Wellesley income fund

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Wellesley income fund

Postby balesfam » Wed Apr 11, 2012 2:32 pm

Hi, my wife and I will be retired in a few months. We have no debt, own our home, and have a 0% car loan for 25,000.
My wifes S.S. will be 2400.00 and mine will be 1200.00 per month. I have an pension of 1385.00 per month from my company.
We have 550,000 to invest in vanguard funds, and need at least 3% over the long term.
I have been reading about investing for along time, it gets so confusing. Our cash has been through the tech bubble, 911, and the 2008 diaster.
We have little tolerence for risk. She is 66, and I am 62. I would like to know, what would be wrong with putting most of our cash in the Wellesley
income fund and sit back and enjoy life. I like the dividend paying stocks, and the average length of the bonds, and the mix between treasuries and corporate.
Thanks for any thoughts
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Re: Wellesley income fund

Postby The Wizard » Wed Apr 11, 2012 2:49 pm

Wellesley isn't a bad choice at all.
There are some other VG balanced funds you might also want to look at...
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Re: Wellesley income fund

Postby steve r » Wed Apr 11, 2012 2:52 pm

This keeps things real simple. Has the value investments you like. Limits the needs to think in the future ... where to withdrawl money. Expense ratios are very low. (0.18). I see no problem with all your investments here.

You may want to look at a data set used to backtest various index strategies. You can see how the fund performed in the past. Usually looking at the past for a specific fund is a recipe for disaster. That said you are looking back at a fund that tried to be diversified and hold a fairly constant mix of bonds / large value stocks overtime, not to try to beat the market.

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Re: Wellesley income fund

Postby balesfam » Wed Apr 11, 2012 2:57 pm

I love the mix of companies it invest in. I also like how it behaved in 2008 on down about 10%. I assume I would not need to mix in a TIPs fund for inflation due to the stock mix.
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Re: Wellesley income fund

Postby The Wizard » Wed Apr 11, 2012 3:00 pm

balesfam wrote:I love the mix of companies it invest in. I also like how it behaved in 2008 on down about 10%. I assume I would not need to mix in a TIPs fund for inflation due to the stock mix.

Arguably not the best assumption.
Compare and contrast with the Target Retirement Income Fund (VTINX).
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Re: Wellesley income fund

Postby balesfam » Wed Apr 11, 2012 3:14 pm

I do like tr, does anybody know why Wellesley has a 47.5% turnover rate, and does it matter.
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Re: Wellesley income fund

Postby steve r » Wed Apr 11, 2012 3:23 pm

balesfam wrote:I do like tr, does anybody know why Wellesley has a 47.5% turnover rate, and does it matter.


Great question. The fund should be a buy, hold and forget type fund. I am curious.
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Re: Wellesley income fund

Postby dbr » Wed Apr 11, 2012 3:39 pm

It would be worth obtaining the annual report and statement of additional information to see what costs the fund pays for brokerage expenses and so on.

https://personal.vanguard.com/us/funds/ ... IntExt=INT
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Re: Wellesley income fund

Postby Islander » Wed Apr 11, 2012 5:52 pm

If the choice be Wellesley or Target Retirement Income,suggest you do a Morningstar analysis of both funds including yield, performance, and risk/reward profile.

As for the turnover rate, it is very low for an actively managed fund and merely indicates that the managers are doing what they
are supposed to be doing ie., minding the store.
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Re: Wellesley income fund

Postby BigD53 » Wed Apr 11, 2012 6:09 pm

I never had a problem being 100% in Wellesley. I did just that for many years. However, to satisfy my feeling that I should be a bit more "diversified", I created a simple two-fund portfolio: 50% Wellesley, and 50% Target Retirement Income.

I like the TR fund because it includes Tips, and many more different kinds of bonds. And of course lots more stocks with Total Stock Market and Total International. I don't need (or desire) to take much risk, nor do I wish to have a complicated portfolio. These two simple funds suit me just fine. Best of luck to you. :beer
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Re: Wellesley income fund

Postby Sheepdog » Wed Apr 11, 2012 6:16 pm

BigD53 wrote:I never had a problem being 100% in Wellesley. I did just that for many years. However, to satisfy my feeling that I should be a bit more "diversified", I created a simple two-fund portfolio: 50% Wellesley, and 50% Target Retirement Income.

I like the TR fund because it includes Tips, and many more different kinds of bonds. And of course lots more stocks with Total Stock Market and Total International. I don't need (or desire) to take much risk, nor do I wish to have a complicated portfolio. These two simple funds suit me just fine. Best of luck to you. :beer

Ditto. Among my stock containing funds, I am 62% Wellesley and 38% Target Income for the reasons which BigD53 mentioned. (I am 78, retired, and living off of these plus SS.)
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Re: Wellesley income fund

Postby Stonebr » Wed Apr 11, 2012 6:51 pm

steve r wrote:
balesfam wrote:I do like tr, does anybody know why Wellesley has a 47.5% turnover rate, and does it matter.


Great question. The fund should be a buy, hold and forget type fund. I am curious.


65% of Wellesley is in bonds. Bond funds always have high turnover due to coupon and maturity reinvestment. Turnover in Vanguard Total Bond Index Fund is 73%, for example.
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Re: Wellesley income fund

Postby balesfam » Wed Apr 11, 2012 10:44 pm

Thanks guys for your advice. I like the idea of Wellesley and target retirement. I have been going round and round for months trying to come to a decision, and I think this is the portfolio for me and my wife.
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Re: Wellesley income fund

Postby 1530jesup » Wed Apr 11, 2012 11:45 pm

to kind of divert this thread, would Wellesley be a good Roth candidate?
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Re: Wellesley income fund

Postby Tuxx » Thu Apr 12, 2012 4:04 am

Yes, Wellesley is a good ROTH candidate because it does not get the 15% dividend tax treatment.

To the OP, I would suggest looking at Managed Distro Payout. $550K would generate $3034.17 per month. That is over twice your target of 3% plus you get a middle of the month income stream. Which really helps to budget. Instead of having everything come in at one lump at the start of the month.
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