What is the biggest misconception investors have toward investing in REITs?
Having watched countless investors, friends and even relatives reallocate portfolios in the years following the tech bubble, it has become increasingly clear that one of the biggest misconceptions they have, not just about REITs but fixed income in general, is that this portion of their portfolio will by definition be the lowest risk component. Over a long time period, fixed income securities have indeed exhibited less volatility than equities. But with the risk aversion that followed the technology crash, and the unprecedented bull market in all types of fixed income securities, I worry that a bubble in tech stocks may have been replaced by at least a “mini-bubble” in “lower risk” securities. This is being driven every day by financial advisors and others preaching conventional wisdom to baby boomers that they can secure their retirement savings by buying bonds and other income-oriented investments. The undeniable truth that investors must understand when they buy REIT stocks is that,
