Why can't I break up with Wellington? (Roth Conversion question)

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Topic Author
tyjy
Posts: 60
Joined: Thu Mar 09, 2017 11:37 am

Why can't I break up with Wellington? (Roth Conversion question)

Post by tyjy » Sat Nov 02, 2019 1:46 pm

We are retiring in 2020 and want to maintain a 60/40 asset allocation. Our portfolio is all at Vanguard, divided between taxable, SEP IRA, His Roth, Her Roth, Her TIRA, most in basic VG 3/4 Lazy Portfolio funds, except for a tiny bit in VWELX, keep reading...

I just did my very first Roth Conversion yesterday, put all my TIRA into my ROTH, and wished I had confirmed my thoughts with this forum BEFORE I did it because now I'm second guessing my decision and mad at my ignorance : /

So, my TIRA only had $16k in it, all invested in (VWELX) Wellington Investor Shares. (The 52 week high price of $43/share is when I did the conversion). My existing ROTH IRA has $18k in (VTIAX) Total International Stock Admiral shares & $39k in (VTSAX) Total Stock Market Admiral shares. My intention before actually making the transaction was to put $10k of the conversion into the VTSAX and $6k into the VTIAX mainly because I've read the strategy that stocks are better in a ROTH IRA than bonds.

Well, at the last minute I couldn't let myself get rid of Wellington! It's like I'm married to it and don't want to let it go! Two negatives are the ER is .25% and it's a 65/35 stock/bond ratio. The positive is it's managed well and makes money. So I just opened the same fund in my Roth (obviously also bought at the 52 week high price of $43/share) and now I'm not sure I was stupid : /

Let me have it! I need to know if I went wrong and if I should correct it right away? A question is why do I think Wellington is so great? Are those bonds in a Roth that big a deal? Does that .25% ER add up and senseless to pay?

Thanks so much!

retiredjg
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Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by retiredjg » Sat Nov 02, 2019 1:54 pm

tyjy wrote:
Sat Nov 02, 2019 1:46 pm
Are those bonds in a Roth that big a deal?
Not in my opinion.

Even though I prefer stocks in Roth when all things are equal, I think people make this a much bigger deal than it really is. If you like Wellington, you should have some. If Roth IRA is where it needs to be, so be it.

rkhusky
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Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by rkhusky » Sat Nov 02, 2019 1:57 pm

$16K is not a big deal. Perhaps you should up the ante to $50K so that you can get Admiral shares.

Haeysh
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Joined: Sat Jun 22, 2019 11:38 am

Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by Haeysh » Sat Nov 02, 2019 2:06 pm

My wife has no interest/desire to handle financial matters. To simplify one part of our financial puzzle, nearly all iIRA and Roth are Wellington. Why not have part of your money under management? I’ve backtested this fund vs many combinations vs 60/40 and if beats nearly all. Relax. You could do a lot worse.

aerosurfer
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Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by aerosurfer » Sat Nov 02, 2019 2:07 pm

It’s all tax free in a Roth, move it as you see fit until you find your comfort level.

Do you have other tax sheltered retirement money? Just buy Wellington in that account or the equivalent of stocks/bonds in that account

Grasshopper
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Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by Grasshopper » Sat Nov 02, 2019 2:11 pm

I keep it simple all tax deferred in Wellington, taxable in Total World and use Total Bond to balance my allocation. So when I convert to Roth's it is just moving shares around, easy peasy.

tibbitts
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Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by tibbitts » Sat Nov 02, 2019 2:12 pm

I have some high-yield bond funds in a Roth and they have actually outperformed some equity funds in the same account for the duration I have owned them.

I would try to own Wellington where you have a $50k balance. I do invest in a couple of funds where I can't meet the $50k but only with a total of $8k so far.

Topic Author
tyjy
Posts: 60
Joined: Thu Mar 09, 2017 11:37 am

Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by tyjy » Sat Nov 02, 2019 2:53 pm

I'm feeling better, thank you!

So, since I do have enough in that Roth to "ante up to $50k" to make that Wellington fund into Admiral shares, maybe I should do some rearranging, just to at least save some ER?

retiredjg
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Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by retiredjg » Sat Nov 02, 2019 3:01 pm

That would subject more of your money to a higher ER. Doesn't make a lot of sense to me just to get a lower ER on one fund.

But without knowing what your portfolio space looks like and what you are trying to accomplish, nothing really makes sense. :D

Haeysh
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Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by Haeysh » Sat Nov 02, 2019 4:08 pm

Yes. Good idea

KlangFool
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Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by KlangFool » Sat Nov 02, 2019 4:11 pm

tyjy wrote:
Sat Nov 02, 2019 2:53 pm
I'm feeling better, thank you!

So, since I do have enough in that Roth to "ante up to $50k" to make that Wellington fund into Admiral shares, maybe I should do some rearranging, just to at least save some ER?
Come on. Is it really worth your effort to optimize just to save 0.1% in annual expense ratio?

KlangFool

Topic Author
tyjy
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Joined: Thu Mar 09, 2017 11:37 am

Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by tyjy » Sat Nov 02, 2019 8:33 pm

retiredjg wrote:
Sat Nov 02, 2019 3:01 pm
That would subject more of your money to a higher ER. Doesn't make a lot of sense to me just to get a lower ER on one fund.
Yeah, that's true, didn't think if it that way. And yes, it's only .1% less ER.

I think I'll just keep that little bit of Wellington and continue forward as originally planned following the 3 fund lazy portfolio and AA.

Thanks so much for giving me some help here! It's nice to have somewhere to turn!

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BL
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Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by BL » Sat Nov 02, 2019 9:02 pm

Sounds like you are doing fine. There is no tax consequence for changing funds in tax-advantaged accounts like a Roth IRA, so if, after a few months of consideration, you decide to change something, it should be fine. If you think something out carefully and are sure you want to stay with it, that is fine. You seem to have the basics down, so why not "live a little" if it seems right. Write down your plan so you can stick with it through ups and downs.

FactualFran
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Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by FactualFran » Mon Nov 04, 2019 3:29 pm

Having bonds in a Roth is not a big deal. Having bonds in a Roth can result in a higher total return than having only stocks. VWELX has had a higher total during 12 of the 17 rolling 10 calendar year periods that VWELX and VTSMX have both existed.

Dave55
Posts: 565
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Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by Dave55 » Mon Nov 04, 2019 5:49 pm

tyjy wrote:
Sat Nov 02, 2019 1:46 pm
We are retiring in 2020 and want to maintain a 60/40 asset allocation. Our portfolio is all at Vanguard, divided between taxable, SEP IRA, His Roth, Her Roth, Her TIRA, most in basic VG 3/4 Lazy Portfolio funds, except for a tiny bit in VWELX, keep reading...

I just did my very first Roth Conversion yesterday, put all my TIRA into my ROTH, and wished I had confirmed my thoughts with this forum BEFORE I did it because now I'm second guessing my decision and mad at my ignorance : /

So, my TIRA only had $16k in it, all invested in (VWELX) Wellington Investor Shares. (The 52 week high price of $43/share is when I did the conversion). My existing ROTH IRA has $18k in (VTIAX) Total International Stock Admiral shares & $39k in (VTSAX) Total Stock Market Admiral shares. My intention before actually making the transaction was to put $10k of the conversion into the VTSAX and $6k into the VTIAX mainly because I've read the strategy that stocks are better in a ROTH IRA than bonds.

Well, at the last minute I couldn't let myself get rid of Wellington! It's like I'm married to it and don't want to let it go! Two negatives are the ER is .25% and it's a 65/35 stock/bond ratio. The positive is it's managed well and makes money. So I just opened the same fund in my Roth (obviously also bought at the 52 week high price of $43/share) and now I'm not sure I was stupid : /

Let me have it! I need to know if I went wrong and if I should correct it right away? A question is why do I think Wellington is so great? Are those bonds in a Roth that big a deal? Does that .25% ER add up and senseless to pay?

Thanks so much!
Wellington is an excellent managed fund. The .25% is a far cry from "expensively" managed funds. I would not give it a second thought.

Dave

Topic Author
tyjy
Posts: 60
Joined: Thu Mar 09, 2017 11:37 am

Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by tyjy » Mon Nov 04, 2019 7:19 pm

BL: "Thinking things out carefully" has been a plus for me AND a pain for me! I THINK I'm doing okay then panic. But you're right, I can rearrange funds in there and I like that "live a little" motto! I needed that! Thanks!

Factual: Thanks for that. Bonds in the fund is what got me worried but I read every single tab about the VWELX fund and the dividends I've gotten on just my $16k have been great. VWELX seems to have a good long term "reputation" (I know that's probably not the right word but hopefully ykwim)

Dave: that's what I thought, then I freaked out a little. Also, I am a recovering client of an "expensively managed" brokerage firm and learning this investment world on my own for only a handful of years I still worry.



One thing that threw me off was, when I did this on Thursday, all the funds I was dealing with were at their top share price, VWELX was $43/share Total Stock was $75/sh and Total International Stock was $28/sh. I knew I'd be "selling" the TIRA VWELX shares at a high, but didn't want to BUY at a high so I concluded I'd make it a wash, just sell and buy the same thing for my Roth. (Especially because I like Wellington for some odd reason?) After that...I worried about my reasoning, ugh :oops:

Thank you to all for the reassurance! I am going to continue to try but sure appreciate this forum!! :sharebeer

dru808
Posts: 176
Joined: Sat Oct 15, 2011 2:42 pm

Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by dru808 » Mon Nov 04, 2019 10:05 pm

I’m in the same boat, sort of. I started my investment journey with the vanguard star fund. I cannot for the life of me completely get rid of it. I traded out of most of it and I’m below the buy in minimum, but I cannot get rid of the final $400 or so left in it. It’s sentimental, I guess. No biggie, it’s a micro sized portion of my accounts. Good luck 🍀

Topic Author
tyjy
Posts: 60
Joined: Thu Mar 09, 2017 11:37 am

Re: Why can't I break up with Wellington? (Roth Conversion question)

Post by tyjy » Mon Nov 04, 2019 10:11 pm

dru808 wrote:
Mon Nov 04, 2019 10:05 pm
I’m in the same boat, sort of. I started my investment journey with the vanguard star fund. I cannot for the life of me completely get rid of it. I traded out of most of it and I’m below the buy in minimum, but I cannot get rid of the final $400 or so left in it. It’s sentimental, I guess. No biggie, it’s a micro sized portion of my accounts. Good luck 🍀
:happy thank you for that :thumbsup

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