All REIT roth?
All REIT roth?
I have several retirement accounts, two that are pretax dollars, one ROTH ira, and a taxable account. My portfolio is as close as I can get it to a three fund + REIT index fund.
I hold my VG REIT index fund along with TSM in my ROTH ira for obvious tax reasons. As my portfolio grows, I am having to exchange TSM for REIT in order to keep my desired asset allocation on point.
Eventually, the entire ROTH will be REIT.
Is there any inherent problems with this outside of the fact that rebalancing becomes more difficult?
I hold my VG REIT index fund along with TSM in my ROTH ira for obvious tax reasons. As my portfolio grows, I am having to exchange TSM for REIT in order to keep my desired asset allocation on point.
Eventually, the entire ROTH will be REIT.
Is there any inherent problems with this outside of the fact that rebalancing becomes more difficult?
Re: All REIT roth?
Jay, There's not enough information to make reasonable comments. Are the 4(?) accounts roughly the same value? What is in each? Which accounts will have new contributions in the near future?
Are you asking about asset location, as answered in this wiki page:
http://www.bogleheads.org/wiki/Principl ... _placement
Are you asking about asset location, as answered in this wiki page:
http://www.bogleheads.org/wiki/Principl ... _placement
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
Re: All REIT roth?
We have 2 small ROTHs that are all REITs. I see no problems with that. What percentage are REITs of your overall portfolio? Personally, a 5-10% portfolio allocation to REITs is plenty.JaySayms wrote:I have several retirement accounts, two that are pretax dollars, one ROTH ira, and a taxable account. My portfolio is as close as I can get it to a three fund + REIT index fund.
I hold my VG REIT index fund along with TSM in my ROTH ira for obvious tax reasons. As my portfolio grows, I am having to exchange TSM for REIT in order to keep my desired asset allocation on point.
Eventually, the entire ROTH will be REIT.
Is there any inherent problems with this outside of the fact that rebalancing becomes more difficult?
Re: All REIT roth?
That is the same range my desired asset allocation allows. Currently at roughly 7%.goingup wrote:We have 2 small ROTHs that are all REITs. I see no problems with that. What percentage are REITs of your overall portfolio? Personally, a 5-10% portfolio allocation to REITs is plenty.JaySayms wrote:I have several retirement accounts, two that are pretax dollars, one ROTH ira, and a taxable account. My portfolio is as close as I can get it to a three fund + REIT index fund.
I hold my VG REIT index fund along with TSM in my ROTH ira for obvious tax reasons. As my portfolio grows, I am having to exchange TSM for REIT in order to keep my desired asset allocation on point.
Eventually, the entire ROTH will be REIT.
Is there any inherent problems with this outside of the fact that rebalancing becomes more difficult?
Last edited by JaySayms on Tue Jul 28, 2015 5:51 pm, edited 1 time in total.
Re: All REIT roth?
It will take me a while to input that information into a post....will do my best to get that up soon.celia wrote:Jay, There's not enough information to make reasonable comments. Are the 4(?) accounts roughly the same value? What is in each? Which accounts will have new contributions in the near future?
Are you asking about asset location, as answered in this wiki page:
http://www.bogleheads.org/wiki/Principl ... _placement
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Re: All REIT roth?
Hi Jay,
Rick Ferri often recommends this portfolio and refers to it as The Core Four.
Best.
Rick Ferri often recommends this portfolio and refers to it as The Core Four.
Best.
Last edited by abuss368 on Mon Jul 27, 2015 8:19 pm, edited 1 time in total.
John C. Bogle: “Simplicity is the master key to financial success."
Re: All REIT roth?
abuss368 wrote:Hi Jay,
Rick Ferri often recommend this portfolio and refers to it as The Core Four.
Best.
Yes, exactly. Ferri is where I got the idea. Really I'm more curious if anyone has objections to an ALL ROTH REIT. Because I can only contribute $5500 per year, in order to keep my REIT allocation to 5-10% of asset allocation I am routinely exchanging TSM for REIT in my ROTH. At some point there will be no more TSM and the ROTH will be all REIT. Just wondering if there are any issues with this that I haven't thought about....
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Re: All REIT roth?
My tax-deferred account is currently maxed with only REIT (VNQ). It makes up about 17% of my portfolio.
I will probably try to lessen it next year with new contributions.
I will probably try to lessen it next year with new contributions.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)
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Re: All REIT roth?
I see no inherent problem with having your Roth IRA all in the REIT Index Fund.JaySayms wrote:abuss368 wrote:Hi Jay,
Rick Ferri often recommend this portfolio and refers to it as The Core Four.
Best.
Yes, exactly. Ferri is where I got the idea. Really I'm more curious if anyone has objections to an ALL ROTH REIT. Because I can only contribute $5500 per year, in order to keep my REIT allocation to 5-10% of asset allocation I am routinely exchanging TSM for REIT in my ROTH. At some point there will be no more TSM and the ROTH will be all REIT. Just wondering if there are any issues with this that I haven't thought about....
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: All REIT roth?
What I was implying (probably not very clearly) is that it depends on what percentage of your assets is/will be in the Roth. It is one thing if 8% of your assets are in a Roth, but quite another if 80% of your assets are in a Roth. Yes, it is ok to have 8% of your assets in REITs. No, you probably don't want 80% of your assets in Reits.JaySayms wrote:Yes, exactly. Ferri is where I got the idea. Really I'm more curious if anyone has objections to an ALL ROTH REIT.abuss368 wrote:Hi Jay,
Rick Ferri often recommend this portfolio and refers to it as The Core Four.
Best.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
Re: All REIT roth?
A related downside is that your ROTH growth (for better or worse) will be 100% based on reits. Long term you would expect the to grow about the same but over short 10-15 year periods they can diverge drastically (compare 1985-1999 to 2000-2014). You might prefer to spread that risk across all of your tax advantaged accounts if possible.JaySayms wrote:I have several retirement accounts, two that are pretax dollars, one ROTH ira, and a taxable account. My portfolio is as close as I can get it to a three fund + REIT index fund.
I hold my VG REIT index fund along with TSM in my ROTH ira for obvious tax reasons. As my portfolio grows, I am having to exchange TSM for REIT in order to keep my desired asset allocation on point.
Eventually, the entire ROTH will be REIT.
Is there any inherent problems with this outside of the fact that rebalancing becomes more difficult?
Re: All REIT roth?
The only issue is: In the event your REIT value drops too far below your set AA, you will be forced to purchase REITs in your 401k/tIRA. Worst case, you have to buy them in a taxable account, at which point you have to look at the tax consequences vs adjusting your AA.
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Re: All REIT roth?
Have you considered adding International REITs to further diversify?
John C. Bogle: “Simplicity is the master key to financial success."
Re: All REIT roth?
This is a common dilemma for those of us that want a REIT tilt, but have no good place to hold them other than Roth IRA.
Personally I would prefer to keep my Roth 100% VTSAX, because I want the highest, most dependable growth there. I'm tempted to put my REIT and SCV tilt funds there, given lack of low cost choices in my 401k, but in the end prefer VTSAX.
Personally I would prefer to keep my Roth 100% VTSAX, because I want the highest, most dependable growth there. I'm tempted to put my REIT and SCV tilt funds there, given lack of low cost choices in my 401k, but in the end prefer VTSAX.
Re: All REIT roth?
If you want REITs they belong in tax-advantaged. Most people can find a VTSAX-type fund in their 401K. Additionally, VTSAX is appropriate for a taxable account. In other words, there are plenty of locations for VTSAX, but for not so for REITs.TheGipper wrote:Personally I would prefer to keep my Roth 100% VTSAX, because I want the highest, most dependable growth there. I'm tempted to put my REIT and SCV tilt funds there, given lack of low cost choices in my 401k, but in the end prefer VTSAX.
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Re: All REIT roth?
I had 100% VTSAX in my Roth, but now also have about 8% in the REIT Index. Just curious, is your overall portfolio 100% equities?TheGipper wrote:This is a common dilemma for those of us that want a REIT tilt, but have no good place to hold them other than Roth IRA.
Personally I would prefer to keep my Roth 100% VTSAX, because I want the highest, most dependable growth there. I'm tempted to put my REIT and SCV tilt funds there, given lack of low cost choices in my 401k, but in the end prefer VTSAX.
"Nothing is simpler than owning the stock market and holding it forever, and that’s essentially the idea behind the index fund.” - Bogle.
Re: All REIT roth?
I see no problem with having all of your Roth IRA dedicated to REIT. Some people prefer it that way (all stocks in Roth). Some prefer to have all bonds in the Roth because they don't want their Roth space to shrink. And some people prefer to have both stocks and bonds in the Roth IRA.
Just suit yourself on this one. If you run out of space and have no other place to hold REIT, consider dropping your target percentage if you must.
Just suit yourself on this one. If you run out of space and have no other place to hold REIT, consider dropping your target percentage if you must.
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Re: All REIT roth?
I'm firmly in the camp that one should be maximizing growth potential in Roths, thus for me it seems wasteful to put bonds in Roths. REITs wouldn't be bad, but given volatility, I just prefer VTSAX, despite it also being tax-efficient and appropriate for taxable (I use it both).
Re: All REIT roth?
Currently I have 6.81% of my overall portfolio invested in VG REIT, in my ROTH. I also hold TSM in my ROTH and it makes up 3.71% of my overall portfolio ( I hold some form of TSM in all my other retirement accounts, together they make up 38.57% of my entire portfolio).celia wrote:What I was implying (probably not very clearly) is that it depends on what percentage of your assets is/will be in the Roth. It is one thing if 8% of your assets are in a Roth, but quite another if 80% of your assets are in a Roth. Yes, it is ok to have 8% of your assets in REITs. No, you probably don't want 80% of your assets in Reits.JaySayms wrote:Yes, exactly. Ferri is where I got the idea. Really I'm more curious if anyone has objections to an ALL ROTH REIT.abuss368 wrote:Hi Jay,
Rick Ferri often recommend this portfolio and refers to it as The Core Four.
Best.
So my ROTH is 10.52% of my overall portfolio, of which 6.81% is REIT
Re: All REIT roth?
For the sake of simplicity, I haven't considered doing so. I hold total international stock and for now that is all the international stock exposure I am willing to deal with. I may add international bonds in the future when my bond holdings are more significant. Maybe at that point I would also consider international REITS.abuss368 wrote:Have you considered adding International REITs to further diversify?
Re: All REIT roth?
randomguy wrote:A related downside is that your ROTH growth (for better or worse) will be 100% based on reits. Long term you would expect the to grow about the same but over short 10-15 year periods they can diverge drastically (compare 1985-1999 to 2000-2014). You might prefer to spread that risk across all of your tax advantaged accounts if possible.JaySayms wrote:I have several retirement accounts, two that are pretax dollars, one ROTH ira, and a taxable account. My portfolio is as close as I can get it to a three fund + REIT index fund.
I hold my VG REIT index fund along with TSM in my ROTH ira for obvious tax reasons. As my portfolio grows, I am having to exchange TSM for REIT in order to keep my desired asset allocation on point.
Eventually, the entire ROTH will be REIT.
Is there any inherent problems with this outside of the fact that rebalancing becomes more difficult?
I see your point with this. Fortunately (I didn't mention this - it just only recently changed) I now have a ROTH option in my 401K, and I've elected to put new contributions evenly split into pretax and ROTH. UNfortunately, this 401k is a trust, and I have NO control over the funds. It is a consortium of actively managed funds with an asset allocation of 60/40 (stocks/bonds) and has averaged 6.1% over the last 10 years. If it wasn't for tax advantage and a generous match, I would not use it.