Reasons to Diversify Your Portfolio with Real Estate

Adding real estate to your portfolio has a two-fold advantage: the investments not only diversify a portfolio but also potentially serve as a hedge against inflation. Typically, returns are derived from capital gains, tax credits, and/or rental and lease income.

There are several ways you can invest in real estate. Typically, direct investments involve purchasing, improving, and/or renting land or buildings. Indirect investments involve purchasing shares in entities that invest in real estate (e.g., real estate investment trusts (REITs), mutual funds and exchange-traded funds that invest in real estate-related stocks and/or REITs, and real estate limited partnerships).