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Since 1950, the Dow Jones Industrial Average has yielded average annual returns of 12.19%. It is an average of 30 large blue-chip corporations and has been in existence since 1896. The index is often considered one of the best performance gauges of the US Stock Market. At the end of October 2002, its value was the same as it had been precisely four years earlier in October 1998 ("Invest" par.2). Since this index serves as one of the best indicators of stock performance in the US, it is fair to state that the average long-term investor would have been better off with their money in their bank account rather than invested in stocks or mutual funds. Most people are content with some level of short-term risk in their investments, while they take comfort in the commonly held belief that the stock market will rise in the long-term. This belief has begun to change for a number of factors. The technology bubble of the late 1990's, the crash of 1987, accounting scandals, and countless other factors have influenced a growing feeling of distrust in the future of the stock market. Even with US interest rates reaching 30 year lows, people are no longer prepared to risk their retirement money on a system that seems to get more volatile with every passing month. In this new era of investment, there is a need, now more than ever, to find new avenues in which investors can diversify their portfolios and minimize their risk. One possible opportunity is through the purchase of real estate, and more specifically Real Estate Investment Trusts or REITs. The following paper will provide some history and background about REITs' origins, outline what REITs are, and demonstrate how REITs operate. The main focus will be on equity REITs ...