Holding REITs in 401k- Brokeragelink

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Jshros
Posts: 2
Joined: Sat Jun 09, 2018 9:40 am

Holding REITs in 401k- Brokeragelink

Post by Jshros » Sat Jun 09, 2018 9:50 am

Hello All,
I've added some REITs to my 401k via the Fidelity Brokeragelink option. I'm looking for high dividend payouts to put in this tax advantaged account. It seems logical to me. Fees are low and in line with my regular 401k plus I get frequent returns added.
Why wouldn't everyone do this? Is this a sound strategy?

danaht
Posts: 546
Joined: Sun Oct 18, 2015 11:28 am

Re: Holding REITs in 401k- Brokeragelink

Post by danaht » Sat Jun 09, 2018 10:54 am

Might be a good strategy - if you are good at picking stocks to hold for the long term. A lot of people do not like to buy individual stocks because individual stocks require constant monitoring and can be unpredictable - even after doing a lot of research. Using a brokerage-link to buy a REIT ETF like VNQ might be a better option for people who want to invest in REITs, but do not want to take the individual stock risk.

livesoft
Posts: 63084
Joined: Thu Mar 01, 2007 8:00 pm

Re: Holding REITs in 401k- Brokeragelink

Post by livesoft » Sat Jun 09, 2018 11:14 am

Why wouldn't everyone do this?

1. REITs can lose money.
2. They don't like REITs and find they have no place in their portfolios.
3. They don't have Brokerage link nor REITs in their 401(k)s.
Wiki This signature message sponsored by sscritic: Learn to fish.

rgs92
Posts: 2284
Joined: Mon Mar 02, 2009 8:00 pm

Re: Holding REITs in 401k- Brokeragelink

Post by rgs92 » Sat Jun 09, 2018 11:30 am

While I just use a regular balanced-index portfolio, another alternative to tax-advantaged investments is holding a preferred stock index like PFF (iShares preferred) or PFFD (Global X preferred with a lower expense ratio) in a taxable account where you get a 15% tax rate on the dividends.

Holding REITS in a non-ROTH account means you eventually have to pay the full income tax on the accumulated dividends.

But studies have shown you are just better off with a vanilla 2 or 3 fund portfolio in any retirement vehicle.

User avatar
ruralavalon
Posts: 14273
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Holding REITs in 401k- Brokeragelink

Post by ruralavalon » Sat Jun 09, 2018 5:33 pm

Jshros wrote:
Sat Jun 09, 2018 9:50 am
Hello All,
I've added some REITs to my 401k via the Fidelity Brokeragelink option. I'm looking for high dividend payouts to put in this tax advantaged account. It seems logical to me. Fees are low and in line with my regular 401k plus I get frequent returns added.
Why wouldn't everyone do this? Is this a sound strategy?
I hope your an a REIT index fund, rather than individual real estate investment trusts.

If you mean shares in individual real estate investment trusts that's a very bad idea, that is not diversified and they may be illiquid.

Some people feel that a REIT Index funds adds some inflation protection and some diversification to their portfolio. A REIT index fund can be very volatile, with share prices changing wildly, and is not highly correlated with the total stock market. A REIT index fund should beheld inside a tax-advantaged accountable the 401k.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Post Reply