Reits for Roth

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Reits for Roth

Postby bh » Sat Jan 29, 2011 12:51 am

Assuming one has
1) access to the index funds for SP 500, Intnl, Bond, etc, in 401K but no REIT option
2) significantly higher balance in 401K than Roth currently

Is there any issues to be considered with using the Roth primarily as a REIT account?........seems to me that if I choose to build up a holding in REITS this is the best option. Not sure if I've ever heard of anyone considering turning their roth into primarily a reit account though so maybe i'm overlooking something?
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Postby tludwig23 » Sat Jan 29, 2011 12:59 am

Other than some potential difficulty with rebalancing, there is no problem with this.
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Postby bh » Sat Jan 29, 2011 1:22 am

tludwig23 wrote:Other than some potential difficulty with rebalancing, there is no problem with this.


not sure i follow.............still working so can change contributions %'s between various indexs in the 401k to get the allocations towards the desired
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Postby dreamrider » Sat Jan 29, 2011 2:13 pm

This is what I was thinking of doing as well.
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Postby bh » Sat Jan 29, 2011 4:26 pm

dreamrider wrote:This is what I was thinking of doing as well.


were you leaning towards a single fund - - - index or managed?

or were you planning to buy a handful of reits diversified geographically and across propert types where you could manage the dividend yields and which months they pay a little more specifically?
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Postby tludwig23 » Sat Jan 29, 2011 4:29 pm

bh wrote:
tludwig23 wrote:Other than some potential difficulty with rebalancing, there is no problem with this.


not sure i follow.............still working so can change contributions %'s between various indexs in the 401k to get the allocations towards the desired


I wasn't sure if you meant that the IRA would only have the REIT index in it. If so and you need to move more money into the REIT you need to wait until your next contribution cycle. But if there are other funds in the IRA too, rebalancing should be simple.
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Postby celia » Sat Jan 29, 2011 5:02 pm

I hold REITs (and other things) in a Roth. You don't have to wait for "late" tax statements, since the Roth is tax-free.
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Postby CABob » Sat Jan 29, 2011 5:25 pm

IMO the ideal holding in a Roth IRA is one that throws off high otherwise non qualified distributions. From that standpoint REIT is a great holding in a Roth. This also assumes that you have holdings in other types of accounts that will maintain your desired asset allocation and allows you to rebalance when appropriate.
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Postby kyounge1956 » Sat Jan 29, 2011 6:39 pm

My circumstances are similar: about 4x as much in tax-deferred as in Roth (no taxable investment account). I have all my REITs, and all my TIPS as well, in the Roth IRA, because these asset classes aren't available in the tax-deferred account. My target allocation is 70% fixed income, 30% equity. The equity is supposed to be split evenly between stocks and REITs, but based on the data I had available when I chose this AA, it wouldn't make much difference to either return or standard deviation if the stock/REIT split went as far out as 25/5 or 5/25. Last time I checked, REITS were a little over 6% of the total. Right now, all Roth contribuitons are going to the TIPS fund, to keep fixed income at 70% of total, but if REITs go down to 5% I'll need to re-think that a little.
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Re: Reits for Roth

Postby Default User BR » Sat Jan 29, 2011 7:33 pm

bh wrote:Is there any issues to be considered with using the Roth primarily as a REIT account?

Until fairly recently, that's what I did. Some Rith space now has value funds in it.



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Postby bh » Sat Jan 29, 2011 8:11 pm

tludwig23 wrote:
bh wrote:
tludwig23 wrote:Other than some potential difficulty with rebalancing, there is no problem with this.


not sure i follow.............still working so can change contributions %'s between various indexs in the 401k to get the allocations towards the desired


I wasn't sure if you meant that the IRA would only have the REIT index in it. If so and you need to move more money into the REIT you need to wait until your next contribution cycle. But if there are other funds in the IRA too, rebalancing should be simple.


i guess that what i'm saying is that with the 401K being larger and the various index funds availability there-in (and still being added to as I'm mid-career so i will keep growing it with contributions/earnings for foreseeable future); .........

I would anticipate that I could buy primarily REITS in the roth for a number of years before getting to an overall allocation that was too REIT heavy

in essence; my concern was if I was missing something by focusing on overall portfolio rather than balancing the holdings better within the roth

from the comments so far; seems to have some merit
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Re: Reits for Roth

Postby bh » Sat Jan 29, 2011 8:14 pm

Default User BR wrote:
bh wrote:Is there any issues to be considered with using the Roth primarily as a REIT account?

Until fairly recently, that's what I did. Some Rith space now has value funds in it.



Brian


thx for the input................i have been using the 401K to hold the index funds and purchased dividend payers in the roth
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Postby Jacobkg » Sat Jan 29, 2011 8:29 pm

I hold exclusively Vanguard REIT in my IRA because it's not available in my 401k.
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Postby gotfina » Sat Jan 29, 2011 11:22 pm

the real question is why would you own a traded REIT for real estate exposure? They are never that correlated to actual RE, have swings like the market, and aren`t always the most transparent on what they bought when and own. I would go with a non-traded REIT in a post tax account to take advantage of the tax benefits
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Postby bh » Sun Jan 30, 2011 12:09 am

gotfina wrote:the real question is why would you own a traded REIT for real estate exposure? They are never that correlated to actual RE, have swings like the market, and aren`t always the most transparent on what they bought when and own. I would go with a non-traded REIT in a post tax account to take advantage of the tax benefits


i hardly understand what you typed.......what does it mean in layman's terms? how do you buy a non-traded position?.....................please explain
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Postby gotfina » Sun Jan 30, 2011 12:23 am

you buy it through an advisor. Non-traded just means it does not trade on an exchange like a stock. It is money in brick and mortar, you own a piece of a physical property. What do you own if you buy ticker "O" or any other REIT on an exchange? Or should I ask what determines the value (price of shares)? The whim of the market. Find an advisor that knows the area well, some are total junk.
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Postby jidina80 » Sun Jan 30, 2011 1:14 am

The real question is whether an investor wants a REIT fund for additional portfolio diversification, or whether the investor is chasing past performance. REITs are trading at high prices right now, by almost any metric.

This forum always sees a lot 'REIT' notes as prices are rising and high. Same with 'small-cap', 'value' funds, or 'international'. I'd really like to see the statistics on how often these terms are used on this forum and their subsequent performance. I'm sure it is a good contrarian indicator.

Just.
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Postby gotfina » Sun Jan 30, 2011 1:24 am

jidina80 wrote:The real question is whether an investor wants a REIT fund for additional portfolio diversification, or whether the investor is chasing past performance. REITs are trading at high prices right now, by almost any metric.

This forum always sees a lot 'REIT' notes as prices are rising and high. Same with 'small-cap', 'value' funds, or 'international'. I'd really like to see the statistics on how often these terms are used on this forum and their subsequent performance. I'm sure it is a good contrarian indicator.

Just.


Thanks for making my point towards a non-trade reit... they sell at NAV, NOT market price.. which is most times a premium to NAV of the RE.
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