Thursday, March 19, 2009

Right time for REITs?

Ok. . .let's look at a fund that I'm thinking of adding to my Roth IRA. I am currently interesed in an extremely beaten down sector. . .real estate. It's no surprise to anyone that real estate has gone down substantially. In fact, it seems to have gone down faster than it went up. Either way, it has left me thinking. . .why not take a dip in the Real Estate Investment Trust(REIT) pool?

The REIT fund that I'm looking at is within the Vanguard family of funds. It is the Vanguard REIT Index Fund Investor Shares (VGSIX) fund. Currently, it pays out an approximate 10.24 % dividend - - -I am aware, however, that in the current economic climate this dividend could go down but wanna know what I think? Who cares! Even if this dividend gets slashed in half then it's still paying out more than 5%. This thing has gone down around 57 % over the course of the past year. Since January the fund fell around 27 %. . .

So why own this fund that keeps on falling??

Considering the fact that I'm 24 years old I am blessed in that I have time on my side. I am looking to get into this hopefully by the end of June if not sooner. If I had the cash now I would be happy to get into it tomorrow. I just feel strongly that real estate cannot continue on this path much longer. If anything. . .real estate will eventually bottom and this fund won't move anywhere in price and as a result I'll just have to stomach the 10% return from the dividend for a while! Hah. . .ok, that's a bit cocky. . .especially for this market. But honestly, how much more can real estate fall?

-Feel free to comment. Hopefully we can all increase our knowledge of investments and the size of our portfolios by bouncing ideas off of one another. . .