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Hi AK,
I'm new to your blog.
In searching for passive income in the past it was all about property and I never really considered REITS, stocks or funds in general. However I'm slowing accumulating these instruments in recent years to both diversify and bolster my passive income stream.
Too many investment and UT performance reports assume you will keep reinvesting dividends to take advantage of compounding and show wonderful returns. Unfortunately for retirees who cannot afford to roll their dividends back to their investments these numbers do not hold true.
REITS often make cash calls and one can see even the holdings that you've mention like AIMS, LMIR, Cache, Sebana over the past 3 years have lost capital for their investors (assuming you don't reinvest).
If you look at income-focused UT reports purely on a NAV basis most head south. I've seen advice by other investors that say we should look for even higher returns, spend a portion of that and reinvest the rest (eg, get a 10% dividend, spend 8% and reinvest the rest) but that also usually entails taking on much higher risk. Another talks about a hybrid between income and value & growth investing.
If you look at income-focused UT reports purely on a NAV basis most head south. I've seen advice by other investors that say we should look for even higher returns, spend a portion of that and reinvest the rest (eg, get a 10% dividend, spend 8% and reinvest the rest) but that also usually entails taking on much higher risk. Another talks about a hybrid between income and value & growth investing.
So if you're an investor starting out today that needs dividends as income but wants to preserve or grow his capital you're really in a hard place.
How would you advice someone in this situation?
How would you advice someone in this situation?
Regards
V
Hi V,
Welcome to ASSI. :)
If we entered at a high price, it is unlikely that we are going to do well. It is not just REITs but the same with everything else, including ETFs.
If we want to invest in REITs, for example, it would be more meaningful to compare within the REITs sector to see which ones have performed better. Why did I choose to stay significantly invested in AIMS AMP Capital Industrial REITs instead of Sabana REIT, for example?
In the current day environment, if we want to preserve our capital (i.e. zero risk and volatility) and yet want to receive income, investment grade bonds or fixed deposits are the best bets. Even so, the risk is not zero.
Grow our capital (and I take this to mean appreciating prices) and yet want some income? I am sure there isn't anything that can provide such certainty although if we have a very long term investment horizon, the chances will improve if we invest in a basket of well run companies that pay dividends.
Best wishes,
AK
Welcome to ASSI. :)
If we entered at a high price, it is unlikely that we are going to do well. It is not just REITs but the same with everything else, including ETFs.
If we want to invest in REITs, for example, it would be more meaningful to compare within the REITs sector to see which ones have performed better. Why did I choose to stay significantly invested in AIMS AMP Capital Industrial REITs instead of Sabana REIT, for example?
In the current day environment, if we want to preserve our capital (i.e. zero risk and volatility) and yet want to receive income, investment grade bonds or fixed deposits are the best bets. Even so, the risk is not zero.
Grow our capital (and I take this to mean appreciating prices) and yet want some income? I am sure there isn't anything that can provide such certainty although if we have a very long term investment horizon, the chances will improve if we invest in a basket of well run companies that pay dividends.
Best wishes,
AK
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