I have some of my 401k in Vanguard REIT index Fund (VGSIX). What should I do?

Question

Would now be a good time to take money out of it or contribute more to it. I am looking at very long term. I am 30.
I also have the rest of the 401k pretty diversified. Any advice?

Answer 1

I am not a great fan of REIT's, but many advisors recommend keepint a constant 5-10% of your stock portfolio in REIT's for diversification. As long as you don't put too much into it, putting a small amount in REIT's is reasonable. I think Vanguard is a good way to get REIT exposure. You may want to go to the Vanguard Diehard's forum to discuss this. They love to discuss asset allocation in Vanguard funds.

Answer 2

I also hold a small stake in VGSIX. My situation is probably a little different than yours, but I have been adding to my holding. That's because I was fortunate to take some profits - once late last year and once early this year when the fund was still up about 8% YTD. I am now looking to repurchase my shares at a lower price. Thanks to the big decline last week I am in good position to complete what's, for me, a rare instance of successful market timing.

My feeling is that this fund is a good choice for a diversified portfolio, so I would not recommend you sell your position. If you haven't done so already, decide on an asset allocation strategy that includes the percentage of REITs in your portfolio. Then look to see where you stand now. You may still be overweight in REITs because of the tremendous run they've had in recent years. If so, sell the excess. Otherwise hold on and look for possible further declines as a buying opportunity to maintain your allocation target.

Answer 3

VGSIX is reasonably well diversified between different types of REITs. There will be some ups and downs, but over the long term it should provide a good return.

If you are diversified, my suggestion would be to leave it alone. I definitely wouldn't add now. Take money out only to improve your diversification.

Answer 4

I am a financial planner, but I don't have a crystal ball. If you have a solidly diversified asset allocation model, I might leave it there. However, I have been moving most of my clients into a different sector fund from real estate, such as energy for the present or international investments.

Answer 5

I think that Real Estate is a good investment because there is only so much land, its a limited resource. So I wouldn't change the fund, but be sure to be diversified.

Answer 6

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