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URL:  http://boards.fool.com/drdm-asks-in-thinking-about-various-asset-classes-29872416.aspx

Subject:  Re: Asset allocation Date:  2/26/2012  2:49 PM
Author:  intercst Number:  70217 of 75833

drdm asks,

In thinking about various asset classes where does fully paid off rental property fall? Would that part of a retirement portfolio be considered in a manner similar to bonds? The property is aIn thinking about various asset classes where does fully paid off rental property fall? Would that part of a retirement portfolio be considered in a manner similar to bonds? The property is a significant percentage of our retirement. Should we have more stocks to balance out this relatively stable (in this area of the country) investment?. Should we have more stocks to balance out this relatively stable (in this area of the country) investment?

It depends what you mean by "a significant percentage of our retirement".

Most diversified retirement portfolios would include a 5%-10% allocation to REITs (Real Estate Investment Trusts) You could make an argument for replacing the REIT allocation with an individual rental property (though owning one property vs. a piece of hundreds of properties located in multiple areas is more risky.)

If the rental property is more than 10% of the value of your portfolio, I'd consider it more of a dividend-paying stock than a bond and reduce my equity allocation.

intercst
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