Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
vanguard reit mutual fund
Old 03-26-2011, 06:31 PM   #1
Thinks s/he gets paid by the post
veremchuka's Avatar
 
Join Date: Oct 2010
Location: irradiated - too close to the nuclear furnace
Posts: 1,294
vanguard reit mutual fund

i just finished rick ferri's "all about asset allocation" and after reviewing the retired portfolios and his reasoning i want to allocate 5-8% of total portfolio to the vg reit fund.

reits have had a great run and i'm wondering if this is a bad time to move money from total stock market index? for example, when people here ask about gnma i strongly suggest that now is a bad time - very high nav and interest rates are bound to rise and that'll really drop the nav. the time to buy gnma was 4 years ago.

this would be a permanent allocation for the non correlation to equities not a market timing play, the time for that was apparently a few years ago. is the reit fund teetering on a cliff and it'd be better to wait?

thanks.

btw this will be in roll over ira.
__________________

__________________
veremchuka is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-26-2011, 06:37 PM   #2
Thinks s/he gets paid by the post
steelyman's Avatar
 
Join Date: Feb 2011
Location: Triangle
Posts: 3,218
I've owned that fund since 2005 and have been very satisfied with it. I intend to hold that for the long term as well as Fidelity Real Estate Investment. Both are in non-taxable accounts, as I think that makes things a little simpler. I kept averaging in during '08-'09 and it has worked well.

The reason why I decided to buy these funds was reading the book "A Random Walk Down Wall Street", by Burton Malkiel.
__________________

__________________
steelyman is offline   Reply With Quote
Old 03-26-2011, 11:31 PM   #3
Full time employment: Posting here.
 
Join Date: Nov 2008
Posts: 728
You never know when the time is right to buy any mutual fund; the same is true of VG REIT. So, if you like the investment and I do, average in over 12 to 24 months.

I've been adding to VG REIT every month for the past 3 years. I intend to keep it far into the future knowing that it will have up and down years. I read Money Mag and Kiplingers each month; both of them have suggested it in the past few months.

Good Luck!
__________________
jerome len is offline   Reply With Quote
Old 03-27-2011, 07:40 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,654
Interesting. I have been considering adding that fund (I currently have no Reits) and was hesitating because of the recent run-up. But, I guess, "if not now when?" applies.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is online now   Reply With Quote
Old 03-27-2011, 07:48 AM   #5
Full time employment: Posting here.
 
Join Date: Mar 2004
Location: No Where for Very Long
Posts: 747
I have no idea when is the right time to buy any fund, but I dd just buy into Vanguard REIT...
__________________

Lancelot is offline   Reply With Quote
Old 03-27-2011, 08:56 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,983
I've owned VGSIX continuously since Jun 2005, when I bought it isn't important now but I'm not a trader...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is online now   Reply With Quote
Old 03-27-2011, 10:15 AM   #7
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
If it is part of your long term asset allocation then buy it. Or ask yourself this: If you already owned it would you be selling it now? FWIW I went through the same dilemma in 2006-2007 when setting up my AA. I bought, watched it crash, bought heavily when it was lagging the rest of my AA and watched it grow again. It makes up 5% of my AA.

DD
__________________
At 54% of FIRE target
DblDoc is offline   Reply With Quote
Old 03-27-2011, 10:15 AM   #8
Thinks s/he gets paid by the post
 
Join Date: Mar 2009
Location: Pittsburgh, PA suburbs
Posts: 1,769
I have had this fund since 2004 in a taxable account. I plan to keep it for awhile longer.
__________________
WhoDaresWins is offline   Reply With Quote
Old 03-27-2011, 10:35 AM   #9
Thinks s/he gets paid by the post
Free To Canoe's Avatar
 
Join Date: May 2008
Location: Cooksburg,PA
Posts: 1,738
REIT time to buy?
I like the VGSIX index and have half of my REIT allocation there.
My thinking was like the OP in 2007. REITs had already taken a 17% hit. I bought in then. One thing that I did not know or pick up from other research was how extremely volatile this segment is. Even the index fund. It seems to take bigger jumps than even the emerging market funds. I stuck with it during the downturn (what else could I do?). Mr. Toad's wild ride.

I think that REITs are currently overvalued but many are buying now. I am gradually selling to reduce my exposure.

My 2 cents.

Free to canoe
__________________
Free To Canoe is offline   Reply With Quote
Old 03-27-2011, 10:42 AM   #10
Recycles dryer sheets
 
Join Date: Feb 2007
Posts: 62
I bought ICF (the ishares REIT) in an IRA account in 2006 and have added some to it every year since. Just a few days ago I bought a chunk of the Vanguard REIT too. It was the largest purchase of a REIT I had made since '06 to try to get my asset allocation a little more inline. Alas, five years later of dollar cost averaging and I am still in the red on it by a little. Still, I'm not planning to sell it. Ever.
__________________
tricky88 is offline   Reply With Quote
Old 03-27-2011, 11:49 AM   #11
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
As others have said, it's very difficult to time when to enter and exit based on fundamentals or price movement. A big run-up does not necessary indicate overvaluation. I have not heard that a bubble is on the horizon. Even if a bubble does exist, it may take years to burst. In short, there's no magic formula of entry and exit. If REIT is part of your AA, any time is the right time to maintain its targeted level in your portfolio.
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Old 03-27-2011, 11:54 AM   #12
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Quote:
Originally Posted by Free To Canoe View Post
REIT time to buy?
I think that REITs are currently overvalued but many are buying now. I am gradually selling to reduce my exposure.
just curious --- What's your method of assessing the value of the REIT market?
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Old 03-27-2011, 01:45 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
I use the ETF VNG instead of the MF. I also own ICF. I couldn't make up my mind which one to buy when I was setting up DW's rollover IRA, so just split it 50/50. Turns out that after about 2 .5 yrs, they have performed almost identically and very nicely. REITs are about 3% of our total FIRE portfolio and I'm adding whenever some liquidity becomes available to bring that up to the 5% range.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 03-27-2011, 03:05 PM   #14
Thinks s/he gets paid by the post
Free To Canoe's Avatar
 
Join Date: May 2008
Location: Cooksburg,PA
Posts: 1,738
Quote:
Originally Posted by Spanky View Post
just curious --- What's your method of assessing the value of the REIT market?
Good question. I am evaluating my mutual funds by multiplying the PE x the book value to get a number. It is an idea kind of borrowed from Ben Graham. I look at the resulting number to get a relative idea what is happening in each asset class.

The S&P 500 index fund came in at about 28. Other funds a little higher.
REIT funds were around 100.

I know that REITs are different and that there are many ways to value a thing. I am definitely open to suggestions in this regard.

Free to canoe
__________________
Free To Canoe is offline   Reply With Quote
Old 03-27-2011, 04:32 PM   #15
Thinks s/he gets paid by the post
veremchuka's Avatar
 
Join Date: Oct 2010
Location: irradiated - too close to the nuclear furnace
Posts: 1,294
thanks. yes, i want to keep this as part of the portfolio, it is not a buy the hot thing move.

i like the dca BUT the $ will be coming from my tsmi in my rollover ira. vanguard's policy is exchanging out of a fund means you can't put $ into that fund for 60 days. i don't like being limited in any way so that makes dca every 90 days puts the tsmi fund into a "locked up" for 1 year situation. if i needed to rebalance (moving $ into tsmi) i can't.

maybe a lump sum would be better. i've often read that when looking back at results, lump sum vs dca, the lump sum method performed better. the reasoning is the stock market goes up more than down.
__________________
veremchuka is offline   Reply With Quote
Old 03-27-2011, 04:34 PM   #16
Thinks s/he gets paid by the post
steelyman's Avatar
 
Join Date: Feb 2011
Location: Triangle
Posts: 3,218
You could always move a lump sum into something like their Prime Money Market fund and then average out of that one, not Total Stock Market.
__________________
steelyman is offline   Reply With Quote
Old 03-27-2011, 05:10 PM   #17
Thinks s/he gets paid by the post
veremchuka's Avatar
 
Join Date: Oct 2010
Location: irradiated - too close to the nuclear furnace
Posts: 1,294
yes that is true but i ignored that as i do not like parking a large amount of money in the PMM fund, what's it paying now 8, 12 basis points!
__________________
veremchuka is offline   Reply With Quote
Old 03-27-2011, 06:20 PM   #18
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Quote:
Originally Posted by Free To Canoe View Post
Good question. I am evaluating my mutual funds by multiplying the PE x the book value to get a number. It is an idea kind of borrowed from Ben Graham. I look at the resulting number to get a relative idea what is happening in each asset class.

The S&P 500 index fund came in at about 28. Other funds a little higher.
REIT funds were around 100.

I know that REITs are different and that there are many ways to value a thing. I am definitely open to suggestions in this regard.

Free to canoe
I heard that price/funds from operations (income + depreciation + mortgage amortization - sales of property) is one metric to use. Historical multiple is about 12x. I am not sure how one could get the data for the calculation. Another one is yield comparison to 10-year treasury.
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Old 03-27-2011, 06:32 PM   #19
Thinks s/he gets paid by the post
steelyman's Avatar
 
Join Date: Feb 2011
Location: Triangle
Posts: 3,218
Quote:
Originally Posted by veremchuka View Post
yes that is true but i ignored that as i do not like parking a large amount of money in the PMM fund, what's it paying now 8, 12 basis points!
Right, I understand. It's been a long time since I dumped a full investment into a mutual fund all at once (not since I first started in the mid-90s), and it did end up working out OK, I think about a 600% return, but it took 15+ years.

I guess the main reason why I would dollar cost average into the VG REIT fund is that it's really a volatile fund, which I suppose is due to its specialty nature. It's not going to behave like a broader market index fund.
__________________
steelyman is offline   Reply With Quote
Old 03-28-2011, 12:28 PM   #20
Recycles dryer sheets
In-control's Avatar
 
Join Date: Mar 2007
Posts: 319
This is tough call, for comparison I am in VG Wellington & Wellsley funds and if you look at their holding you will find REITs and property management companies. Look at your current holdsing and you may find that you are already exposed to the market segment.
__________________

__________________
Just Trekking thru!
In-control is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
vanguard tips mutual fund veremchuka FIRE and Money 5 10-16-2010 09:44 PM
How to Cancel Vanguard Mutual Fund Buy Order CupCake FIRE and Money 10 01-08-2009 09:43 PM
VGSIX (Vanguard REIT Index) really took a hit today Telly FIRE and Money 8 03-06-2007 09:31 PM
Adding REIT Fund TromboneAl FIRE and Money 20 04-16-2006 09:00 AM
Hedge fund-like mutual fund: SWHEX brewer12345 FIRE and Money 2 11-01-2005 02:29 PM

 

 
All times are GMT -6. The time now is 10:49 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.