A couple points:
1. With 2 houses and a stake in commercial real estate property, why do you want more exposure to real estate? Disclamer: I have used the TIAA real estate fund in the past (and will probably again) in conjunction with TIAA traditional as a component of the "low volatility" part of my portfolio. In my opinion it is not at all like REITs, which behave like the stocks that they are. But that's not a discussion for this thread.
2. If you are going to use REITs and SCV funds you are not really "diversifying," you are concentrating your assets into small subsets of publicly traded equity (stocks). Doing so will likely increase the volatility of your portfolio (as measured by sharp/sortino ratios), potentially increase the magnitude of future drawdowns, and increase the uncertainty of your future returns. The rational reason for doing this is to increase the expected returns of your portfolio. Expected returns are not the same as realized returns. as history has shown repeatedly.
So what about you makes you substantially different than the average investor, for which the market portfolio is the most efficient balance of risk and return? What about you makes you think its appropriate to take on new dimensions of risk right now? Notice I'm not saying what characteristics about the market, what characteristics about you. When I say average investor I mean average within the whole universe of investable assets. You're not comparing yourself only to single retail investors, or bogleheads, you're including day traders, institutional investors, hedge funds, high frequency algorithms, etc. What makes you more than say a standard deviation from the mean?
Things you might want to ask yourself:
1. Do I have any debt or other long-term financial obligations?
2. Am I financially independent? To what degree?
3. Do I have children or other people relying on my financial well-being?
4. What are my plans for future earnings (lifestyle, inheritance, charity, education, private equity)?
5. How secure is my current and future income?
6. Are there unexpected future expenses that I haven't accounted for (private school, higher education, health care, long-term care, care of a loved-one etc?
These are tough questions warranting some serious reflection. You don't have to answer these here in this thread, but you should be honest with yourself. And this is just a start off the top of my head. I try to do it myself periodically, and up to now I've always come back to the conclusion that in the whole wide world I'm pretty much average. I remember that my investment horizon is finite, as I will need my investments to fund my retirement at some point in the coming years or decades. So I don't use SCV or REITs.
1. With 2 houses and a stake in commercial real estate property, why do you want more exposure to real estate? Disclamer: I have used the TIAA real estate fund in the past (and will probably again) in conjunction with TIAA traditional as a component of the "low volatility" part of my portfolio. In my opinion it is not at all like REITs, which behave like the stocks that they are. But that's not a discussion for this thread.
2. If you are going to use REITs and SCV funds you are not really "diversifying," you are concentrating your assets into small subsets of publicly traded equity (stocks). Doing so will likely increase the volatility of your portfolio (as measured by sharp/sortino ratios), potentially increase the magnitude of future drawdowns, and increase the uncertainty of your future returns. The rational reason for doing this is to increase the expected returns of your portfolio. Expected returns are not the same as realized returns. as history has shown repeatedly.
So what about you makes you substantially different than the average investor, for which the market portfolio is the most efficient balance of risk and return? What about you makes you think its appropriate to take on new dimensions of risk right now? Notice I'm not saying what characteristics about the market, what characteristics about you. When I say average investor I mean average within the whole universe of investable assets. You're not comparing yourself only to single retail investors, or bogleheads, you're including day traders, institutional investors, hedge funds, high frequency algorithms, etc. What makes you more than say a standard deviation from the mean?
Things you might want to ask yourself:
1. Do I have any debt or other long-term financial obligations?
2. Am I financially independent? To what degree?
3. Do I have children or other people relying on my financial well-being?
4. What are my plans for future earnings (lifestyle, inheritance, charity, education, private equity)?
5. How secure is my current and future income?
6. Are there unexpected future expenses that I haven't accounted for (private school, higher education, health care, long-term care, care of a loved-one etc?
These are tough questions warranting some serious reflection. You don't have to answer these here in this thread, but you should be honest with yourself. And this is just a start off the top of my head. I try to do it myself periodically, and up to now I've always come back to the conclusion that in the whole wide world I'm pretty much average. I remember that my investment horizon is finite, as I will need my investments to fund my retirement at some point in the coming years or decades. So I don't use SCV or REITs.
Statistics: Posted by folkher0 — Sat Sep 14, 2024 10:34 am