Advice for new allocation or new fund in retirement?

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zorclon
Posts: 3
Joined: Mon Dec 03, 2018 11:35 am

Advice for new allocation or new fund in retirement?

Post by zorclon » Mon Dec 03, 2018 4:34 pm

Hi,
I'm new here and presently have an allocation of 70/30 in Vanguard mutual funds. Looking to start taking a payout within a year or two when I retire. I came across the Vanguard Managed Payout Fund, (VPGDX). Thinking about this as a single fund solution for retirement. Any suggestions or alternatives are appreciated!

mhalley
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Joined: Tue Nov 20, 2007 6:02 am

Re: Advice for new allocation or new fund in retirement?

Post by mhalley » Mon Dec 03, 2018 6:51 pm

Welcome to the forum!
Bogleheads have not embraced the managed payout funds. 70/30 seems a very aggressive aa for retirement, but if you are comfortable with it that seems fine. If you want a one fund solution, a target retirement or life strategy fund would be good, just pick the one with your desired aa. If you want a fund that changes, pick tr, if you want a static aa, pick ls.

https://investor.vanguard.com/mutual-fu ... etirement/#/

https://investor.vanguard.com/mutual-fu ... estrategy/#/

Thesaints
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Re: Advice for new allocation or new fund in retirement?

Post by Thesaints » Mon Dec 03, 2018 7:28 pm

Ask yourself who is the payout managed for. It will be a kind of "average investor" and if you are him, then the fund is likely good for you. On the other hand, if you aren't that "average" and have the skills to combine stock and bond funds to obtain a payout tailored to your specific needs...

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Phineas J. Whoopee
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Re: Advice for new allocation or new fund in retirement?

Post by Phineas J. Whoopee » Tue Dec 04, 2018 4:08 pm

As mentioned in mhalley's links Vanguard's Managed Payout Fund, VPGDX, takes far more risk than many retirees would choose for themselves.

The payouts are based on the past three years' returns, and go down when those returns are negative, as a close reading of the statutory prospectus makes clear.

I'm not saying nobody should use it, but it must be approached with caution.

PJW

averagedude
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Re: Advice for new allocation or new fund in retirement?

Post by averagedude » Tue Dec 04, 2018 5:37 pm

Im not impressed with the managed payout fund being a one fund solution for retirement. Me personally, i dont want commodities or alternative investments. When im choosing investments, i want asset classes that have had a long history of strong performance to diversify in and commodities and some alternative investments dont fit the bill. This is a reasonable fund to invest in as a 1 fund solution and you could do alot worse, so if you are comfortable with this fund then go for it. I would suggest that you consider one of the life strategy funds that Vanguard offers ( VSMGX) as your one fund solution before pulling the trigger.

zorclon
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Joined: Mon Dec 03, 2018 11:35 am

Re: Advice for new allocation or new fund in retirement?

Post by zorclon » Wed Dec 05, 2018 9:30 am

Thanks to everyone for your advice and thoughts. Always good to seek the wisdom of others. I will consider the Life Strategy funds. However, I like to have some control of AA and plan to change my AA soon to one that is more conservative.

For stocks, I currently use https://investor.vanguard.com/mutual-fu ... file/VTSAX VTSAX. For bonds, I currently use https://investor.vanguard.com/mutual-fu ... view/vbtlx VBTLX. Do you think these 2 funds are a simple way to achieve my long term goals? Any other suggestions are appreciated.

Once again, thanks to all that responded!

Thesaints
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Re: Advice for new allocation or new fund in retirement?

Post by Thesaints » Wed Dec 05, 2018 5:14 pm

Well, you have no exposure to the foreign half (presently) of the stock market and the total bond index fund does not have a duration necessarily tuned to your particular needs.

radiowave
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Re: Advice for new allocation or new fund in retirement?

Post by radiowave » Wed Dec 05, 2018 5:28 pm

zorclon wrote:
Wed Dec 05, 2018 9:30 am
Thanks to everyone for your advice and thoughts. Always good to seek the wisdom of others. I will consider the Life Strategy funds. However, I like to have some control of AA and plan to change my AA soon to one that is more conservative.

For stocks, I currently use https://investor.vanguard.com/mutual-fu ... file/VTSAX VTSAX. For bonds, I currently use https://investor.vanguard.com/mutual-fu ... view/vbtlx VBTLX. Do you think these 2 funds are a simple way to achieve my long term goals? Any other suggestions are appreciated.

Once again, thanks to all that responded!
zorclon welcome to the forum!

Your current 2 fund portfolio using VTSAX and VBTLX is an excellent choice for a diversified and low cost solution. You will have much more flexibility using this combination when you start to withdraw in retirment.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

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