The Stock Market, Investments, and Investing Thread
#59
(09-27-2019, 09:23 PM)billydingdong Wrote: [2] Never heard of fundrise, but I'd be interested to know why you prefer it over REITs. Looks cool, but I wonder if there's a catch — high % expense fees or transaction fees (entering/exiting a position)...  I'll check it out over the weekend.

I won't speak for anybody else, but my main issue with publicly-traded REITs is that they're correlated to and exposed to public market fluctuations. One flaw of market-weight indexing is that it necessarily fails to represent the share of the economy that is privately traded, and I'm pretty sure real estate is disproportionately private, although I could be imagining that.

The other side of that coin is liquidity and transparency, but that's the risk-return ratio for you. My thinking is that once you've gotten to a point where your essential long-term investing goals - growing old on something other than Whiskas - are provided for, you can start looking at riskier strategies with shorter windows and higher expected returns. The management fees do look a little higher than I'm used to at Fundrise and aren't necessarily in line with my larger passive strategy, but a basket of private real estate projects is, at least, interesting to think about.

The secondary issue is that I'm in a position where I need more taxable income like I need a stab wound. That I can do Fundrise in incremental amounts via a Roth IRA and eliminate taxation on the returns entirely while still "withdrawing" dividends up to my original contribution tax-free in a pinch is also interesting. With the highest expected return of anything in my portfolio, dropping the marginal tax rate on the eventual withdrawal of the gains from 30% to 0% is a big deal, and whatever portion of my current Roth portfolio I shifted out to taxable would still be taxed as long-term capital gains/qualified dividends instead of regular income.

The downside is that if Fundrise's structure turns out to be a bagholder scam or simply grossly mismanaged, I can't write off the losses. That's something for me to look much more closely at and part of the risk you dilute by choosing a REIT index fund.
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RE: The Stock Market, Investments, and Investing Thread - by Jetset - 09-29-2019, 01:05 PM

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