Real Estate is becoming a part of 401K plans

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July 23, 2005

Real Estate is becoming a part of 401K plans

Corporate employees haven't had any opportunity to invest into real estate thru self sponsored retirement plans. The only available investments were pretty much confined to stocks, bonds and money markets.

Real estate investment trusts or REIT are very popular investments today and offer excellent opportunity for 401k plan participants to buy into real estate.

REIT is a company that manages a portfolio of real estate investments, similar to closed end mutual funds. REITs invest in everything from shopping centers to office buildings to apartment complexes and hotels.

REITs must distribute often up to 90% of their income in form of dividends.

Since stocks have been very erratic and unpredictable to put it mildly since 1999 or so, and real estate has been booming, it is natural for many 401K sponsors to look at REITs.

Some Real estate investment trusts have returned 8.65 percent so far this year. Over the last five years the return is more than 20%.

Still many companies are reluctant to let their 401k invest into REITs. According to the Profit Sharing/401(k) Council of America, only 15.6 percent of plans made real estate options for employees.

The two large 401(k) plan vendors with several real estate investment options available are Principal Financial and Fidelity Investments.

You still have to check with you employer if you 401k plan has those REIT funds.

Posted in Real Estate at July 23, 2005 10:28 PM

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July 23, 2005

Real Estate is becoming a part of 401K plans

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