returns when the stocks surged in November.

Asset allocation

As an experienced investor in Toronto, Nicholas Kyriacopoulos advises careful consideration of your current situation and future financial goals. For the most part, this is about the amount of risk you can take on and your ability to recover if an investment doesn’t go your way.

If you still have decades left to work and rebuild, you can afford to take more risks than if you are approaching retirement and are looking for holdings you can rely on for a long time.

Consider your long-term goals

Nicholas Kyriacopoulos observes that besides your current situation, you also need to think about long-term goals. Where do you want to be in five, ten, or twenty years, and what can you do along the way to ensure your investment takes you in the right direction? Setting goals and having plans is just as important in 2021 as it has always been.

Don’t ignore your instincts

As Nicholas Kyriacopoulos, investing does involve risk and it sometimes means going with what you feel deep in your gut. While your decisions should always be backed by data and analysis of the market, following your instincts make it easier to have confidence in your decisions.

Your instincts can come about as a result of noticing minor details others are not noticing. If the feeling is strong enough, take the risk.

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