REITs - Real Estate Investment Trusts - Info & Discussion
- bob90245
- Normxxx
- suzana1
- radiodude
- allancoleman
- radiodude
- bob90245
- Happy_2
- allancoleman
- azxcvbnm
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» bob90245 - Re: Re: Re: Re: Where to put REITs question
In response to message posted by Normxxx:Norm, you are correct to caution about variable annuities. One reason I was looking into Vanguard Variable Annuities is that they have lower expenses: 0.62% versus 2.23% for the average variable annuity at other fund families. For most asset classes, variable annuities would not be suitable as you stated. However, where a significant part of the total return is paid in current dividends, tax deferal may have a place - especially if one is in a high marginal tax bracket and will hold the annuity for the long term (15+ years). As I decided with REITs, this asset class would probably not derive enough benefit from a variable annuity. Another asset class to consider for a variable annuity might be junk bonds. And as I see from Vanguard's website, they do offer a High Yield Bond Variable Annuity with a current yield of 5.86%. Do not consider this a recommendation - just FYI.
Bob
(Sorry for being off-topic)
-- posted by bob90245
» Normxxx - Re: Re: Re: Re: Re: Where to put REITs question
In response to message posted by bob90245:FWIW, I believe REITs and Hi-Yield Bond Funds to be overpriced for new money. The risk/reward ratio has increased too much. I would hold until the downturn (probably not until the fed increases rates, which may not be for some time yet). I really do not know where to put new money and am just building cash at this point.
I don't think you can plan for 15+ years. I doubt you can plan for 5+ years. In these times, you have no way to know in advance what the best asset classes are likely to be. So the rule is to stay flexible and be prepared to switch. In Industry, they prepare 5 year plans which are updated every 6 months.
-- posted by Normxxx
» suzana1 - Need an informed opinion about a particular REIT Where's Makena
Is there anyone here acquainted with BRE Properties REIT which is closing an offer for sale of preferred stock tomorrow? In 1999 Makena and Poobah posted information about an offer from the same BRE Prop. and with their help I made a good-sized investment at 8.5%. It performed wonderfully all through the downturn and the stock was called and paid off this January. They weren't clear about a new offer and I neglected to follow up until this past Friday, only to find that the current offer of Pref stock at 6.75% will be completed tomorrow. Are there better deals? I trust this company because they fulfilled all promises through bad times. I know this isn't the REIT thread, but it hasn't been updated recently, so I hope someone has a place to send me. Thank you very much. Susana1-- posted by suzana1
» radiodude - oops, there goes my REIT
Well, I have about 7% of my portfolio in a REIT index (RWR) and while it was rolling along, today it hit the skids and lost over 4% of it's value on a scare of higher interest rates.I still plan to hold on and sell it in about 20 years if all goes according to plan. I see no reason to bail out.
.
-- posted by radiodude
» allancoleman - Re: oops, there goes my REIT
In response to message posted by radiodude:radiodude ,
your reit ( RWR ) has had a n.a.v. of $ 110 a share as short a period ago as the beginning of last year ( 2003 ) . your present yield is showing as 3.16 % . is it worth the risk for that return ? ? you're presently close to 52 week highs if not all time highs . it's YOUR money .
if it were MY money , i would seriously look at all your asset classes that were interest rate sensitive . if the fed , as some people expect , raises interest rates this summer BEFORE the election , most of these investments along with bond mutual funds will suffer n.a.v. losses .
just my opinion of course . 
. i just think it's easier to NOT lose money than it is to attempt to make up for losses . this secular bear market has made " buy and hold " at least questionable .
-- posted by allancoleman
» radiodude - Re: Re: oops, there goes my REIT
In response to message posted by allancoleman:hmmmm, I hadn't thought about selling it, but if I were to sell it, it's in my IRA so I would not pay any taxes (for now) on the earnings or cap gains if I sold it.
I'll have to think about this. I'm not much of a market timer which is why I was going to hold RWR basically forever.
..
-- posted by radiodude
» bob90245 - Re: Re: Re: oops, there goes my REIT
In response to message posted by radiodude:Vanguard had a good article in their newsletter awhile back.
http://flagship2.vanguard.com/VGApp/hnw/...
Here's an excerpt:
"In reality, interest rate changes are never good or bad. Because of the inverse relationship between bond prices and bond yields, they're good and bad. When interest rates fall, the resulting rise in bond prices boosts returns in the short term, but longer-term returns can suffer. That's because the lower rates translate into lower returns on future investments. Conversely, when interest rates rise, the short-term pain caused by falling prices can eventually be salved by higher returns on reinvested income."
radiodude,
Unfortunately, your REIT is an exchange traded fund and not a regular mutual fund. And correct me if I'm wrong, your dividends aren't being reinvested. So you won't get the benefit of reinvested dividends as would be the case in a mutual fund (VGSIX for example). Keep in mind that since dividends make up a good portion of the long-term total return, the concept of reinvesting dividends is applicable to both bond mutual funds and REIT mutual funds. However in a REIT mutual fund, that would be less so.
For me, holding VGSIX is just one part (5% to 10%) of my overall diversified stock portfolio. I like the idea of the Coffeehouse portfolio.
-- posted by bob90245
» allancoleman - Re: Re: Re: oops, there goes my REIT
In response to message posted by radiodude:radiodude ,
i used to think investing was forever . i own the fidelity magellan fund ( FMAGX ). it was over $ 145 a share . it has now struggled back to $ 101 a share . i may NEVER get back to where i was before this secular bear market began if we are in a cyclical bull market rally now and the secular bear market resumes later this decade .
i own the gateway fund ( GATEX ) . i paid $ 23 a share for it because i was going to throw more money into the market in 2001 because " buy on the dips " . i watched it go to $ 18.50 a share . i've now struggled back to $ 23.49 a share with alittle bit of profit to show for three years of investing . you think i'm going to ride this puppy down again ? ?
both of these funds have really done well in this cyclical rally and i'm in no hurry to sell either one right now . but i certainly don't intend to ride them down again .
forever ? ? i've removed that word from my investing vocabulary . it's not a question of market timing . it's a matter of protecting your profits and putting your money in other asset classes . mdorsey on the bond forum is STILL showing people that bought and held the s & p 500 since december 31 , 1999 as being underwater at this time in SPITE of this excellent rally we've had this last year .
as i said before it's YOUR money . as for me , with MY money , this second go round i'm going to watch it alittle closer this time . fortunitely we're only talking 10 % of my asset allocation . the rest has continued to show positive returns . but just think how much better i could have done if i had protected my profits .
just my feelings .
-- posted by allancoleman
» azxcvbnm - Re: Re: Re: oops, there goes my REIT
In response to message posted by radiodude:I think you significantly underestimate the risk of REIT's, and how much they can fall. Look at the past few years performance and you'll see that REIT's have exploded as real estate prices in general have gone up and up. Investors have also poured money in to chase the yields which are better than most stocks and are comparable to bonds. If the real estate market were to collapse, you'd see losses of 30%. How much more can real estate prices go up? You have to ask that question because you are certainly not in it for the yield. If you are, then why not move to a safer short-term bond fund? The intermediate GNMA fund is also relatively safe, and yields near 4.7%. This isn't about market timing, but how much risk you're willing to take. I'd say the same thing if REIT's were up 20% this year.
-- posted by azxcvbnm
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