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Food for thought, once you reach a certain stage in life and have put together a financial plan is there really any such thing as extra money? Shouldn't any wind fall be treated the same as other money and allocated per your plan? If the 10K is the first money a person has available then now is the time to start a plan. Give me 10K I wasn't expected and it gets dealt with the same way as the other money coming in. Which for us would be at this point in time 50% Wellesley and 25% Wellington and 25% Capital appreciation (TRowe).
It seems like you have a lot of overlap with those 3 funds. Blending Wellington & Wellesley Income seems particularly odd.
wellesely and wellington are a popular blend but does not offer much in the way of diversification. both good funds but except for a higher equity allocation to large cap in the end there is little portfolio diversification . it is popular for a retirement portfolio where you want to hold volatility down . you want more than wellesly but not as much as a fully diversified portfolio would give you in a severe down turn.
it has no midcaps to speak of
no small caps
very little foreign
no emerging market
medium credit quality bonds only.
personally i would pick one or the other and add some more diversification in either different types of equities or more varied types of bonds depending on my tolerance for volatility.
Last edited by mathjak107; 05-11-2015 at 03:08 AM..
It seems like you have a lot of overlap with those 3 funds. Blending Wellington & Wellesley Income seems particularly odd.
Three different portfolio's each with a unique purpose and a need for a balanced fund within each.
All three are taxable funds with a different time horizon of possible use if needed. The Vanguard portfolio has long term new money going in and will vary with different stages of life and allocation preferences. It is 80 percent about managing portfolio growth and 20% any possible or elective draw down from taxable accounts and the inevitable redistribution to taxable from tax sheltered required by RMD's. Now is not a whoopee time for large cap domestic stocks etc etc etc. Let there be a 10 percent correction or greater and new money will go in differently. The key is where does new money go in the short term while maintaining medium term allocations. It also helps maintain allocation over the multiple portfolios which have different types of holdings. Taxable small caps are elsewhere than Vanguard. Remember our situation is one of continued accumulation and soon probably little or no draw down for living expenses that can be anticipated. We are spending more money now than originally planned for as we have upped our desired spending and will continue to do so probably even more than planned for. I am also of the school that both active and index funds have a role and advantages at different times.
wellesely and wellington are a popular blend but does not offer much in the way of diversification. both good funds but except for a higher equity allocation to large cap in the end there is little portfolio diversification . it is popular for a retirement portfolio where you want to hold volatility down . you want more than wellesly but not as much as a fully diversified portfolio would give you in a severe down turn.
it has no midcaps to speak of
no small caps
very little foreign
no emerging market
medium credit quality bonds only.
personally i would pick one or the other and add some more diversification in either different types of equities or more varied types of bonds depending on my tolerance for volatility.
Yes, I agree with all of this. I also agree that it would be better to pick one or the other. I think that's how the company designed the funds--to be one or the other--not both.
If anything, adding a dash of Vanguard Extended Market Index to Wellesley Income and ditching Wellington altogether would make more sense.
I would do Vanguard total stock market index, little bit of everything and you are well diversified into thousands of stocks: large cap, small cap, value, growth, etc.
I would do Vanguard total stock market index, little bit of everything and you are well diversified into thousands of stocks: large cap, small cap, value, growth, etc.
not really , , a total market fund is really an s&p 500 fund in sheeps clothing. The entire total market fund is dominated by the s&p 500. even in some of the biggest run ups in mid and small caps where you had 5% differences the total market fund saw less than a 1% difference.
what you need is an s&p 500 and an extended market fund and season to taste. while it is called a total market fund the way it is weighted has everything but the s&p 500 counting very little in the mix
Last edited by mathjak107; 05-11-2015 at 11:45 AM..
Yes, I agree with all of this. I also agree that it would be better to pick one or the other. I think that's how the company designed the funds--to be one or the other--not both.
If anything, adding a dash of Vanguard Extended Market Index to Wellesley Income and ditching Wellington altogether would make more sense.
For now extended market is in my tax sheltered along with a small cap index fund. New Horizon serves its purpose in another taxable portfolio. We still have a chunk of change income stream to still kick in with it along with current income being invested. As MJ said in another thread he would be not really enthusiastic about putting new money into bonds right now and large caps are pretty pricey. Wellington enables me to use active management with a building equity tilt and Wellesley with a more income tilt. My index funds are not a favorite right now.
Three different portfolio's each with a unique purpose and a need for a balanced fund within each.
All three are taxable funds with a different time horizon of possible use if needed. The Vanguard portfolio has long term new money going in and will vary with different stages of life and allocation preferences. It is 80 percent about managing portfolio growth and 20% any possible or elective draw down from taxable accounts and the inevitable redistribution to taxable from tax sheltered required by RMD's. Now is not a whoopee time for large cap domestic stocks etc etc etc. Let there be a 10 percent correction or greater and new money will go in differently. The key is where does new money go in the short term while maintaining medium term allocations. It also helps maintain allocation over the multiple portfolios which have different types of holdings. Taxable small caps are elsewhere than Vanguard. Remember our situation is one of continued accumulation and soon probably little or no draw down for living expenses that can be anticipated. We are spending more money now than originally planned for as we have upped our desired spending and will continue to do so probably even more than planned for. I am also of the school that both active and index funds have a role and advantages at different times.
OK, it sounds like you have it figured out pretty well. Although I don't own any index funds, I agree with you that blending active & index funds can definitely be a good strategy.
OK, it sounds like you have it figured out pretty well. Although I don't own any index funds, I agree with you that blending active & index funds can definitely be a good strategy.
Since we exchange a lot I will explain for you and MJ a little more. One taxable portfolio will be for any major as in major medical expenses. One as a adjunct to our banking account and the third a legacy or if needed end of life medical care after the others are gone. They will be fed by my eventual SS on my own record and RMD's along with continuing current income savings. We could blow it all up and increase the level of spending.
just curious what the plan is for expensive medical needs if the invested portfolio's are down 40 or 50% and you need money at that point ?
that is what convinced us not to try to self insure. i couldn't see keeping so much powder dry in safe investments so it would be there regardless of market conditions.
we were going to do that until it was pointed out that for 1% of the gains on our portfolio we could just get a policy and invest that money the same as any other money.
if you remember when we did that money magazine article the one place me and their planners differed was on the self insuring aspect. they were right and i was wrong on that one when i really thought about what self insuring really means if you actually are going to do it in an action and not just words..
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