Is the Vanguard Balanced Index Fund all you need?

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simplesauce
Posts: 99
Joined: Tue Jan 17, 2017 8:22 am

Re: Is the Vangaurd Balanced Index Fund all you need?

Post by simplesauce » Thu May 18, 2017 6:00 am

stemikger wrote:
freebeer wrote:
Grt2bOutdoors wrote:
onourway wrote:The only potential issue I see with the Balanced Index fund is lack of international exposure.
That has been a net benefit to those who did not partake in the lower international returns.
Someone who had held 100% AAPL for the last two years would also have seen a net benefit over holding SP500 but that doesn't mean that it would have been an optimal investment decision. Bogleheads principle is diversification aka to "own the market". Diversification implies that if you are less diversified and happen to hold an asset class that does better than the market you will be rewarded but that doesn't mean you were wise to do so it means you were lucky. Similarly it does look smart to have held US only these last couple of years but that doesn't mean it's an optimal plan for the future (is it a "good enough" plan? probably yes but that's a different question).
Can't disagree with what you said, but as for me. I read Common Sense on Mutual Funds and the chapter on International Investing just made so much sense, I don't think I could ever invest in international. I really do feel like I already have built in international diversification in my all U.S. index fund because of all the multinationals. However, that is not the only reason, I'm confident the U.S. is the safest place a person can invest and will remain that way throughout my lifetime. It was never an issue if international did better, like you said I just got lucky. The only thing I can confidently say as an investor who is saving for retirement is, if international starts doing better than the U.S. I still will stick with my all U.S. Index portfolio. I don't think I can confidently say I will always be 60/40 stocks bonds or any other allocation, but I can be confident about an all U.S. portfolio.
I read that too. But I am still wrestling with this. Every other author I like says International is crucial. And they say Bogle and Buffett are being biased because they made all of their money here.

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Toons
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Re: Is the Vanguard Balanced Index Fund all you need?

Post by Toons » Thu May 18, 2017 6:06 am

All you need?
Indeed.
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

NiceUnparticularMan
Posts: 1740
Joined: Sat Mar 11, 2017 7:51 am

Re: Is the Vangaurd Balanced Index Fund all you need?

Post by NiceUnparticularMan » Thu May 18, 2017 6:24 am

simplesauce wrote:
stemikger wrote:
freebeer wrote:
Grt2bOutdoors wrote:
onourway wrote:The only potential issue I see with the Balanced Index fund is lack of international exposure.
That has been a net benefit to those who did not partake in the lower international returns.
Someone who had held 100% AAPL for the last two years would also have seen a net benefit over holding SP500 but that doesn't mean that it would have been an optimal investment decision. Bogleheads principle is diversification aka to "own the market". Diversification implies that if you are less diversified and happen to hold an asset class that does better than the market you will be rewarded but that doesn't mean you were wise to do so it means you were lucky. Similarly it does look smart to have held US only these last couple of years but that doesn't mean it's an optimal plan for the future (is it a "good enough" plan? probably yes but that's a different question).
Can't disagree with what you said, but as for me. I read Common Sense on Mutual Funds and the chapter on International Investing just made so much sense, I don't think I could ever invest in international. I really do feel like I already have built in international diversification in my all U.S. index fund because of all the multinationals. However, that is not the only reason, I'm confident the U.S. is the safest place a person can invest and will remain that way throughout my lifetime. It was never an issue if international did better, like you said I just got lucky. The only thing I can confidently say as an investor who is saving for retirement is, if international starts doing better than the U.S. I still will stick with my all U.S. Index portfolio. I don't think I can confidently say I will always be 60/40 stocks bonds or any other allocation, but I can be confident about an all U.S. portfolio.
I read that too. But I am still wrestling with this. Every other author I like says International is crucial. And they say Bogle and Buffett are being biased because they made all of their money here.
For what it is worth, from an unbiased perspective, the multinationals in the U.S. are not really a substitute for diversified international investments, due to their sector concentration and the fact most of those companies still have large exposure to the U.S. as well, and therefore the correlation to other U.S. companies will be high. If you think carefully about this issue of multinationals and want to achieve meaningful diversification, what you instead should be thinking is you want international companies with less U.S. sales, not U.S. companies with some international sales. And in fact things like small international companies and emerging market companies have lower observed correlation with U.S. stocks than large international companies in developed countries.

Hence why most people who offer this argument ALSO admit to just being biased in favor of the United States. Because from the standpoint of an unbiased investor interested in meaningful diversification, this would not be a persuasive argument that an all-U.S. portfolio had achieved their goals.

Lou354
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Joined: Sun Apr 03, 2016 10:51 pm

Re: Is the Vanguard Balanced Index Fund all you need?

Post by Lou354 » Thu May 18, 2017 8:43 am

Gort wrote:
How do you calculate the annual federal tax due on a $100,000 Balanced Index portfolio in a taxable account, 15% tax bracket?
Vanguard will send you a form 1099 telling you the amount of ordinary income, long term capital gains, Short term capital gains, and dividends for the year. Does that answer your question?

dbr
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Re: Is the Vanguard Balanced Index Fund all you need?

Post by dbr » Thu May 18, 2017 9:04 am

Lou354 wrote:
Gort wrote:
How do you calculate the annual federal tax due on a $100,000 Balanced Index portfolio in a taxable account, 15% tax bracket?
Vanguard will send you a form 1099 telling you the amount of ordinary income, long term capital gains, Short term capital gains, and dividends for the year. Does that answer your question?
We could add that one then fills out a tax return for the year in question which produces the income tax due for that year. If one goes back and deletes all the entries for the investments one gets a lesser tax due. The difference between the two is the tax "due on the investments."

If the question is to know that amount in advance, then one has to estimate income items from the fund and run a prospective tax return to find out what will be due.

bikechuck
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Re: Is the Vanguard Balanced Index Fund all you need?

Post by bikechuck » Thu May 18, 2017 10:13 am

This has been an interesting thread and has me contemplating how I want to restructure my portfolio after my wife and I retire later this year. I am now thinking of doing the following ...

1) Use the Vanguard Balanced Index Fund as our core holding however, a 60/40 split is too rich for our risk tolerance in our mid 60s so...

2) Augment it with TIAA Traditional my vintage pays approx. 3.5 - 4.0% and a similar investment paying a guaranteed minimum 4.5% with another insurance co. (we already have both of these)

3) Season it with an Investment in TIAA Real Estate and VG total International Equities held in our Roths

4) Maintain cash (in high yield savings accounts and CDs) equal to approx. 2 years spending requirements

5) Aim for 50% in (Equities + Real Estate) and 50% in (Bonds + number 2 above + Cash & CDS).

This is a bit splattered around but it is conservative and should be fairly easy to maintain. I welcome any input on this approach for a risk averse couple in their mid 60s.

dexter74
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Joined: Thu Jan 19, 2017 12:34 am

Re: Is the Vanguard Balanced Index Fund all you need?

Post by dexter74 » Thu May 18, 2017 2:35 pm

VBINX is all I have in my Roth and I love it. I'm by no means an expert when it comes to investing - hence, all the more reason to have balanced index. It really doesn't get much easier. Obviously, you have to be comfortable w/ the AA [60/40 is perfect for me] and be ok not holding any intl.

I believe Mr. Bogle himself said Balanced Index is really all the majority of investors need, and that's the fund he uses for his grandchildren.

Mr.BB
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Re: Is the Vanguard Balanced Index Fund all you need?

Post by Mr.BB » Thu May 18, 2017 2:37 pm

I think a lot has to do with your age. For someone in there 20's and into their 30's, I think that is too conservative of a fund.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

rattlenap
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Joined: Wed May 25, 2016 6:22 pm

Re: Is the Vanguard Balanced Index Fund all you need?

Post by rattlenap » Thu May 18, 2017 6:46 pm

AlwaysaQ wrote:Can somebody who held Vanguard Balanced Index tell me what percentage of dividends were qualified dividends? That info doesn't seem available on the website.
15% I believe.

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