I am a real estate broker and investor who's been investing since 1999 when I bought my first property at 19. I have always had 80-90% of my total net worth invested in real estate and the rest liquid as a cash reserve besides maxing out my IRA, SEP IRA or Solo 401k for tax purposes. I've been reading a lot more the past few years, and I've gotten really into all of the books, podcast, and blogs in the FinCon community. I have come to believe I should have a substantial portion of my net worth invested in a Schwab Total Stock Market Index Fund (SWTSX) or Vanguard Total Stock Market Index Fund (VTSAX). My questions is, what % of a real estate investor's net worth should be in index funds and bonds, and what % in real estate? I'm considering 1. selling a property to diversify versus just 2. not buying any more real estate and investing only in Index Funds and Bonds until I get to the asset allocation of 50% real estate 50% equities and bonds, however, because of my substantial equity in R.E. it could take 10-20 years to get to 50-50 without selling a property even if I'm investing 50% of my net income. What does the community think about this?

@Rob Brown Your asset allocation should be determined by your personal financial situation. You can sit down with a fee-only planner to chalk out an asset allocation strategy. You can then diversify to get the "right" mix asset allocation mix. 

You might have to have a certain portion of your assets in a specific asset-class because of the nature of your business. 

E.g. I am a syndicator which means that I need to have liquid cash and a significant portion of my net worth tied into my real estate projects. The proper asset allocation strategy for me would not work at this stage. But that is a peculiarity of the business that I am. 

Both the Vanguard and the Schwab indices are great!

Hi Rob,

For me, my asset allocation looks like this.  65% of my total assets in real estate. In that total 80% in SFRs multi-units, I own.  The remaining 20% is with a syndicator for large multi-family properties.  The reaming 35% of the total I have 25% in stocks which I have in SP 500 index and QQQ. Both are short-term positions as I am a trader of those instruments. The remaining 10% I have in cash sitting in an online savings account.   Real estate % can go up when I see a deal that I like.  This is what works for me.

I second @Omar Khan 's advice. Go pay someone who can take a holistic look at your goals and skill set to help you develop a plan for you to reach them. If possible find someone who has worked with RE Brokers before and understands the nuisances of the industry. 

Applying other's asset allocation to your life is like trying to take an award winning chili recipe and make tacos. Sure, it makes the best chili, but how much work will you have to do in order to produce even mediocre tacos?

Originally posted by @Bill F. . 

Applying other's asset allocation to your life is like trying to take an award winning chili recipe and make tacos. Sure, it makes the best chili, but how much work will you have to do in order to produce even mediocre tacos?

Love the awesome chilli or mediocre tacos analogy, Bill.  I may even go one further and compare a fine motor mechanic to becoming a carpenter or rehabber.  They both fix things,  but why change specialties?

I used to be 100% paper equities and was a series 7 licensed stockbroker. I never liquidated my retirement funds but am now 94% RE, 6% mutual funds and stocks.  My specialty is RE. I am sticking with the one that brought me.

I have financial/wealth advisor friends that say 'If you ever sell, let me know. Be happy to manage your portfolio.' They know nothing about RE. 90+% won't, so don't expect an unbiased opinion on your asset allocation.  They make no fees or commissions from RE acquisition or debt paydown.

"Put all your eggs in one basket, then watch that basket." Andrew Carnegie    Do what you know and can control.

@Steve Vaughan That is a much better analogy! I missed breakfast this morning and have food on my mind. 

The issue you brought up about wealth advisors who have an incentive to sell you a products is a large one and that's why I believe Omar suggested a fee based one whose incentives are more aligned with their customers. 

Your path illustrates a great point. You educated yourself about different asset classes, found what best suited your knowledge, skills, and abilities, and proceeded to have success. Your asset allocation didn't cause you to have success, it is simply a by product of the process of being successful.