Reit's

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Real Estate Investment Trusts

Financial markets transfer funds from those who have excess funds to those who need funds. A financial market is a market in which financial assets or securities such as stocks and bonds can be purchased or sold. Funds are usually transferred in financial markets when one party purchases financial assets previously held by another party. Financial markets facilitate the flow of funds and thereby allow financing and investing by households, firms, and government agencies. Real estate investment trusts or REITs is a good example of a financial market.

What are REITs?

According to investopedia, REITs are securities that sell like stocks on the major exchanges and invest in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate. REITs can also be defined as a real estate company or trust that has elected to qualify under a certain tax provision to become a pass-through entity that distributes to its shareholders substantially all of its taxable earnings in addition to any capital gains generated from the sale or disposition of its properties.

Individuals have the possibility to invest in REITs either by purchasing their shares directly on an open exchange market or by investing in a mutual fund that specializes in public real estate. An additional benefit to investing in REITs is the fact that many are accompanied by dividend reinvestment plans which allow shareholders to automatically reinvest cash dividends and capital gains distributions, thereby accumulating more stock without paying brokerage commissions. Among other things, REITs invest in shopping malls, office buildings, apartments, warehouses and hotels. Some REITs will invest specifically in one area of real estate…...

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