REITs (Real Estate Investment Trusts)
Real Estate Investment Trusts, or REITs, are real estate companies that offer common shares to the public and return the profits to shareholders as dividends. Unlike buying stock in a single company, an REIT investor is buying a portion of a managed pool of real estate [source: Forbes]. As the properties in that pool begin to make money through property sales, rentals or leases, the REIT distributes the profits to investors.
While aggressive investors appreciate the potential for high return on investment and long-term growth that REITs offer, the single focus on property ownership means that they are extremely vulnerable to the ups and downs of the real estate market.
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