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Invest in REITs to counter inflation (投资在房地产投资信托来应对通货膨胀)

One of the reason there are more people being involved in investing is to generate second income that can be used to counter inflation. This is because the rise in salaries and interest from fixed deposit are not high enough to cover the inflation. However, although equities or stocks can sometimes outrun inflation, but it has a relatively higher risk as market fluctuates every day. Hence, the writer would like to introduce REITs to you guys as a reference, to see whether will REITs be another option when comes to countering inflation.

Investing in property is one of the best way to counter inflation as the property price will increase once inflation kicks in. However, it requires a lot of money for one to invest in property market, hence REIT shall be a cheaper alternative for these investors. Real Estate Investment Trust (REIT) is like a mutual fund, where it is a company that owns, operates and finances income-generating real estate. Property under REIT portfolio can be diversified, and include office building, residential building, shopping malls and warehouses.

Since most REITs are publicly listed, investors can buy and sell their shares anytime just like normal stocks. Furthermore, REIT investment need not any management because there is someone who help investors to manage these properties. Besides, although actual property can earn you both rental and capital gain, but the capital gain will never be liquidated if investors never sell their property, and it will take at least 6 months to convert the property into money. Unlike actual property, selling REIT shares allows you to get the cash within at most 3 days. During bull market, REIT will have a better capital gain than actual property since REIT shares will move alongside all other stocks. On the contrary, they will also suffer higher losses when bear market hits.

In short, REIT is a good option for property investors that have not enough money to afford actual property. Furthermore, REIT investors can still enjoy both capital gain and dividend gain at the same time, without having the trouble to manage the property or renting the property. Hence, REIT is still one of the best tools to counter inflation.





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