Investment

» Happy_2 - Asset allocation

Here is my current asset allocation:
Real Estate 65%
Notes/DOT 9%
Equities 26%
The real estate is all at original cost.

-- posted by Happy_2

» allancoleman - YTD, June 2007

In response to YTD, June 2007 posted by Happy_2:

Agree with you , Happy_2 , about non - traded reits . All one has to do is plug in " Wells Reit " into google to have ebnough hits , links , and information to research to satisify one's desire to stay away from them . Although I love real estate , I'd much rather own the real thing than to trade in any kind of reit that is managed by someone else on any terms . The 1031 exchange is just one of the many benefits of personally owning real estate .

Even though I only bought real estate in the beginning as an additional leg of my retirement portfolio and due to love of the stuff , it has worked out to be an entirely independant critical mass in it's own right . Would encourage every young person to buy some of it just for the joy of it .

-- posted by allancoleman

» retiredinprescot - YTD, June 2007

In response to YTD, June 2007 posted by allancoleman:

Allancoleman,
Respectfully, I have a different take on Real Estate. I don't want to own Real Estate with the headaches of maintenance (unlike you, I hate spending time chopping weeds), insurance, potential liability and the need to eventually find a buyer. I'm not saying that direct ownership is bad, just that it isn't what a lot of people I know want to do.

Despite all the bad press you've read about Wells and other non-traded REITS, they have done better for me than any of my bonds or 401K stable value funds. As we all know, what really counts is what you NET. I've done better than 7% total return annually in my REITS with no price volatility to worry about and a steady dividend (averaging 6%) plus the kick up in value when the Reits have matured.
I'm NOT advocating these for anyone else, but my wife and I love them as bond replacements for us. I don't really care that a commission was paid to my advisor/broker because what counts for me is what I made, net-net.

-- posted by retiredinprescot

» success409 - YTD, June 2007

In response to YTD, June 2007 posted by allancoleman:

Allan, elaborate on the joy of it. I just sold a rental because I don't enjoy dealing with tenants and maintenance. I have concluded so far that the only way I would ever own real estate as an investment is thru a REIT or use a property managment firm to manage the property which make it hard to make a profit especially at first. Buying raw land might be ideal but it also has a lot of risk and you need a lot of capital to tie up in order for it to appreciate. Real estate in general has not returned as much as the stock market.

-- posted by success409

» allancoleman - YTD, June 2007

In response to YTD, June 2007 posted by retiredinprescot:

Agree with you , retiredinprescot , about managing property , tenants , potential libility , taxes , etc . Which is why I'm liquidating it now . However , the 35 years I had real estate and was employed in my working career , real estate was an excellent write off against my wages .

Agree with you about the " NET " return . Different stokes for different folks .

-- posted by allancoleman

» allancoleman - YTD, June 2007

In response to YTD, June 2007 posted by success409:

The joy of real estate for me , success409 , was mostly owning it . When I was a kid , I remember spending weekends with my Dad looking for it , buying it , and selling it . My Dad wasn't one for stocks , bonds , and pensions . He made his fortune in real estate and I think I share that same love of it .

Agree with you about tenants , which is why I sold all of the rentals first and kept the easier maitained empty building lots to sell for last . And yes , over the longer term , the stock market has returned about the same as real estate , but , of course , I didn't know that at the time I was buying real estate at the same time I was investing in the stock market . My real estate was always just meant to be a different leg of my retirement portfolio incase the other leg didn't pan out .

-- posted by allancoleman

» Happy_2 - tenants

The secret to handling tenants is to have a large enough building that you can pay for professional management.
Twenty units minimum.

-- posted by Happy_2

» allancoleman - tenants

In response to tenants posted by Happy_2:

Never was successful enough to get that much money together , Happy_2 .

-- posted by allancoleman

» Derelict - Please give me your take on my asset allocation

In response to YTD, June 2007 posted by retiredinprescot:

I have been listening to Moneytalk show for some time. Bob Brinker had discussions with Burton Malkiel and David Swenson that I thought were great and opened my eyes on how to better diversify to increase expected returns at a given level of risk. I decided after June 30th to re-evaluate my asset allocation.

I am thinking about setting my asset allocation for most of my portfolio with the following:

All are no load funds and low annual expense. I am looking to retire in about 20 years.

5% TIPS (inside 401(k))
15% GNMA fund (inside 401(k))
60% Total market index
15% Developed foreign market index (inside Roth IRA)
5% Emerging market index (Inside Roth IRA)

I have no credit card debt.

I have a fixed rate 5.5 mortgage and am in no hurry to pay off the mortgage with this rate. I figure this is my real estate investment that Swensen recommended as another asset class. It is overweighted compared to my other asset classes, but there is not much I can do about that since that is the price of trying to own a place where I live.

I have another small account inside a Roth IRA that I consider play/gamble money. I will try to play and beat the market with this money. It will be for more risky investments and I'll trade more actively here. This was what Burton Malkiel said he did and I liked that idea.

What do you think?

-- posted by Derelict

» azxcvbnm - Please give me your take on my asset allocation

In response to Please give me your take on my asset allocation posted by Derelict:

Your allocation looks pretty solid to me, I can only offer some nitpicking which is more a matter of personal preference. I would have more foreign exposure; foreign markets seem cheaper than the US market currently. 10%-20% more in foreign markets while keeping a 80% developed foreign vs. 20% emerging foreign mix would be my main suggestion. Again, this is only a matter of personal preference and you need not feel that there is something wrong with your current scheme.

Placing most of your bond allocation with GNMA is again, your decision. I would go to a shorter duration fund or money market right now, but for a long-term set it and leave it portfolio, GNMA is OK. If you're satisfied with this allocation, then there's no need to change.

-- posted by azxcvbnm