4. REITS (3% - 6%)
What are they?
REITs are hybrid securities that offer bond-like yields and stock-like appreciation potentials. REITs are designed to generate income for investors as 90% of their taxable income must be distributed each year to shareholders.
What are the risks?
REITs can be volatile, just like stocks. Many REITs are not immune from the economic ravages of a recession.
- Realty Income Corp (O)
- Healthcare and Technology REITs, such as Physicians Realty Trust (DOC) and Digital Realty Trust (DLR)
- REITs index fund, such as Vanguard Real Estate Index (VNQ), it provides a low cost entry to a diversified portfolio of about 180 REITs.