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Old 04-06-2015, 09:40 AM
 
Location: North West Arkansas (zone 6b)
2,672 posts, read 2,008,103 times
Reputation: 3670

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Looking to continue building my retirement 401k since I'm not working currently (I'm 50).

I've seen some attractive REIT investments that return 8-10% in dividends a year. I've heard that there is an interest rate risk when rates go up, but not quite sure I understand how that works.

I'm looking at strip mall REITs, health related real estate, and commercial property as well as restaurant REITs.

My thinking is I can use DRIP (dividend reinvestment) to compound my growth over the next several years.

Thoughts on such an approach?
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Old 04-06-2015, 09:55 AM
 
Location: Central Massachusetts
4,800 posts, read 4,842,106 times
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If you are not working you cannot contribute to any sort of retirement account I beleive and even more on the 401k which are employer sponsored. Some smarter people might weigh in on this but I am pretty sure I am right.
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Old 04-06-2015, 10:02 AM
 
Location: North West Arkansas (zone 6b)
2,672 posts, read 2,008,103 times
Reputation: 3670
Quote:
Originally Posted by golfingduo View Post
If you are not working you cannot contribute to any sort of retirement account I beleive and even more on the 401k which are employer sponsored. Some smarter people might weigh in on this but I am pretty sure I am right.
Over the years and many jobs, I have rolled my 401k money into a separate 401k retirement account which I can control and purchase stocks etc.
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Old 04-06-2015, 10:18 AM
 
Location: Idaho
1,451 posts, read 1,152,796 times
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One also has the option to keep existing 401K plan after retirement if there are good investment choices and low fees in the current plan.

So if the current 401K plan has REIT choice, you can certainly rebalance your portfolio anytime and move some funds or add to REIT investment option. Diversification is always a good way to invest.

In my 401K, I have about 5% in REIT and 2% in International REIT. The REIT fund has been doing well with 1 Yr return at 24%, YTD return at 5.3%, 5yrss at 15.7%. The Internation REIT has not fared as well with 1Yr return at 9%, YTD at 4.5% and 5 Yrs at 10.4%

It would be nice if I had put more money in the REIT but I am OK with my current 401K asset allocation.
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Old 04-06-2015, 11:59 AM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,527 posts, read 39,903,732 times
Reputation: 23634
As with investing, diversity is your friend. I would cap a REIT at 10% max investment, and only funds that were targeted for growth, not income producing (REITs can go broke)

I choose to directly own my commercial real estate, but it can be a PITA with additional risk / reward.

Having owned strip malls and food provider space, they are near the BOTTOM of my list. (Tough on property, and staying in business).

I would probably look into storage space, 'active' senior housing units, and memory care.

ONLY invest in stuff you watch and know. I have three (ex) retired friends trying to adjust to losing a few million each in a senior living REIT.. I looked golden, and I was a signature away from assigning some capital. It sounded too good to be true (12% historical gains).

I target 10% gain on actively managing my own (during rental phase), and 15% equity gain when I can opportunistically sell. So far so good (~30 properties). Tomorrow it could all end. Since I manage my own, I keep 30% of my portfolio in investment RE.

As mentioned... this is risky, but I OWN it and I know the tenants and bankers and keep a close eye on all!.

REITs can be very good and very slimey.
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Old 04-06-2015, 12:13 PM
 
Location: Central Massachusetts
4,800 posts, read 4,842,106 times
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Quote:
Originally Posted by gunslinger256 View Post
Over the years and many jobs, I have rolled my 401k money into a separate 401k retirement account which I can control and purchase stocks etc.

Yes i know you can roll them out into other investments but my point was when you said building that you were contributing. If I was wrong then I misunderstood. I just meant that if you are not earning income you are not allowed to make contributions to a retirement account. That is all.
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Old 04-06-2015, 12:27 PM
 
Location: Canada
5,878 posts, read 2,378,409 times
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Quote:
Originally Posted by gunslinger256 View Post
Over the years and many jobs, I have rolled my 401k money into a separate 401k retirement account which I can control and purchase stocks etc.
I did the same thing (about 10 years ago)..although I picked a "basket" that would cover a whole host of products ..which was part of an Income portfolio ..which compounded monthly. It worked for me as I didn't touch it and it was shielded from being Taxable income....Now that I have retired..I only have to pay income tax on what I withdraw..and at a lower income tax bracket...So win win for me anyway

Prior to switching..I did invest in Asset Allocation, Resource/Energy, Equity Growth...but as I got closer to retirement, I funnelled them into more secure and monthly payouts ( re-invested directly into same*compounding). BUT the important thing is you must keep an eye on things, get educated, watch the market in order to take advantage and reduce your losses...Lucky I made some good decisions...LOL even the Bank Investment rep asked my how I did what I did?? I said..Because I'm not just another pretty lady
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Old 04-06-2015, 12:55 PM
 
Location: Approximately 50 miles from Missoula MT/38 yrs full time after 4 yrs part time
2,294 posts, read 3,338,641 times
Reputation: 4824
Quote:
Originally Posted by gunslinger256 View Post
Looking to continue building my retirement 401k since I'm not working currently (I'm 50).

I've seen some attractive REIT investments that return 8-10% in dividends a year. I've heard that there is an interest rate risk when rates go up, but not quite sure I understand how that works.

I'm looking at strip mall REITs, health related real estate, and commercial property as well as restaurant REITs.

My thinking is I can use DRIP (dividend reinvestment) to compound my growth over the next several years.

Thoughts on such an approach?
Just some comments:

I have had a particular "REIT" stock in my portfolio for approx 15 years.

It has served me well. It is in the "Retail" sector.

In the last 5 years the actual stock price has more than doubled.

Annual Distributions have been very acceptable.

YMMV!!!
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Old 04-06-2015, 02:13 PM
 
29,764 posts, read 34,848,700 times
Reputation: 11675
As noted by others. I have REIT index funds in both Retirement and Taxable accounts. Being retired I can't put new money into the retirement accounts but I can and do use REITS as part of my allocation and can add or subtract when rebalancing.
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