3 fund portfolio + REIT

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rocket
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3 fund portfolio + REIT

Post by rocket » Sat Apr 16, 2011 8:35 am

Concerning the Lazy Man's Portfolio, Majesty of Simplicity portfolio, 3-fund portfolio, I think 5% to 10% of portfolio in a REIT Index would improve the 3-fund portfolio. Perhaps move part of the original bond fund allocation to REIT Index. What do you think ????

YDNAL
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Re: 3 fund portfolio + REIT

Post by YDNAL » Sat Apr 16, 2011 8:57 am

rocket wrote:Concerning the Lazy Man's Portfolio, Majesty of Simplicity portfolio, 3-fund portfolio, I think 5% to 10% of portfolio in a REIT Index would improve the 3-fund portfolio.
5% of portfolio with 90% Equities is 5.5556% of Equities.
5% of portfolio with 10% Equities is 50% of Equities.

Not the same, is it?
rocket wrote:Perhaps move part of the original bond fund allocation to REIT Index. What do you think ????
ONE of the last things you should want is to add Equities at the expense of Bonds.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde

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anthau
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Post by anthau » Sat Apr 16, 2011 9:22 am

Sounds like Rick's Core Four.
Best, | | Anth

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bertie wooster
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Post by bertie wooster » Sat Apr 16, 2011 9:29 am

I'm not a fan of overweighting REITs. Instead I prefer to overweight small and/or small value. But, that being said if you were to overweight REIT's you might consider half of our REIT allocation in domestic REITs (ie VNQ) and half in international (ie VNQI). But I'm a big fan of splitting equity 50/50 b/w international and domestic.

I absolutely agree with LANDY that $ for REITs should come from the stock allocation, no the bond allocation.

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abuss368
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Post by abuss368 » Sat Apr 16, 2011 1:12 pm

REITs can provide additional diversification via property ownership. You will receive substantial income from these equity investments.

This income is a combination of the following:

1) Dividends - taxed at ordinary incoem tax rates
2) Return of capital - not taxed, but rather a reduction in basis. May eventually be at capital gains rates if sold.
3) Capital Gains Distributions - Taxed at the preferred capital gains tax rate fo 15%

REITs can provide additional income stream and help fund a retirement.

I know many folks who have REITs in both taxable and tax advantaged accounts, enjoy substantial income, are fine with the taxes, and don't mind the volitility of it all. In fact, one retired early.

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