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If you are interested in investing in REITs check out VNQ. It is an exchange traded fund that holds 97 REITs in its portfolio.

Now would be an excellent time to get into some REIT's. For most people REIT's are probably the best way to participate in Real Estate. However, not all REIT's are the same. Each REIT specializes in some segment of Real Estate. Some examples:

NLY Annaly - Specializes in Mortgages
NNN Commercial Net Lease - Specializes in Retail malls
HRP HRPT - Focuses on Office and Industrial Buildings

I own all three, but would not recommend Annaly at this time. While Annaly is a capable manager of mortgage, and may very well handle the changing interest rate situation, I currently consider it to be a bit risky.

As a group, don't expect any appreciable capital gain anytime soon given the current environment. However, they do tend to pay dividends ranging anywhere from 5 to 8%, and most are probably good for current income. Just make sure you know what real estate segment they are focusing on. For more information you can check out www.reit.com and possibly www.reitwrecks.com.

Hi,

I hope that you understand about investing classes and the return/risk relationship when you ask this question. Most books I have read do not recommend more than 10% of your portfolio on REITs. Why? Because of the risk. For example, the Vanguard REIT Index Fund shows a risk of between 24% and 40% depending on the number of years used for the computation. Compare that to an average bond fund with a risk of 7% or so and balanced funds with a risk between 7 and 10 percent. If this is greek to you, may I recommend Ric Edelman's The Lies About Money?