My withdrawal plan. Is this right?

[pb4uski]

Quote:

Originally Posted by Shabby OK, so I think I need some education on this and have needed it for a long time. Mutual funds kick off dividends and LT and ST Cap gains. All these aren't included in "Yield" numbers Why? I want to be able to compare funds and it doesn't matter to me what the $$ is called that kicks off (I know it's taxed different, blah blah).

No, only regular dividends are included in the yield numbers... ST and LT CG distributions are excluded.

The 3.57% yield on the VWINX overview page is roughly the 12/17/18 0.235 dividend distribution times 4 divided by the 9/20/2018 reinvest price of $26.58.

The reason that CG distributions are not included is because they can vary wildly........ 2018:$1.0408.... 2017:$0.309.... 2016:$0.2686

[SecondCor521]

I'm surprised nobody's brought this up (as far as I noticed, anyway), but OP didn't say how many years s/he has in Wellesley. At age 51 and on the conservative side with conservative investments, you'd probably want about 30 years' expenses or so.

If OP has 40 years of expenses in Wellesley, I'd say s/he is fine. If OP has 10 years of expenses there, I'd be worried.

[VungTau]

Quote:

Originally Posted by 24601NoMore I'd recommend you keep minimum $$ in the zero percent checking and do regular (ie: monthly) transfers from your MM. You're giving up 2.55% annually of every $ that's in checking vs. the MM. Let's say your yearly expenses are $50K, so you're keeping that in checking. That's $1,275 in lost/opportunity cost income you're passing up.

My bank gives me 2.1% interest in a savings account, full access to the funds albeit with a limit of 6 transactions per month - for me, more than enough to fully manage my money.

Don't waste your money in a 0% interest account!

[jollystomper]

Quote:

Originally Posted by 24601NoMore I'd recommend you keep minimum $$ in the zero percent checking and do regular (ie: monthly) transfers from your MM. You're giving up 2.55% annually of every $ that's in checking vs. the MM. Let's say your yearly expenses are $50K, so you're keeping that in checking. That's $1,275 in lost/opportunity cost income you're passing up.

+1

I keep barely a month of expenses my checking account, and only move it there from a high yield savings account (which currently pays 2.2%, you can do better) at the end of the preceding month.

[Dtail]

Quote:

Originally Posted by jollystomper +1 I keep barely a month of expenses my checking account, and only move it there from a high yield savings account (which currently pays 2.2%, you can do better) at the end of the preceding month.

+2

[DrRoy]

I keep my current year's cash in a MM. Why lose the interest?

[Shabby]

Quote:

Originally Posted by 24601NoMore Note that neither # includes LT or ST Cap gains. .

Thank you so much for breaking this down. I have wondered about this for about 20 years. So charts on funds are useless? I want real growth of my $10k.

I understand that the NAV goes down, but there isn't a site or stat that gives the real world yield for a fund? This seems crazy.

[24601NoMore]

Quote:

Originally Posted by Shabby Thank you so much for breaking this down. I have wondered about this for about 20 years. So charts on funds are useless? I want real growth of my $10k. I understand that the NAV goes down, but there isn't a site or stat that gives the real world yield for a fund? This seems crazy.

Not sure I follow..real world yield is shown on the M* page for a fund (among many other places). For example, see the link I posted yesterday to the M* VWINX page and look at TTM and 30-day yield #s..that's the "real world yield" for those time periods.

Charts on a fund show total return, including NAV changes (eg: increases or decreases in underlying assets including equities, bonds, etc) and distributions (LT gains, ST gains and dividends). So, the M* chart for VWINX (as well as the YTD, 1-year, 3-year, 5-year and 10-year) averages show "total" return including NAV changes, LT + ST cap gains and dividends.

[GravitySucks]

Quote:

Originally Posted by 24601NoMore I'd recommend you keep minimum $$ in the zero percent checking and do regular (ie: monthly) transfers from your MM. You're giving up 2.55% annually of every $ that's in checking vs. the MM. Let's say your yearly expenses are $50K, so you're keeping that in checking. That's $1,275 in lost/opportunity cost income you're passing up.

+1
Though I like to make my life a little more complicated, so I keep enough to get to the next bond ladder redemption in FIDO MM, then I move a quarters expenses worth to the CU MM which pays less, then a month's expenses worth to no interest CU checking.
Unless I'm traveling. Then I put enough in checking to cover how long I'm gone plus a bit.

[Shabby]

Quote:

Originally Posted by 24601NoMore Not sure I follow..real world yield is shown on the M* page for a fund (among many other places). For example, see the link I posted yesterday to the M* VWINX page and look at TTM and 30-day yield #s..that's the "real world yield" for those time periods.

So TTM includes the Cap Gain payments you get?

[audreyh1]

Quote:

Originally Posted by Shabby So TTM includes the Cap Gain payments you get?

No.

[Shabby]

Quote:

Originally Posted by audreyh1 No.

And what is the theory why I shouldn't be concerned about that? It doesn't need to be included because the NAV drops the same amount?
Thanks for helping me understand this. It has plagued me for years.
I look at Wells payouts for 2018 and think. Geesh, the LT Gains were so much that I would want it included.
Q1 $0.17
Q2 $0.20
Q3 $0.20
Q4 $0.24
LT $1.04

[24601NoMore]

Is your Wellesley holding in tax deferred (IRA, 401K, etc) or taxable?

Simplifying all this..if you're interested in "yield", just look at the Dividend Income column and ignore the LT and ST Cap Gain columns (plus Return of Capital, which is rare).

ETA - I believe you mentioned your "dividends" are > than your annual spend. Assuming you were not including LT and/or ST Cap gains in that number, then all is good. Just pull out the dividend amount quarterly and reinvest the LT and ST cap gains. That will in most cases give you some growth, as Wellesley tends to return more than "just" it's dividends yearly (though last year, total return of -2.57% on VWINX was less than dividends [plus cap gains] paid out).

[Shabby]

Quote:

Originally Posted by 24601NoMore Is your Wellesley holding in tax deferred (IRA, 401K, etc) or taxable?

It is taxable. My thoughts were the tax consequences wouldn't be much because I get $51k in dividends and $12k in std deduction.

[Bir48die]

Quote:

Originally Posted by 24601NoMore I'd recommend you keep minimum $$ in the zero percent checking and do regular (ie: monthly) transfers from your MM. You're giving up 2.55% annually of every $ that's in checking vs. the MM. Let's say your yearly expenses are $50K, so you're keeping that in checking. That's $1,275 in lost/opportunity cost income you're passing up.

Yes if you keep all $50k in for the full year. However chances are your average will be $25k so cut that number in half. Still better than zero

[24601NoMore]

Quote:

Originally Posted by Shabby It is taxable. My thoughts were the tax consequences wouldn't be much because I get $51k in dividends and $12k in std deduction.

If you're at 51K in dividends with most of that coming from Wellesley, that'd imply you have a pretty heft sum in that one fund. You might want to consider a little more diversification..

BTW, does that $51K include dividends + LT and ST cap gains? Assume so based on the earlier posts.

[audreyh1]

Quote:

Originally Posted by Shabby And what is the theory why I shouldn't be concerned about that? It doesn't need to be included because the NAV drops the same amount? Thanks for helping me understand this. It has plagued me for years. I look at Wells payouts for 2018 and think. Geesh, the LT Gains were so much that I would want it included. Q1 $0.17 Q2 $0.20 Q3 $0.20 Q4 $0.24 LT $1.04

You asked about yield. TTM (trailing twelve month) is actually referring to the TTM Yield, the yield over the past 12 months so no, it does not include cap gains.

The NAV increases as dividends are received, so of course it drops when dividend distributions are paid out.

Capital gains also accumulate in the fund. The NAV of the fund usually rises over time reflecting capital appreciation, and eventually some of that is realized capital gains, so of course the NAV of the fund drops when capital gains distributions are paid out. If someone is only taking the yield (i.e. dividend distributions) from the fund, then they will reinvest those capital gains distributions back into the fund, otherwise you are dipping into the "principal" as well.

Some of us don't pay any attention to where the gains come from in a fund, whether from dividends or from capital appreciation. We just look at the total return and take some fixed % from the fund regardless.

[Texas Proud]

Quote:

Originally Posted by Shabby And what is the theory why I shouldn't be concerned about that? It doesn't need to be included because the NAV drops the same amount? Thanks for helping me understand this. It has plagued me for years. I look at Wells payouts for 2018 and think. Geesh, the LT Gains were so much that I would want it included. Q1 $0.17 Q2 $0.20 Q3 $0.20 Q4 $0.24 LT $1.04

Think of this as a individual stock... you got dividends from the stock for the Qs... then at year end you sold enough stock to get the last $1.04.... would you include that in your yield?


A cap gain is selling stock... it reduces the amount of stock you have... it is NOT yield...

[Shabby]

To if I am trying to compare 2 funds, say VWINX and VFINX and I look at M*. Do I go to "Trailing Total Returns" on each for the 3YR and look at 6.08% vs. 13.53% and that has all the gains I get (Share price, dividends, ST & LT CG)? Better than TTM Yield right?

(Please no flaming about past performance not being a blah, blah....)

[Shabby]

Quote:

Originally Posted by Texas Proud This of this as a individual stock... you got dividends from the stock for the Qs... then at year end you sold enough stock to get the last $1.04.... would you include that in your yield? A cap gain is selling stock... it reduces the amount of stock you have... it is NOT yield...

OMG, thanks! I get it! That really helps.