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Investing in Real Estate Made Simple: REITs Explained

When it comes to investing your money, there's a smart and relatively safe option called a Real Estate Investment Trust, or REIT for short. I'll give this a three out of 10 on the risk scale. Think of it as a way to own a piece of income-generating properties, like offices, shops, apartments, and hotels, without actually buying the whole property.

Imagine your friend gathers $100 each from 3000 people, totaling $300,000. He uses this money to buy a property, then rents it out. The rental income is shared among all 3000 people, giving them a taste of passive income – money that comes in without much effort.

Here's a simple comparison: It's like you and others buying different parts of a house. You might own the front door, someone else owns the windows, and a few others own the bricks. Together, you all own the whole property. This is how a REIT works, except with larger properties.

REITs are cool because they're required by law to share 90% of their profits with investors, somewhat like receiving dividends. They mainly make money from rent paid by tenants. However, the way they're taxed is a bit different.

Here's an interesting fact: On average, in the past 10 years leading up to 2019, REITs performed better than a well-known stock index called the S&P 500. They had an average return of 10%. If you're in the USA, there's a specific REIT called VGSLX by Vanguard that could give you about a 12% return on average. That's even better than what most regular real estate investors achieve.

Even if you're in the U.K. like me, you can use platforms like Trading 212 to invest just $100 in a similar REIT. The great thing is that these REITs offer diversification, which means you can invest in various property markets worldwide.

So, investing in real estate doesn't have to be complicated or involve buying entire properties. With REITs, you can own a piece of many properties and enjoy the rewards of rental income and potential growth. It's like a way to join forces with others and become a mini-property owner.

"Disclaimer: The content provided in this video is intended for informational purposes only and should not be construed as financial advice. The views and opinions expressed in this video are solely those of the presenter and do not necessarily represent the views or opinions of any organization the presenter may be affiliated with. The presenter is not a financial advisor, and any action taken based on the information provided in this video is at the viewer's own risk. It is always recommended that viewers seek professional financial advice before making any financial decisions. The presenter is not responsible for any financial losses or damages that may occur from the use of the information presented in this video."

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