Invest in REITs: A Beginner’s Path to Financial Wellness
REITs are influenced by real estate-specific factors like property demand, rental income, and interest rates, which differ from broader equity or bond market dynamics. This article's discussion of low interest rates reflects the pre-2019 environment, where REITs benefited from a low-rate regime. However, by 2025, rising interest rates have pressured REIT valuations, making this point less applicable today. ( Updated on May 20, 2025 ) In [10], Charles Schwab provides the case for REITs. Here are the four reasons why REITs might deserve a place in your portfolio: Diversification REITs rarely perform in lockstep with stocks or bonds due to the below reasons: In recent years, the divergence was partly the result of low interest rates, which caused yield-hungry investors to drive REIT prices higher. REITs tend to follow the real estate cycle, which typically lasts a decade or more, whereas bond- and stock-market cycles typically last an average of roughly 5.75 years. Income ...