thinking about adding some REIT

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sidwin516
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thinking about adding some REIT

Post by sidwin516 »

Was talking to my advisor. He pointed out that I have 0 REIT. he said I should look at moving some of my sideline cash and get some. he said take a look at HTA and FRT.

Anyone have any favorite REIT they like?

Thanks!
DarkHelmetII
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Re: thinking about adding some REIT

Post by DarkHelmetII »

sidwin516 wrote: Wed Apr 14, 2021 1:53 pm Was talking to my advisor. He pointed out that I have 0 REIT. he said I should look at moving some of my sideline cash and get some. he said take a look at HTA and FRT.

Anyone have any favorite REIT they like?

Thanks!
Why not VNQ? Like you I have zero REIT (aside from small % in S&P 500) but recently have been tinkering an intentional, long-term addition to the asset allocation to further diversify.
tibbitts
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Re: thinking about adding some REIT

Post by tibbitts »

sidwin516 wrote: Wed Apr 14, 2021 1:53 pm Was talking to my advisor. He pointed out that I have 0 REIT. he said I should look at moving some of my sideline cash and get some. he said take a look at HTA and FRT.

Anyone have any favorite REIT they like?

Thanks!
You won't find much support for individual REITs here. And probably not that much support for REITs in general lately.
brad.clarkston
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Re: thinking about adding some REIT

Post by brad.clarkston »

I'm a REIT fan but you really need to put in the research on what your buying.
Obviously office REIT's are depressed still and does not look like a good buy for awhile.

I'm long on Realty Income (O - Shopping Centers), Omega Healthcare (OHI - Senior Care), Iron Mountain (IRM - Info Storage) as a few examples of more blue chip quality companies but you need to research what types of REIT's and management qualities you are looking for.
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ruralavalon
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Re: thinking about adding some REIT

Post by ruralavalon »

sidwin516 wrote: Wed Apr 14, 2021 1:53 pm Was talking to my advisor. He pointed out that I have 0 REIT. he said I should look at moving some of my sideline cash and get some. he said take a look at HTA and FRT.

Anyone have any favorite REIT they like?

Thanks!
We used Vanguard Real Estate Index Fund Admiral Shares (VGSLX) for a small part of our stock allocation. The ETF share class is Vanguard Real Estate ETF (VNQ).

I recommend NOT using individual REITs, because too risky and illiquid.
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ChiKid24
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Re: thinking about adding some REIT

Post by ChiKid24 »

I like BRMK. They are a mortgage REIT that doesn't own real estate, but rather makes money by offering short term hard money loans to real estate developers and construction companies. I like this business model better than REITs that own real estate. That said, they still qualify as a REIT, which means they need to pay out 90% of their earnings in the form of a dividend. Currently the yield is around 7.8%.

The company went public in 2019, just before COVID hit. They decreased their dividend last year as a risk mitigation step, but actually raised it back up in January this year. To me, that shows financial confidence.
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sidwin516
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Re: thinking about adding some REIT

Post by sidwin516 »

thanks for the fund information. i said i would think about it.

up to january i was 90% stocks US based and 10% bonds. i've shifted to 60/40 and sleep better that's for sure but i should be opening up to shifting to some international (europe) and some REIT. He was telling me i should look for reit to get some dividend income as well.

Thanks!
brad.clarkston
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Re: thinking about adding some REIT

Post by brad.clarkston »

ChiKid24 wrote: Wed Apr 14, 2021 2:36 pm I like BRMK. They are a mortgage REIT that doesn't own real estate, but rather makes money by offering short term hard money loans to real estate developers and construction companies. I like this business model better than REITs that own real estate. That said, they still qualify as a REIT, which means they need to pay out 90% of their earnings in the form of a dividend. Currently the yield is around 7.8%.

The company went public in 2019, just before COVID hit. They decreased their dividend last year as a risk mitigation step, but actually raised it back up in January this year. To me, that shows financial confidence.
BRMK is more like a high-risk BDC (Business Development Company) than a REIT, way more spicy then I'm willing to touch.

A good BDC is another option to think about. I like Capital Southwest Corp (CSWC) in that field. If your looking for a product that always has to throw a divi a BDC is required to toss back 70% of it's earnings but that is a financial play not a REIT.
brad.clarkston
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Re: thinking about adding some REIT

Post by brad.clarkston »

sidwin516 wrote: Wed Apr 14, 2021 3:12 pm thanks for the fund information. i said i would think about it.

up to january i was 90% stocks US based and 10% bonds. i've shifted to 60/40 and sleep better that's for sure but i should be opening up to shifting to some international (europe) and some REIT. He was telling me i should look for reit to get some dividend income as well.

Thanks!
That's a pretty general statement from an advisor I'd question him/her more on that subject before you blindly jump into the abyss.
One extra divi company (hopefully a blue chip) won't make any serious impact over what your index fund toss for divi's.

I have a specific 20 company divi port in my Roth just for future payouts. It has a hard tilt towards REIT's as I got tired of re-balancing a REIT fund in my main index port. But it's not all REIT's and I'm not just recreating the S&P 500 like many divi investors do - I find that crazy in general.
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Re: thinking about adding some REIT

Post by Northern Flicker »

If you have zero REIT exposure, then you are not holding a market index fund. Whether you add a REIT fund can only be answered in the context of reviewing the portfolio.

If sidelined cash needs to be deployed, and you are not just deploying into an existing asset allocation, then that is implying that the existing allocation is suboptimal for meeting your needs.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
collinit19
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Re: thinking about adding some REIT

Post by collinit19 »

NTST looks promising. I missed the downdraft last year with SPG when I was dollar cost averaging a couple mortgage REITS. You can't win them all. :)
UpperNwGuy
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Re: thinking about adding some REIT

Post by UpperNwGuy »

I have all the REIT I need in VTSAX — market weight — so I will never have to add any REIT. I also don't have an advisor, so I don't have to deal with this kind of suggestion.
Tigermoose
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Re: thinking about adding some REIT

Post by Tigermoose »

brad.clarkston wrote: Wed Apr 14, 2021 2:23 pm Obviously office REIT's are depressed still and does not look like a good buy for awhile.
That's exactly why it is a good time for a long term investor to buy.
Institutions matter
ChiKid24
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Re: thinking about adding some REIT

Post by ChiKid24 »

brad.clarkston wrote: Wed Apr 14, 2021 3:32 pm
ChiKid24 wrote: Wed Apr 14, 2021 2:36 pm I like BRMK. They are a mortgage REIT that doesn't own real estate, but rather makes money by offering short term hard money loans to real estate developers and construction companies. I like this business model better than REITs that own real estate. That said, they still qualify as a REIT, which means they need to pay out 90% of their earnings in the form of a dividend. Currently the yield is around 7.8%.

The company went public in 2019, just before COVID hit. They decreased their dividend last year as a risk mitigation step, but actually raised it back up in January this year. To me, that shows financial confidence.
BRMK is more like a high-risk BDC (Business Development Company) than a REIT, way more spicy then I'm willing to touch.

A good BDC is another option to think about. I like Capital Southwest Corp (CSWC) in that field. If your looking for a product that always has to throw a divi a BDC is required to toss back 70% of it's earnings but that is a financial play not a REIT.
Curious what makes BRMK high-risk in your mind? They have zero debt on their balance sheet, maintain a weighted average LTV of 60% on their loan portfolio providing an ample equity buffer, and have historical principal losses of 0.1% on close to $3 billion of loan originations.
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Re: thinking about adding some REIT

Post by UpperNwGuy »

Tigermoose wrote: Wed Apr 14, 2021 3:52 pm
brad.clarkston wrote: Wed Apr 14, 2021 2:23 pm Obviously office REIT's are depressed still and does not look like a good buy for awhile.
That's exactly why it is a good time for a long term investor to buy.
And what if commercial office real estate never comes back? What if working from home becomes the permanent new normal. Office buildings will go the way of shopping malls, and REITs that own them will remain depressed forever.
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Re: thinking about adding some REIT

Post by brad.clarkston »

Tigermoose wrote: Wed Apr 14, 2021 3:52 pm
brad.clarkston wrote: Wed Apr 14, 2021 2:23 pm Obviously office REIT's are depressed still and does not look like a good buy for awhile.
That's exactly why it is a good time for a long term investor to buy.
There also overpriced in my opinion which is the reason I'm not buying. From my research healthcare REIT's are my personal better buy.
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Re: thinking about adding some REIT

Post by Tigermoose »

UpperNwGuy wrote: Wed Apr 14, 2021 3:54 pm
Tigermoose wrote: Wed Apr 14, 2021 3:52 pm
brad.clarkston wrote: Wed Apr 14, 2021 2:23 pm Obviously office REIT's are depressed still and does not look like a good buy for awhile.
That's exactly why it is a good time for a long term investor to buy.
And what if commercial office real estate never comes back? What if working from home becomes the permanent new normal. Office buildings will go the way of shopping malls, and REITs that own them will remain depressed forever.
That fear is already baked into the current prices.
Institutions matter
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Re: thinking about adding some REIT

Post by UpperNwGuy »

Tigermoose wrote: Wed Apr 14, 2021 3:55 pm
UpperNwGuy wrote: Wed Apr 14, 2021 3:54 pm
Tigermoose wrote: Wed Apr 14, 2021 3:52 pm
brad.clarkston wrote: Wed Apr 14, 2021 2:23 pm Obviously office REIT's are depressed still and does not look like a good buy for awhile.
That's exactly why it is a good time for a long term investor to buy.
And what if commercial office real estate never comes back? What if working from home becomes the permanent new normal. Office buildings will go the way of shopping malls, and REITs that own them will remain depressed forever.
That fear is already baked into the current prices.
So what? That doesn't mean that the price is likely to rise in the future.
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arcticpineapplecorp.
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Re: thinking about adding some REIT

Post by arcticpineapplecorp. »

sidwin516 wrote: Wed Apr 14, 2021 3:12 pm thanks for the fund information. i said i would think about it.

up to january i was 90% stocks US based and 10% bonds. i've shifted to 60/40 and sleep better that's for sure but i should be opening up to shifting to some international (europe) and some REIT. He was telling me i should look for reit to get some dividend income as well.

Thanks!
is this a retirement or a taxable account?

you don't want REITs in a taxable acct precisely because they pay dividends.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
Tigermoose
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Re: thinking about adding some REIT

Post by Tigermoose »

UpperNwGuy wrote: Wed Apr 14, 2021 3:58 pm
Tigermoose wrote: Wed Apr 14, 2021 3:55 pm
UpperNwGuy wrote: Wed Apr 14, 2021 3:54 pm
Tigermoose wrote: Wed Apr 14, 2021 3:52 pm
brad.clarkston wrote: Wed Apr 14, 2021 2:23 pm Obviously office REIT's are depressed still and does not look like a good buy for awhile.
That's exactly why it is a good time for a long term investor to buy.
And what if commercial office real estate never comes back? What if working from home becomes the permanent new normal. Office buildings will go the way of shopping malls, and REITs that own them will remain depressed forever.
That fear is already baked into the current prices.
So what? That doesn't mean that the price is likely to rise in the future.
It means that your fears that you listed have no relation to the future price.
Institutions matter
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ruralavalon
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Re: thinking about adding some REIT

Post by ruralavalon »

UpperNwGuy wrote: Wed Apr 14, 2021 3:54 pm
Tigermoose wrote: Wed Apr 14, 2021 3:52 pm
brad.clarkston wrote: Wed Apr 14, 2021 2:23 pm Obviously office REIT's are depressed still and does not look like a good buy for awhile.
That's exactly why it is a good time for a long term investor to buy.
And what if commercial office real estate never comes back? What if working from home becomes the permanent new normal. Office buildings will go the way of shopping malls, and REITs that own them will remain depressed forever.
Yes. Will commercial office real estate return to "normal" or will there be a "new normal"?

This is why market timing is not a good idea.
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Re: thinking about adding some REIT

Post by watchnerd »

sidwin516 wrote: Wed Apr 14, 2021 1:53 pm Was talking to my advisor. He pointed out that I have 0 REIT. he said I should look at moving some of my sideline cash and get some. he said take a look at HTA and FRT.

Anyone have any favorite REIT they like?

Thanks!
Do you have a reason for buying REITs other than a comment from your advisor?

I find his stated rationale ("you have cash"), while it might be a good point to invest in *something*, I find the pivot to REITs, *specifically*, to be worthy of more elaboration for investing in a particular sector.
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Re: thinking about adding some REIT

Post by annu »

I have had 10% of my total portfolio into VNQI(50%), VNQ/FREL(50%). Cant wait for them to get back to the price I got them for and sell.
Especially with Vanguard, something changed and dividends are not happening regularly..at all.

International REIT:https://investor.vanguard.com/etf/profile/VNQI
US REIT: https://investor.vanguard.com/etf/profile/VNQ
US REIT: Fidelity version of US REIT, https://screener.fidelity.com/ftgw/etf/ ... mbols=frel

I dont feel, REITS are worth the effort, if you like real estate, much better options out there.
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Re: thinking about adding some REIT

Post by tibbitts »

watchnerd wrote: Wed Apr 14, 2021 4:38 pm Do you have a reason for buying REITs other than a comment from your advisor?

I find his stated rationale ("you have cash"), while it might be a good point to invest in *something*, I find the pivot to REITs, *specifically*, to be worthy of more elaboration for investing in a particular sector.
Well, part of the reason for having the adviser would be that a client might not think of buying specific investments on his/her own. So yes the adviser should be willing to provide some reasoning behind this suggestion. But when you're doing active investing you have to somewhat expect that the reasoning will be that the specific recommended REITs are currently undervalued, or something similar.
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Re: thinking about adding some REIT

Post by tibbitts »

annu wrote: Wed Apr 14, 2021 4:57 pm I have had 10% of my total portfolio into VNQI(50%), VNQ/FREL(50%). Cant wait for them to get back to the price I got them for and sell.
Especially with Vanguard, something changed and dividends are not happening regularly..at all.

International REIT:https://investor.vanguard.com/etf/profile/VNQI
US REIT: https://investor.vanguard.com/etf/profile/VNQ
US REIT: Fidelity version of US REIT, https://screener.fidelity.com/ftgw/etf/ ... mbols=frel

I dont feel, REITS are worth the effort, if you like real estate, much better options out there.
And these much better passive options are...?
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happyisland
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Re: thinking about adding some REIT

Post by happyisland »

Tigermoose wrote: Wed Apr 14, 2021 4:27 pm
UpperNwGuy wrote: Wed Apr 14, 2021 3:58 pm
Tigermoose wrote: Wed Apr 14, 2021 3:55 pm
UpperNwGuy wrote: Wed Apr 14, 2021 3:54 pm
Tigermoose wrote: Wed Apr 14, 2021 3:52 pm

That's exactly why it is a good time for a long term investor to buy.
And what if commercial office real estate never comes back? What if working from home becomes the permanent new normal. Office buildings will go the way of shopping malls, and REITs that own them will remain depressed forever.
That fear is already baked into the current prices.
So what? That doesn't mean that the price is likely to rise in the future.
It means that your fears that you listed have no relation to the future price.
Wouldn't that same logic apply to your optimism for a commercial real estate tilt?
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Re: thinking about adding some REIT

Post by tibbitts »

UpperNwGuy wrote: Wed Apr 14, 2021 3:58 pm
Tigermoose wrote: Wed Apr 14, 2021 3:55 pm
UpperNwGuy wrote: Wed Apr 14, 2021 3:54 pm
Tigermoose wrote: Wed Apr 14, 2021 3:52 pm
brad.clarkston wrote: Wed Apr 14, 2021 2:23 pm Obviously office REIT's are depressed still and does not look like a good buy for awhile.
That's exactly why it is a good time for a long term investor to buy.
And what if commercial office real estate never comes back? What if working from home becomes the permanent new normal. Office buildings will go the way of shopping malls, and REITs that own them will remain depressed forever.
That fear is already baked into the current prices.
So what? That doesn't mean that the price is likely to rise in the future.
True, but the price is no more or less likely to rise or fall than with any other equity sector.
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sidwin516
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Re: thinking about adding some REIT

Post by sidwin516 »

tibbitts wrote: Wed Apr 14, 2021 5:01 pm
watchnerd wrote: Wed Apr 14, 2021 4:38 pm Do you have a reason for buying REITs other than a comment from your advisor?

I find his stated rationale ("you have cash"), while it might be a good point to invest in *something*, I find the pivot to REITs, *specifically*, to be worthy of more elaboration for investing in a particular sector.
Well, part of the reason for having the adviser would be that a client might not think of buying specific investments on his/her own. So yes the adviser should be willing to provide some reasoning behind this suggestion. But when you're doing active investing you have to somewhat expect that the reasoning will be that the specific recommended REITs are currently undervalued, or something similar.
we talk on a monthly basis and he guides me on questions i have about investing in general. i told him i'm 60/40 now and we talked about further diversify my holdings and since i plan on retiring in 18 months or so he pointed out REIT would be a good place to go with the dividends pay out.

I'm currently about $200k that still sitting on the side lines from stuff i sold in january before the dip. I've rebalanced my retirement stuff in january and sold my after tax brokerage account. I moved a huge chunk to my kids 529. I've divided the amount up in 4 payments and made all 4 payments completed now.

I was thinking of going even more in the 529 since that will go tax free, but currently i'm maxed out the state contribution. he said if i could still swing putting more in the 529 i should to create the generational wealth i've asked him about. He said if not look at some REIT for long term dividends.

THanks for all the tickers. I can't wait to read up on them. I love how this site has so many people eager to give their input about everything investing related. Find this place a wealth of knowledge.
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arcticpineapplecorp.
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Re: thinking about adding some REIT

Post by arcticpineapplecorp. »

sidwin516 wrote: Wed Apr 14, 2021 6:23 pm
tibbitts wrote: Wed Apr 14, 2021 5:01 pm
watchnerd wrote: Wed Apr 14, 2021 4:38 pm Do you have a reason for buying REITs other than a comment from your advisor?

I find his stated rationale ("you have cash"), while it might be a good point to invest in *something*, I find the pivot to REITs, *specifically*, to be worthy of more elaboration for investing in a particular sector.
Well, part of the reason for having the adviser would be that a client might not think of buying specific investments on his/her own. So yes the adviser should be willing to provide some reasoning behind this suggestion. But when you're doing active investing you have to somewhat expect that the reasoning will be that the specific recommended REITs are currently undervalued, or something similar.
we talk on a monthly basis and he guides me on questions i have about investing in general. i told him i'm 60/40 now and we talked about further diversify my holdings and since i plan on retiring in 18 months or so he pointed out REIT would be a good place to go with the dividends pay out.

I'm currently about $200k that still sitting on the side lines from stuff i sold in january before the dip. I've rebalanced my retirement stuff in january and sold my after tax brokerage account. I moved a huge chunk to my kids 529. I've divided the amount up in 4 payments and made all 4 payments completed now.

I was thinking of going even more in the 529 since that will go tax free, but currently i'm maxed out the state contribution. he said if i could still swing putting more in the 529 i should to create the generational wealth i've asked him about. He said if not look at some REIT for long term dividends.
but if this is going to be in taxable, why do you want to create taxable income when you can sell shares that provide potentially lower taxation through capital appreciation? See below, REITS are tax inefficient and shouldn't be in a taxable acct:

Image

source: https://www.bogleheads.org/wiki/Tax-eff ... _placement
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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sidwin516
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Re: thinking about adding some REIT

Post by sidwin516 »

sorry for the confusion. i'm retiring but my wife is going to continue to work for 4 more years. his comment about the reit because i was talking to him about now that i'm in 60/40 things to think about if we have a long recovery like we did from 99-10. I was reading about murdoch today and he said up to 99 he was legit. He said with the collapse of .com and the wars, his plan never recovered and he was hoping to be able to float what he did for just a short term but the war followed the .com and then 08-09 so it took too long.

my advisor told me traditionally you think bonds is the place to go when you are scared but right now with so many selling off their bonds, bonds and securities are following in each other in the short term. he told me if i was worried about a long recovery for the future is also open myself up to a precious metal position. he said it would be a good idea to get 3-5% to start in addition to 5% worth of REIT and move some of my investments to international. One thing i pointed out to him is that i'm 99% of all my assets are located in the here and that why he made the suggested i move some out if that made me feel better about my overall portfolio.

i had him, fidelity, and my local bank take a look and everyone is saying i'm set for the future but i also want to make sure i'm good for the near future as well. Ever since i joined this forum and went from 95/5 to 60/40 i'm going to admit i sleep a lot better and the market flux doesn't really bother me as much as it once did. i still have about 300k in a smaller brokerage account that i've been building back.

ANother thing he pointed out to me was investing age vs real age. He said if you plan on working till you are 67 then you can take on a lot more risk in your 40's. i plan on retiring before i turn 45 so he said i have to start thinking like an investor who is 60 years old.
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Re: thinking about adding some REIT

Post by annu »

tibbitts wrote: Wed Apr 14, 2021 5:02 pm
annu wrote: Wed Apr 14, 2021 4:57 pm I have had 10% of my total portfolio into VNQI(50%), VNQ/FREL(50%). Cant wait for them to get back to the price I got them for and sell.
Especially with Vanguard, something changed and dividends are not happening regularly..at all.

International REIT:https://investor.vanguard.com/etf/profile/VNQI
US REIT: https://investor.vanguard.com/etf/profile/VNQ
US REIT: Fidelity version of US REIT, https://screener.fidelity.com/ftgw/etf/ ... mbols=frel

I dont feel, REITS are worth the effort, if you like real estate, much better options out there.
And these much better passive options are...?
Crowdstreet or even fundrise or roofstock for that matter
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Re: thinking about adding some REIT

Post by abuss368 »

tibbitts wrote: Wed Apr 14, 2021 2:15 pm You won't find much support for individual REITs here. And probably not that much support for REITs in general lately.
How the years have changed! I recall how REITs and TIPS were the rage on the board a decade ago!

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Re: thinking about adding some REIT

Post by abuss368 »

ruralavalon wrote: Wed Apr 14, 2021 2:31 pm
I recommend NOT using individual REITs, because too risky and illiquid.
I would add that all REITs are not created equal! Big differences between equity REITs (own actual physical buildings) and mortgage REITs (push paper around).

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Re: thinking about adding some REIT

Post by abuss368 »

UpperNwGuy wrote: Wed Apr 14, 2021 3:54 pm
And what if commercial office real estate never comes back? What if working from home becomes the permanent new normal. Office buildings will go the way of shopping malls, and REITs that own them will remain depressed forever.
See Wall Street Journal. Amazon calling back employees after Labor Day.

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Re: thinking about adding some REIT

Post by abuss368 »

arcticpineapplecorp. wrote: Wed Apr 14, 2021 4:05 pm is this a retirement or a taxable account?

you don't want REITs in a taxable acct precisely because they pay dividends.
We have a good friend of family who built up a very large passive income stream from dividends in a taxable account. Included REITs and High Dividend funds along with total market. Retired early and living from dividends only.

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Re: thinking about adding some REIT

Post by abuss368 »

annu wrote: Wed Apr 14, 2021 4:57 pm I have had 10% of my total portfolio into VNQI(50%), VNQ/FREL(50%). Cant wait for them to get back to the price I got them for and sell.
Especially with Vanguard, something changed and dividends are not happening regularly..at all.

International REIT:https://investor.vanguard.com/etf/profile/VNQI
US REIT: https://investor.vanguard.com/etf/profile/VNQ
US REIT: Fidelity version of US REIT, https://screener.fidelity.com/ftgw/etf/ ... mbols=frel

I dont feel, REITS are worth the effort, if you like real estate, much better options out there.
I sold Vanguard’s International Real Estate / REIT fund a while back. Nothing at all legally or taxation wise like US REITs. The fund was not paying quarterly dividends and went almost a whole year. Something is up and not right there.

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Re: thinking about adding some REIT

Post by abuss368 »

annu wrote: Wed Apr 14, 2021 8:18 pm
tibbitts wrote: Wed Apr 14, 2021 5:02 pm And these much better passive options are...?
Crowdstreet or even fundrise or roofstock for that matter
Those are options for sure. Illiquid and lock your money up for 5 years at least. Avoid daily whips of the markets but subject to revaluations.

Do you invest in Fundrise?

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Re: thinking about adding some REIT

Post by abuss368 »

sidwin516 wrote: Wed Apr 14, 2021 6:23 pm
we talk on a monthly basis and he guides me on questions i have about investing in general. i told him i'm 60/40 now and we talked about further diversify my holdings and since i plan on retiring in 18 months or so he pointed out REIT would be a good place to go with the dividends pay out.
Have you considered Vanguard’s High Dividend Funds which are much more tax friendly (subject to qualified 15% tax rebate) than REITs? They often pay more too.

Vanguard High Dividend Fund - VYM - Yield 2.98%

Vanguard International High Dividend - VYMI - 3.10%

Tony
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Taylor Larimore
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Total Stock Market Index Fund holds REITs

Post by Taylor Larimore »

sidwin516 wrote: Wed Apr 14, 2021 1:53 pm Was talking to my advisor. He pointed out that I have 0 REIT.
sidwin516:

If you own the total stock market index fund, you already own the market weight in REITs.

Total stock Market Index Fund is the U.S. stock fund in The Three-Fund Portfolio.

Best wishes.
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Re: thinking about adding some REIT

Post by arcticpineapplecorp. »

sidwin516 wrote: Wed Apr 14, 2021 7:26 pm sorry for the confusion. i'm retiring but my wife is going to continue to work for 4 more years. his comment about the reit because i was talking to him about now that i'm in 60/40 things to think about if we have a long recovery like we did from 99-10. I was reading about murdoch today and he said up to 99 he was legit. He said with the collapse of .com and the wars, his plan never recovered and he was hoping to be able to float what he did for just a short term but the war followed the .com and then 08-09 so it took too long.

my advisor told me traditionally you think bonds is the place to go when you are scared but right now with so many selling off their bonds, bonds and securities are following in each other in the short term. he told me if i was worried about a long recovery for the future is also open myself up to a precious metal position. he said it would be a good idea to get 3-5% to start in addition to 5% worth of REIT and move some of my investments to international. One thing i pointed out to him is that i'm 99% of all my assets are located in the here and that why he made the suggested i move some out if that made me feel better about my overall portfolio.
not sure about the recommendation regarding precious metals.

and I know it's a small percentage in REIT so it likely won't have much difference anyway.

but here's something to consider.

The chart below shows what happened between 1/1/2007-3/6/2009 (bottom of the fall in the Great Recession):

Image

blue line is total US stock market index fund
orange line is vanguard REIT index fund
Green line is Vanguard Balanced index fund

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

what do you notice?

What I notice is:
total Stock market lost 50%
REIT index fund lost 70%
Balanced index only lost 30%

So you have to understand that if you're buying REIT for the dividend you have to understand it acts like a stock (not real estate) and it can fall further than the stock market as a whole and certainly further than a fund that contains bonds.

what do you think now after seeing how REITs performed during the Great Recession?
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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Re: thinking about adding some REIT

Post by summit »

My favorite is Simon (SPG).
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Re: thinking about adding some REIT

Post by Northern Flicker »

sidwin516 wrote: Wed Apr 14, 2021 6:23 pm
tibbitts wrote: Wed Apr 14, 2021 5:01 pm
watchnerd wrote: Wed Apr 14, 2021 4:38 pm Do you have a reason for buying REITs other than a comment from your advisor?

I find his stated rationale ("you have cash"), while it might be a good point to invest in *something*, I find the pivot to REITs, *specifically*, to be worthy of more elaboration for investing in a particular sector.
Well, part of the reason for having the adviser would be that a client might not think of buying specific investments on his/her own. So yes the adviser should be willing to provide some reasoning behind this suggestion. But when you're doing active investing you have to somewhat expect that the reasoning will be that the specific recommended REITs are currently undervalued, or something similar.
we talk on a monthly basis and he guides me on questions i have about investing in general. i told him i'm 60/40 now and we talked about further diversify my holdings and since i plan on retiring in 18 months or so he pointed out REIT would be a good place to go with the dividends pay out.

I'm currently about $200k that still sitting on the side lines from stuff i sold in january before the dip. I've rebalanced my retirement stuff in january and sold my after tax brokerage account. I moved a huge chunk to my kids 529. I've divided the amount up in 4 payments and made all 4 payments completed now.

I was thinking of going even more in the 529 since that will go tax free, but currently i'm maxed out the state contribution. he said if i could still swing putting more in the 529 i should to create the generational wealth i've asked him about. He said if not look at some REIT for long term dividends.

THanks for all the tickers. I can't wait to read up on them. I love how this site has so many people eager to give their input about everything investing related. Find this place a wealth of knowledge.
The dividend payout of REITs is a rather dubious reason to add them to your asset allocation. You should care about total return, not just dividends.

There is nothing wrong with investing in REITs, but nobody knows whether REITs or any other sector will be one of the good performers in the foreseeable future. Having a sound overall asset allocation and deploying cash accordingly is what many believe provides the best odds of success.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: thinking about adding some REIT

Post by CloseEnough »

Suggest taking a look at TIREX (TIAA Cref real estate fund). I think a small but meaningful allocation to REIT is good for diversification.
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Re: thinking about adding some REIT

Post by watchnerd »

CloseEnough wrote: Thu Apr 15, 2021 7:22 am I think a small but meaningful allocation to REIT is good for diversification.
Can you elaborate?

REITs are highly correlated with the general stock market.

0.73

https://www.portfoliovisualizer.com/ass ... rrelations
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Re: thinking about adding some REIT

Post by Johm221122 »

sidwin516 wrote: Wed Apr 14, 2021 3:12 pm thanks for the fund information. i said i would think about it.

up to january i was 90% stocks US based and 10% bonds. i've shifted to 60/40 and sleep better that's for sure but i should be opening up to shifting to some international (europe) and some REIT. He was telling me i should look for reit to get some dividend income as well.

Thanks!
We really need to know exactly what you hold and what account type.
I hold index funds and I'm happy to hold REITS at market weight. Why is your advisor more bullish on REITS than say value, small cap or international?
Last edited by Johm221122 on Thu Apr 15, 2021 8:18 am, edited 1 time in total.
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Re: thinking about adding some REIT

Post by Johm221122 »

abuss368 wrote: Wed Apr 14, 2021 8:30 pm
arcticpineapplecorp. wrote: Wed Apr 14, 2021 4:05 pm is this a retirement or a taxable account?

you don't want REITs in a taxable acct precisely because they pay dividends.
We have a good friend of family who built up a very large passive income stream from dividends in a taxable account. Included REITs and High Dividend funds along with total market. Retired early and living from dividends only.

Tony
Did this portfolio perform better than just holding S&P 500 or Total market index? If it did will it do it in future ?Don't we usually recommend index funds and diversification because we don't know future?
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Re: thinking about adding some REIT

Post by CloseEnough »

Can you elaborate?

REITs are highly correlated with the general stock market.

0.73

https://www.portfoliovisualizer.com/ass ... rrelations
It is true that for the period you provided data REITs are fairly well correlated with the stock market. If you pick a longer period, that goes back into the mid-90s, I don't think that is the case. So whether the historical change beginning in around 2007-8 where REITs pretty much moved with the stock market is the case going forward, we will see. I would agree that REITs probably will not do as much for diversification as some other asset classes, but I still have a view that some helpful diversification is provided. Could be wrong.
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Re: thinking about adding some REIT

Post by abuss368 »

watchnerd wrote: Thu Apr 15, 2021 7:41 am
CloseEnough wrote: Thu Apr 15, 2021 7:22 am I think a small but meaningful allocation to REIT is good for diversification.
Can you elaborate?

REITs are highly correlated with the general stock market.

0.73

https://www.portfoliovisualizer.com/ass ... rrelations
Correlation fluctuates with different market environments for all asset classes.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: thinking about adding some REIT

Post by Nate7out »

watchnerd wrote: Thu Apr 15, 2021 7:41 am
CloseEnough wrote: Thu Apr 15, 2021 7:22 am I think a small but meaningful allocation to REIT is good for diversification.
Can you elaborate?

REITs are highly correlated with the general stock market.

0.73

https://www.portfoliovisualizer.com/ass ... rrelations
That's lower correlation than EM or Intl Small Caps - it seems low enough to provide some diversification benefit.

I think the problem with REITs is that they have been determined to not be a separate asset class. Their risk/return can be captured by a portfolio of SCV + HY bonds, and one is therefore taking some idiosyncratic sector risk investing in REITs.

That said, I still hold 10% of my portfolio in REITs.
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Re: thinking about adding some REIT

Post by DesertDiva »

sidwin516 wrote: Wed Apr 14, 2021 1:53 pm Was talking to my advisor. He pointed out that ...
Just curious: how does your advisor get paid?
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