Houston Chambers
What percentage of your net worth should be in real estate?
I know that the number goes down the higher your net worth but can some one give me some good estimates. Example: 300,000$=95 400,000$=80 ect. All the way to 30 million. Thank you?
Public Comments
- Boy, your examples are WAY too high. The more money you have, the more you can afford to have nonliquid assets, which is what real estate is. But everyone needs mostly liquid assets. I'd say R/E should be no more than 25% of your portfolio UNLESS it is really your business or your hobby and you devote a lot of time to it. Become an expert. Otherwise, limit yourself. I know lots of people who bought rental properties they can't wait to sell because of the headaches. That's why 80-95% is ridiculous. For people with lower net worths, say under $1M, 5-10% is a typical max (from Schwab, Fidelity, T Rowe Price, Vanguard web sites). Over that, you can go higher, but see above caveats. From one expert: Culling together data from a variety of industry sources and standing research, Black notes that real estate investment, balanced between private and publicly-traded real estate, should represent approximately 20 percent of a portfolio also consisting of stocks and bonds. See complete article at: http://knowledge.emory.edu/article.cfm?articleid=1053 The point of owning real estate is to diversity the risk, because R/E moves inversely with stocks and bonds. If all you own is R/E, you lose that benefit. so not too much r/E is best.
