Author Topic: Where do you count your Real Estate investments in Stock/Bond allocation  (Read 2562 times)


  • Stubble
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Today I'm formalizing my written Investment Policy and ran across an interesting question.  Most "experts" recommend some flavor of a stock to bond ratio (i.e. 60/40, bonds as % of age, etc.)  and I was trying to decide where to put the real estate investments.  I assume we lump direct ownership and REITS together.  I'm also ignoring that we can treat them as an investment class of their own because you would still need to pull the percentage from stocks, bonds, or a little from each.  So, I'm still left with a question.

How do you classify real estate investments and why? 
« Last Edit: April 16, 2016, 01:49:54 PM by Jim2001 »


  • Pencil Stache
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I don't really invest in REITs myself so not completely sure what i would classify them, probably closer to stocks than bonds since with REITs you are often investing in companies with apartments/buildings for rent.

As far as direct ownership I don't really consider my own house an investment. To me it is a purchase/expense. If it makes money great but a single house in 1 location is far too risky to consider it an investment from my view. I just feel it is worth owning for the lifestyle it affords me to have. Similarly to if I were renting.

You could potentially see direct ownership of rentals you rent out differently, but that one I'm honestly not sure.


  • Stubble
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  Agreed. I'm not intending to count the home I live in as part of the "investment" portion of my 'stache.  I'm speaking strictly about REITs and rentals.

« Last Edit: April 16, 2016, 03:16:19 PM by Jim2001 »


  • Walrus Stache
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Does the product you buy follow the rules of stocks, or bonds, or something else?  That would be your answer.


  • Handlebar Stache
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This is a fairly straightforward question. The universe of investments that can grow your wealth can be divided into "ownership" versus "lending." Both stocks and RE make you money through your ownership of them. A share of stock is a piece of a business. Buying a share of a REIT is buying a piece of a real estate business.

Eric Tyson introduced the concept to me in his "For Dummies" books. Here's an Investopedia link that pretty much says the same thing:

Bonds, of course, are in the other category of "lending investments."


  • Stubble
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  Exactly the information I was looking for with a solid, logical justification.



  • Bristles
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I have often wondered about this, thanks for posting.

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  • 5 O'Clock Shadow
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Never thought of it like this, fantastic!