REITs and Diversification in a Retirement Withdrawal Portfolio

Danny M. Ervin and Joseph C. Smolira

Journal of Real Estate Portfolio Management, 2023, vol. 29, issue 2, 140-150

Abstract: This study uses Monte Carlo simulation to examine the success of the monthly withdrawal of funds from portfolios consisting of U.S. large capitalization stocks, U.S. corporate bonds, and real estate investment trusts (REITs). The objective of this research is to provide an empirical examination of the effect of diversification with REITs on the withdrawal of funds from a retirement portfolio. We compare portfolios consisting of large capitalization stocks and corporate bonds to portfolios consisting of large capitalization stocks, corporate bonds, and REITs. We examine both portfolio compositions using a variety of portfolio weights, fund withdrawal rates, and fund withdrawal periods. The results of the study indicate that, in general, portfolios with REITs had a greater likelihood of sustaining a given number of withdrawals over this time. The results of this study can be used for retirement planning since they provide a historical perspective on the success of various withdrawal rates. Our results indicate that REITs, when added to a portfolio of stocks and bonds, can increase the success rates for a withdrawal portfolio. This indicates that individuals and large investment funds would likely benefit from adding REITs to a withdrawal portfolio of stocks and bonds.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10835547.2023.2221631 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:repmxx:v:29:y:2023:i:2:p:140-150

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/repm20

DOI: 10.1080/10835547.2023.2221631

Access Statistics for this article

Journal of Real Estate Portfolio Management is currently edited by Peng Liu and Vivek Sah

More articles in Journal of Real Estate Portfolio Management from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().