What is REIT(Real Estate Investment Trust)? REIT works as mutual funds for stocks in which a firm takes money from investors and from that money they buy real estate properties and manages investors' money. REITs buy properties and lease the properties and collect the rent. Collected rent is distributed among shareholders as dividends. All the small and big investors can buy REITs. The minimum investment amount in REITs is ₹50,000(approx), the amount may vary from REIT to REIT. REITs have also divided their assets into parts called units similar to mutual funds. Properties bought by REITs can be any segment healthcare, apartments, etc. REITs give investors to be part of highly valued real estate properties. Rates of properties are extensively high in cities like Hyderabad, Mumbai, Delhi, etc. these cities being expensive get out of reach of common people so REITs help common investors excess to these properties and become a part of it and take advantage of the growth of real estate...
What is an ETF(Exchange Traded Fund)? After the popularity of mutual funds in the last two decades here came an interesting investing object ETFs. ETFs make an investment in stocks of a particular index in the same weightage as of index which it follows. In an easy way, ETFs can be said as mutual funds that can be traded like stocks. ETFs can be traded at exchanges and the price depends on the buy and sells of units. Eg. Nifty ETF. How does ETFs work? Firstly the AMC buys the stocks with the same weightage as of index which the ETF will be following. Then these shares are divided into small units so that they can be distributed among the investors. And finally, these shares are then allotted to the investors. In case of more demand, the AMC can issue more shares and in case of low demand, the people can sell their shares back to the AMC. And after the allocation is done the AMC(Asset Management Company) which sponsors the ETF will list Read More: What is Nifty 50 and Sensex? How i...