Some relatives are approaching retirement but still 5-10 years away. They make decent monty but neither is raking in tons of cash. They look to me for financial advice around retirement and I'd like to steer them to Vanguard Wellesley (VWINX) because it's conservative, generates income, and is simple to manage. They're not interested in the complexity of a really diverse portfolio with a bunch of slice-and-dice asset classes that they don't understand (international, small cap, foreign bonds, etc.) and their assets are not so large that it would be practical to hold a substantial position in each of the asset classes anyway.
Questions:
1) From the limited information I've provided here, is this good advice? Is 60/40 bonds/stocks too aggressive for their situation? Would I be better with separate funds for stocks/bonds so that I can manually adjust the asset allocation as they age? My parents are risk-averse and preservation of capital is important. They have some limited investments in real estate and other retirement accounts, but Wellesley would represent ~50% of their total portfolio.
2) Is it ok for them to hold Wellesly in a taxable account? They are not in high enough tax brackets to benefit from muni bonds, and once they enter retirement in 5-10 years their tax rate will drop quite a bit anyway. I've encouraged them to use tax-deferred accounts, with limited success...can't do much about that.
Questions:
1) From the limited information I've provided here, is this good advice? Is 60/40 bonds/stocks too aggressive for their situation? Would I be better with separate funds for stocks/bonds so that I can manually adjust the asset allocation as they age? My parents are risk-averse and preservation of capital is important. They have some limited investments in real estate and other retirement accounts, but Wellesley would represent ~50% of their total portfolio.
2) Is it ok for them to hold Wellesly in a taxable account? They are not in high enough tax brackets to benefit from muni bonds, and once they enter retirement in 5-10 years their tax rate will drop quite a bit anyway. I've encouraged them to use tax-deferred accounts, with limited success...can't do much about that.