Investing in the markets vs investing in REITs
Investing in the markets vs investing in REITs
Namaskar dosto and welcome to another exciting, fun and insightful podcast by Angel One.
Agar aap pehli baar yaha aaye ho toh this is where we break down various important stock market questions and topics for investors looking to kick off a successful investment journey. Bore nahi karunga doston don’t worry, so are you ready?
Toh aaj ka topic hai REIT versus real estate stocks: kya REIT dvaara indirect investment karna smart option hai? Or is it better to invest directly by buying the stocks of thriving real estate companies?
Just like always, mai aapke saath saara information share karunga, lekin apna choice aap pe force nahi karunga. Sahi choice banane ke liye aapke paas pura information rahega aur decision making power bhi.
Toh chalo REIT versus real estate stocks ka competition shuru kare?
Iss competition mein 5 rounds rahenge:
First round mein risk profile comparison rahega
Second round mein expertise requirements compare karenge
Round three mein dekha jayega earnings potential by capital growth
Round four mein we will discuss dividends
Round five mein we will discuss diversification
Oh but wait, let's first find out:
What is a REIT?
REIT is the abbreviation of Real Estate Investment trust. It is somewhat like a mutual fund in the sense that investor capital pool kiya jata hai aur manage kiya jata - aage yeh investor capital ko kai real estate stocks mein invest kiya jata hai. Investor capital ka management investment banking experts dvara hota hai, very much like a mutual fund.
REITs are more like stocks however, rather than mutual funds, because they are bought and sold on the stock market and their prices fluctuate.
Ab hum competition ke liye ready hai.
REIT versus real estate stocks round # 1: Risk profile comparison
Stock market mein the prices of stocks (and other securities also traded) fluctuate throughout the day. Issi ke karan stock market mein risk hai. Suna hi hoga yeh line - capital markets are subject to market risk; please read all related documents carefully before investing.
Yeh aapko iss liye bola jata hai kyunki there is no way to guarantee which way a stock price will move. Log predict karte hai, with the help of technical tools and indicators, lekin there is no guarantee that the prediction will be correct. Phir bhi bahut log stock market mein invest karke earnings paate hai. Lekin iss mamlein mein REIT aur stocks dono same hai kyunki dono stock market pe trade kiya jata hai aur dono mein risk hai.
REIT versus real estate stocks round # 2: Expertise requirement
REIT mein, expert investor real estate companies evaluate karte hai aur choose kar lete hai. Jabki Stocks kharidte samay, investor ko khud harr company pe research karna hota hai. Inko harr company ka financial records of 3 to 5 years dekhna padta hai in order to make an informed choice. Toh direct stocks mein invest karne ke liye, at least basic finance understanding chahiye hi chahiye, taki aap sahi stocks choose kar payenge.
However you might be able to get away without much understanding of finance in the case of an REIT investment since the stock choices are made for you.
REIT versus real estate stocks round # 3: Earnings potential from capital growth
Yeh bhi guarantee nahi kar sakta hu if I'm being honest dost lekin historically, REIT prices move up when property prices are on an upward trend. Stocks mein, things are a lot more complicated than that.
In every other way, however, REITs and stocks display similar potential for capital growth:
Dono mein you try to buy at a low price and sell at a high price
Dono mein, risk reward benefit from one Investment might be completely different than another
Dono mein, zyada tal, long term mein risk thoda bahut plateau out ho jata hai
Dono mein you have high risk-high reward potential wale and low risk- low rewards potential wake and some options in between.
REIT versus real estate stocks round # 4: Earnings potential from dividends
Some stocks declare dividends and some do not. Dividends milne ki koi guarantee nahi hai aur agar mil bhi rahe hai amount aur frequency fixed nahi rehta hai.
REITs mein government ne rule banaya hai ki 90% of taxable income has to be paid as dividend to unitholders. Ji haan, REIT investors ko unitholders bolte hai instead of shareholders
REIT versus real estate stocks round # 5: diversification
There are residential REITs and commercial REITs, retail REITs and mortgage REITs and these may be further divided into small cap and large cap REITs. Aap sirf ek REIT le loge toh you you get exposure only to that one subgroup, lekin to several companies in that subgroup.
Stocks mein you can choose to diversify your real estate investment across retail residential and commercial, for example.
How can one invest in REITs?
REIT ya real estate stock mein invest karne ke liye you need a demat account. You can invest in them via your smartphone nowadays using a broking app.
Aaj kal broking apps free mein milte hai and you can set up trading and demat accounts with a few clicks and entirely online verification.
Agar aap koi bhi stock market investments kar rahe ho toh 3 cheez yaad rakhiye:
Consider how much capital you have over and above your daily and basic lifestyle expenses
Consider your investment horizon. Ideally you should find yourself in a position where you need to pull out your capital jab market down hai aur stock ya REIT ke prices kam hai
Diversification pe bhi dhyan do. Hamesha alag alag sectors aur alag alag categories of investments mein invest karna can be better taki ek sector ya ek investment mein agar loss ho jaye, dusre investments yeh loss offset kar sakte hai.
Do remember, this podcast has been made for educational purposes only and as an investor aapko thoroughly dusre sources se bhi research karna chahiye.
Hum aise podcasts se aapko aise hi interesting investment topics ke baare mein insights dete rahenge, so subscribe to our YouTube channel and follow us on other social media platforms. Until then, happy investing and goodbye!
Investments in the securities markets are subject to market risks. Read all the related documents carefully before investing.