Pick One of Three! Vanguard Balanced Funds
Pick One of Three! Vanguard Balanced Funds
I am knowledgeable about all the options available to me at vanguard (and lazy porfolios/slice and dice etc.), but my preference is around a 60 stock / 40 bond single balanced fund. Basically just set it and forget it. I've narrowed it down to 3 choices, and wanted some input if you can. My tax bracket is low, 10-15%, so my taxable portion of portfolio (only 5% of total) owning bonds will have a zero to minimal impact.
So would you own which one below and why? I just can't make up my mind (and I'm not the biggest fan of international investing, given that all global multinationals aren't really american companies anymore (many would debate that). I just want each of your opinions, which one of the three below would you pick for a multi decade portfolio.
What would you pick and why? My decision will be based on your input, so thank you for taking the time.
1. Wellington Admiral
2. Balanced Index Admiral
3. Lifestrategy Moderate Growth
Thanks for the help
So would you own which one below and why? I just can't make up my mind (and I'm not the biggest fan of international investing, given that all global multinationals aren't really american companies anymore (many would debate that). I just want each of your opinions, which one of the three below would you pick for a multi decade portfolio.
What would you pick and why? My decision will be based on your input, so thank you for taking the time.
1. Wellington Admiral
2. Balanced Index Admiral
3. Lifestrategy Moderate Growth
Thanks for the help
Last edited by dcarste on Wed Jul 01, 2015 3:25 pm, edited 1 time in total.
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Re: Help Picking a Balanced Fund at Vanguard
Balanced Index Admiral - stated investment charter (no fine tuning unlike the Lifestrategy Funds which have been known to see-saw between active management, then International Bond addition, who knows what comes next?) I own Wellington, but it's not my only fund holding, it has a fine long term track record, I'd hold it if it were my only fund. I've already indicated I'm not a fan of Lifestrategy funds.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Pick One of Three! Vanguard Balanced Funds
I use LS Mod Growth. It is far more diversified than the other choices. I can live with the tweaking by Vanguard. Set it and forget it.
- FelixTheCat
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Re: Pick One of Three! Vanguard Balanced Funds
Vanguard Balanced Index ~ Jack Bogle owns it.
http://www.reuters.com/article/2012/09/ ... LI20120911
http://www.reuters.com/article/2012/09/ ... LI20120911
Felix is a wonderful, wonderful cat.
Re: Help Picking a Balanced Fund at Vanguard
+1Grt2bOutdoors wrote:Balanced Index Admiral - stated investment charter (no fine tuning unlike the Lifestrategy Funds which have been known to see-saw between active management, then International Bond addition, who knows what comes next?) I own Wellington, but it's not my only fund holding, it has a fine long term track record, I'd hold it if it were my only fund. I've already indicated I'm not a fan of Lifestrategy funds.
John Bogle has been asked several times, if someone wanted to be a 100% index investor how many funds do they need to own. Without hesitation, he always suggests the Vanguard Balanced Index Fund is a great choice and all anyone needs. I also love the fact that he puts his money where his mouth is and owns this fund himself.
Also, Jack does not say this all the time, but he feels you should count social security as part of your fixed income. If that's the case, and 60/40 seems to be right for you, some may argue this would not only be good for a multi-decade portfolio, but a portfolio for a lifetime.
Now one caveat. You didn't say how old you are. If you are younger, 60/40 may be too conservative. There is a post out here I believe I started about holding the Vanguard Balanced Index Fund from Cradle to Grave and it had some interesting responses. You can do a lot worse even if a younger investor just kept adding to this fund and never looked back.
I do not own taxable investments, so my plan in retirement is to throw it all in this fund. As Jack says, investing doesn't get better than that.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!
Re: Pick One of Three! Vanguard Balanced Funds
I prefer LS Moderate Growth for better diversification; it holds international stocks and international bonds. Wellington is a fine fund but has very little in international.
But any of the three are fine. Wellington will generate some capital gains, but in your 15% tax bracket, there won't be any tax cost on them.
But any of the three are fine. Wellington will generate some capital gains, but in your 15% tax bracket, there won't be any tax cost on them.
Re: Pick One of Three! Vanguard Balanced Funds
As per your circumstances, I would just use TSM for stocks and an Online Saving account ( Ally/ Barclays ) for "Bonds"
Last edited by joe8d on Wed Jul 01, 2015 8:30 pm, edited 1 time in total.
All the Best, |
Joe
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Re: Pick One of Three! Vanguard Balanced Funds
LS because of the international diversification.
Re: Pick One of Three! Vanguard Balanced Funds
I will give another + to the balanced index admiral fund. Too easy and a .09 ER.... would treat you just fine.
Re: Pick One of Three! Vanguard Balanced Funds
How about knowing how each has behaved in the past in a rising interest rate environment and what its duration and credit risks are before deciding on '"liking" or "disliking" a fund?
Re: Pick One of Three! Vanguard Balanced Funds
If you can't decide then just pick #2 Balanced Index. This is the boring but solid option. Also it is near 4th July and it is the most American!
If you want a little more risk then pick #1 Wellington. Has a higher stock allocation currently at 66% though it can go 60-70%. Also less diversified and you are betting on the active management being as good as its long, excellent history. Historically this one outperformed the other two.
If you want world exposure for the diversification go with #3 though you said you didn't care for it so then that makes your choice easier - #1 or 2. (Wellington has about 10% foreign stock so you get some exposure with #1).
At the end of the day all 3 are good - there are no wrong answers!
Disclaimer - I hold about 50:50 Wellington and Balanced. Best of both worlds.
If you want a little more risk then pick #1 Wellington. Has a higher stock allocation currently at 66% though it can go 60-70%. Also less diversified and you are betting on the active management being as good as its long, excellent history. Historically this one outperformed the other two.
If you want world exposure for the diversification go with #3 though you said you didn't care for it so then that makes your choice easier - #1 or 2. (Wellington has about 10% foreign stock so you get some exposure with #1).
At the end of the day all 3 are good - there are no wrong answers!
Disclaimer - I hold about 50:50 Wellington and Balanced. Best of both worlds.
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Re: Pick One of Three! Vanguard Balanced Funds
Balanced Index. In fact Jack Bogle invests his personal funds for his grandkids in this exact fund. Mayor can find the interviews online.
Best.
Best.
John C. Bogle: “Simplicity is the master key to financial success."
Re: Pick One of Three! Vanguard Balanced Funds
I wanted to simplify my TIRA portfolio and went through the same decision question. I decided on Balanced Index because it is simple, low cost and has been left alone. I know what I am buying.
Wellington is an excellent fund but "active" vs passive/index and a bit more expensive. Has a great track record but who knows down the road what they will invest in. It is somewhat concentrated e.g. has 96 stocks, and tens of billions of assets.
Life Strategy and Target Date funds are nice ideas but what are you buying? VG has made numerous changes to the composition recently upping international stock and adding International bonds. Previously they upped the equity allocation. I really like Vanguard but don't feel their "experts" know any more than other firm's experts.
So, you buy it today and who knows what their experts will decide? Not something I want to worry about. Oh and every time they change the TD or LIfe Strategy fund composition or allocation It affects my taxable positions if I want to keep my total portfolio allocation the same. e.g. raise international equities in a TD fund then do I have to sell my taxable International equities to keep my international equities at my target. Ugh. Not for me.
So, I'll stick with Balanced Index with a .09 expense ratio and supplement it as necessary/if necessary.
Wellington is an excellent fund but "active" vs passive/index and a bit more expensive. Has a great track record but who knows down the road what they will invest in. It is somewhat concentrated e.g. has 96 stocks, and tens of billions of assets.
Life Strategy and Target Date funds are nice ideas but what are you buying? VG has made numerous changes to the composition recently upping international stock and adding International bonds. Previously they upped the equity allocation. I really like Vanguard but don't feel their "experts" know any more than other firm's experts.
So, you buy it today and who knows what their experts will decide? Not something I want to worry about. Oh and every time they change the TD or LIfe Strategy fund composition or allocation It affects my taxable positions if I want to keep my total portfolio allocation the same. e.g. raise international equities in a TD fund then do I have to sell my taxable International equities to keep my international equities at my target. Ugh. Not for me.
So, I'll stick with Balanced Index with a .09 expense ratio and supplement it as necessary/if necessary.
Re: Pick One of Three! Vanguard Balanced Funds
Lifestrategy Moderate Growth because of the international diversification in both stocks and bonds. If you don't care about international holdings, the other funds are fine choices. Wellington holds a small percentage in international while Balanced Index sticks to the U.S.
Re: Pick One of Three! Vanguard Balanced Funds
"My decision will be based on your input, so thank you for taking the time."
Whoa!
You need to own your own decision.
You say you want to set it and forget it. You say you're not fond of international investing.
Just one of the three funds you've identified avoids international investing, right?
Lev
Whoa!
You need to own your own decision.
You say you want to set it and forget it. You say you're not fond of international investing.
Just one of the three funds you've identified avoids international investing, right?
Lev
Re: Pick One of Three! Vanguard Balanced Funds
In my experience, when people use this type of wording they are often mistaken about their tax bracket, so I looked at some of your previous posts to see if that low tax bracket seemed right.dcarste wrote: My tax bracket is low, 10-15%...
From the previous posts, it appears you are single and make something in or near low six figures. This would put you in the 28% tax bracket although your overall or "effective" tax might be near 15%. I consider the 28% bracket to be one of the higher ones, not a lower one.
If this is correct and if you want a balanced fund in taxable, you should consider using Tax Managed Balanced Fund.
My suggestion is that a balanced fund in taxable is not ideal because you are locked into selling the both stocks and bonds - you have no option to sell just stocks or just bonds. For the convenience of just one fund, this is a "problem" that some people don't mind though.
Link to Asking Portfolio Questions
Re: Pick One of Three! Vanguard Balanced Funds
You talk about your low tax rate and that you only have 5% of your portfolio in 'taxable'. It's not clear if the single fund you're choosing is to fill that 5% or if you talking about the bulk of your portfolio. Assuming the latter, and that you are young enough that these funds will be invested for a reasonably long period, I think it would be a massive oversight to ignore international markets. One can argue the pros/cons of international bond exposure, but I don't feel any US-based investor with a long time-horizon has a properly diversified portfolio without any international exposure - that is almost the definition of a 'diversification free lunch'. One strong vote for LifeStrategy (or a Target Retirement Fund if you desire reduced equity exposure over time.)
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Re: Pick One of Three! Vanguard Balanced Funds
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Last edited by Northern Flicker on Thu Mar 31, 2022 2:53 pm, edited 1 time in total.
- Christine_NM
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Re: Pick One of Three! Vanguard Balanced Funds
I've had Balanced Index (in taxable!) since 2002. I have also owned Wellington in an IRA, but now have Wellesley in the IRA. I considered the LifeStrategy MG but preferred access to Admiral Shares and no surprises in fund management.
It was a long decision, several years of watching different funds and comparing them to what I had. I think the small difference in ER and the fixed allocation to total bond and stock markets finally won me over to Balanced Index. I never regretted it. The taxable thing is a very light burden.
There used to be a core fund concept -- Balanced Index is my core fund and I have other funds too, some riskier than VBIAX, some less risky.
If you are determined to have just one fund then maybe LifeStrategy is better for you.
It was a long decision, several years of watching different funds and comparing them to what I had. I think the small difference in ER and the fixed allocation to total bond and stock markets finally won me over to Balanced Index. I never regretted it. The taxable thing is a very light burden.
There used to be a core fund concept -- Balanced Index is my core fund and I have other funds too, some riskier than VBIAX, some less risky.
If you are determined to have just one fund then maybe LifeStrategy is better for you.
16% cash 49% stock 35% bond. Retired, w/d rate 2.5%
Re: Pick One of Three! Vanguard Balanced Funds
If I could only choose one of those funds, then it would be LifeStrategy, because it's more diversified. I don't think you could go wrong with any of them, though.
- Tim
- Tim
Re: Pick One of Three! Vanguard Balanced Funds
I do not see your age, your work-retirement status, etc.
I can suggest based only on investment theory, not on your financial condition.
The LS Moderate Growth holds 4 total stock and bond market index funds, providing global exposure based on Vanguard's research conclusions, for the lowest management fee I am aware of in a balanced fund with these allocations.
Theoretically, it would seem to be the best choice.
The issues raised about Vanguard modifying the LifeStrategy Funds as the years pass is not negative if those modifications have improved the stated investment objective of the funds--as (personal opinion) I think they have. I have owned LS Growth Fund since it was offered over 20 years ago. I have often wondered why Vanguard did not make certain improvements and, gratefully,the improvements were eventually made.
Without doubt the LS Growth fund is the best single investment I ever made.
peace
I can suggest based only on investment theory, not on your financial condition.
The LS Moderate Growth holds 4 total stock and bond market index funds, providing global exposure based on Vanguard's research conclusions, for the lowest management fee I am aware of in a balanced fund with these allocations.
Theoretically, it would seem to be the best choice.
The issues raised about Vanguard modifying the LifeStrategy Funds as the years pass is not negative if those modifications have improved the stated investment objective of the funds--as (personal opinion) I think they have. I have owned LS Growth Fund since it was offered over 20 years ago. I have often wondered why Vanguard did not make certain improvements and, gratefully,the improvements were eventually made.
Without doubt the LS Growth fund is the best single investment I ever made.
peace
Re: Pick One of Three! Vanguard Balanced Funds
If we were talking about me...
I'd probably go with VG LS Moderate Growth because I want significant international presence in my portfolio.
Since international is not as important to you, I guess my second choice would be Wellington for 3 reasons:
1. I still can't let go of my own desire for international company exposure, of which Wellington has some.
2. Wellington's international allocation is not very far from (presumibly) your proposed amount in this thread. (Did I mention I can't let go of my own desire for international company exposure?)
3. I already forgot my third reason.
All in all, you can't go wrong with Vanguard's Balanced Fund, either. I respect it. I venerate it. Alas, it is not for me.
I'd probably go with VG LS Moderate Growth because I want significant international presence in my portfolio.
I'm not sure I understand the statement, but many argue that international diversification is achieved through U.S. companies that are multinational. My problem is that same thinking allows me to consider that many non-U.S. multinationals also have U.S. exposure...and I want that their exposure to the U.S. market, too.dcarste wrote:(and I'm not the biggest fan of international investing, given that all global multinationals aren't really american companies anymore (many would debate that).
Since international is not as important to you, I guess my second choice would be Wellington for 3 reasons:
1. I still can't let go of my own desire for international company exposure, of which Wellington has some.
2. Wellington's international allocation is not very far from (presumibly) your proposed amount in this thread. (Did I mention I can't let go of my own desire for international company exposure?)
3. I already forgot my third reason.
All in all, you can't go wrong with Vanguard's Balanced Fund, either. I respect it. I venerate it. Alas, it is not for me.
Last edited by pingo on Mon Jul 06, 2015 6:45 pm, edited 2 times in total.
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Re: Pick One of Three! Vanguard Balanced Funds
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Last edited by Northern Flicker on Mon Feb 17, 2020 11:28 pm, edited 1 time in total.
Re: Pick One of Three! Vanguard Balanced Funds
My thoughts in red...
dcarste wrote: What would you pick and why? My decision will be based on your input, so thank you for taking the time.
1. Wellington Admiral
I like Wellington and would have no problem investing in it, but I couldn't put very much in it solely because it's an active fund. I know it's been around forever, but it's active, so I'd have a difficult time putting much more than 1/3 of my pie in it. Rational? Maybe not, but there you go.
2. Balanced Index Admiral
If I wanted a pure 60/40 index fund that only had domestic exposure then this fund would be it. I'd buy it, hold it, and never think about it again. Its allocations don't change/shift/move. To quote many pointy headed bosses I've had in the past, "It is what it is..."
3. Lifestrategy Moderate Growth
If this were my money I would pick the LS fund because it has international exposure and is in my mind more diversified. If I had my choice I would remove the International bond fun within the LS fund. The Intl bonds wouldn't keep me from investing in the LS fund, but they sure don't make me want to invest in it either. You said you aren't a fan of international investing, so the LS fund appears to me off the table for you.
A man is a success if he gets up in the morning and gets to bed at night, and in between he does what he wants to do. - Bob Dylan