A common complaint by a retail investor is that REITs are currently over-priced and the challenge would be to find an investment strategy beyond that of simply buying and holding onto a portfolio of REITs.
Making matters worse, with the introduction of Mapletree Commercial Trust into the Straits Times Index, this would mean that 4/30 stocks in the index are now Real Estate Investment Trusts.
*REITs are a favourite among Singaporean retail investors due to the relatively high dividend payouts and the simple idea of collecting dividends from rent, often secured with contracts and longer cashflow predictability.
This presents a problem for those who are trying to retire early on the back of dividends from their portfolio – a drop in value means a drop in cashflow which significantly affects retirement livelihood.
That is why it is important to have counterbalances – when something drops, something else rises so that