Hi,
I am in need of an intervention.
Situation: I have owned Vanguard Wellington & Wellesley (VWELX and VWINX) for many years now and I am very, very happy with both of them. But, I may have to sell them now. Most of our money is already in taxable accounts and 80% of new contributions go to taxable accounts, so tax-deferred space is at a premium. Years ago, when we had much less money and most of it was in our 401Ks, we built our retirement accounts around Wellington+Wellesley but we are now quickly running out of room for taxable bonds and other tax-inefficient assets.
The idea would be to sell Wellington and Wellesley, and replace them with taxable bonds in the tax-deferred accounts and large (value) equities in the taxable account.
The problem is I can't bring myself and pull the trigger and sell them. I clearly blame UncleMick for this because without his constant pssst reminders I wouldn't know what I was missing.
The question really is what funds should I replace them with.
On the bond side I was thinking about the Total bond market fund (VBMFX which I already own) or the intermediate term investment grade fund (VFICX).
On the equity side I hesitate between the total stock market fund (VTSMX which I already own) or the equity income fund (VEIPX) which is a perfect match for the equity portion of VWELX and VWINX. I am aware that the equity fund is not super tax-efficient but all distributions are taxed at 15%, so I am fine with it. I would like to keep a value-tilt and the equity income fund would allow me to do just that.
So what would you suggest I do? Should I sell VWELX and VWINX? Which funds should I replace them with?
A bit more information: I am squarely in the 28% tax bracket (5% for state), flirting with the 33% bracket and AMT.