A few years ago when I was on a big asset allocation kick, I bought some REITs (real estate investment trusts) for my RRSP account. The amount was only about 5% of the portfolio but according to the experts, having some real estate is a good diversifier.
While I accept the idea that REITs are good for your portfolio in theory, I never liked the whole investment trust structure of REITs and their huge payouts. I had bought some RioCan (REI.UN.TO) which is a reasonable proxy for the Canadian REIT market but started to get nervous when there was some news reports about the unsustainability of their dividend.
The other problem I had with my REITs was that my original investment was now only about 3% so I needed to buy more to get back up to 5%. But I didn’t really want to buy any more and even if I did, 5% is not that much. This was the same sort of thinking I had with my former leveraged investment plan – either go big or go home.
So I decided just to sell it and not worry about it any more which is what I did for $18.60 per unit. I’m just leaving the proceeds in cash for the moment until I can do a proper asset allocation analysis of our investments. Once that is done I’ll rebalance according to my desired allocation (roughly 80% equity, 20% bonds).
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