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Our total assets are 75% equities, bonds and cash, and 25% real estate.

The real estate is our primary residence, paid-in-full and in a neighborhood/city/region that's pretty solid.

Reading Bernstein, et al., and looking to do some reallocation juggling at the turn of the new year, do I now want to consider a new allocation to REITs?

I understand that REITs are an entirely different market segment than our primary residence. I understand also that REITs are pricey right now.

Nevertheless, do I want to consider moving to what might be a total allocation of 30%, say, to real estate? TIA.
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The general rule is not to count a house in your portfolio if you're living in it.

>>do I now want to consider a new allocation to REITs

Sure, stick 5-10% of your portfolio in REITS (in a retirement account). 30% seems high, depending on your age.

>>I understand also that REITs are pricey right now.

Don't try to time the market. People thought the Dow was pricey at 200.

Nick




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The real estate is our primary residence, paid-in-full and in a neighborhood/city/region that's pretty solid.

I'll second the thought for emphasis. Don't consider your house an investment if you're living in ti.

JLC

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I stay away from REITs, even though I don't view them as being comparable to the investment I have in my primary or secondary residences. Realistically speaking, I don't seen how many folks (myself included) can consistently beat the SP500. I own several diversified Vanguard funds, so I'm not soley in the SP500, but I'm 90% or more in mid and large cap stocks, with a bit of concentration in drugs and technology. I retired at 49 by following this gameplan, and I intend to stick with the horse that brought me to financial independence.
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I'll second the thought for emphasis. Don't consider your house an investment if you're living in ti.

I disagree. A person's house is an investment, at least to the extent it frees up financial resources that otherwise would have to be spent paying rent during retirement.
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Hi, I've heard not to consider ones house as part of net worth or as an investment. I guess I'm not sure why. This is an asset (albeit not a particularly liquid one) that appreciates and could be sold on retirement to downsize and provide further income among many other things. I'm sure there is a scientific reason that probably isn't worth much in the real world.
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I think your house can be thought of an investment if you plan to move to a smaller or less expensive house in the future and invest your equity. I think of it as a form of inflation hedge. For those of us who have lived along the CA coast, our houses have tended to be the biggest source of net asset growth, and we realize, much as we might hate to do it, we could, if needed, sell and move to a less expensive area. Maybe buy an acre of Texas sagebrush, or maybe even a mountain top in beautiful eastern Tennessee.

db
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One point regarding not considering your house as an investment is that the value should not be lumped with the portion of your portfolio that is used to make withdrawal calculations.

This can lead to withdrawal amounts that the portfolio cannot sustain.

I prefer to calculate retirement income based upon a portfolio w/o the value of the house as long as I live in it. I consider the house to be a way of controlling my housing expenses and possibly to add to the portfolio at a later date.

Also, I have a reserve amount for known expenditures, new roofs, cars, etc. that I do not include in the portfolio for purposes of withdrawal calculations.

Other than that, I consider my house to be a very important part of my retirement portfolio.

JG
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