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why not just Wellington, also a real estate Q
Old 02-16-2017, 09:01 PM   #1
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why not just Wellington, also a real estate Q

For some one heading into (or at) FIRE, why not just put all your $ in Wellington admiral shares? It's slightly above a 60/40 that a person would need to rebalance anyway, no fuss, and could last longer than the SWR of 30 years...I'm about 50 and looking to FIRE within the next 2 years fyi.

Also, I've been considering investing 50k in passive turn key real estate, maybe 2 properties... after all expenses $2-250/mo. but Wellington has returned 7% over the past 10 years...so what's the benefit even if I were to manage a 7% return in passive real estate over 10 yrs vs just hanging out in Wellington and not having to deal with any annoyance (besides regular market dips)?
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Old 02-16-2017, 09:14 PM   #2
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For some one heading into (or at) FIRE, why not just put all your $ in Wellington admiral shares? It's slightly above a 60/40 that a person would need to rebalance anyway, no fuss, and could last longer than the SWR of 30 years...I'm about 50 and looking to FIRE within the next 2 years fyi.
Historically, it has been a fine fund. The strongest objection that some people might have is management risk: You'll be betting that the future managers of this active fund continue to do as well as their predecessors. It is quite a record. Investing environments change, and there's no guarantee that stock/bond selection methods that worked before will continue to work. These would be arguments for "buying the market" through an index fund (to include a balanced fund or a target-date fund with multiple assets that are automatically rebalanced).
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Old 02-16-2017, 09:28 PM   #3
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The reason I don't is because of tax efficiency... otherwise I would consider it and monitor it closely.... remember when Magellan was a solid performer and then quickly lost its luster once Peter Lynch left.
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Old 02-16-2017, 09:41 PM   #4
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The reason I don't is because of tax efficiency... otherwise I would consider it and monitor it closely.... remember when Magellan was a solid performer and then quickly lost its luster once Peter Lynch left.


Do you say that because of unqualified dividends or even just dividends in general if it was in a taxable account?
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Old 02-16-2017, 09:50 PM   #5
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The reason I don't is because of tax efficiency... otherwise I would consider it and monitor it closely...
+1. Wellington has been a great fund for decades, but I'd rather hold bond funds and other income generators in deferred accounts and equity funds and other capital appreciation investments in taxable. That simple for me.
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Old 02-16-2017, 10:06 PM   #6
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I do not have a lot in either Wellesley and Wellington, but would feel safe leaving more in these funds to make it easier for my wife when I pass. They do not rely on a hot stock picking star manager like many active funds, and their style has always been quite conservative, like not chasing dot coms in the late 90s, nor hot banking stocks in the early 2000s, etc... Their philosophy is not likely to change.

Regarding tax efficiency, most people have both taxable and deferred/non-taxed accounts. I could stuff the IRA and Roth accounts with these funds, plus a couple of similar old-time balanced funds to be safe. The taxable can go into some broad-based ETFs. My wife should be able to handle that.
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Old 02-16-2017, 10:15 PM   #7
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Do you say that because of unqualified dividends or even just dividends in general if it was in a taxable account?
Not sure what you are getting at... but in my case I have bonds/fixed income in tax-deferred accounts and stocks that generate tax preferenced dividends and capital gains in taxable accounts and I can't achieve that tax efficiency with Wellesley or Wellington.

If I only had taxable accounts or only tax-deferred accounts then I would definitely consider them as it would make my investing much easier.
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Old 02-16-2017, 10:55 PM   #8
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I have about 60% of my assets in Wellington. It was the best 401K investment my company offered and It has done very well over the years.
As others mentioned, you could achieve better tax performance but I do like the convenience. I have some health issues and I figure its a hands off investment DW can handle if I am gone.

I keep a close eye on it but it seems to be doing what I need it to do.
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Old 02-17-2017, 04:37 AM   #9
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Wellington has returned 7% over the past 10 years...so what's the benefit even if I were to manage a 7% return in passive real estate over 10 yrs vs just hanging out in Wellington and not having to deal with any annoyance (besides regular market dips)?
Past returns have nothing to do with what you will get going forward.
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Old 02-17-2017, 05:00 AM   #10
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Originally Posted by tmitchell View Post
For some one heading into (or at) FIRE, why not just put all your $ in Wellington admiral shares? It's slightly above a 60/40 that a person would need to rebalance anyway, no fuss, and could last longer than the SWR of 30 years...I'm about 50 and looking to FIRE within the next 2 years fyi.
Another point of view is that it's good to have 2 separate funds, a stock fund and a bond fund. When one fund tanks, you could sell from the other fund (that didn't tank or tanked significantly less) for your ongoing annual expenses. How did Wellington do during the 2007-2009 bear market compared to a total bond index fund? I am just asking, I haven't checked.

I know nothing about real estate investing.

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Why not just Wellington?
Old 02-17-2017, 06:47 AM   #11
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Why not just Wellington?

I've posted this list before, so I'll just cut & paste:

1. We only own ETFs, primarily to avoid year-end CG distributions.
2. It's more difficult to slice/dice and maximize tax efficiency with stocks and bonds in the same fund.
3. The expense ratio, while low by most standards, is still quite a bit higher than our index ETFs.
4. We prefer to house everything at Fidelity, where Vanguard MFs would be costly to trade.
5. Despite the excellent track record, we prefer highly diversified index funds over actively managed funds.
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Old 02-17-2017, 06:58 AM   #12
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I think it would be ok if you are in the 15% tax bracket.
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Old 02-17-2017, 07:12 AM   #13
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What makes a W/W blend tax-inneficient?

Is it the fact that at year's end they throw off Capital Gains and Dividends?
As rec7 suggests in post #12, would it matter if one maintains income in the 15% bracket?
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Old 02-17-2017, 08:38 AM   #14
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Not sure what you are getting at... but in my case I have bonds/fixed income in tax-deferred accounts and stocks that generate tax preferenced dividends and capital gains in taxable accounts and I can't achieve that tax efficiency with Wellesley or Wellington.



If I only had taxable accounts or only tax-deferred accounts then I would definitely consider them as it would make my investing much easier.

.


That's where I was going.
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Old 02-17-2017, 09:25 AM   #15
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The reason I don't is because of tax efficiency... otherwise I would consider it and monitor it closely.... remember when Magellan was a solid performer and then quickly lost its luster once Peter Lynch left.
Agreed. And there are plenty of other examples. One of my first mutual fund investments was Mutual Shares managed by Michael Price. I made a lot of money (for a young guy just out of college) on this fund. But, after Price left it slowly regressed and I eventually sold it.
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Old 02-17-2017, 09:45 AM   #16
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I do not have a lot in either Wellesley and Wellington, but would feel safe leaving more in these funds to make it easier for my wife when I pass. They do not rely on a hot stock picking star manager like many active funds, and their style has always been quite conservative, like not chasing dot coms in the late 90s, nor hot banking stocks in the early 2000s, etc... Their philosophy is not likely to change.
This is the other side of the coin. Monitoring one's index funds takes a certain amount of dedication, skill and mental health (granted not as much as most people think).

The real danger, IMHO, is not that the fund management may go far astray but that the survivor might be hornswaggled by some fast talking Jasper into high-cost, low return, risky investments.

How to prevent that is a good question.
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Old 02-17-2017, 09:49 AM   #17
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No investment is safe from a smooth-talking pool boy.
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Old 02-17-2017, 10:11 AM   #18
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This is the other side of the coin. Monitoring one's index funds takes a certain amount of dedication, skill and mental health (granted not as much as most people think).

The real danger, IMHO, is not that the fund management may go far astray but that the survivor might be hornswaggled by some fast talking Jasper into high-cost, low return, risky investments.

How to prevent that is a good question.
"fast talking Jasper"....I like that. You're pretty smooth talking yourself, Chuckanut.
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Old 02-17-2017, 04:10 PM   #19
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thanks for your thoughts everyone
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Old 02-17-2017, 05:21 PM   #20
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This is the other side of the coin. Monitoring one's index funds takes a certain amount of dedication, skill and mental health (granted not as much as most people think).

The real danger, IMHO, is not that the fund management may go far astray but that the survivor might be hornswaggled by some fast talking Jasper into high-cost, low return, risky investments.

How to prevent that is a good question.
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No investment is safe from a smooth-talking pool boy.
I forgot to add some music.

No need to ask
He's a smooth operator
Smooth operator, smooth operator
Smooth operator

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