The Market Podcast | REITs, the new investment mantra for investors by Nishant Agarwal

Investors can say goodbye to fixed at least for some time now amid a fall in interest rates scenario, the next best investment options which investors can look at is REIT or Real Estate Investment Trusts, Nishant Agarwal, Managing Partner & Head - Family Office, ASK Wealth Advisors said in ‘The Market Podcast’ with Moneycontrol.

The normal yield on good bank FDs is hovering around 5-6% pre-tax. Now, depending on the tax bracket, the returns generated gets further eroded. Hence, it becomes important to invest in other asset classes such as equities,” says Agarwal.

“But, if someone is looking for returns along with tax benefits and is slightly safe then there are new avenues available in the market in the form of REITs. These are grade A properties, great tenants, consistent rental income, and can still make 6-7yields which also has certain tax advantage,” he added.

Agarwal further added that this is the time when investors can slowly lower their allocation from FD without increasing it to equities and can invest in an intermediate asset class like REITs – to give better yield in the portfolio.

The other asset class which investors should look at is investing beyond geographies i.e. global investment/global diversification as well as Gold. These are the asset classes that could be added to one’s portfolio.

Asset Allocation:

Asset allocation is a crucial step in wealth creation. To obtain consistent returns, one should diversify towards Indian equities, global exposure, Gold, Real Estate, and Debt.

Primarily these 5 asset classes in the portfolio along with some cash in the hand for a daily emergency will lay down the framework for a strong and diversified portfolio that could withstand the volatility shocks better than any other portfolio.

If you are in the age bracket of 25-40 years, minimum allocation towards equities should be 50%, 5-10% should be allocated towards Gold, 10-15% in REITs, and the balance between Debt or Global can be looked at, explains Agarwal.

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