opinions on VNQ? [Vanguard REIT Index]

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Woodlake
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opinions on VNQ? [Vanguard REIT Index]

Post by Woodlake » Wed Mar 29, 2017 1:40 pm

as someone who work in the commercial real estate industry, I am really interested to learn more about the performance of VNQ

do you guys think REITs ETF like VNQ would be a good option to have in your portfolio? Should I invest some of the money in my taxable account into VNQ?

delamer
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Re: opinions on VNQ?

Post by delamer » Wed Mar 29, 2017 1:47 pm

We'd need details on your other investments to give an informed opinion.

Generally though, I wouldn't invest in REITs if my income was already heavily dependent on real estate.

jebmke
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Re: opinions on VNQ?

Post by jebmke » Wed Mar 29, 2017 1:51 pm

If I recall correctly, REIT dividends are not qualified so it may not make sense for you to hold them in a taxable account.
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alex_686
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Re: opinions on VNQ?

Post by alex_686 » Wed Mar 29, 2017 1:55 pm

I will second jebmke point on not to invest in taxable. I think you should overweight REITs but they are not tax efficient. VQN would be at the top of my list for REITs. On why one should or should not overweight REITs, check out this recent thread.

viewtopic.php?f=10&t=214588

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oldcomputerguy
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Re: opinions on VNQ?

Post by oldcomputerguy » Wed Mar 29, 2017 1:55 pm

Woodlake wrote:as someone who work in the commercial real estate industry, I am really interested to learn more about the performance of VNQ

do you guys think REITs ETF like VNQ would be a good option to have in your portfolio? Should I invest some of the money in my taxable account into VNQ?
REITs by law have to pay out 90% to their shareholders, and those dividends do not get preferred tax status like qualified dividends and long-term capital gains do. So whatever earnings you get from REITs will jack up your tax bill. That's why it's generally recommended to hold them (if at all) in a tax-advantaged account (401k, IRA).

Use the search box in the upper-right corner to search the board for REITs. You'll see tons of discussion pro and con.
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

NiceUnparticularMan
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Re: opinions on VNQ?

Post by NiceUnparticularMan » Wed Mar 29, 2017 2:08 pm

My investment philosophy led me to the conclusion that a small but substantial allocation to real estate in my at-risk portfolio made sense, and a bit more than I already was getting through other funds. I further believe doing that in a leveraged and diversified way makes sense. And finally I believe doing that in a low-cost way makes sense.

If you share those beliefs, VNQ would be a reasonable choice of vehicles to top up your REIT holdings. I also think reasonable people can also conclude it is not necessary to do that, particularly if they invest in funds which have some exposure to REITs anyway and don't believe in a large target allocation, such that they are really only talking about a small difference anyway.

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Woodlake
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Re: opinions on VNQ?

Post by Woodlake » Wed Mar 29, 2017 2:18 pm

but I assume most 401k don't offer VNQ as one of the fund choice, you guys make a good point on dividend/tax issue, I could probably invest some money in VNQ from IRA

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Ethelred
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Re: opinions on VNQ?

Post by Ethelred » Wed Mar 29, 2017 2:28 pm

If my job security depended on the commercial real estate market, there is no way I would invest in REITs. A drop in the market could easily see you lose your job and your investments drop in value at the same time.
Last edited by Ethelred on Wed Mar 29, 2017 2:32 pm, edited 2 times in total.

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SpringMan
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Re: opinions on VNQ?

Post by SpringMan » Wed Mar 29, 2017 2:28 pm

VNQ is inexpensive and is a good fund. I think shopping malls might be a drag on the REIT index. People don't go to malls like they used to. Rising interest rates may also be a head wind.
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grabiner
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Re: opinions on VNQ?

Post by grabiner » Wed Mar 29, 2017 9:01 pm

Ethelred wrote:If my job security depended on the commercial real estate market, there is no way I would invest in REITs. A drop in the market could easily see you lose your job and your investments drop in value at the same time.
This is an important point. Your retirement depends on your human capital as well as your investment capital, and you need to diversify accordingly. The OP's human capital is in real estate, and thus his investment capital should underweight it.
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Re: opinions on VNQ?

Post by Valuethinker » Thu Mar 30, 2017 5:08 am

Woodlake wrote:as someone who work in the commercial real estate industry, I am really interested to learn more about the performance of VNQ

do you guys think REITs ETF like VNQ would be a good option to have in your portfolio? Should I invest some of the money in my taxable account into VNQ?
It's a perfectly good way to invest in Commercial RE.

*but* I wouldn't invest in a US fund, overweighting the sector, if I worked in the US CRE industry. That's doubling down on risk-- career risk and portfolio risk, together.

I probably wouldn't even invest in VG's International Property (equities) fund, for the same reason.

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in_reality
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Re: opinions on VNQ?

Post by in_reality » Thu Mar 30, 2017 5:13 am

:thumbsup VNQI :thumbsup

Not as correlated to the US real estate market but not strictly REITs which aren't used as much everywhere overseas.

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