Join Early Retirement Today
Reply
 
Thread Tools Display Modes
50% Wellesley/50 % Wellington - So Simple Why didn't I do it?
Old 07-22-2008, 08:58 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 2,525
50% Wellesley/50 % Wellington - So Simple Why didn't I do it?

I started investing in mutual funds in 1987 and quickly acquired a large stable of pick of the month mutual funds that eventually worked its way up to about 35 funds which periodically rotated with more pick of the month choices ( from the various monthly financial publications), . Even with this large number (I guess actually a closet index fund with God knows what bias but certainly much higher costs than index funds) I actually managed to ER on my investments only in January of 2003 which I tought at the time was really not bad after 16 years of investing and directing about 15 % of my income to the mutual funds.

Imagine my surprise when I actually ran what if numbers on what it would have been if I'd only bought 50% Welleslley/50 Wellington and nothing else:

1/1/03 to today (per quicken) my basket 9.4% Wellsi/Welltn 8.1%

1/1/00 to today - my basket 2.3 % Wellsi/Welltn 7.2%

1/1/88 to today my basket 8.2 % Wellsi/Welltn 10%

Jeez! I could have gone fishin instead of putting all that time into reading all those books and financial publications and slicing and dicing!
ejman is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-22-2008, 09:13 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Mar 2004
Posts: 1,318
Yep.
You've had your first enlightenment moment on the path to being a craven asset allocatin' slicer dicer.

I spent a whole lot of years losing a lot of sleep, brokerage commissions, self-esteem (the 50% or so of the time I got it wrong) as well as money before I reached investing Nirvanah...

In fairness I'm not a Wellesley-Wellington-only person, but I own both funds and put together something that acts about the same only is more complicated. Just goes to show, getting yourself to investing simplicity is really hard!
__________________
ER for 10 years; living off 4.3% of savings (and a few book royalties ;-)
ESRBob is offline   Reply With Quote
Old 07-22-2008, 09:15 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 2,020
Quote:
Originally Posted by ESRBob View Post
In fairness I'm not a Wellesley-Wellington-only person, but I own both funds and put together something that acts about the same only is more complicated. Just goes to show, getting yourself to investing simplicity is really hard!
Boy, that chapter would have been short!
Marquette is offline   Reply With Quote
Old 07-23-2008, 12:07 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
Getting yourself to invest simply is really hard! - LOL! That's a GREAT line!

A couple of years ago I wished I had just thrown all my money into DODBX in the first place because I hadn't been able to beat it as a benchmark for many, many years.

And though I seriously considered switching to all DODBX two years ago, the tax hit was too great to overcome. So I stayed put.

Now I'm glad I didn't - because I would have been switched right at the inflection point! For the last two years my more diversified asset allocation portfolio has soundly beaten DODBX - especially this year!

So, simpler is better, but maybe sticking to your plan once you have it in place is good too.

Audrey
audreyh1 is offline   Reply With Quote
Old 07-23-2008, 06:51 AM   #5
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,000
Quote:
Originally Posted by audreyh1 View Post
So, simpler is better, but maybe sticking to your plan once you have it in place is good too.
Best of all is being lucky.

I've been in DODBX for 15 years, gradually ramping up my allocation until it reached 50% when I retired 3 years ago. It was a solid, consistent performer for me but I cut back to 20% when I rolled over my 401k, seeking a little more diversification. Sure glad I did.
__________________
Numbers is hard
REWahoo is offline   Reply With Quote
Old 07-23-2008, 07:09 AM   #6
Full time employment: Posting here.
CitricAcid's Avatar
 
Join Date: May 2008
Posts: 546
Quote:
Originally Posted by REWahoo View Post
Best of all is being lucky.

I've been in DODBX for 15 years, gradually ramping up my allocation until it reached 50% when I retired 3 years ago. It was a solid, consistent performer for me but I cut back to 20% when I rolled over my 401k, seeking a little more diversification. Sure glad I did.
Market timing sucks when it hurts you.

But it is absolutely awesome when it helps you.
CitricAcid is offline   Reply With Quote
Old 07-23-2008, 08:43 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Jul 2007
Location: St. Louis
Posts: 1,563
Quote:
Originally Posted by ejman View Post
I started investing in mutual funds in 1987 and quickly acquired a large stable of pick of the month mutual funds that eventually worked its way up to about 35 funds which periodically rotated with more pick of the month choices ( from the various monthly financial publications), . Even with this large number (I guess actually a closet index fund with God knows what bias but certainly much higher costs than index funds) I actually managed to ER on my investments only in January of 2003 which I tought at the time was really not bad after 16 years of investing and directing about 15 % of my income to the mutual funds.

Imagine my surprise when I actually ran what if numbers on what it would have been if I'd only bought 50% Welleslley/50 Wellington and nothing else:

1/1/03 to today (per quicken) my basket 9.4% Wellsi/Welltn 8.1%

1/1/00 to today - my basket 2.3 % Wellsi/Welltn 7.2%

1/1/88 to today my basket 8.2 % Wellsi/Welltn 10%

Jeez! I could have gone fishin instead of putting all that time into reading all those books and financial publications and slicing and dicing!

What you say is true but keep in mind that during that time bonds did well. I think we are going into a new time when bonds may not do so well. I would only go into short term bonds at this point.
FANOFJESUS is offline   Reply With Quote
Old 07-23-2008, 09:15 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 35,712
Quote:
Originally Posted by ejman View Post
1/1/88 to today my basket 8.2%.
It could have been a lot worse. Not all mutual funds do that well. I remember a financial article where its author half-jokingly wrote

"I invest in mutual funds. Lots of them. This is how they work. When the market goes down, they go down a lot. When the market goes up, they go down a little."
NW-Bound is offline   Reply With Quote
Old 07-23-2008, 09:21 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 35,712
Quote:
Originally Posted by REWahoo View Post
Best of all is being lucky.

I've been in DODBX for 15 years, gradually ramping up my allocation until it reached 50% when I retired 3 years ago. It was a solid, consistent performer for me but I cut back to 20% when I rolled over my 401k, seeking a little more diversification. Sure glad I did.
I got some other old-fashioned value oriented MFs. They went down just like DODBX. Guess what? All these managers got lured in by dividends from financials.

So, what did you diversify to, if you care to share?
NW-Bound is offline   Reply With Quote
Old 07-23-2008, 09:25 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 2,525
Quote:
Originally Posted by rec7 View Post
What you say is true but keep in mind that during that time bonds did well. I think we are going into a new time when bonds may not do so well. I would only go into short term bonds at this point.
Well yes, capital appreciation from the bond portion of Wellsi/Welltn would be hit as rates go up. But now that I'm retired, wouldn't the bond portion of Wellsi/Welltn result in greater income to me?

I've read I should be looking at total return but in practice I live off the declared dividends and CG of my funds and do not actually sell any shares. Although there is some year to year fluctuation I find I can live with that - going on 6 years now.
ejman is offline   Reply With Quote
Old 07-23-2008, 11:30 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
Quote:
Originally Posted by REWahoo View Post
Best of all is being lucky.

I've been in DODBX for 15 years, gradually ramping up my allocation until it reached 50% when I retired 3 years ago. It was a solid, consistent performer for me but I cut back to 20% when I rolled over my 401k, seeking a little more diversification. Sure glad I did.
WOW! Talk about LUCKY!

That's what always struck me about DODBX - it's not that diversified. So it sure bamboozled me that from 2000-2006 it beat my much more diversified asset allocation. Finally, 2007-2008 shows that the broader diversification does indeed pay off over the long run.

Definitely lucky is the best. I wouldn't be RE if it weren't for some really good luck.

Audrey
audreyh1 is offline   Reply With Quote
Old 07-23-2008, 11:37 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 35,712
Quote:
Originally Posted by audreyh1 View Post
Definitely lucky is the best. I wouldn't be RE if it weren't for some really good luck.

Audrey
Yes. That's why during years when I did well, I tried hard not to gloat. I believe in this principle, which I call the "Conservation of Luck".
NW-Bound is offline   Reply With Quote
Old 07-23-2008, 11:44 AM   #13
Full time employment: Posting here.
CitricAcid's Avatar
 
Join Date: May 2008
Posts: 546
Quote:
Originally Posted by NW-Bound View Post
Yes. That's why during years when I did well, I tried hard not to gloat. I believe in this principle, which I call the "Conservation of Luck".
I always have believed in this and swore by it, but I usually use it in reference to sports (mostly baseball). Oh, he is tearing the cover off the ball right now, but over the long haul of the season most of the luck balances out.
CitricAcid is offline   Reply With Quote
Old 07-23-2008, 01:54 PM   #14
Thinks s/he gets paid by the post
 
Join Date: Jul 2007
Location: St. Louis
Posts: 1,563
Quote:
Originally Posted by ejman View Post
Well yes, capital appreciation from the bond portion of Wellsi/Welltn would be hit as rates go up. But now that I'm retired, wouldn't the bond portion of Wellsi/Welltn result in greater income to me?

I've read I should be looking at total return but in practice I live off the declared dividends and CG of my funds and do not actually sell any shares. Although there is some year to year fluctuation I find I can live with that - going on 6 years now.
That's true, sounds like you have a great plan. What percent of the total investment to they kick off each year? I know the yield is around 3.5% but with the capital gains and everything I am guessing at least 6%. If you take all the money they kick off.
FANOFJESUS is offline   Reply With Quote
Old 07-23-2008, 02:40 PM   #15
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 2,525
Quote:
Originally Posted by rec7 View Post
That's true, sounds like you have a great plan. What percent of the total investment to they kick off each year? I know the yield is around 3.5% but with the capital gains and everything I am guessing at least 6%. If you take all the money they kick off.
Last year it was 5.2% - with my particular AE of about 55% stocks 25% bonds 20% short term reserves
ejman is offline   Reply With Quote
Old 07-23-2008, 05:22 PM   #16
Thinks s/he gets paid by the post
 
Join Date: Jul 2007
Location: St. Louis
Posts: 1,563
Quote:
Originally Posted by ejman View Post
Last year it was 5.2% - with my particular AE of about 55% stocks 25% bonds 20% short term reserves
I should have made my question more detailed. I was thinking just about the Wellesley-Wellington only. But I guess that too would be 5 to 6% for everything. But other than that 20% short term reserves you have about a Wellesley-Wellington mix with those numbers.

Thanks
FANOFJESUS is offline   Reply With Quote
Old 07-23-2008, 07:53 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 10,252
Balanced funds are particularly tax inefficient, so they should not be held in a taxable account. But I don't have to tell folks who own DODBX, Wellesley and Wellington in a taxable account: they should be able see how their returns are diminished significantly by the taxes the pay.
LOL! is offline   Reply With Quote
Old 07-23-2008, 09:15 PM   #18
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 2,525
Quote:
Originally Posted by LOL! View Post
Balanced funds are particularly tax inefficient, so they should not be held in a taxable account. But I don't have to tell folks who own DODBX, Wellesley and Wellington in a taxable account: they should be able see how their returns are diminished significantly by the taxes the pay.
That's true if you are in the accumulation phase. Since I'm retired, I actually use the dividends and CG's to live on and true am taxed on these but I haven't quite figured out how to totally eliminate taxes other than the ultimate solution and 6 ft under sounds a mite drastic as a tax avoidance option....
ejman is offline   Reply With Quote
Old 07-23-2008, 09:22 PM   #19
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 2,525
Quote:
Originally Posted by rec7 View Post
I should have made my question more detailed. I was thinking just about the Wellesley-Wellington only. But I guess that too would be 5 to 6% for everything. But other than that 20% short term reserves you have about a Wellesley-Wellington mix with those numbers.

Thanks
Sorry, you are right Wellsi/Welltn only dividends and CG distributions was 6.7% last year for my accounts. My short term reserves drags down the return but I sleep very soundly so good trade off for me
ejman is offline   Reply With Quote
Old 07-23-2008, 11:00 PM   #20
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,000
Quote:
Originally Posted by NW-Bound View Post
So, what did you diversify to, if you care to share?
Nothing exotic - most was moved to Wellesley but I also bought more DODFX to bring international up to 15% of my total.
__________________
Numbers is hard
REWahoo is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
VG Wellington Down $1.53? AlmostDone FIRE and Money 11 12-27-2006 09:57 AM
A Basic VG Wellington Question setab FIRE and Money 12 12-07-2006 08:44 PM
Wellington (Fidelity/TR Price) ferco FIRE and Money 5 09-06-2006 12:33 PM
Wellington and Wellsley Tim Bates FIRE and Money 26 03-17-2006 11:49 PM
Wellington & Wellesley ats5g FIRE and Money 9 12-05-2005 03:38 PM

» Quick Links

 
All times are GMT -6. The time now is 01:32 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.