Hello,
I’m a balancing my retirement portfolio to be diverse. No samples of mixes of stocks, bonds, cash etc… include REITS. Is there examples or where do they fit in.
Thank you
Sal
Sal,
Plenty of sample portfolios include REITs, as well as commodities, etc. You just need to look for them. But rather than copy someone’s suggesting asset class allocations, you need to understand why those choices were made and what the evidence might be for making them.
In short, head to your local library or bookshop and pick up three or four books on Modern Portfolio Theory, Asset Allocation, etc. or just do a web search. The resources are out there.
Arindam
2 Likes
Arindam
Ok thanks, I will keep searching
Sal
Sal,
Again, let’s me emphasize that there are dozens of places to find recommendations about how to build portfolios based on one’s age, risk tolerance, etc. But what really needs to be done is to understand why the various portfolios are constructed, which is typically on the basis of past performance and the hope that the future will unfold the same way.
If you trust that assumption, then you can trust that their suggestions will serve you well. However, if you think that 30 years of Fed intervention and money printing has distorted markets and price discovery, then you’re going to build different sorts of portfolios.
The “bottom line” is this. No one can predict the future. But the range of likely events can be gamed.
Arindam
reits are similar to bonds. more risk then cash, less than stocks, but not ever called. it can be a higher yielding product.
retirement portfolios, can be dependent on your needs for cash. locking money away in individual bonds, probably ill advised. might check with your brokerage account for a meet with a cfp(certified financial planner)- note some are offered free depending on account perks-probably best to start there first then do research on their recommendations before moving forwards, I find doing it myself is fun to do now that I am retired, I don’t ask others for money(why do I want to give my money to someone else). I do it myself (it gives me something to do- with my added time- CNBC junkie- couch potato).
As for REITs, the question is how much risk tolerance you have. Generally, they are not too risky, if you invest in those that only hold government backed mortgage instruments. Take a look a EFC (Ellington). Extremely reliable and super consistent on monthly dividends. MF doesn’t spend enough time balancing their over-the-top tech stock recommendations with investment income oriented stocks. My portfolio is actually up 5% in this market, despite the hammering tech has taken. Also, look at SJT – its a trust based on royalties earned for natural gas and pipeline work. Note that trusts have to be monitored closely. However, if you keep an eye on it, the dividends are quite high, paid monthly, and fairly reliable.
1 Like