Which bucket does a REIT sleeve go in when you set your allocation?

I split mine, half and half, and I picked that because I couldn't defend either extreme. It's an admission of uncertainty dressed up as a policy. Works fine so far and I have no argument for why 50/50 rather than 70/30.

Reading this and realizing I don't have buckets at all, I have a brokerage account and a list of things I want. Following.

If it can drop 20 percent in a quarter and your building can't, they don't belong on the same line. That's how I'd think about it on a jobsite and I don't see why paper is different.

The two framings are answering different questions, which is why they both sound correct.

A REIT is a company that owns income-producing property and is required to pay out most of its taxable income to shareholders as dividends. That's where the high yields come from. Because its shares trade on an exchange all day, the price is set by whoever is buying and selling at that moment. Your rental gets appraised occasionally and otherwise just sits there at whatever number you last wrote down.

So over a week or a quarter, a REIT tends to move with the stock market and with interest rates. Over a long stretch, returns are driven much more by the rents and values of the buildings the REIT owns. Each of those statements holds on its own timescale, and each one is only part of the picture.

What that means for your bucket question depends on what your allocation limit is protecting you from. If the limit exists to control how far the portfolio can fall in a bad quarter, then short-run behavior is the relevant thing and treating the sleeve as equity is a coherent choice. If the limit exists to stop you being over-concentrated in one asset class over a decade, then it's real estate exposure and should count as such.

Write down which of those two things your limit is for. The bucket answers itself after that.

Land and a REIT sleeve have essentially nothing in common in my experience except the word real estate, so I've never been tempted to put them in one bucket. My acreage has no price until someone makes an offer. That absence of a daily quote is a feature I'm paying for.

Own bucket, own limit, own rules for when you add. Stops the labeling argument entirely.

Following the answer from rena-guide, what's the actual limit supposed to be for a beginner? I understand the reasoning now, I just don't know whether the number I write next to the bucket should come from anywhere other than my own guess.