A Minimalist Approach to Investing with REITs

The busier life gets, the more enticing a minimalist lifestyle becomes. It would seem as though the very technology that was meant to make life easier has really only made it easier to do things faster which means we get more done in a shorter period of time. If it could stop at that, all would be well. Unfortunately, as a society, we seem to be gluttons for punishment. Instead of taking a deep breath, knowing that we accomplished more in less time, we set out to take on more and the cycle continues.

The same holds true for investing. We spend hours each day pouring over the markets, looking for sound investments, leaving us little free time to just sit back and relax. In at least one area of your life, why not learn a minimalist approach and let it be that? Learn a minimalist approach to investing and save yourself some time, frustrations and needless worries.

The Key Is Letting Someone Else Do the Labor

With a minimalist approach to investing, the key is letting someone else do the ongoing labor of following the markets and moving your investment money around for you. Typically, this would be in some form of fund or trust such as traded REITs, which are real estate investments in which the investors own a piece of properties, earning taxable dividends dispersed regularly and at predetermined intervals. Although it’s not quite that simple, it really is once you understand how an REIT works.

A Little Background on REITs

An REIT has a fund manager who makes it his or her business to follow the markets religiously, buying and selling income properties so that profits accumulate. It is often an arduous task and one that takes 100% of your time and effort (work time that is!) if you are going to be a fund manager. It is your job to snatch up properties that look to offer a high ROI and as stated, the earnings will be dispersed among investors within the Trust. But the income doesn’t actually come from selling real estate. Typically, the earnings are from either mortgages held by the trust or from rents collected by the trust.

And then there is the fact that you can invest in traded REITs and non-traded REITs. Sound a bit confusing and like a whole lot of work? Well, it can be for the fund manager and that’s why a minimalist approach to investing loves REITs. The bulk of all the actual work is on the manager. This only touches the tip of what REITs are about, but enough so that you understand it is easier than investing in real estate because your investment is managed for you. If that is one bit of information you can understand about Real Estate Investment Trusts, this should be your takeaway.

How Is This Minimalism?

The term minimalism implies simplifying life and everything about it. From décor to basic elements of a lifestyle to investment strategies, the goal is to do less to get more done and in the process, don’t add more to your load. Keep it simple. With minimal effort, you gain more in the long run. Which leads us to the difference between traded REITs and non-traded REITs. If you want to keep it simple, go with traded REITs. These are investments in publicly held companies that are traded on the exchanges such as the NYSE or NASDAQ.

The reason why these seem to be more simplistic is that there is sometimes a bit less risk involved and you can follow movement on the daily exchange postings at day’s end and once again at the beginning of the next trading day. You can follow your trust’s movement – a wonderful way to keep your investment transparent by following the value of shares, of which you hold a certain percentage of the whole. And, when all is said and done, there are REIT advocacies that offer information on REITs and are the voice of trusts throughout the US. It’s good to know you are backing an investment product that has an interested group that keeps everyone involved in the loop.

Summing up the Benefits of REITs and Trusts in General

There is so much more involved than just a few basic facts about REITs, but they highlight the point being made. Someone else, the trust’s manager, does all the actual ‘work’ even though you should be checking the numbers daily. You still don’t need to worry about where the investment money would be best spent. It’s the perfect solution to a minimalistic approach to investing because after you’ve found an ethical and profit-generating trust, you can (for the most part) leave the worries to the person or entity managing the trust. That takes minimal effort to realize a high ROI based on the experience and success of your trust and trust’s manager. Minimal effort for maximum gain. Minimalistic investing.

Show More

Related Articles

Back to top button