How to make money on the stock market by buying real estate stock

With current economic prospects, effective financial planning could be the answer to the question: how to make money on the stock market by operating on American markets? And when it comes to financial planning, we don't just think about the best shares to buy on Wall Street, but useful solutions for trading and investing money. In a nutshell, rules must be followed.

Often we make use of profitable trading signals to get an investment address, but not always enough. To complete a good investment profile it is necessary to implement an intelligent asset allocation that includes a diversified portfolio. To do this, which sector could do more for us than real estate?

Real Estate on Wall Street is synonymous with profit

The state of health of the American real estate sector, according to macro data, seems to be good. A condition that allows many points of reflection on the possible investments in this field. Especially if we consider the fact that the foundations of the American economy remain discreet, beyond the contingencies and fears of analysts.

The subprime crisis, a period to forget

Those who follow the markets keep alive the memory of the monstrous crisis of 2008. A collapse of the major US business banks, starting with Lehman Brothers, and an American economy on its knees. As everyone knows, the triggering factor started right from the real estate and from the credits that the banks gave without the necessary cover. All the rest is known history and what turns out to be unusual is that the current conjunctures bring the Real Estate segment to be one of the most profitable!

An acronym to keep in mind: REIT

A diversified portfolio must include multiple types of instruments. Really worthy of note in this perspective are the REITs (Real Estate Investment Trusts), real estate investment funds that operate like equities (or vice versa). In Italy there are no similar realities and it is a pity, but those who work on Wall Street know the peculiarities well: very high dividend yields and sometimes even monthly, accompanied by tax incentives for the structures owned by the companies.

The performance of the sector index on Wall Street

2019 for REITs was a great year. The graph of theS&P 500 Real Estate (S5REAS), benchmark for the sector, shows a very positive trend, with about 30% growth from January to now.

Also the Bloomberg U.S. REIT, compared to S&P 500 has a trend that already visually seems to be better.

How to make money on the stock market by investing in real estate?

Anyone wishing to invest in REITs must necessarily take into account two fundamental aspects. The first, the most obvious, is that these types of shares must be framed as a global balance in a smart investment portfolio that perhaps also includes more speculative stocks. The second is a consequence of the first, namely the fact that due to their non-speculative nature one should expect gains on the long term on average. Finally, there is also a third very positive aspect to be assessed, relating to dividends. Those stocks that provide a monthly coupon produce an effect similar to a salary income, which is absolutely not trivial.