I own my house free and clear and it represents about 15% of my net worth. In determining my allocation to real estate, should this be considered as part of
my allocation?
house as part of asset allocation
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 arbaway |
house as part of asset allocation |
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Posts: 4 (05/29/09 09:21:27) |
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Less Antman |
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Posts: 956 (06/03/09 20:46:15) |
No, for a couple of reasons:
(1) Your personal residence represents an undiversified investment in a single location. (2) The market for residential housing is uniquely distorted by a host of government intervention, including Fannie Mae, Freddie Mac, HUD, and the Community Reinvestment Act, to name a few, so its performance is quite unlike that of commercial rental properties, which dominate REIT funds. On the other hand, I consider the REIT allocation to be the least important portion of the typical portfolio: domestic stocks, international stocks, and commodity futures are the critical categories, so if you use your home as an excuse to reduce your REIT allocation, it won't make me sleepless. |
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