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Money systems

Lesson 56 · Written for kid, teen, and little

REITs — real estate without buying a house

Buy a share, collect rent (sort of).

The idea

Want to invest in real estate without buying a whole house? A REIT is one way to do that. It is a company that owns, operates or finances real estate, such as apartments, stores or warehouses. When you buy a share, you own a small part of the REIT. U.S. REITs generally must pay shareholders at least 90% of their taxable income as dividends — not 90% of the rent they collect. Dividends and share prices can change. 🏠

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Words to know

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REIT

A company that owns or finances income-producing real estate or related assets. A share gives you a small ownership interest in the company.

Dividend

Cash distributed to shareholders. U.S. REITs generally must distribute at least 90% of their taxable income annually; that is not the same as 90% of rent collected.

VNQ

An exchange-traded fund holding a collection of REITs. Its actual holdings and fees depend on the fund.

The 90% rule

U.S. REITs generally must distribute at least 90% of taxable income annually. Dividends can change, and this rule does not guarantee steady payments or prevent investment losses.

Try it — no accountMake the call

In a hypothetical example, you are 14 and have $200 for a long-term investment. An adult helps with an eligible account that allows the purchase within that amount, including fees. Which option can provide real-estate exposure without buying a house?

In the full lesson

  1. 1Make the call

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