All things STOCKS

#251
#251
Fullfillmer said:
64 -- don't have to provide for anyone else. i would say I am targeting layered risk.

first layer -- lower risk to always have my monthly bills covered. second layer -- reasonable risk -- once again to cover the amount of my monthly expenses - so at that point I would be doubly covered.

Next layers -- all bets are off - but I have to believe that there are vehicles for really good returns - with smart reasonable risk.

The last layer or two would be described as aggressive.
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Can you live on 4% of your nest egg?
 
#252
#252
Fullfillmer said:
What sort of rates do you typically see?
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Honestly depends on what the REIT focuses on. Commercial development, retail/malls, residential, etc. You can find one in about any flavor. Dividends will be higher than a typical equity but again that’s due to the unqualified treatment. I would recommend ballparking your total taxable income and see what bracket you’re going to fall into. Make sure it makes sense to get into a REIT versus taking smaller equity dividends that have a max rate of 20%.
 
#254
#254
Fullfillmer said:
What sort of return do you typically get? Is there only a taxable event when you exit the trust? Is there an annual dividend ? How is your investment in an REIT valued?
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Returns are going to vary, but are likely between bonds and stocks. Returns similar to preferred stocks or utilities wouldn't be far fetched. There are REITs for every type of property that's out there... office buildings, apartments, shopping centers, even single family homes. They can be concentrated in a specific region or geographically diverse. I think that the dividends paid out are required to be something like 90% of the annual earnings. But there should be LT appreciation also if it's a well run REIT and the general economic conditions are favorable. They're similar to corporate equities... risks and returns are correlated and will fluctuate. Earnings, willing buyers and sellers, interest rates, and other economic factors will determine the prices.

You should probably hire a fee only financial advisor (one that does not take a commission on their recommended investments).
 
#255
#255
Fullfillmer said:
Yes - but that sounds rather sad when you can get 3% on a CD or something comparable. :)

What do you get 4% on? That could be one of the early layers.
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You can't get 3% on a CD unless you go about 7 years. Thunder's fee only adviser is a good idea. If you want to do it yourself, and don't need the highest returns, invest in a Vanguard balanced fund.

Go to vanguard.com (in their mutual funs), and check out VPGDX which is a Managed Payout Fund that sends you a 4% yearly draw based on a payment to you each month, and varies the makeup of the fund and includes about 10 of their funds.

VBIAX is their Balanced Fund of 60% stocks/40% Bonds. VWINX is the Wellesley Income Fund which is about 40% stocks/60% bonds. You can check out how well each has done in the last 1,5, and 10 years, and since each fund started.

Keep this in mind. The higher the return, the higher the risk. Don't get greedy at your age. Decide how much you feel comfortable in losing in a year. 100% stocks could temporarily lose almost half your money.

50/50 stocks/bonds should cut that down in half. At least, that is about what happened in 2008/2009. Past performance doesn't guarantee future returns.
 
#256
#256
1972 Grad said:
You can't get 3% on a CD unless you go about 7 years. Thunder's fee only adviser is a good idea. If you want to do it yourself, and don't need the highest returns, invest in a Vanguard balanced fund.

Go to vanguard.com (in their mutual funs), and check out VPGDX which is a Managed Payout Fund that sends you a 4% yearly draw based on a payment to you each month, and varies the makeup of the fund and includes about 10 of their funds.

VBIAX is their Balanced Fund of 60% stocks/40% Bonds. VWINX is the Wellesley Income Fund which is about 40% stocks/60% bonds. You can check out how well each has done in the last 1,5, and 10 years, and since each fund started.

Keep this in mind. The higher the return, the higher the risk. Don't get greedy at your age. Decide how much you feel comfortable in losing in a year. 100% stocks could temporarily lose almost half your money.

50/50 stocks/bonds should cut that down in half. At least, that is about what happened in 2008/2009. Past performance doesn't guarantee future returns.
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Thanks- and 5 yrs on the cd.
 
#259
#259
Ok - it was something that started with a C not Goldman - sorry.

So I am really liking the reit route for the first layer of my plan :) so now which ones do you guys recommend and why?

What is an ETF and would that be a sound second layer?

Thanks all. I am really appreciative of all the great advice.

I think this could get really fun.
 
#260
#260
Some ETFs own REITs.

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Simon Property Group (SPG) is pretty successful at owning shopping centers... likely oversold last year on fears of Amazon taking over the world. I think that Simon owns a lot of the higher end malls.

DLR is interesting. Digital Realty Trust. They specialize in providing space for for technology companies to set up their infrastructure. Could be a play on block chain.

American Tower (AMT) and Crown Castle (CCI) are REITs that own communication towers.

Ryman Hospitality Properties (RHP) owns the Grand Ole Opry, the Ryman, WSM radio, the Opryland Hotel and other Gaylord hotels and resorts.

Innovative Industrial Properties (IIPR) specializes in providing space for marijuana growing operations.

7 REIT Payouts Getting Set To Grow In February

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ETFs are Exchange Traded Funds. They're very similar to mutual funds, but they trade like stocks throughout the day instead of being priced after markets close like the mutual funds. There are slight variations based on the way they're organized and/or regulated. UITs are similar... Unit Investment Trusts. Ameritrade just announced that their platform will offer 24 hour (M-F) ETF trading.

Stick with the ETFs that have high trading volumes and low fees. DIA, QQQ, MDY, SPY, XRT, IWM, the 10 in the Select Sector SPDR group, State Street's SPDRs like XBI, Blackrock's iShares, Invesco's PowerShares, Vanguard, Schwab, Direxion.

The biggest criticism of owning ETFs is that poor components aren't excluded... you'll own the leaders as well as the dogs. The best thing about owning them is probably that it's easy to diversify your investments.

Home - Unique ETF's that divide the S&P 500 into 10 sectors | Select Sector SPDRs

https://us.spdrs.com/en/product/index.seam

List of American exchange-traded funds - Wikipedia
 
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#261
#261
Thunder Good-Oil said:
Some ETFs own REITs.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Simon Property Group (SPG) is pretty successful at owning shopping centers... likely oversold last year on fears of Amazon taking over the world. I think that Simon owns a lot of the higher end malls.

DLR is interesting. Digital Realty Trust. They specialize in providing space for for technology companies to set up their infrastructure. Could be a play on block chain.

American Tower (AMT) and Crown Castle (CCI) are REITs that own communication towers.

Ryman Hospitality Properties (RHP) owns the Grand Ole Opry, the Ryman, WSM radio, the Opryland Hotel and other Gaylord hotels and resorts.

Innovative Industrial Properties (IIPR) specializes in providing space for marijuana growing operations.

7 REIT Payouts Getting Set To Grow In February

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

ETFs are Exchange Traded Funds. They're very similar to mutual funds, but they trade like stocks throughout the day instead of being priced after markets close like the mutual funds. There are slight variations based on the way they're organized and/or regulated. UITs are similar... Unit Investment Trusts. Ameritrade just announced that their platform will offer 24 hour (M-F) ETF trading.

Stick with the ETFs that have high trading volumes and low fees. DIA, QQQ, MDY, SPY, XRT, IWM, the 10 in the Select Sector SPDR group, State Street's SPDRs like XBI, Blackrock's iShares, Invesco's PowerShares, Vanguard, Schwab, Direxion.

The biggest criticism of owning ETFs is that poor components aren't excluded... you'll own the leaders as well as the dogs. The best thing about owning them is probably that it's easy to diversify your investments.

Home - Unique ETF's that divide the S&P 500 into 10 sectors | Select Sector SPDRs

https://us.spdrs.com/en/product/index.seam

List of American exchange-traded funds - Wikipedia
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So are you looking for a correction in the market in the next 3 to 6 months?

Looking at morningstar it looks like Health, technology, Japan, Foreign small/mid, US Equity seem the most consistent plays - outside of reits should someone be trying to cherry pick or find funds or groups of funds? It should be apparent that I have 0 experience here.

Muni's and bond funds - don't seem to perform very well at first blush - do you stay clear of those?

Would a reasonable strategy be 40 % reit 40 % stock fund 20 % lets roll?

I guess it depends on individual factors, but it would seem to me that a normal strategy of 40/60 bonds to stocks - is better replaced with 40 /60 reits to stocks. What are your thoughts?

Thanks again for the great advice.
 
#262
#262
Fullfillmer said:
So are you looking for a correction in the market in the next 3 to 6 months?

Looking at morningstar it looks like Health, technology, Japan, Foreign small/mid, US Equity seem the most consistent plays - outside of reits should someone be trying to cherry pick or find funds or groups of funds? It should be apparent that I have 0 experience here.

Muni's and bond funds - don't seem to perform very well at first blush - do you stay clear of those?

Would a reasonable strategy be 40 % reit 40 % stock fund 20 % lets roll?

I guess it depends on individual factors, but it would seem to me that a normal strategy of 40/60 bonds to stocks - is better replaced with 40 /60 reits to stocks. What are your thoughts?

Thanks again for the great advice.
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There's no telling which direction any of those investments could go. It wouldn't be wise to go 100% invested right away. The better idea could be to keep two-thirds to 90% in a short duration bond fund (earning 1-2%), safe municiple bond funds, the safest corporate bond funds, and/or bank CDs and then average it into more aggressive investments slowly over time. Markets could be toppy here, but there's also a risk in staying out of equities. Nobody ever buys at every bottom and sells at every top.

I do like Healthcare and Energy. Consumer Staples is less risky than other equities. Financials could do well with interest rates creeping up. Utilities, REITs, LT Bond funds, and dividend focused funds will be under pressure anytime that interest rates are rising. Individual stocks of well run companies usually are rewarding to own over time. Johnson & Johnson for example is a good healthcare company. Dominion Resources is a good utility/energy company. Google, Amazon, and Apple aren't going out of business anytime soon.

If I were just starting out I'd look real hard at the 10 Select Sector SPDR ETFs, QQQ, DIA, SPY, MDY, and some foreign ETFs. Watch out for the small companies that don't have a diversified customer base or multiple sources of revenue that don't have barriers of entry for competitors (Fitbit, GoPro, Snap for example).
 
#263
#263
Thunder is giving some sound advice here. The REITs that I own are BXMT, CIM, GEO, HCP, IRM, PK, and TWO. I only have about 8% of my portfolio invested in REITs. I am at 55% equities, 40% bonds, 5% cash in the investing account. I do have additional cash and real estate.
 
#264
#264
1972 Grad said:
Thunder is giving some sound advice here. The REITs that I own are BXMT, CIM, GEO, HCP, IRM, PK, and TWO. I only have about 8% of my portfolio invested in REITs. I am at 55% equities, 40% bonds, 5% cash in the investing account. I do have additional cash and real estate.
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Thanks, I am a novice so bare with me - can you make a case that the REITs and the bonds are interchangeable?

I assume the Reit's have greater yield but greater risk.

If I ended up 40% reits, 55% equities would I be accomplishing about the same thing that you have?

Thanks for the advice.
 
#265
#265
Fullfillmer said:
Thanks, I am a novice so bare with me - can you make a case that the REITs and the bonds are interchangeable?

I assume the Reit's have greater yield but greater risk.

If I ended up 40% reits, 55% equities would I be accomplishing about the same thing that you have?

Thanks for the advice.
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You are right about REITs being much more volatile than bonds. I wouldn't put that much in REITs because of the volatility. I forgot one REIT that I own, and that is MIC, or MacQuairie Infrastructure.

To give you an idea of volatility, I bought it on Oct. 3, 2017 for $72.80 a share. Since then it has gone down 10% to $65.60. My investment of $11,291 is now worth $10,168. I have had one dividend payment of $220.11. I will get that every 3 months, but at the current rate of about 8.5% dividend , I will still be behind in a year.

Your goal now should be preserving your wealth, and hitting for singles and doubles, instead of swinging for the fences.



I meant to add that REITs are interest rate sensitive. When rates rise, the underlying business has increased costs and more expensive acquisitions, therefore is less profitable. Also, the dividend becomes less attractive . The stock price usually goes down, which makes the dividend percentage rate is higher, if they keep the same payout. Be careful about loading up on REITs.
 
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#266
#266
If you feel really good about real estate you could put a portion into home builders, home builder ETFs, Home Depot/Lowes, and businesses that supply builders like cement/concrete/wall board & plywood, Mueller, United Rental, HD Supply, and on the larger scale Caterpillar and Deere. They can all move together... up or down. Whirlpool also does well when construction does well... and it's a very well run company.
 
#267
#267
You guys are complicated. I'm months from retirement and I am moving towards an 80% S&P 500 index fund and 20% cash/crap return.

The cash side should give me 4-5 years of expected withdrawals if 2008 shows up again. I have a pension so that helps and I start SS soon.
 
#268
#268
VolStrom said:
You guys are complicated. I'm months from retirement and I am moving towards an 80% S&P 500 index fund and 20% cash/crap return.

The cash side should give me 4-5 years of expected withdrawals if 2008 shows up again. I have a pension so that helps and I start SS soon.
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If you have a big enough pension and enough SS, then you can afford to freewheel a little on the 80/20 split. If you don't have those, you may need to be a little more careful.
 
#269
#269
VolStrom said:
You guys are complicated. I'm months from retirement and I am moving towards an 80% S&P 500 index fund and 20% cash/crap return.

The cash side should give me 4-5 years of expected withdrawals if 2008 shows up again. I have a pension so that helps and I start SS soon.
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We are all jealous..... Have fun in your retirement :rock:
 
#274
#274
So instead of bonds..... why couldn't I just put money in a money market and a 5 yr cd and reits. and let that suffice for the 30 - 40 % safe and semi - secure that covers my bills and such and make hay on the other 60 to 70 %?

mm 1.7%
cd 3 %
reits 6 %

average fairly safe investments ... 3.57%

What say you advisors?

Or 20% fairly safe?
 
#275
#275
Fullfillmer said:
So instead of bonds..... why couldn't I just put money in a money market and a 5 yr cd and reits. and let that suffice for the 30 - 40 % safe and semi - secure that covers my bills and such and make hay on the other 60 to 70 %?

mm 1.7%
cd 3 %
reits 6 %

average fairly safe investments ... 3.57%

What say you advisors?

Or 20% fairly safe?
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You can ladder CDs or bonds, and have one of them mature every year . In other words, a 1 year CD, a 2 year CD, a 3 year CD, 4 year, 5 year, etc. for your bills. After 1 year, spend the 1st, and buy another 5 year CD every year.

Also, if you have time, go to Morningstar, and see if you can find Christina Benz's articles on the "bucket" approach to retirement investing.


Edit: Or, just google Christine Benz bucket approach.
 
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