Things Senior Citizens Should Keep In Mind When Investing In Reits

Senior citizens have fewer investment options because they cannot take on high risk and also need greater flexibility than investors in other age groups. 

However, real estate investment trusts (Reits) have emerged as an attractive investment option for senior people. Reits are investment tools that work like mutual funds, with the difference being that while mutual funds usually invest in equities and debts, Reits invest in real estate to generate returns through rental income and capital appreciation.

Let’s check out the benefits of investing in Reits from a senior citizen’s perspective.

Benefits Of Investing In Reits For Senior Citizens

Reits offer the benefit of dividend income as well as capital appreciation. A Reit must distribute at least 90 per cent of its taxable income to its unit holders. So, a senior citizen investing in the Reits can get a regular income that they may need during their retirement. It can be difficult for senior citizens to invest directly in real estate, manage the property, and ensure a timely rental income; however, through Reits, they can indirectly invest in properties with high rental return and capital appreciation potential. Reit managers are highly proficient in property acquisition, leasing, and their entire management. So, seniors don’t need to get personally involved in such activities. Seniors can invest in Reits if they align with their retirement goals and risk appetite.

Things Seniors Should Keep In Mind When Investing In Reits

Reits can be highly volatile and depend heavily on the market conditions. Factors such as interest rate, taxes, and government policies can impact the performance of Reits. Dividends can be irregular sometimes, depending on the company’s decision and market conditions. If Reits are not traded frequently in the market, it can become difficult for seniors to liquidate their investment.

Conclusion

Before investing in a Reit, you must perform a thorough research and check aspects, such as their management quality, occupancy level of the properties in the Reit portfolio, dividend distribution records, liquidity, among others. Prefer a Reit that has a diversified property portfolio and the quality of tenants are highly reliable.

Reits can also be a good substitute for investors who have always wanted to invest in real estate but couldn’t accomplish it due to the high entry ticket size. You must consult an investment advisor before investing in instruments, such as Reits. 

The author is an independent financial journalist