So, we spoke yesterday about what we should be doing with our economic impact checks and our tax refunds.
If you folks are young enough- or there are two of you working- you might be able to put this money to a pretty interesting use. Investing in a REIT- a real estate investment trust. The underlying properties of the REIT are income-generating real estate assets.
I own a few hundred shares in some publicly traded REIT’s. And, they’re good investments- not just because they are providing reasonable returns (dividends)- but because a portion of their profits are Qualified Business Income, which means that portion that is QBI is not taxed by the feds.
But, if you don’t need your money for about 5 years, there is a darned good REIT you should consider. And, they will let you participate in their REIT with an investment as low as $500.
Who is this?
Diversy Fund. There are two different funds in which you can invest. Of course, if you are not a qualified investor (one with substantial means), you are limited to their “Growth REIT”, comprised of multifamily properties, which is where that $ 500 minimum investment can be applied. (Their “Series A Round” requires a minimum $25K investment.) And, their returns have been pretty good. They don’t impose any management fees on your funds. (Of course, they do take a share of the profits.)
The profits developed by the Growth REIT (the dividends) are reinvested. (These funds are Reg A investments. This means the fund is registered with the Securities and Exchange Commission (SEC), but has less than $ 50 million in assets. And, they may not require audited financials; until the fund has $ 10 million in assets or 500 shareholders, they don’t have to report all their information to the SEC.)
The big drawback to the Diversy is that this is not a liquid fund. In other words, you cannot take your money out just because you want. (You may be able to sell your investment to someone else.) The money you invest stays in the fund until Diversy divests itself of that property in which you invested. Which typically means your funds are “locked in” for five to six years.
If you can’t see yourself clear of needing that money in the near future, then this opportunity is not for you.
Hmm, that’s an interesting idea! For me, the question would be, how much money would I want to have in savings already, so that I wouldn’t miss the $500? It would probably have to be thousands of dollars, which I do not currently have, unfortunately. I like the idea, though.
I don’t know, Jeanine. A 10% compounded return for 5 to 6 years would double your money.
I too am interested in REIT.I invested in some though a Government plan in India.
Let’s see what more I can find here.
Good luck, Dr. A!
I wish I could invest, but two weeks into the quarantine, I lost my regular writing gig. The website I wrote for went through pandemic budget cuts—I was one of the most recent writers to join so I was one of the firs to get cut . Hoping I can get back to work there if the economy ever recovers.
I am so sorry to hear that they cut you. (It’s their loss, for sure.)
This pandemic is upending too many of us. The benefit of the quarantine, of course, is that we are still here to complain about it.
definitely something to consider!
Glad you found it of interest, Nancy.
Solid info, Roy. I just wish I’d been more financially aware when I was in my twenties and thirties.
That’s why I post these items. To make folks more aware- something I wish had been done for me!
Well, not for me (now semi-retired as of last Friday) or my spouse (fully retired) but I suspect some of your readers will be happy to know about this.
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That’s why I didn’t participate, Alana. The time frame is a bit off for us.
thank you so much for this post, now i will be able to give some info to my dh which he will appreciate 🙂
while i have not commented often on your posts lately, i will be back to read and comment more soon..
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I appreciate all your visits, Vidya! Thanks for the comment.
This sounds interesting, if a young family starts with a certain amount can they add to it? Also is this like an annuity with a guaranteed return after it matures or like stocks were you can lose it all?
Real estate rarely drops to zero (not even during the Great Depression or Great Recession). But, as is true for everything in life, nothing is guaranteed.