Real Estate Investment Trusts (REITs) have long been a favourite among Singapore investors. They are prized for their steady dividends and relatively low volatility compared to individual stocks. But not everything you hear about REITs is true. Not understanding how REITs work or believing common myths can lead to poor investment decisions and disappointing returns. Follow as we bust three common REIT myths and show why careful selection and a long-term mindset matter more than chasing short-term yields.Myt ...

Group 1 - Building a diversified portfolio is essential for long-term investment success, as relying heavily on a few stocks can lead to significant losses [1] - High-quality real estate investment trusts (REITs) can enhance portfolio diversification by providing steady income through dividends and potential capital appreciation [2][3] - REITs combine attractive income and growth potential without increasing the overall risk of the portfolio, making them a smart addition [7] Group 2 - Historical data shows that a 100% stock portfolio has delivered an average annual return of 10.5%, but with high volatility, including a 54.2% gain in the best year and a 43.1% loss in the worst year [5] - A 100% bond portfolio has a maximum loss of 13.1% in its worst year, but it only generates an average return of 5%, indicating that increasing bond allocation reduces overall returns [6] - Allocating at least 5% of a portfolio to REITs can yield higher returns with lower risk compared to a traditional 60/40 portfolio, with REITs delivering an average annual total return of 12.6% since 1972 [7]

Group 1 - The US Federal Reserve has cut interest rates, impacting global markets including Singapore, necessitating proactive investment strategies [1][2] - Cash yields are declining, with Singapore fixed deposit rates currently between 1.4% to 2.5%, while inflation erodes the real value of cash [2][3] - Investors are advised to avoid holding idle cash and instead invest in assets that can generate income or appreciate in value [3] Group 2 - Dividend stocks and REITs are highlighted as attractive alternatives for income as fixed deposit rates decline [4][5] - Specific examples include CapitaLand Integrated Commercial Trust (CICT) with a yield of 4.8%, CapitaLand Ascendas REIT (CLAR) at 5.4%, and Frasers Logistics & Commercial Trust at 6.7% [5][6] - Investors should focus on REITs with strong sponsors and quality assets, as well as dividend blue chips like DBS Group (4.8% yield) and UOB (5.1% yield) [6][7] Group 3 - Diversification is essential; investors should balance their portfolios across different sectors and consider global growth leaders like TSMC, Alphabet, and Meta Platforms [8][9] - A diversified portfolio can mitigate local volatility and provide access to long-term growth opportunities [9][10] - The Fed rate cut is seen as a pivotal moment for investors to reassess their portfolios and seek steady income from quality investments [10]

Core Insights - Real estate investing is accessible to individuals without significant wealth through various strategies such as house hacking, REITs, and crowdfunding [2][10]. Group 1: House Hacking - House hacking involves purchasing a home and generating rental income while living in it, often covering housing costs through rent [3]. - Common strategies include buying multifamily properties, building accessory dwelling units (ADUs), renting out extra space on platforms like Airbnb, and getting roommates [6][12]. Group 2: Real Estate Investment Trusts (REITs) - REITs allow for passive investment in commercial real estate, requiring minimal upfront capital, with some platforms allowing investments starting at $1 [7][8]. - REITs are mandated to distribute at least 90% of their taxable income to shareholders, providing a reliable source of dividend income [8][9]. Group 3: Crowdfunding Platforms - Real estate crowdfunding platforms enable investors to pool resources for real estate projects, with some options available for non-accredited investors [10][11]. - Minimum investments vary, with platforms like Fundrise allowing entry with as little as $10 [11]. Group 4: Home Equity Line of Credit (HELOC) - Homeowners can utilize a HELOC to finance real estate investments, borrowing up to 85% of their home's value [12][13]. - The interest on a HELOC may be tax-deductible if used for home-related investments [17]. Group 5: Getting Started - Individuals should assess their financial goals and situation before investing in real estate, considering options like REITs or crowdfunding if direct property purchase is not feasible [18][19]. - For those looking to build equity, saving for a down payment or exploring FHA loans with low down payment requirements can be beneficial [23].