why not just Wellington, also a real estate Q

[tmitchell]

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)?

 

[samclem]

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).

 

[pb4uski]

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.

 

[twolfy]

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?

 

[Midpack]

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.

 

[NW-Bound]

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.

 

[pb4uski]

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.
.

 

[Sittingduck]

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.

 

[DrRoy]

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.

 

[DEC-1982]

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.

There are many paths for investing, and no single one suits everybody.

 

[Cobra9777]

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.

 

[FANOFJESUS]

I think it would be ok if you are in the 15% tax bracket.

 

[HadEnuff]

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?

 

[twolfy]

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.
Thanks

 

[Chuckanut]

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.

 

[Chuckanut]

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.

 

[NW-Bound]

No investment is safe from a smooth-talking pool boy.

 

[HadEnuff]

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.

 

[tmitchell]

thanks for your thoughts everyone

 

[NW-Bound]

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.

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​

 

[NgineER]

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)?

Since no one addressed the Real estate question I will try to do that...

Even turn key properties can have their headaches. You are dealing with people after all.

I'm going to assume that your $2-250/ month is after 50% rule, i.e. That 50% of rent income goes to expenses, taxes, insurance, management, repairs, vacancies etc. and after mortgage payments. If not, then do not invest in real estate.
If you can get 7% return on your invested money after considering the above items then after 10 years you'd only have 5 years left on a 15 year mortgage, and your equity in the property would have increased substantially. Five years later you'd own the property outright and your cash flow would increase substantially.

I'm looking to invest in more properties myself. I have one that cash flows $5,000/year, in 15 years when it is paid off the cash flow should triple.

It can be a great investment if you buy the right property and select the right tenants, if you don't do the due diligence it can be a nightmare.

 

[calmloki]

We've just finished bringing all the figures together to ship to our tax person. Rental income is the heavy lifter, followed by lending, followed a long way back by stocks. Of the three, lending has been the easiest, though we've taken some substantial hits when borrowers vanish as the mist.. Real estate provides more entertainment than one might wish - and it is a huge PITA to divest. We have people, well, a person other than tenants, who would be impacted adversely by our divesting. And selling itself is a large and time consuming PITA. Stocks and index funds contribute the smallest amount, and mainly in unrealized and ephemeral gain. Since stock prices seem to be based on people's whims and reactions to "news" as reported by whomever they feel very unstable. Fast and easy to sell though - and we have sold more than a few losers.