By: Dusty Trails

Dusty Trails — Thu, 24 Dec 2009 21:17:59 +0000

Do you consider a REIT an “alternative investment”? The low correlation factor of REITS make them a safer investment than Hedges Funds, private equity, gold? commodities. I am using an allocation model than suggests 8% hedge funds, 2% private equity. In retirement, I am much more comfortable with a non-correlated investment that throws off income. I am not sure REITS have to be in an IRA, 401k, etc. to be effective. IMHO, investors in their 30s pick one or two REIT vehicles to own and watch it through a boom/ bust cycle. Once you see what your personal performance was, you cherry pick the good REITs or learn how to rotate out of them at the top of the rental/retail/construction/medical Blgs. cycle. Your aim should be to build your position slowly, selectively, in your 40s thru midfifties. As you approach retirement, when REITS are out of favor, and the interest rates are, you ramp up your allocation towards that 8-10%, probably with an ETF REIT, or a low/noload fund. I assume you are at your peak earning years, so selling your old REITs are taxed at favorable capital gains rates. You hopefully now have a REIT pool throwing of greater than 6% income for you to eat off of in retirement. that income was a great cushion and comfort for me, in 2008.

By: Pinyo

Pinyo — Tue, 21 Aug 2007 20:29:47 +0000

I own REIT as well and my target is 5% for my 401k, but slightly higher for IRA. What is your take on Real Estate ETFs as alternative to funds?

Comments on: Asset Allocation in Action–Should a Diversified Portfolio Include a REIT Mutual Fund?

By: Dusty Trails

By: Pinyo