cancel
Showing results for 
Search instead for 
Did you mean: 
     
Highlighted
Frequent Contributor

Re: Dry Powder from Sale of REA

Wasn't Principal substituted for TREA in some plans?

If so, what an irresponsible decision. No liquidity guarantee.

The decision makers need to do some mansplaining.

Can you say litigation?

Bob 

0 Kudos
Highlighted
Explorer ○○○

Re: Dry Powder from Sale of REA

Hi Bob,

Most University folks that I was around knew very little about TREA and had little interest in real estate as a investment. Most believed that real estate was a very risky investment as in much more risky than equities. A very close faculty friend that was a business professor and owned 3 farms, thousands of acres of timber, and several other real estate holdings told me to not invest in TREA because of how risky direct ownership real estate was. Needless to say I did not take that advise and have been rewarded nicely for not. I believe this is part of the reason TREA is being replaced in faculty retirement plans along with the overhead costs compared to other investments. Most have no idea of how unique TREA is as investment/annuity and how it fits with their other retirement plan allocations. Even here the argument as to bond vs equity comes up. It is neither a round or square peg, but triangular peg and only fits in the triangular hole, that is it is a separate and distinct investment from all others.

S

0 Kudos
Highlighted
Participant ○○

Re: Dry Powder from Sale of REA

Thanks, yogi.  I figured that was the reason.  We never know what TREA may do in the future but it is worth noting that during the real estate crisis they did not change the rules in such a way that not having a foothold position would be disadvantageous.

0 Kudos
Highlighted
Explorer ○○○

Re: Dry Powder from Sale of REA

Hi Learner,

I still hold as small number of units in my ATRA account. All the rest I have sold in four other accounts. I would reinvest in TREA in the future, but will most likely not hold nearly as many units as in the past. That is one reason (the main reason is 1% return for TIAA Traditional in IRAs) why I am moving some funds out of TIAA to Fidelity and Vanguard in my IRAs.

S

0 Kudos
Highlighted
Frequent Contributor

Re: Dry Powder from Sale of REA

@Learner , I posted recently about the T-REA outreach letter here and just noted that there wasn't nothing new,   https://community.morningstar.com/t5/TIAA-Funds/TIAA-Real-Estate-Account-VA-10-Q-for-3-31-20/m-p/699...

But never having seen this before, I read it several time just to make sure that there wasn't any rule change there. There wasn't.

It takes only a letter to us or a post on SEC/Edgar to do that for many rules that aren't fundamental.

What happened before doesn't matter.

YBB
0 Kudos
Highlighted
Frequent Contributor

Re: Dry Powder from Sale of REA

S.,

I have seen the Principal fund used as a substitute for TREA. 

Perhaps I looked at the wrong material but I saw no substantial difference in ER between TREA and Principal. 

So, if I'm right (and I expect you to correct me if I am mistaken) I ask myself: why would a responsible fiduciary choose a relatively expensive real estate fund with no guarantee of liquidity over a relatively expensive real estate fund that has just lowered its ER and has a liquidity guarantee?

Cheers.

Bob

0 Kudos
Highlighted
Explorer ○○○

Re: Dry Powder from Sale of REA

Bob,

I know little to nothing about Principal except what I have read here. I thought from what I read here that it was a poor substitute for TREA as you are outlining. I agree with all your conclusions. But, some are apparently happy with Principal and very happy with the annual returns. Other also are sold on VNQ which seems to fit their investment needs just fine. I own some VNQ in a limited fashion but would never hold near the absolute dollar amount (or % of assets) that I held in TREA. VNQ to me is a risky real estate asset as are all REITs. I own one REIT (energy related) presently that traded up from around $25 to almost $50 and is now at $11.25 today, that is all in this year. Since I only hold 200 shares it is very small amount of our assets and is like a grain of sand on the New Jersey shore.

Liquidity guarantee backed by the TIAA general account is so important. That keeps TREA assets from being frozen in times like this. To me that alone makes the difference.

S

0 Kudos
Highlighted
Participant ○○

Re: Dry Powder from Sale of REA

Skipper and yogi, I understand the point about a foothold.  I have a foothold in a different situation.  Five years ago, I moved almost all of my money in my 457 account to my 403(b) account except $5K.  That $5K is my foothold position in my 457.  Without it, I would not be able to transfer money from 403(b) to 457 if I want to do it in the future when the circumstances change (say, 457 Stable Value Fund earning higher interest than TIAA Trad).

Skipper wrote:  " I own some VNQ in a limited fashion but would never hold near the absolute dollar amount (or % of assets) that I held in TREA."  Exactly the same for me.  I stated this a number of times before.

0 Kudos
Highlighted
Participant ○

Re: Dry Powder from Sale of REA

As of Feb. 24, I no longer have a position in TREA, which used to be about 10% of my AA. 

My target AA is now 65% U.S. equities / 35% TIAA Traditional.

This post on the Bogleheads' forum seemed relevant to this discussion:

"TREA did what it was supposed to do: Outperform cash for the past few years while waiting for the market to tank while not tanking itself."

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=307502&start=50#p5257379

0 Kudos
Highlighted
Follower ○○○

Re: Dry Powder from Sale of REA

What is the name of the annuity account many of you are speaking of? TIAA Traditional?  What is it paying for a new investor right now?  Thanks for the help.

0 Kudos
Highlighted
Frequent Contributor

Re: Dry Powder from Sale of REA


@rac98g wrote:

What is the name of the annuity account many of you are speaking of? TIAA Traditional?  What is it paying for a new investor right now?  Thanks for the help.


There are several versions of TIAA Traditional within TIAA retirement accounts only,    https://community.morningstar.com/t5/forums/forumtopicprintpage/board-id/TIAA/message-id/6337/print-...

YBB
0 Kudos
Highlighted
Frequent Contributor

Re: Dry Powder from Sale of REA

Tell ya what, Oldzey. That sure looks like a retrospective view managed for the moment. 😁

Take care.

Bob

0 Kudos
Highlighted
Explorer ○○

Re: Dry Powder from Sale of REA

Trea is only suitable for long term investors.

0 Kudos
Highlighted
Follower ○○○

Re: Dry Powder from Sale of REA

This post on the Bogleheads' forum seemed relevant to this discussion:

"TREA did what it was supposed to do: Outperform cash for the past few years while waiting for the market to tank while not tanking itself."

 

Yes, Oldzey, relevant---and nifty. And an understatement: TREA outperformed short- and intermediate-term bond funds as well. TIAA  reported that as of 03/31/20, TREA's average annualized return was 5.0% for the past 5 years, 8.8% for the past 10. With negligible volatility.

0 Kudos
Highlighted
Participant ○○

Re: Dry Powder from Sale of REA


@rac98g wrote:

What is the name of the annuity account many of you are speaking of? TIAA Traditional?  What is it paying for a new investor right now?  Thanks for the help.


You mentioned TIAA Traditional.  This thread is on TIAA Real Estate Account (TREA).  They are not the same in case there is a wrong impression.

0 Kudos
Highlighted
Follower ○○○

Re: Dry Powder from Sale of REA

@Learner @yogibearbull Thank you, both!  I have been a long time owner of the Real Estate Account, but do not own other TIAA offerings.  I am interested to look a little more closely at their fixed products and possibly branch out some.

0 Kudos
Highlighted
Explorer ○○○

Re: Dry Powder from Sale of REA

Have not read entire thread yet but I see that you have both RA and IRA'a. Do you have TIAA brokerage access? I ask this because brokerage access provides a vastly larger number of options even if it is not very adequate like TIAA's Pershing offering.

Learner has touched on clarifying your investment strategy before the trip. I suggest also that you clarify "how" you get there. I suggest this because prior to the current disaster I had lots of cash because of sales and there was a too rich market and I was looking for "better" than MMF rates. I ventured into unfamiliar areas based on returns and that bit back pretty hard.

Right now there is an intelligent thread on M* Fidelity Investments that investigates and rationalizes a number of pretty safe places to put cash while waiting. See "Where to put cash". 

I discovered that I did not really have a "strategy" for buy/sells. I am NOT a trader. There are threads on M*, current and past, that caused me to consider "how" along with "what". I am considering, and you may wish to also, things like moving averages, MACD, PSAR, stock charts, Portfolio Visualizer Back Test to put more rigor into your decisions. I found that these are readily available on the Internet and my brokerage research. 

The 1st QTR 2020 has convinced me that I need to spend a lot more thought on "what" AND "how" or the results can be SERIOUS loses.  GOOD LUCK!!!   :-)))

PS: Oooops! Forgot to mention I am looking at how Pyramid Up or Down might fit into my strategy. I am also looking at putting areas like tech ETF's, low volatility stock ETF's and CEF MF's into "portfolios" for management as opposed to treating more like random investments.

0 Kudos
Highlighted
Explorer ○○○

Re: Dry Powder from Sale of REA

Several mention "foothold" positions in several things like TREA and account types. I also have mentally stored this tactic for MF's I own. At the brokerage I use T Rowe Price has been pretty hard to buy since they have closed them to new investors. In future sell situations I will consider leaving a small foothold in those I own to allow reentry and prevent being frozen out of good investments.

0 Kudos
Highlighted
Explorer ○○○

Re: Dry Powder from Sale of REA


@Learner wrote:

Bob wrote:  "By how much is TREA down since its high? By how much is TREA down compared to other segments of one's portfolio?"

You have a well-thought out and well-planned retirement investment strategy.  It has been working well for you since 2000 (?).  I have no doubt that your approach will not fail you.

I have a strategy too.  No bonds or bond funds, I use Trad instead.  A reasonable amount of cash. 

The remaining issues for me are my allocations to stock index mutual funds and TREA.  I handle them differently.  I have no idea, none at all, what the stock market will do at any point.  So I choose my allocation to stocks carefully and leave it alone.  To me, TREA is different.  At some points, its relative attractiveness compared to minimum 3% Trad changes.  When it seems more attractive than Trad, I go with TREA and stay with it for many years.  When it seems less attractive than Trad, I switch to Trad.  I find myself in such a position rarely, two ins since 1995 and two outs since 1995 including the March 2020 exit. 

No Einstein here, but this is my relativity theory.  :-)


Before TIAA changes to IRA guaranteed 3%  and no limits on REA investments, I ran my entire TIAA retirement accounts on this principal. It was a binary decision, one or the other. Then TREA returns disappeared and TIAA rules took over. Now I am back investing like when I was a younger man. Hmmmm.   :-(((

0 Kudos
Highlighted
Explorer ○○○

Re: Dry Powder from Sale of REA


@Learner wrote:

Rusty,

I'll try to give you an idea based on what they posted.  I am relying on my memory so this information is not reliable.

Sold TREA, at least partially, if not fully - Learner, yogi, juris, Skipper.  Wizard (?)  judger (?)    Esteban got out a long time ago.

Maintained TREA - Bob, John (jjustice)

Corrections are welcome.


Still selling TREA. At this moment considering selling half of remainder while keeping footholds all over. Since the 2nd QTR is near the end, I may sell more next QTR. I have to rethink RMD's, living expenses needed, taxes, Roth conversions before I reduce TREA to a pittance.

PS: Oops! Did a  REA trade on 1st days of this QTR. More moves need to wait until new QTR on 7/1/20.

0 Kudos
Announcements

Morningstar is here to help you respond to the Coronavirus crisis.