REITs could be affected by rising interest rates

Many investors in Missouri have been doing well by purchasing shares in Real Estate Investment Trusts, or REITs. For the past eight years, REITs have been paying dividends that have been as high as 100 times greater than the interest payments banks make for savings account assets. However, some investors are saying that it’s time to start getting out of certain types of REITs.

A prominent investor recently discussed why he decided to sell all of his shares in American Capital Agency Corp and why he would not purchase any shares in Realty Income Corp given its current share price. The investor said that residential mortgage REITs were not a good long-term investment right now because they would be impacted the most by rising interest rates.

Though the Federal Reserve has not raised interest rates in a significant way yet, the investor told Forbes that the Fed is likely to raise interest rates eventually. Over the next year or so, the Fed may begin to manage public expectations by dropping hints that they will raise interest rates in the future. After accumulating economic data over that period of time, the Fed may then be in a position to raise interest rates significantly.

When an investor is planning their estate for the benefit of younger generations, they will probably want to protect investments that will continue to grow in value for many years. An estate planning attorney may be able to talk to an individual or couple about the long-term health of the assets in their portfolio and how to protect assets with a trust.

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