My withdrawal plan. Is this right?

[HI Bill]

Quote:

Originally Posted by Texas Proud A cap gain is selling stock... it reduces the amount of stock you have... it is NOT yield...

There are two types of capital gain, realized and unrealized. Vanguard shows short term capital gains and losses, and long-term capital gains and losses for each investment. These are not REALIZED until you sell the investment. Looking at these helps you determine both the gains (including dividends if reinvested), and the potential tax liability (what % of the investment are made up of LTCG and STCG?).

Example: I have a total cost of $440K. Current market value is $615K. STCG are -$4K, and LTCG are +$179K. If I were to sell all today, I would pay taxes on the difference between the market value and the total cost. In this case, ~$175K out of $615K would be realized (mostly) LTCG, so about 28% of the investment would be subject to LTCG taxes. If my adjusted gross income isn't above $488,450, then this would put the LTCG in the 15% tax bracket, and I'd pay $26,250 in LTCG taxes.

[audreyh1]

Quote:

Originally Posted by 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....)

Yes, the total return includes everything.

You can compare total returns between two funds over any time period, and IMO that is the only way to compare funds, although comparing the total return of funds that own drastically different assets like VFINX, 100% stock in S&P500, and VWINX, an income oriented balanced fund owning ~40% equities, makes little sense.

Since I don’t care about yield myself, and don’t invest for yield, I can’t tell you whether paying attention to TTM Yield is useful or not. It I may be useful to someone (known as an income investor) seeking to only live off the yield of their portfolio.

[Shabby]

Quote:

Originally Posted by audreyh1 You can compare total returns between two funds over any time period, and IMO that is the only way to compare funds, although comparing the total return of funds that own drastically different assets like VFINX 100%stock in S&P500 and VWINX an income oriented balanced fund owning 40% equities makes little sense. Not sure what you are referring to: trailing total return.

Yeah, I picked those two funds randomly, not to really compare.
The "Trailing Total Returns" is shown on the Morningstar performance page for the funds. So as an example what website and figure would you use to compare VFINX and VWINX? Where do I get your "Total Returns" number?

[Huston55]

Quote:

Originally Posted by pb4uski There is no one right way. I do something similar to what you plan to do... my retirement portfolio cash is the middleman between the checking account that I use to pay my bills and the rest of my retirement portfolio and dividends are taken in cash... those dividends and annual rebalancing replenish cash.

OP-

Lots of good responses thus far. I use the same technique as PB4 (above) but, my AA (60/35/5-ish) is more aggressive than yours. I also view my “cash” as buckets which are now enough to carry me until SS. Because my AA is more aggressive, I keep enough in “cash-ish” (includes ST bond fund) to cover expenses for the vast majority of bear markets (~4yrs) to avoid having to sell equities. Given that you’re ~30/70 AA (VWINX), you can get by with less cash than me. Also, based on your posts, you seem to have enough VWINX to cover almost 30 yrs of expenses plus, you have SS coming in 11 yrs. So, from an expenses standpoint, I think you’re covered. My only suggestion is to keep more cash in MM to get the interest (many ways to do this). You should also do some tax planning to minimize the tax bite.

Well done!

[audreyh1]

Quote:

Originally Posted by Shabby Yeah, I picked those two funds randomly, not to really compare. The "Trailing Total Returns" is shown on the Morningstar performance page for the funds. So as an example what website and figure would you use to compare VFINX and VWINX? Where do I get your "Total Returns" number?

I see now that Morningstar uses that language on their performance page. Just hadn’t noticed before.

I just usually see the term Total Return. And yes they apply to a time period - past 1, 3, 5, years and so on.

P.S. I had already modified my reply and added a bit.

[Shabby]

Quote:

Originally Posted by Huston55 My only suggestion is to keep more cash in MM to get the % (many ways to do this).

Yes, I am going to take that advice and keep more in the MM instead of Cash to get the returns. I can use another MM that gets less return but I don't need to sell it and wait a day to clear the trade. Merrill Lynch made all this really annoying in Jan when they stopped paying good returns on the normal MM accounts. Now we need to execute a trade to buy into the MM that earns 2.5%.

[Shabby]

Quote:

Originally Posted by audreyh1 I just usually see the term Total Return. And yes they apply to a time period - past 1, 3, 5, years and so on.

What website are you normally using to look at that data?

[24601NoMore]

Quote:

Originally Posted by Shabby Yeah, I picked those two funds randomly, not to really compare. The "Trailing Total Returns" is shown on the Morningstar performance page for the funds. So as an example what website and figure would you use to compare VFINX and VWINX? Where do I get your "Total Returns" number?

If you want to compare two funds (not that comparing VWINX to VFINX makes sense as others have noted), go to the M* Performance page for a fund and click "Compare" to the far right of the chart. Enter the second ticker symbol (or third..fourth..etc). Will update the performance numbers as well as the chart, and show +/- for each additional ticker compared to your original fund. Even better, look at the "Expanded View" to go back year by year for the past 10 years.

Here's the performance page for VWINX. You'll need to enter the other tickers and expand the view to see 10 years..

http://performance.morningstar.com/f...&culture=en_US

ETA - note the term "Total Returns" at the top, above the graph. The return %s listed are "everything" - NAV change plus distributions, (LT & ST Cap Gains, Dividends, etc).

[audreyh1]

Quote:

Originally Posted by Shabby What website are you normally using to look at that data?

Morningstar is probably the most reliable source for total return performance data over many time periods and across multiple fund families.

[Texas Proud]

Quote:

Originally Posted by HNL Bill There are two types of capital gain, realized and unrealized. Vanguard shows short term capital gains and losses, and long-term capital gains and losses for each investment. These are not REALIZED until you sell the investment. Looking at these helps you determine both the gains (including dividends if reinvested), and the potential tax liability (what % of the investment are made up of LTCG and STCG?). Example: I have a total cost of $440K. Current market value is $615K. STCG are -$4K, and LTCG are +$179K. If I were to sell all today, I would pay taxes on the difference between the market value and the total cost. In this case, ~$175K out of $615K would be realized (mostly) LTCG, so about 28% of the investment would be subject to LTCG taxes. If my adjusted gross income isn't above $488,450, then this would put the LTCG in the 15% tax bracket, and I'd pay $26,250 in LTCG taxes.

I know... I was trying to give a simple example for the OP to understand... he said he now understands the difference...


Seems you did not get what I was trying to put down....

[Huston55]

Quote:

Originally Posted by Shabby Yes, I am going to take that advice and keep more in the MM instead of Cash to get the returns. I can use another MM that gets less return but I don't need to sell it and wait a day to clear the trade. Merrill Lynch made all this really annoying in Jan when they stopped paying good returns on the normal MM accounts. Now we need to execute a trade to buy into the MM that earns 2.5%.

Lots of guidance on that in this thread.

http://www.early-retirement.org/foru...ive-93051.html

[FANOFJESUS]

Wellesley pays out so much money do you need any cash?

[rayvt]

"Cash and MM aren't the same to me."

But they are the same. It's just that one pays more interest than the other.

"So my thought was put the years $$ in the bank account and watch it go down to 0. Then Dec 31st I pull another years worth from the 2.55% MM into the bank."

Yes, and then? Do you then replenish the MM account? From where? From stocks (Wellesley), right?

So your withdrawals are really from Wellesley, just with a 1 year detour through checking account and 2 year detour through MM.


Like many of the other commenters, I see no need to keep much of a balance in a 0% checking account. Keep your cash in a MM account and transfer the money you need each month from the MM to the checking.

[Dtail]

Quote:

Originally Posted by rayvt "Cash and MM aren't the same to me." But they are the same. It's just that one pays more interest than the other. "So my thought was put the years $$ in the bank account and watch it go down to 0. Then Dec 31st I pull another years worth from the 2.55% MM into the bank." Yes, and then? Do you then replenish the MM account? From where? From stocks (Wellesley), right? So your withdrawals are really from Wellesley, just with a 1 year detour through checking account and 2 year detour through MM. Like many of the other commenters, I see no need to keep much of a balance in a 0% checking account. Keep your cash in a MM account and transfer the money you need each month from the MM to the checking.

+1

[cbslc]

I have a similar strategy with my cash assets that I will use until my qualified accounts can be accessed. But, I am using CD laddering with my cash mix.
So 2 months cash in checking/savings (1.2%), 6 months in high yield MM (2.1% with 6 monthly withdrawals), then I have a mix of CD's with laddered dates of maturity ranging from 18 months (2.5-3%) to 5 yr (2.9-3.45%).
But this is only 1/3 of my assets and only needs to get me to 59.5 (from 47 assuming I can actually make the leap this yr). The rest is in a pretty diverse set of funds from municipal bonds (utahy, to international funds). Then a hefty dose in a liquid annuity from Tiaa Cref that I use to escape market bubbles when I see them.
I'd recommend you look at some higher yielding cash methods. And definitely seek out high yield MM accounts that can be easily transferred to your more liquid savings acct.