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Wellesley vs T-Bills
Old 05-24-2023, 06:21 AM   #1
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Wellesley vs T-Bills

I have about 30% of my portfolio in the Wellesley Admiral fund. This is my intended 3-8 year bucket of money. It of course has languished this past year but I still believe it is a good holding for this intended bucket.

However, in the short term, I was considering taking 50% or more of this holding and buying 6 month T-Bills and then going back into Wellesley. It痴 in my IRA so no tax hit on the sale. Thoughts?

If it helps, I知 retiring in 3 weeks and have about 3 years of living expenses in cash bucket, which is in MM and 3-6 month T-Bills.
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Old 05-24-2023, 06:46 AM   #2
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Better to have cash available instead of relying solely on invested (bonds or stocks) for near term needs. I use T bills along with CDs ladders out to 2 years.
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Old 05-24-2023, 06:51 AM   #3
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So you're considering market timing for the 6 month period.

Either you'll make a little money or make not as much.

6 month treasury is currently 5.3%. So you'll collect ~2.65% in total interest.

Wellesley could go up 2.65% within a couple days...or it could go down.

If Wellesley has moved up, possibly even more than you've collected on the treasuries, will you still buy it back? Or will you sit in cash and wait for it to drop back before repurchasing?

If you believe it's a good holding for the bucket, what is your desire to move to treasuries for 6 months? Will the additional ~2.65% change things significantly for you? If not, then again, why looking to do something now?

Generally, the best course of action in this type of situation is to do nothing.
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Old 05-24-2023, 07:00 AM   #4
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Better to have cash available instead of relying solely on invested (bonds or stocks) for near term needs. I use T bills along with CDs ladders out to 2 years.

But he's not looking to do the move for near term needs - he's taking it out for 6 months, then repurchasing what he sold.
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Old 05-24-2023, 07:31 AM   #5
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I can usually just time either the stock market or the bond market. Wellesley, with it's bond/stock allocation, requires the timing of both. Stay the course.
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Old 05-24-2023, 07:51 AM   #6
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Originally Posted by njhowie View Post
So you're considering market timing for the 6 month period.

Either you'll make a little money or make not as much.

6 month treasury is currently 5.3%. So you'll collect ~2.65% in total interest.

Wellesley could go up 2.65% within a couple days...or it could go down.

If Wellesley has moved up, possibly even more than you've collected on the treasuries, will you still buy it back? Or will you sit in cash and wait for it to drop back before repurchasing?

If you believe it's a good holding for the bucket, what is your desire to move to treasuries for 6 months? Will the additional ~2.65% change things significantly for you? If not, then again, why looking to 8do something now?

Generally, the best course of action in this type of situation is to do nothing.

Warren Buffett: "Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell." ... "Lethargy, bordering on sloth should remain the cornerstone of an investment style."
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Old 05-24-2023, 07:51 AM   #7
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Thanks for the quick replies and yes I知 in my head. Should I time the market, take 5% guaranteed for 6 months or leave it and forget it in Wellesley for the next 3+ years. I知 hedging towards the latter but over thinking. Hence the post.
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Old 05-24-2023, 09:14 AM   #8
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Thanks for the quick replies and yes I知 in my head. Should I time the market, take 5% guaranteed for 6 months or leave it and forget it in Wellesley for the next 3+ years. I知 hedging towards the latter but over thinking. Hence the post.
Taylor Larimore's market timing quotes https://www.bogleheads.org/wiki/Tayl..._timing_quotes
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Old 05-24-2023, 09:59 AM   #9
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IMO, Wellesley is not intended to be a short term (under 2 years) investment. It's for people who want a fairly consistent earnings stream year after year after year...... Therefore you will be speculating with your money. In that case don't risk more earnings and principle than you can afford to lose without a significant impact on your lifestyle and future plans.

Full disclosure, I have a small (under 10%) of my portfolio in Wellesly. I have done nothing with it other than reinvest the dividends and capital gains for well over 5 years.
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Old 05-24-2023, 10:15 AM   #10
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Thanks for the quick replies and yes I知 in my head. Should I time the market, take 5% guaranteed for 6 months or leave it and forget it in Wellesley for the next 3+ years. I知 hedging towards the latter but over thinking. Hence the post.
It's really 2.5% over the 6 months, it's only 5% if you hold for a year.

Just thinking it's 5% for 6 months, is like many other mind tricks, that can trick a person into thinking something is better than it really is.
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Old 05-24-2023, 10:19 AM   #11
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... Just thinking it's 5% for 6 months, is like many other mind tricks, that can trick a person into thinking something is better than it really is.
Yes, but IMO even that is a bit dangerous when looking at short periods and small interest rate differences. IMO these should be thought about using actual after-tax dollars.
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Old 05-24-2023, 10:41 AM   #12
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You could sell 50% and build a 5 year Treasury or CD ladder, and never buy back Wellesley
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Old 05-25-2023, 05:11 AM   #13
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Originally Posted by njhowie View Post
So you're considering market timing for the 6 month period.

Either you'll make a little money or make not as much.

6 month treasury is currently 5.3%. So you'll collect ~2.65% in total interest.

Wellesley could go up 2.65% within a couple days...or it could go down.

If Wellesley has moved up, possibly even more than you've collected on the treasuries, will you still buy it back? Or will you sit in cash and wait for it to drop back before repurchasing?

If you believe it's a good holding for the bucket, what is your desire to move to treasuries for 6 months? Will the additional ~2.65% change things significantly for you? If not, then again, why looking to do something now?

Generally, the best course of action in this type of situation is to do nothing.
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Old 05-25-2023, 05:44 AM   #14
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But he's not looking to do the move for near term needs - he's taking it out for 6 months, then repurchasing what he sold.
6 months for me is near term YMMV
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