Are these investments redundant?

[Carol1862]

We have our IRA in Vanguards Wellesley and the Index 500. We are thinking of closing the Index 500 and moving it all to Wellesley. We are realizing that having the Index 500 might not be necessary as it follows some similar companies. Opinions are appreciated.

[Animorph]

I would say nowhere near redundant.

Wellesley is something like 60% bonds, and the stocks it holds tend to be large value stocks. S&P 500 will be a mix of growth and value, with no bonds.

Adding S&P 500 moves your allocation to more stocks and more growth stocks in particular. If you were looking to add more stocks and add some growth stocks it seems like a perfectly reasonable addition to me.

[racy]

It all depends on your objective(s) for this money and your tolerance for price variability. What's good for some isn't necessarily good for you.

Look and compare the two funds at Vanguard. There are clear differences between them.

[Carol1862]

Since we don’t get pensions I’m much more conservative than others. When we do get SS (DH waiting to age 70) it will cover 80% of our expenses.

I remember reading a thread in which someone said if he passed away he told his wife to park everything in Wellesley. KISS. I have had Wellesley for a long time but was a novice in investing. We also had target retirement date funds and a balanced fund. Plus the Index fund. Research and educating ourselves led us to close all the other accounts except the Index 500 and simply fund Wellesley. (If I’m honest here we used Fidelity and Vanguard and had similar accounts in each). I know they’re managed differently but realized there was no necessity to spread it all out. Redundancy. I thought perhaps were still doing that.

We are not proficient in this but so far we’ve had success in the products we’ve chosen.

[Sunset]

I have a small Vanguard IRA ~$200K , I moved all of it to Wellington fund.
Before I had it in VTI and BND.

Wellington is 60% stock, 30% bonds, so it's a good enough mix for me.

[Chuckanut]

Quote:

Originally Posted by Carol1862 We have our IRA in Vanguards Wellesley and the Index 500. We are thinking of closing the Index 500 and moving it all to Wellesley. We are realizing that having the Index 500 might not be necessary as it follows some similar companies. Opinions are appreciated.

I think you need to read more about the different types of mutual funds and how they historically perform in different economic situations. I don't mean to sound harsh but equating Wellesley to an Index 500 fund, is like a new cook thinking salt and sugar can be substituted for each other because they are both fine white granules.

Spend a few months reading HumbleDollar.com. No need to rush. The fact that you have chosen a low-cost provider shows you are on the right track, something that most people can't say. You have a small knowledge gap to fill, then you can aim straight for the FIRE bullseye.

[Carol1862]

Quote:

Originally Posted by Chuckanut I think you need to read more about the different types of mutual funds and how they historically perform in different economic situations. I don't mean to sound harsh but equating Wellesley to an Index 500 fund, is like a new cook thinking salt and sugar can be substituted for each other because they are both fine white granules. Spend a few months reading HumbleDollar.com. No need to rush. The fact that you have chosen a low-cost provider shows you are on the right track, something that most people can't say. You have a small knowledge gap to fill, then you can aim straight for the FIRE bullseye.

You are not being harsh. I want to learn. I want to be knowledgeable. Thank you for suggesting Humble Dollar. I will go research it

[target2019]

Wellesley income fund is a managed fund with just 66 company stocks and income producing bonds. It is a managed fund.

S&P 500 fund has 500 of the largest company stocks. It is a blended index fund.

In your own words, does 66 or 500 have a better chance of helping you meet your goals?

There are quite a few questions you might want to ask yourself, so that you will be comfortable with the results down the road.

[yakers]

Both funds are excellent,(I have both) but the mix of them, your Assrt Allocation , is what you want to determine. 100% S&P500 would be too much for me and I wouldn't want Wellesley in a taxable account, Wellington would be a bit better, but the S&P500 is excellent in taxable.

[RetireeRobert]

Quote:

Originally Posted by Carol1862 Since we don’t get pensions I’m much more conservative than others. When we do get SS (DH waiting to age 70) it will cover 80% of our expenses. We are not proficient in this but so far we’ve had success in the products we’ve chosen.

The question is "how" conservative do you want to be? You did not say how much was in the two funds. If the 500 fund is the smaller position, your total position may still be somewhat conservative.

But I do agree with the KISS principle. So eliminating the 500 fund entirely and having everything in just one remaining fund would be KISS heaven.

Good luck with your research and your decisions.

[yakers]

Not exactly what you asked and I don't know your desired AA but I have toyed with Wellesley in tax deferred and Wellington in my taxable account as my only two holding except for cash.