Tip #4: Diversify.
As much as I love REITs, it's important to own stocks from different sectors in order to limit exposure to one particular industry. Diversification is probably even more important to a dividend investor.
Given the more recent declines in REIT values, I have modified my target REIT allocation from 10% to 15%. Note: that does not include mortgage REITs, as I consider the volatility to be dangerous. I only recommend mortgage REITs for experienced REIT investors.
How much diversification should one have? It depends on your individual risk tolerance. I generally recommend 65% of assets in equity and 35% in bonds and cash.
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