Asset Allocation

[Brangus Baldies]

Looking for some advice. Currently have approximately 800k invested. 125k in FXAIX, 100K IN VWINX, THE remaining in SPAXX and Stable Value fund. Currently withdraw 2k a month from a MM fund for living expenses.

Looking for a plan that can both preserve capital and give me growth of 3% which will cover my monthly withdraws. When I retired a few years ago I had 4 years of expenses put aside in a MM Fund. I have 2 years left in this fund. Currently 66, retired at 63.5.

Thanks

 

[pb4uski]

I don't get the problem. SPAXX is currently yielding 4.96%. What is your stable value fund yielding? Probably more than 3%.

Or put another way, did your portfolio grow some in 2023 despite the withdrawals for spending?

 

[DrRoy]

30 year treasuries are at 4.3%, with high grade corporate bonds even higher.

 

[VanWinkle]

it seems you are 20% equities and 80% fixed income. This will work as long as money markets are making north of 4% and Government bonds are yielding more than 3%. I worry that the plan will not look sustainable in a couple years due to interest yield being reduced. The money market funds will drop overnight as interest rates drop. Money leaving the money markets will go to bonds or stocks and they have a better long term chance of hitting your yield needs. I would slowly move in that direction increasing the equity portion with a balanced fund if that suits you better than a pure stock fund. You don't need 75% in stocks, but something above 30% would likely help keep up with the 3% real growth needed.

Good luck to you,

VW

 

[Brangus Baldies]

Thank you

 

[Montecfo]

An allocation less tilted to fixed income probably makes more sense over the long term. We are in a declining interest rate environment.

 

[imjustawarrior]

You could build a tips ladder to guarantee $2k/mo real and invest the rest in equities. It looks like a 30 year ladder would be ~$530k. Then invest the rest in your favorite equity fund.

https://www.tipsladder.com/

 

[Brangus Baldies]

Thanks I am starting to research these types of ladders. Trying to learn how they work. Thanks for replying

 

[Al18]

If you want growth of 3% over inflation, you’ll need to increase your stock exposure. You can see over the past 5 years, VWINX has returned a total of 26.39% according to https://weissratings.com/en/mutual-fund/vwinx-nasdaq

You may want to increase your stock exposure by investing another 100K in a 60% stock/40% bond fund FBALX that over the past 5 years has a total return of 71.49% according to
https://weissratings.com/en/mutual-fund/fbalx-nasdaq.

 

[Brangus Baldies]

Thanks. I think I will look int this.

 

[Brangus Baldies]

Thoughts on Wellington vs FBALX

 

[Al18]

Wellington stock/bond allocation is 33%/67% while Fidelity Balanced is 60%/40%.

Over the longterm, Fidelity Balanced has consistently done much better than Wellington.

I’m attaching a link from Portfolio Visualizer comparing the two funds over a 15 year period https://www.portfoliovisualizer.com/fund-performance?s=y&sl=2HKiEudqe60MslICyYKTXt

 

[Brangus Baldies]

Thank you