Dear Mr AK,
I am 56 and I started investing last year. I invested heavily in REITs because of the higher yields and belief that they will fund my retirement.
However, I have been hit by a string of rights issues including the recent one from cache logistics. I don’t have much spare cash and I am not prepared for these.
Now, I wonder if I made a mistake by using my CPF money to invest in REITs too.
My brother-in-law told me that REITs will take back all the money they give out as dividends and sent me a newspaper article on the topic.
I read your recent blog on your impressive passive income from REITs. You are an expert on REITs.
Could you help to shine some light on this matter?
(Reader attached the newspaper article “The REIT myth busted” in the email to me.)
The article generated plenty of discussions many years ago because REITs sank during the Global Financial Crisis and many REITs required capital injections to stay afloat.
I am sure there are many who were burnt and many who still do not believe in REITs.
I have some scary stories from those days which I can tell too.
Horror stories aside, however, I believe in being pragmatic and that all investments are good investments at the right price.
We have to find the right tools to do what we want to do.
In my opinion, REITs are relevant to investors for income.
Having said this, as REITs distribute most, if not all, of their income to their investors, it is only natural to expect some form of fundraising if they are to grow.
So, should you stay invested in REITs?
Read these blogs first:
I hope they provide some of the light you are looking for.
To invest in REITs, it is important to be prepared for possible rights issues. Investors should be able and willing to deal with this possibility.
With this in mind, you have to decide if REITs are right for you. I cannot decide for you.