Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 07-15-2008, 06:36 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,409
You are not missing anything. My nephew fresh out of Annapolis headed for flight school( thus starting TSP) in contrast to my Sis actually listened to my advice(BS depending on who you ask) - gave him Bogle's first Book circa 1994 - 'don't read books' but read this book and max TSP in 500 Index equivalent. Check back in twenty years. And no I didn't see the coming irrational exuberance. He did crack after about 10 yrs listening to fellow officers he slipped and read Four Pillars. He promised to only screw up going forward ( actually I like a lot of Bernstein).

Today I would say pick the lifecycle fund for your age (aka Target) and do your day job - they put in enough bells and whisles to make you think it's complicated. It is not.

heh heh heh - 1966 - 1982 flat I look back as my 'true grit' period - actually I made every stupid move in the investment book except perhaps commodities. Hence I work on grumpy and opinionated - WITH a Curmudgeon Certificate..
__________________

__________________
unclemick 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 07-15-2008, 06:46 PM   #22
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
Quote:
Originally Posted by Midpack View Post
I don't have any room whatsoever in my tax deferred accounts for Wellesley so my only option is in my taxable account. I am in a higher tax bracket, so I don't want income from my taxable holdings now. So PSSST Wellesley doesn't apply to me.
Yes, in your case Wellesley would be a bad choice. Lots of dividends (most taxed as ordinary income) plus sizable capital gains each year.
__________________

__________________
FIREd is offline   Reply With Quote
Old 07-15-2008, 07:09 PM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Quote:
Originally Posted by unclemick View Post
I believe CFB is the evil perpetrator
I'm pretty sure we collaborated.

Before ever coming along to the ER forum, I looked pretty long and hard at how to invest as a 39 year old early retiree. Thats before all y'all changed my mind 5 times.

What seemed to be the best mix was half Wellesley and half Wellington. That put you at about a 50/50 mix of stocks and bonds. The bonds are mostly short-intermediate term corporates of very good credit quality. The stocks are mostly good dividend paying blue chip large cap value bend.

In looking at Wellesley alone, the small slice of equities is somewhat overcome by the value premium. You get a heck of a nice dividend that you can just take and spend. Historically the products principal value more than kept up with inflation.

So you get your check and you spend it.

What could be more difficult for the fund going forward is recent and current low bond rates, that the last 30-something years that wellesley has been in place have been very good for bonds, and that the large cap/value tilt might produce less of a premium than it has historically.

But for a good place to start with your investments, its pretty low volatility and should be a good performer.

I'd say about all the same things apply to Target Retirement Income or the Lifestrategy income funds, although those depend more on TSM and less on a large cap value equity base, but their bonds are far more diverse. Which may or may not be a good thing.

The managed payout 5% fund is a far racier version, but might prove to be a better option over the next 20 years due to the extreme diversification. Of course, if all the equity markets worldwide tank and commodities eat it, that wont be a happy place.

So maybe a nice low risk high yield port today could be a mix of wellesley, TR income, LS income, and MP 5%...?

Last little tidbit is that allegedly the "old money" folks often invested in Wellington and then started shifting the holdings towards Wellesley as they approached retirement...
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 07-15-2008, 07:21 PM   #24
Full time employment: Posting here.
 
Join Date: Oct 2003
Posts: 961
Quote:
Originally Posted by Midpack View Post
There's why my POV is different. I don't have any room whatsoever in my tax deferred accounts for Wellesley so my only option is in my taxable account. I am in a higher tax bracket, so I don't want income from my taxable holdings now. So PSSST Wellesley doesn't apply to me. But after I retire, Wellesley might make good sense for me one day. Thanks...
You can create a more tax efficient pseudo Wellesley fund out of 40% Vanguard's LV index fund/etf or Vanguard's High Dividend fund/etf and 60% Vanguard's intermediate muni fund. Same value tilt, and similar duration/credit quality of bonds.

There is nothing all that special about Wellesley, except that you get it all in one fund.

You can also do about the same with Wellington, just use 60% for the stocks and 40% for the bonds.

- Alec
__________________
ats5g is offline   Reply With Quote
Old 07-15-2008, 07:28 PM   #25
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Quote:
Originally Posted by unclemick View Post
Actual portfolio at age 65 providing 60% of income:

Target Retirement 2015 - SEC yield 3.2% or so

Norwegian widow stocks - 33 a few examples:

electic ute - Con Ed, Excelon, Empire District

Water - Aqua America

Gas - National Fuel Gas

Telephone - Verizon and AT&T

Food - Flowers, J M smucker

Mfg - VFC(wrangler jeans etc) and Borg Warner

Drugs - Eli Lilly and Glaxo

Financial - BAC, JP Morgan

REIT - Washington REIT, United Dominion

The usual suspects for widows and orphans. also STON and EGLE as flyers from this forum for the hormones.

Target(yield) plus early SS plus a fixed(non cola) pension has my basic retirement covered.

I used to make it more complicated.

heh heh heh - OR pssst Wellesley and go fishing! It's the thought that counts.

ooops! Big oil is usually third or sometimes second - add Exxon and Chevron. 85% Target and 15% Norwegian overall.
Hey UM, what about the financial preferreds?

InvescoPowerShares.com - Financial Preferred Portfolio - PGF

Qualified divis and higher up on the scale than the equity holders - ? Just throwing some gas on the male hormone fire
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Old 07-15-2008, 09:27 PM   #26
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,620
Quote:
Originally Posted by cute fuzzy bunny View Post
I'm pretty sure we collaborated.
Wasn't the "Psssst" part of the joke based on a quote that William Shatner/Denny Crane used to say to Candice Bergen's character in "Boston Legal" or whatever the show is called?

I've never seen the show, let alone heard the dialogue, but that's the vague memory I have from a couple years/50,000 posts ago...
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 07-15-2008, 10:51 PM   #27
Dryer sheet aficionado
 
Join Date: Jul 2008
Location: Vientiane by way of California
Posts: 44
Until finding this board I always figured that bonds were something to put money into 'later' when I was 'old'. Now I'm thinking perhaps that reasoning is unwise...
I have no bonds in my portfolio at all and the ways to buy direct (I-bonds, TIPS, etc.) and are not very appealing right now so I am intrigued by the idea of using Wellesley as a bond fund (ala FIREDreamer) sounds like a good one...(of course have to finish doing my research first, thnx WantTo).

But assuming I do decide to get into bonds through a dividend generating fund like this, I have a choice to make of what type of account to do it with and the tax implications of dividends are more than I can quite figure out. My tax bracket is all over the place and highly variable (living abroad now, if I move home it will totally change) so I can't really do the numbers and will just have to go by a rule of thumb.

I could use some of my Roth account to hold Wellseley but as I've got a good number of years to go yet and investing aggressively for that reason, seems in the long term, the savings of tax from long-term aggressive stock investing will be more than what I'd save avoiding paying tax on dividends.

Is my logic sound on this?
__________________
thaidyed is offline   Reply With Quote
Old 07-15-2008, 10:58 PM   #28
Thinks s/he gets paid by the post
Rambler's Avatar
 
Join Date: Jul 2007
Posts: 2,250
Thanks to all, I'll check out the links provided by W2R and others. I'm still accumulating, and in a high tax bracket...but when the j*b goes, I want the high tax bracket to go as well. Also, I am at this point not selling anything to re-allocate, just buying into different products to get to my FIRE AA. I do believe in dividends, as you have probably seen from my previous posts, but I also believe in growth. Most of what I have is in growth stocks, and my additions over the past 8-10 months have been in divvie payers and bonds. But after reading this post, I think it would be a lot easier to manage pssst Wellesley than trying to do all of the management myself. So, I'll be watching a few other funds I have along with dividends produced, and see if I can harvest enough tax losses to get into Wellesley with 100k later in the year. Problem with that though, is that I wouldn't want to sell something that is 20% down yoy when I sold it, to buy something that is only 6% down yoy. So I'll have to do quite a bit of analysis as well as save my pennies so I can get in with over 100k.

Again, thanks to all who have responded.

R
__________________
Rambler is offline   Reply With Quote
Old 07-16-2008, 12:52 AM   #29
Full time employment: Posting here.
Ronnieboy's Avatar
 
Join Date: Feb 2008
Posts: 646
I think this might be a good fund for my mom. She is 66, has been approached by the financial adviser, buy you dinner, sales pitches for some insurance products where it doesn't cost her a dime to purchase (I wonder how the insurance company and FA get paid?!?), never loses money, and she can take out at least 10% year, oh, and it will never deplete!

Anyhow she is asking advise and I am thinking throwing what she has ~$100k into Wellesley and taking the quarterly payouts along with her SS and alimony (she gets till the old man croaks) she should do o.k.
__________________
Ronnieboy is offline   Reply With Quote
norwegian widow
Old 07-16-2008, 08:23 AM   #30
Full time employment: Posting here.
 
Join Date: Oct 2006
Posts: 898
norwegian widow

Can someone explain the origin of this and what it means? I think I understand it from the context of its use, but can someone shed some additional light?
__________________
Someday this war's gonna end . . .
ChrisC is offline   Reply With Quote
Old 07-16-2008, 08:26 AM   #31
Full time employment: Posting here.
CitricAcid's Avatar
 
Join Date: May 2008
Posts: 546
Quote:
Originally Posted by thaidyed View Post
Until finding this board I always figured that bonds were something to put money into 'later' when I was 'old'. Now I'm thinking perhaps that reasoning is unwise...
I have no bonds in my portfolio at all and the ways to buy direct (I-bonds, TIPS, etc.) and are not very appealing right now so I am intrigued by the idea of using Wellesley as a bond fund (ala FIREDreamer) sounds like a good one...(of course have to finish doing my research first, thnx WantTo).

But assuming I do decide to get into bonds through a dividend generating fund like this, I have a choice to make of what type of account to do it with and the tax implications of dividends are more than I can quite figure out. My tax bracket is all over the place and highly variable (living abroad now, if I move home it will totally change) so I can't really do the numbers and will just have to go by a rule of thumb.

I could use some of my Roth account to hold Wellseley but as I've got a good number of years to go yet and investing aggressively for that reason, seems in the long term, the savings of tax from long-term aggressive stock investing will be more than what I'd save avoiding paying tax on dividends.

Is my logic sound on this?
If you have other tax-deferred accounts that is NOT a Roth, I would highly suggest you put Wellesley in the other tax-deferred, instead of the Roth. The big advantages of the Roth is that ALL the CG and capital growth is tax-free, where in regular IRAs and 401ks, the CGs eventually get taxed as regular income. So, you want the best performing growth to occur in your Roth. Obviously, with all the dividends spitting out, you want to DRIP without tax implications so another tax-deferred account would be preferable to a Roth for Wellesley.
__________________
CitricAcid is offline   Reply With Quote
Old 07-16-2008, 08:31 AM   #32
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,156
Quote:
Originally Posted by ChrisC View Post
Can someone explain the origin of this and what it means? I think I understand it from the context of its use, but can someone shed some additional light?
You can thank Unclemick for this one. It is a reference to investing in dividend paying stocks - picture a Norwegian widow waiting by the mailbox for her quarterly check...
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 07-16-2008, 08:33 AM   #33
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,453
I do not have this fund, but will study.

It is quite more conservative than my Dodge & Cox Balanced, which did very well until recently. A couple other value funds I have also recently stumbled. Turned out the one thing they have in common is too much financials in their holdings. Were the managers lured in by the high dividends of financials?

There was a value-oriented mutual fund manager who appeared on TV all the time in the 2002-2005 time frame touting WaMu. He was right, until he became wrong. I just look at WaMu chart. Shocking!

By the way, many people are mislead when they look at price charts of stocks on the Web. A stock or mutual fund throwing off lots of dividends does not look good next to a growth stock, due to low price appreciation. For a fair comparison, one must include the total growth as if the dividends were reinvested. The pictures often look entirely different. I have shown some charts to my friends that really open their eyes.

I like this thread. The pros & cons are explained well. When people disagree, it is with mutual respect.
__________________
NW-Bound is offline   Reply With Quote
Old 07-16-2008, 10:08 AM   #34
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
Quote:
Originally Posted by NW-Bound View Post
I like this thread. The pros & cons are explained well. When people disagree, it is with mutual respect.
I'm sure some would disagree.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 07-16-2008, 10:09 AM   #35
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
Quote:
Originally Posted by unclemick View Post
heh heh heh - 1966 - 1982 flat I look back as my 'true grit' period - actually I made every stupid move in the investment book except perhaps commodities. Hence I work on grumpy and opinionated - WITH a Curmudgeon Certificate..
I started about the same time but went into the late 90's before discovering index investing. I also did commodities with the predictable, usual result.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 07-16-2008, 10:11 AM   #36
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 2,020
Quote:
Originally Posted by 2B View Post
I also did commodities with the predictable, usual result.
Your wealth was commoditized?
__________________
Marquette is offline   Reply With Quote
Old 07-16-2008, 10:16 AM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
He'll be drinking frozen orange juice for a very long time.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 07-16-2008, 10:20 AM   #38
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,453
Quote:
Originally Posted by 2B View Post
I'm sure some would disagree.
Oh boy! Even when I am nice, people can still pick on me
__________________
NW-Bound is offline   Reply With Quote
Old 07-16-2008, 10:57 AM   #39
Recycles dryer sheets
 
Join Date: Oct 2005
Posts: 113
Can somebody explain the difference between VWIAX and VWINX?

I though I'd read somewhere they are identical, with the only difference being a lower expense ratio on VWIAX - which is available through my employer's plans. Is this correct?
__________________
Da Nag is offline   Reply With Quote
Old 07-16-2008, 11:07 AM   #40
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Quote:
Originally Posted by Da Nag View Post
Can somebody explain the difference between VWIAX and VWINX?

I though I'd read somewhere they are identical, with the only difference being a lower expense ratio on VWIAX - which is available through my employer's plans. Is this correct?
Both are wellesley, but one is standard and the other is "admiral shares" meaning you have $100K balance. The latter has a slightly lower expense ratio and thus a slightly higher return if you are willing and able to fund it to that amount.
__________________

__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
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
"Gut feel" versus "evidence-based" medicine Buckeye Health and Early Retirement 10 11-08-2007 11:21 AM
My "Core Plus" Strategy - Feedback on the "Plus" part? milmoose Young Dreamers 24 11-01-2006 10:41 AM
"Retirement expense" over "SS income" Sam FIRE and Money 41 10-30-2006 05:59 PM
Anyone notice "Osama" sounds like "Obama" ? Mr._johngalt Other topics 50 10-29-2006 06:41 AM
Book reports: "Blink" & "Tipping Point" Nords Other topics 2 12-04-2005 05:15 PM

 

 
All times are GMT -6. The time now is 03:02 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.