Quote:
Originally Posted by noppenbd
I disagree. I understand it doesn't change your retirement planning or your ability to fund your retirement. But from a gross portfolio perspective it is not desirable.
I hold that any one asset that grows to be a large fraction of your net worth is not diversified. If you had a large run up in one of your asset classes of your retirement accounts you would want to rebalance, right? It is not really practical to do that with your house, but I think it is important to know that you are overweighted in real estate. So in that case maybe you wouldn't want to go buy a rental property, but rather increase other investments. Or if you owned REITs in your investments you might reduce your exposure to compensate.
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REITs return and the value of my house will not correllate. For starters REITs would probably be owned because of a dividend stream, and I don't see my house paying me dividends any time soon. I would not lower REIT exposure because my house was 20-30-50% of my portfolio.
Consider that REITs can be diversified into commercial real estate, foreign real estate, vacation real estate etc... all those sectors would not correllate to the value of my house in Ohio.
If my wife owned a $1M diamond necklace, that would not stop me from investing in diamonds or commodities.