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-   -   An alternative to: Psst...Wellesley (https://www.early-retirement.org/forums/f28/an-alternative-to-psst-wellesley-35055.html)

youbet 04-22-2008 12:15 PM

Quote:

Originally Posted by FinanceDude (Post 647190)
It's the only way they can mitigate the risk, they need flexibility. How else can they "guarantee" 6 or 7% withdrawals when the market is down 10%??

Hey, no argument from me. I was just surprised that sponsoring an actively managed fund with wide manager discretion was on their agenda.

BTW, you are making a serious mistake in your interpretation of their literature. They DO NOT guarantee the withdrawals as you stated.

Now, important stuff. Did you get a boat or are you still screwing around with that? If you have one, when we going fishing?

FinanceDude 04-22-2008 12:28 PM

Quote:

Originally Posted by youbet (Post 647230)
Now, important stuff. Did you get a boat or are you still screwing around with that? If you have one, when we going fishing?

Well, since I chipped a bone in the top of my foot, and possibly some cartilage damage, I have been distracted. DW has moved on from boats to landscaping, and since I can't do the work..........:p

I am still hunting, but I don't think the PAIN the economy is inflicting has gotten the boat owners yet....they have to sell their gas-guzzling SUV first, then realize now they can't pull their boat, and THEN I can strike........probably a few months away........

When I get one, we can go fishing. I don't remember where you are at but I think it's Illinois or somewhere? Maybe a walleye sojurn on the Wolf River or Wisconsin River is necessary..........;D

cute fuzzy bunny 04-22-2008 02:31 PM

Quote:

Originally Posted by youbet (Post 647178)
Wonder where you got that from? The payout calculator provided by Vanguard at the site still shows 3/5/7.

The growth fund says on the main fund page "The fund's per-share payout for 2008 is $0.0500." on a share price of $20.

The middle one says "The fund's per-share payout for 2008 is $0.0833." on a $20 share price

The high payout one says "The fund's per-share payout for 2008 is $0.1167." on a share price of $20.

Perhaps this is prorated for the thing not starting until may of this year?

cute fuzzy bunny 04-22-2008 02:38 PM

I stuck $60k into the middle fund that I had laying around in a money market not making enough for me to want to leave it in cash anymore.

Very exciting. Lets see what happens! :)

FIRE'd@51 04-22-2008 02:44 PM

Quote:

Originally Posted by cute fuzzy bunny (Post 647317)
The growth fund says on the main fund page "The fund's per-share payout for 2008 is $0.0500." on a share price of $20.

The middle one says "The fund's per-share payout for 2008 is $0.0833." on a $20 share price

The high payout one says "The fund's per-share payout for 2008 is $0.1167." on a share price of $20.

Perhaps this is prorated for the thing not starting until may of this year?

Those are monthly payouts, so the annualized payouts would be 3%, 5%, and 7%, respectively.

BTW, the expense ratio is shown as 0.58%.

cute fuzzy bunny 04-22-2008 03:02 PM

Thats what happens when I try to do math in my head while drinking my first cup of coffee.

The distribution focus funds ER is .57.

Moemg 04-22-2008 04:11 PM

I have about half my assests in taxable accounts . Are these investments taboo for them ?

cute fuzzy bunny 04-22-2008 04:19 PM

Its sort of hard to say. I think by saying things like "<asset class> 0-50%" they're creating an impression that they may wildly change the holdings very quickly and the contents of the fund one day might be different from the next.

Perhaps they're overdoing the ass covering on wanting to give themselves leeway to invest as they see fit. I cant see them making rapid massive changes to the holdings. I would anticipate them to moderate change over a period of years, but if they thrash trade I think they'll lose customers. Many people wanting these funds (primarily people near or in retirement) wont be able to use them in a tax advantaged account.

Plus they oughta be able to balance some of the selling gains with losses. Some pieces of this are going to be extremely volatile. They get the ying and the yang right and trim off the ends, it might end up being reasonable.

I wouldnt expect it to be as miserly in capital gains as the Tax Managed Balanced Fund, but I dont expect it'll look like a commodity fund either.

My 60k is in a taxable fund. We'll see how it goes.

Rich_by_the_Bay 04-22-2008 05:51 PM

Quote:

Originally Posted by Moemg (Post 647375)
I have about half my assests in taxable accounts . Are these investments taboo for them ?

Credible hearsay, if there is such a thing, over on the Diehards board indicates that these will be very actively managed, meaning they will not be great for taxable accounts. Too much taxes on gains, dividends, etc. Do your homework beforehand.

cute fuzzy bunny 04-22-2008 09:00 PM

Frankly, at this point I'd love to pay a lot of taxes on gains and dividends. Every year!

What Rich said is important though. Fully understand any fund before putting money into it, especially taxable funds.

That having been said, the diehards folks are a bunch of worry warts who think anything that isnt some sort of straight index thats been around for 40 year is suspicious, and I have spent a lot of time looking at these funds. Bogleheads think that a chunk of US equities, a slice of US bonds...and maybe...just maybe...a sliver of foreign equities...are all you need. Maybe that how its gone before. Maybe thats how it'll go another 40 years.

But having said that, $60k to me is like blowing a little extra money on a really nice batch of ice cream. My life doesnt depend on it. Shoot, Amazon just had a sale on chocolate and I think I bought about 40lbs worth. Oh well, Mothers Day is right around the corner.

Were I choosing between wellesley and this with safety in mind, I'd take mostly wellesley or target retirement or lifestrategy income and maybe some of this.

If I had a bunch of money and was looking at annuities and gold and commodities and market neutral funds and precious metals and thought "What the hell? Cant I get a little of all of this and not sweat the details?".

In that case I'd buy some. Whoo! Just did!

WilliamG 04-23-2008 06:29 AM

Quote:

Originally Posted by Moemg (Post 647375)
I have about half my assests in taxable accounts . Are these investments taboo for them ?

From the prospectus:
"The Fundsí twelve scheduled distributions in each year are made monthly, at mid-month. An
additional distribution may be made in December, and other additional distributions may be
made with respect to a particular fiscal year in order to comply with applicable law. The Funds
are designed with the expectation that the twelve scheduled monthly distributions will be
paid in cash but that each additional distribution for a particular fiscal year will be automatically
reinvested in additional Fund shares. Accordingly, to allow the Funds to achieve their design
objectives, the Funds will generally automatically reinvest any additional distribution for a
particular fiscal year in additional Fund shares. These additional shares can be redeemed
under the same terms and conditions as any other shares of the Funds."

Don't pay any attention to that man behind the curtain! Indeed it appears that there may be taxable returns you either get in cash or that are re-invested beyond the percent that is paid out monthly. It will be very interesting to track these guys once they are operational.

Gone4Good 04-23-2008 05:38 PM

Hey everyone, I didn't scour the prospectus so I might have missed something but these funds simply look like a modified fixed % withdrawal strategy. Am I wrong in thinking they just payout 3%/5%/7% of the trailing 3 year average NAV?

cashflo2u2 04-23-2008 06:06 PM

All the nervous nellies will probably crap their drawers on this one, but I am putting half my retirement account, which is in an IRA, in the 3% and 5% (50-50). I know somebody will post that they hope I don' t end up crapping my drawers in a few years.

REWahoo 04-23-2008 06:09 PM

Quote:

Originally Posted by cashflo2u2 (Post 647923)
I know somebody will post that they hope I don' t end up crapping my drawers in a few years.

No. But I hope you still have some drawers to...uh... ;)

Actually, I suspect you'll be fine. Let us know how it works out.

cute fuzzy bunny 04-23-2008 06:19 PM

I decided I like surprises and put 60k into the 3% version and 60k into the 7% version to go along with the 60k of the 5% fund I bought yesterday. I'll watch them for a while and see what the allocations turn out to be and what the short term performance looks like and maybe stuff some more money into the one I like the most.

The ER is expected to drop as assets grow. I'm doing my part! ;)

W2R 04-23-2008 06:26 PM

Wow, you sure ARE doing your part! I am a teeny bit jealous since getting in on the ground floor like this sounds like such fun (but it's not in my plan). Enjoy! And let us know what you think once things shake out. :D

cute fuzzy bunny 04-23-2008 06:38 PM

Just like a box of chocolates!

clifp 04-23-2008 06:42 PM

My god folks its Vanguard, not a late night infomercial selling secrets of the wealthy.

Vanguard is "promising" growing returns starting at 3%, 5%, and ooh wait for it 7% for you Vegas gambling action junkies.


Me I'll probably put in $50K into the 5% after a muni bond matures later this year. This assumes that I still have money after my writing puts and naked calls... :)

cute fuzzy bunny 04-23-2008 06:47 PM

Well, they're suggesting growth in the 3%, inflation pacing with the 5% and 'we're gonna try to keep up with inflation but probably wont make it' with the 7%.

I think the juicy one will be the 3% if you've got enough other income sources to fill in while it picks up some capital appreciation. But I want to see what they do with it, how they move with the markets and what the tax situation looks like at the end of the year before I throw a couple more boat anchors in.

Do also remember that we're pretty low profile income wise. My wife only works part time and since we have no debt to service every month our income needs are pretty modest. So some capital gains arent going to make me cry at tax time.

The first 60k came out of cash. The $120k for the two other purchases came out of wellesley.

This is really some nice diversification for the price. The only part I'm not thrilled with is the market neutral piece. If they get the ER down under .45 I'll be thrilled.

Moemg 04-23-2008 06:47 PM

I cheated on Early Retirement and went to Boglehead 's to get their take on the funds . They seem like great funds if you are in the distribution phase but the funds they are investing with I already have so I'm not sure I see the value in changing especially since they are in my IRA which I will not be touching until required . If I did not have a cola pension I would seriously consider them because I like the security of a monthly pay out .


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