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I love real estate.
And I love it for one good reason.
Outside of owning a successful business, the top way to get rich is investing in real estate.
Most of us will never be real estate developers, but thanks to the miracle of REITs, we can own all sorts of solid real estate investments. We can own skyscrapers, warehouses, cell towers, apartment buildings, and just about any type of property we wish.
And here's the best part about it: We never even need to speak to a real estate agent.
With the click of a mouse, we can become an owner of farms, senior living facilities, and even medical cannabis facilities.
So today, I want to take a deep dive into how you can make a ton of money investing in REITs as opposed to stocks.
And I'll even reveal how you could have made $385,000 more if you had invested in them over a long period of time.
According to Research, REITs Outperform Stocks in the Long Term
We are always told that we should own stocks because they offer the highest returns.
I believed that for a long time. But the truth is that REITs outperform stocks over the long run with less volatility, according to several studies I have read over the years.
When I sat down to write this, I checked the National Association of Real Estate Investment Trust data, and I calculated that owning equity REITs since 1980 has provided a return of 11.61% a year. Owning the S&P 500 during that same time frame has compounded at just 8.39%
An investor who put $10,000 in the widely touted index fund would have a little over $197,000 at the start of 2018. The REIT investor who took the far more boring path would have more than $582,000 in their account. Following conventional Wall Street wisdom would have cost our now senior citizen investor $385,000!
While I will continue to adore stocks as well – it's a pretty close race, and long-term investment of both will make you money – history tells us REITs will make us more.
Yet, despite this overwhelming evidence in favor of REITs, people will continue to tell us it's a bad idea to buy them when interest rates are rising. Your broker said so, and that guy on TV said so. They say that REITs are horrible investments in high-interest-rate environments.
About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of "Max Wealth" and Heatseekers.