Why the Yield Gap Matters
To understand where to put our money, we need to look at the classic risk-reward trade-off. Since T-Bills are backed by the government, they are essentially risk-free. Meaning, our initial capital is safe from stock market crashes. REITs, on the other hand, are equities. When buying REITs, we take on real-world property risks like tenants breaking their...Singaporeans just love to compare, and a common matchup is usually Singapore Real Estate Investment Trusts (REITs) versus Singapore Treasury Bills (T-Bills).
As global interest rates rose, T-Bills began offering yields that closely rivalled REITs.
While both are fantastic tools in generating cash flow, they play completely different roles in our portfolio.
This left many questioning whether it was even worth taking on equity risk when guaranteed money paid so well.
Recently, the macroeconomic landscape has shifted yet again.
Here’s why the yield gap has opened up significantly in favour of REITs, and how investors can deploy their cash.
