VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

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roadracer711
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Joined: Mon Feb 26, 2018 11:10 pm

VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Mon Feb 26, 2018 11:23 pm

Hello,

My family member is retiring, she is 66. she has 250K in Primecap and SP500 index.
I am looking to help her set up a good retirement portfolio that is less risky then the current set up.
I have researched the following funds

VWINX Wellesly Income fund vs VWENX Wellington fund vs VTCIX Vanguard Tax-Managed Capital Appreciation vs VTINX Vanguard Target Retirement Income Fund vs VHDYX Vanguard High Dividend Yield Index Fund

They all seem pretty good. what percentage of each should i get with the 250K? what would be the optimal ratio of a couple of them or all of them, where i maximize gains with minimum risk? what would be the optimal way to go?

I have also looked at just getting a total stock market index and the total bond index. how would this compare to the above 5 mutual funds? what would be the ratio of total stock market index to the total bond index i should be looking to get into with the 250k? again to get the most income per month with growth of capital..

I am really stuck here as the funds above seem really good all of them but some do peform better over time but then they have huge drops when the market tanks.....

can anyone assist?
Last edited by roadracer711 on Tue Feb 27, 2018 10:38 pm, edited 1 time in total.

rkhusky
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by rkhusky » Tue Feb 27, 2018 8:33 am

That is very hard to determine without more information. My default answers would be Target Retirement Income (VTINX) or LifeStrategy Conservative Growth (VSCGX).

Is she collecting Social Security? Are these the only retirement funds that she has? Is the money in a taxable account or a 401K or an IRA? Does she have a pension? What are her annual expenses? Is she in good health?

dbr
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by dbr » Tue Feb 27, 2018 8:55 am

You still have to assess how much risk to take (aka allocation across stocks and bonds) for which I recommend reading in Larry Swedroe's books about need, ability, and willingness to take risk.

Before addressing retirement portfolios one should address retirement income, possibly using any or a couple of retirement withdrawal programs as illustrated by FireCalc and several others, including variable withdrawal plans. The one effect on asset allocation is that an overly conservative portfolio cannot support too high needs to withdraw for expenses. Alternative retirement funding plans can include purchasing SPIAs or constructing ladders of TIPS bonds. I throw that out as sop to those who are enthusiasts for such things rather than as a definite recommendation. There is not enough money in $250K to do a lot with SPIAs unless income needs are modest and there are not already annuities such as Social Security in line.

Fund picking is the last and least task in retirement financial planning.

sawhorse
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by sawhorse » Tue Feb 27, 2018 6:55 pm

Please edit the post to indicate what each ticker symbol refers to.

roadracer711
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Tue Feb 27, 2018 10:34 pm

rkhusky wrote:
Tue Feb 27, 2018 8:33 am
That is very hard to determine without more information. My default answers would be Target Retirement Income (VTINX) or LifeStrategy Conservative Growth (VSCGX).

Is she collecting Social Security? Are these the only retirement funds that she has? Is the money in a taxable account or a 401K or an IRA? Does she have a pension? What are her annual expenses? Is she in good health?
We havent applied for Social Security, as we are wating until she gets the age to get the max social security. yes the only retirement funds. yes taxable account. no she doesnt have a pension. she is in good health. she lives a very simple life. so her annual expenses are low. 1500 to 2000 a month

roadracer711
Posts: 29
Joined: Mon Feb 26, 2018 11:10 pm

Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Tue Feb 27, 2018 10:38 pm

sawhorse wrote:
Tue Feb 27, 2018 6:55 pm
Please edit the post to indicate what each ticker symbol refers to.
I added in the names

jpsc
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by jpsc » Wed Feb 28, 2018 3:13 am

roadracer711 wrote:
Mon Feb 26, 2018 11:23 pm
Hello,

My family member is retiring, she is 66. she has 250K in Primecap and SP500 index.
I am looking to help her set up a good retirement portfolio that is less risky then the current set up.
I have researched the following funds

VWINX Wellesly Income fund vs VWENX Wellington fund vs VTCIX Vanguard Tax-Managed Capital Appreciation vs VTINX Vanguard Target Retirement Income Fund vs VHDYX Vanguard High Dividend Yield Index Fund

They are all good funds, the big question - are you investing that 250K for income ?
Since interest rate is rising toward 4% this year, you might just want to wait and buy 10 years US Treasury - that pay 4%
rather than the total stock market index. None of the above fund warranty a 4% return.

mega317
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Joined: Tue Apr 19, 2016 10:55 am

Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by mega317 » Wed Feb 28, 2018 4:09 am

jpsc wrote:
Wed Feb 28, 2018 3:13 am
roadracer711 wrote:
Mon Feb 26, 2018 11:23 pm
Hello,

My family member is retiring, she is 66. she has 250K in Primecap and SP500 index.
I am looking to help her set up a good retirement portfolio that is less risky then the current set up.
I have researched the following funds

VWINX Wellesly Income fund vs VWENX Wellington fund vs VTCIX Vanguard Tax-Managed Capital Appreciation vs VTINX Vanguard Target Retirement Income Fund vs VHDYX Vanguard High Dividend Yield Index Fund

They are all good funds, the big question - are you investing that 250K for income ?
Since interest rate is rising toward 4% this year, you might just want to wait and buy 10 years US Treasury - that pay 4%
rather than the total stock market index. None of the above fund warranty a 4% return.
lol, treasuries aren't in the same universe as a stock index fund. I would like to point out that that is a totally inappropriate comparison without turning this into a dividend thread.

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nisiprius
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by nisiprius » Wed Feb 28, 2018 7:46 am

roadracer711 wrote:
Mon Feb 26, 2018 11:23 pm
My family member is retiring, she is 66. she has 250K in Primecap and SP500 index.
The big picture here: some basic information she and you need to know, for every mutual fund you're looking at, is:

a) is it a stock fund, a bond fund, or a "balanced" fund that holds both stocks and bonds?

b) Where does Vanguard put on their "risk" scale? It's a rough-and-ready set of five categories, but I think it's honest and useful.

You can find the "risk" scale on Vanguard's website by typing a name or ticker symbol into the search box, waiting for the dropdown menu to come down, and picking the fund name. Please, take the time to actually try it out yourself. Start at http://investor.vanguard.com

Image

Image

For what kinds of assets it holds, you can probably tell this by reading the descriptive paragraph--which you should read, anyway. Note that "equities" is another name for "stocks," and "fixed income" is another name for "bonds. You can then go to the "portfolio" tab for more information. They don't show a pie chart for funds that are "obviously" stock funds or "obviously" bond funds, but for balanced funds you will see a pie chart, like this one for VWINX, Wellesley:

Image

You must go beyond just looking at a table of returns over 1-3-5-10 years. You need to have some idea of what's inside the fund.

So here's what I'm seeing--seriously, you should do this yourself to get the "feeling" but I'll go ahead and do some of it for you, and I'm going to round the stock percentage numbers because I think it's important not to get involved in meaningless precision.

PRIMECAP is a (100%) stocks fund, and Vanguard puts it at "5" on their risk scale.
Vanguard 500 Index is a 100% stocks fund, and Vanguard puts it at "4" on their risk scale.

Your family member is holding 100% stocks. That's an awful lot unless she is also happens to be holding similar amounts of "cash" in decent, high-interest bank accounts, or has sources of guaranteed income (Social Security, pensions, annuities).

VWINX, Wellesley, is a balanced fund that's 40/60, i.e. 40% stocks, 60% bonds. Risk potential 3.

VWELX, Wellington, is a balanced fund that's 65/35. Risk potential 3. Same risk category as Wellesley because the categories are very broad.

VTCLX, Vanguard Tax-Managed Capital Appreciation, 100% stocks, risk potential 4. (Notice the description language: " this fund offers investors exposure to the mid- and large-capitalization segments of the U.S. stock market." Stocks.)

VTINX, Vanguard Target Retirement Income Fund, balanced fund, 30/70, Risk potential 2. Thus it has the lowest percentage of stocks of any of the funds you've mentioned, so low that Vanguard actually kicks it down into a lower risk category than Wellington and Wellesley.

VHDYX, Vanguard High Dividend Yield Index Fund, 100% stocks, risk potential 4.

So, she had two stock funds, risk levels 5 and 4. You are looking at two stock funds (Tax-Managed Capital Appreciation and High Dividend Yield) at level 4, two balanced funds (Wellington and Wellesley) at level 3, and one very conservative balanced fund (Target Retirement Income) at level 2.
where i maximize gains with minimum risk? what would be the optimal way to go?
I don't think that's a good question. Broadly, risk and return go together. People get very excited about strategies that seem to give a skosh more return for the same risk, but it's always an argument, the extra return is never very much or very reliable, and there's always a suspicion that the risk is merely hidden, not really reduced. Watch out: wanting high return together with low risk is like wanting a diet that lets you eat all the ice cream you want and lose 10 pounds a month safely; people want it, so people selling diet plans claim to have it.

A good question to ask is what is best for this family member. And if this family member is comfortable enough with finance, one exercise you absolutely should do--don't take the results as gospel, but do the exercise anyway--is to take her through this Vanguard questionnaire:
Vanguard Investor Questionnaire. If the numbers mean nothing to them, go through it yourself but do your best to answer it the way you feel she would, not the way you would or the way you think she "ought to."

Most recommendations for most people would not be 100% stocks. Her overall portfolio, the total of everything in her investment portfolio plus any big cash holdings that aren't part of the day-to-day budget, would be somewhere between 30% stocks and 70% stocks.

If she seriously glazes over at questions like "From September 2008 through November 2008, stocks lost more than 31%. If I owned a stock investment that lost about 31% in 3 months, I would do this..." and says "oh, whatever you think best," then she probably does not appreciate the risk of 70% stocks and should lean in the conservative direction. If she understands things like index funds versus active funds, and seems engaged in decision making and can tell you what the Dow to within ±1000 points, and wants a high stock allocation, then she should lean toward the aggressive direction.
They all seem pretty good. what percentage of each should i get with the 250K?
Not all five! You're not accomplishing anything with that but muddying the waters. Trying to "fine tune" things just introduces complications without provable benefits. It's like making a big deal of taking a travel mug and filling it with half Dunkin' Donuts, half Starbucks, not a thing wrong with it but basically silly.

One approach would be to first decide on percentage of stocks, and second she should choose the balanced fund that comes closest to that percentage. And leave it at that. One fund.

If her "PRIMECAP and 500 Index" split reflect a conscious intention to be part active, part indexed, then she could choose two of the balanced funds: either Wellington or Wellesley as an actively managed balanced fund, and VTINX as an fund-of-index funds.
I have also looked at just getting a total stock market index and the total bond index. how would this compare to the above 5 mutual funds?
It is a very reasonable approach. And the big-picture answer is, it is going to be about the same if you match the stock percentage. The standard recommendation, which I personally agree with, is that you should have some percentage in international stocks, not 100% U.S. I truly don't think this is a big deal, but it's a consensus. That would bring things up to three funds, and you probably should read about the three-fund portfolio.
what would be the ratio of total stock market index to the total bond index i should be looking to get into with the 250k? again to get the most income per month with growth of capital...
There is no magic answer here. First of all, income that you take out of the fund is money that is not going into growing capital, period. Second, as you say yourself,
I am really stuck here as the funds above seem really good all of them but some do peform better over time but then they have huge drops when the market tanks.....
I know already without looking: the two 100%-stock funds, VTCIX and VHDYX, are the funds that had huge drops when the market tanks. More stocks, more risk, deeper drops.

The last thing I'd add is that there is a lot of talk these days, talk with I think is mostly nonsense, that is scaring people away from bonds, bond funds, and portfolios with "normal" bond allocations. Something to keep in mind is that there is not a whole lot of difference between mutual fund bond investments, and the best available bank "money market deposit accounts" and bank CDs (understanding the early withdrawal terms). I feel pretty strongly that most investors should not have their investment portfolio 100% in stocks at retirement age! Any kind of stocks. (Dividend stocks are no different). If, however, for some reason she cannot bear the idea of putting her money into a mutual fund that invests in bonds, then she should shop around for the best bank rates instead.

You may have noticed that I have used the language "she should," "her choice," etc. in most places. That's intentional. She should be involved as actively as possible in the decision-making.
Last edited by nisiprius on Wed Feb 28, 2018 7:56 am, edited 2 times in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

rkhusky
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by rkhusky » Wed Feb 28, 2018 7:55 am

roadracer711 wrote:
Tue Feb 27, 2018 10:34 pm
rkhusky wrote:
Tue Feb 27, 2018 8:33 am
That is very hard to determine without more information. My default answers would be Target Retirement Income (VTINX) or LifeStrategy Conservative Growth (VSCGX).

Is she collecting Social Security? Are these the only retirement funds that she has? Is the money in a taxable account or a 401K or an IRA? Does she have a pension? What are her annual expenses? Is she in good health?
We havent applied for Social Security, as we are wating until she gets the age to get the max social security. yes the only retirement funds. yes taxable account. no she doesnt have a pension. she is in good health. she lives a very simple life. so her annual expenses are low. 1500 to 2000 a month
What is her expected SS benefit at 70?

Her expenses are $18K - $24K per year, which is all she has to live on for the next 4 years. Might want to put $50K - $100K in CD's and/or short term bonds. The rest can go in LifeStrategy Income (VASIX) (20/80), Target Retirement Income (VTINX) (30/70), or LifeStrategy Conservative Growth (VSCGX) (40/60), depending on how much you put in CD's/short bonds and how conservative you want to be. I would re-assess after she starts getting SS checks.

She should only convert/use enough to stay in the 12% tax bracket, so that her capital gains are taxed at 0%. That should be about $62K/year for single, $100K/yr for married. That is the amount of gains, not the withdrawal amount. Although one can still weigh the risk of having so much in stock versus paying 15% cap gain taxes if she decides to go above these amounts.

Note that 4% is widely considered a safe withdrawal rate for a 30 year retirement with a portfolio of at least 30% in stocks. For a portfolio value of $250K, that would be $10K for the first year, adjusted for inflation thereafter. But since she will likely be spending down her portfolio in the next 4 years, it might end up at $200K, which would provide $8K/year. Hopefully, SS will make up the difference. She really can't take the risk of losing 50% in a market crash, which is possible with a 100% stock portfolio.
Last edited by rkhusky on Wed Feb 28, 2018 8:10 am, edited 1 time in total.

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nisiprius
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by nisiprius » Wed Feb 28, 2018 8:02 am

rkhusky has made excellent suggestions. roadracer711, rkhusky mentioned "LifeStrategy Income (VASIX) (20/80), Target Retirement Income (VTINX) (30/70), or LifeStrategy Conservative Growth (VSCGX) (40/60)." So as a quick bit of homework, this is an opportunity for you to go into the Vanguard website the way I suggested, and read the description, look at the risk category, and flip to the "portfolio" page and look at the pie chart for yourself.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

roadracer711
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Wed Feb 28, 2018 10:20 am

jpsc wrote:
Wed Feb 28, 2018 3:13 am
roadracer711 wrote:
Mon Feb 26, 2018 11:23 pm
Hello,

My family member is retiring, she is 66. she has 250K in Primecap and SP500 index.
I am looking to help her set up a good retirement portfolio that is less risky then the current set up.
I have researched the following funds

VWINX Wellesly Income fund vs VWENX Wellington fund vs VTCIX Vanguard Tax-Managed Capital Appreciation vs VTINX Vanguard Target Retirement Income Fund vs VHDYX Vanguard High Dividend Yield Index Fund

They are all good funds, the big question - are you investing that 250K for income ?
Since interest rate is rising toward 4% this year, you might just want to wait and buy 10 years US Treasury - that pay 4%
rather than the total stock market index. None of the above fund warranty a 4% return.
Yes for income..trying to get max income but at same time keep the money growing so it keeps up with inflation

dbr
Posts: 27207
Joined: Sun Mar 04, 2007 9:50 am

Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by dbr » Wed Feb 28, 2018 10:26 am

roadracer711 wrote:
Wed Feb 28, 2018 10:20 am

Yes for income..trying to get max income but at same time keep the money growing so it keeps up with inflation
The more you withdraw from the investment, the less it will grow. The more the investment returns the more it will grow in spite of how much you withdraw. The more return you can expect on average from the investment the less certain you can be of what you will actually get.

A, B, and C exist. You get to pick 2.

If you want specifics, then the rate of withdrawal you can take from a mixed portfolio of stocks and bonds while having a good chance of preserving the real value of the portfolio is about 2%, give or take. To find out more you have to roil around in some retirement withdrawal modeling. The problem is dominated by how much you withdraw and the greatest uncertainty is what particular history of investment returns you will experience for the next 30 years.

roadracer711
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Joined: Mon Feb 26, 2018 11:10 pm

Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Wed Feb 28, 2018 10:38 am

nisiprius wrote:
Wed Feb 28, 2018 7:46 am
roadracer711 wrote:
Mon Feb 26, 2018 11:23 pm
My family member is retiring, she is 66. she has 250K in Primecap and SP500 index.
The big picture here: some basic information she and you need to know, for every mutual fund you're looking at, is:

a) is it a stock fund, a bond fund, or a "balanced" fund that holds both stocks and bonds?

b) Where does Vanguard put on their "risk" scale? It's a rough-and-ready set of five categories, but I think it's honest and useful.

You can find the "risk" scale on Vanguard's website by typing a name or ticker symbol into the search box, waiting for the dropdown menu to come down, and picking the fund name. Please, take the time to actually try it out yourself. Start at http://investor.vanguard.com

Image

Image

For what kinds of assets it holds, you can probably tell this by reading the descriptive paragraph--which you should read, anyway. Note that "equities" is another name for "stocks," and "fixed income" is another name for "bonds. You can then go to the "portfolio" tab for more information. They don't show a pie chart for funds that are "obviously" stock funds or "obviously" bond funds, but for balanced funds you will see a pie chart, like this one for VWINX, Wellesley:

Image

You must go beyond just looking at a table of returns over 1-3-5-10 years. You need to have some idea of what's inside the fund.

So here's what I'm seeing--seriously, you should do this yourself to get the "feeling" but I'll go ahead and do some of it for you, and I'm going to round the stock percentage numbers because I think it's important not to get involved in meaningless precision.

PRIMECAP is a (100%) stocks fund, and Vanguard puts it at "5" on their risk scale.
Vanguard 500 Index is a 100% stocks fund, and Vanguard puts it at "4" on their risk scale.

Your family member is holding 100% stocks. That's an awful lot unless she is also happens to be holding similar amounts of "cash" in decent, high-interest bank accounts, or has sources of guaranteed income (Social Security, pensions, annuities).

VWINX, Wellesley, is a balanced fund that's 40/60, i.e. 40% stocks, 60% bonds. Risk potential 3.

VWELX, Wellington, is a balanced fund that's 65/35. Risk potential 3. Same risk category as Wellesley because the categories are very broad.

VTCLX, Vanguard Tax-Managed Capital Appreciation, 100% stocks, risk potential 4. (Notice the description language: " this fund offers investors exposure to the mid- and large-capitalization segments of the U.S. stock market." Stocks.)

VTINX, Vanguard Target Retirement Income Fund, balanced fund, 30/70, Risk potential 2. Thus it has the lowest percentage of stocks of any of the funds you've mentioned, so low that Vanguard actually kicks it down into a lower risk category than Wellington and Wellesley.

VHDYX, Vanguard High Dividend Yield Index Fund, 100% stocks, risk potential 4.

So, she had two stock funds, risk levels 5 and 4. You are looking at two stock funds (Tax-Managed Capital Appreciation and High Dividend Yield) at level 4, two balanced funds (Wellington and Wellesley) at level 3, and one very conservative balanced fund (Target Retirement Income) at level 2.
where i maximize gains with minimum risk? what would be the optimal way to go?
I don't think that's a good question. Broadly, risk and return go together. People get very excited about strategies that seem to give a skosh more return for the same risk, but it's always an argument, the extra return is never very much or very reliable, and there's always a suspicion that the risk is merely hidden, not really reduced. Watch out: wanting high return together with low risk is like wanting a diet that lets you eat all the ice cream you want and lose 10 pounds a month safely; people want it, so people selling diet plans claim to have it.

A good question to ask is what is best for this family member. And if this family member is comfortable enough with finance, one exercise you absolutely should do--don't take the results as gospel, but do the exercise anyway--is to take her through this Vanguard questionnaire:
Vanguard Investor Questionnaire. If the numbers mean nothing to them, go through it yourself but do your best to answer it the way you feel she would, not the way you would or the way you think she "ought to."

Most recommendations for most people would not be 100% stocks. Her overall portfolio, the total of everything in her investment portfolio plus any big cash holdings that aren't part of the day-to-day budget, would be somewhere between 30% stocks and 70% stocks.

If she seriously glazes over at questions like "From September 2008 through November 2008, stocks lost more than 31%. If I owned a stock investment that lost about 31% in 3 months, I would do this..." and says "oh, whatever you think best," then she probably does not appreciate the risk of 70% stocks and should lean in the conservative direction. If she understands things like index funds versus active funds, and seems engaged in decision making and can tell you what the Dow to within ±1000 points, and wants a high stock allocation, then she should lean toward the aggressive direction.
They all seem pretty good. what percentage of each should i get with the 250K?
Not all five! You're not accomplishing anything with that but muddying the waters. Trying to "fine tune" things just introduces complications without provable benefits. It's like making a big deal of taking a travel mug and filling it with half Dunkin' Donuts, half Starbucks, not a thing wrong with it but basically silly.

One approach would be to first decide on percentage of stocks, and second she should choose the balanced fund that comes closest to that percentage. And leave it at that. One fund.

If her "PRIMECAP and 500 Index" split reflect a conscious intention to be part active, part indexed, then she could choose two of the balanced funds: either Wellington or Wellesley as an actively managed balanced fund, and VTINX as an fund-of-index funds.
I have also looked at just getting a total stock market index and the total bond index. how would this compare to the above 5 mutual funds?
It is a very reasonable approach. And the big-picture answer is, it is going to be about the same if you match the stock percentage. The standard recommendation, which I personally agree with, is that you should have some percentage in international stocks, not 100% U.S. I truly don't think this is a big deal, but it's a consensus. That would bring things up to three funds, and you probably should read about the three-fund portfolio.
what would be the ratio of total stock market index to the total bond index i should be looking to get into with the 250k? again to get the most income per month with growth of capital...
There is no magic answer here. First of all, income that you take out of the fund is money that is not going into growing capital, period. Second, as you say yourself,
I am really stuck here as the funds above seem really good all of them but some do peform better over time but then they have huge drops when the market tanks.....
I know already without looking: the two 100%-stock funds, VTCIX and VHDYX, are the funds that had huge drops when the market tanks. More stocks, more risk, deeper drops.

The last thing I'd add is that there is a lot of talk these days, talk with I think is mostly nonsense, that is scaring people away from bonds, bond funds, and portfolios with "normal" bond allocations. Something to keep in mind is that there is not a whole lot of difference between mutual fund bond investments, and the best available bank "money market deposit accounts" and bank CDs (understanding the early withdrawal terms). I feel pretty strongly that most investors should not have their investment portfolio 100% in stocks at retirement age! Any kind of stocks. (Dividend stocks are no different). If, however, for some reason she cannot bear the idea of putting her money into a mutual fund that invests in bonds, then she should shop around for the best bank rates instead.

You may have noticed that I have used the language "she should," "her choice," etc. in most places. That's intentional. She should be involved as actively as possible in the decision-making.
Wow nisiprius....YOU ROCK LIKE METALLICA!!! THANKS FOR THE AWESOME REPLY!! Lots of good information. Read it all a couple times to get it...
I agree with your thoughts.

I was told that i need to make all the decisions you mentioned. As I have been doing the investing for her this whole time. I have kept everything super aggressive to get as much growth as possible. Now to shift gears to retirement income is tough. I am with you when that next 30 to 40 percent drop in the market comes, this will make the portfolio look way smaller in the short term, if she saw that, i am not sure how react.
In the past the drops were not seen as we waited out the chaos to come out on top and with a lot more gains.

One question...so if the market tanks 30%...normally it recovers a year or two later some and then it drives on to go higher and higher. if during the down turn she takes out her planned normal of 12k. and the market recovers and drives on slowly she should regain the 12k she took out and the portfolio should keep on rising to again be worth what it was or more....i know i said a lot of shoulds. but if we are willing to ride out....would a 90stocks and 10 bonds work. What are your thoughts on the 90/10 idea if one is patient when the drops happens. We really dont stress out when the drops happen.
Your thoughts?

roadracer711
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Joined: Mon Feb 26, 2018 11:10 pm

Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Wed Feb 28, 2018 10:45 am

dbr wrote:
Wed Feb 28, 2018 10:26 am
roadracer711 wrote:
Wed Feb 28, 2018 10:20 am

Yes for income..trying to get max income but at same time keep the money growing so it keeps up with inflation
The more you withdraw from the investment, the less it will grow. The more the investment returns the more it will grow in spite of how much you withdraw. The more return you can expect on average from the investment the less certain you can be of what you will actually get.

A, B, and C exist. You get to pick 2.

If you want specifics, then the rate of withdrawal you can take from a mixed portfolio of stocks and bonds while having a good chance of preserving the real value of the portfolio is about 2%, give or take. To find out more you have to roil around in some retirement withdrawal modeling. The problem is dominated by how much you withdraw and the greatest uncertainty is what particular history of investment returns you will experience for the next 30 years.
Thanks for the great reply. What do you think about leaving it in the investment and with draw what you need monthly . this way if you can live on the 2% that month you good if you take a little more than ok but the rest of your money is still growing?

roadracer711
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Wed Feb 28, 2018 10:46 am

jpsc wrote:
Wed Feb 28, 2018 3:13 am
roadracer711 wrote:
Mon Feb 26, 2018 11:23 pm
Hello,

My family member is retiring, she is 66. she has 250K in Primecap and SP500 index.
I am looking to help her set up a good retirement portfolio that is less risky then the current set up.
I have researched the following funds

VWINX Wellesly Income fund vs VWENX Wellington fund vs VTCIX Vanguard Tax-Managed Capital Appreciation vs VTINX Vanguard Target Retirement Income Fund vs VHDYX Vanguard High Dividend Yield Index Fund

They are all good funds, the big question - are you investing that 250K for income ?
Since interest rate is rising toward 4% this year, you might just want to wait and buy 10 years US Treasury - that pay 4%
rather than the total stock market index. None of the above fund warranty a 4% return.
I see interesting. i havent looked into treasuries..

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Sandtrap
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by Sandtrap » Wed Feb 28, 2018 10:55 am

Read:>>>>>
Risk Tolerance (what is your "sleep factor"?)
https://www.bogleheads.org/wiki/Risk_tolerance
Asset Allocation (what is right for you?)
https://www.bogleheads.org/wiki/Asset_allocation
Consider:>>>>>
Retirement Income Fund (VTINX) (30/70) ER (.13)
Wellesley Income Fund - Investor Shares (VWINX) (35/65) ER (.22)
Wellesley Income Fund - Admiral Shares (VWIAX) (35/65) ER (.15)
LifeStrategy Conservative Growth (VSCGX) (40/60) ER (.12)
Balanced Index Fund (VBIAX) (60/40) ER (.07)
Wellington Fund - Investor Shares (VWELX) (65/35) ER (.25)
Wellington Fund - Admiral Shares (VWENX) (65/35) ER ( .16)
Note the "expense ratios". Also Consider Lower costs in Admiral shares.

Read:>>>>>
Outstanding write up on the 64/40 allocation by Bernstein.
http://web.archive.org/web/20061214061 ... in6040.pdf
R. Ferri on Bernstein's 60/40
http://www.etf.com/sections/index-inve ... nopaging=1

You can also enter your funds and/or fund combinations here to get an idea of how the allocations project into future returns and risk. It is not a predictor because the future is unknown, but does give an idea of how different funds and allocations have performed in the past for comparison.
ONLINE FINANCIAL TOOLS
PORFOLIO VISUALIZERS, PROJECTIONS, AND ANALYSIS
https://www.portfoliovisualizer.com
Firecalc. Retirement. How long will your money last?
https://www.firecalc.com

j :D

rkhusky
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by rkhusky » Wed Feb 28, 2018 11:53 am

roadracer711 wrote:
Wed Feb 28, 2018 10:38 am
...would a 90stocks and 10 bonds work. What are your thoughts on the 90/10 idea if one is patient when the drops happens. We really dont stress out when the drops happen.
It depends. Will SS cover all basic needs, such that portfolio is only used for wants?

I second the use of FireCalc above or CFireSim: http://www.cfiresim.com/ to see how you would have fared in the past using various stock percentages and withdrawal amounts. If you can live on 2%, it has a very high rate of success with almost any asset allocation.

For the fun of it, I ran a couple of simple scenarios through CFireSim, with a portfolio size of $250K over a 30 year period:

Withdraw $5K/yr inflation adjusted, 0% - 100% stocks, 100% success over past returns

Withdraw $10K/yr inflation adjusted, 100% stocks, 95% success over past returns
Withdraw $10K/yr inflation adjusted, 50% stocks, 91% success over past returns
Withdraw $10K/yr inflation adjusted, 0% stocks, 43% success over past returns

Withdraw $20K/yr inflation adjusted, 100% stocks, 35% success over past returns
Withdraw $20K/yr inflation adjusted, 50% stocks, 14% success over past returns
Withdraw $20K/yr inflation adjusted, 0% stocks, 3% success over past returns

Note that the future is unlikely to be the same as the past. There is a possibility that even if you get 95% or 100% from CFireSim or FireCalc, your strategy could still fail. And a possibility that your strategy could succeed, even if it would have only worked 10% of the time in the past.

roadracer711
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Wed Feb 28, 2018 8:25 pm

rkhusky wrote:
Wed Feb 28, 2018 11:53 am
roadracer711 wrote:
Wed Feb 28, 2018 10:38 am
...would a 90stocks and 10 bonds work. What are your thoughts on the 90/10 idea if one is patient when the drops happens. We really dont stress out when the drops happen.
It depends. Will SS cover all basic needs, such that portfolio is only used for wants?

I second the use of FireCalc above or CFireSim: http://www.cfiresim.com/ to see how you would have fared in the past using various stock percentages and withdrawal amounts. If you can live on 2%, it has a very high rate of success with almost any asset allocation.

For the fun of it, I ran a couple of simple scenarios through CFireSim, with a portfolio size of $250K over a 30 year period:

Withdraw $5K/yr inflation adjusted, 0% - 100% stocks, 100% success over past returns

Withdraw $10K/yr inflation adjusted, 100% stocks, 95% success over past returns
Withdraw $10K/yr inflation adjusted, 50% stocks, 91% success over past returns
Withdraw $10K/yr inflation adjusted, 0% stocks, 43% success over past returns

Withdraw $20K/yr inflation adjusted, 100% stocks, 35% success over past returns
Withdraw $20K/yr inflation adjusted, 50% stocks, 14% success over past returns
Withdraw $20K/yr inflation adjusted, 0% stocks, 3% success over past returns

Note that the future is unlikely to be the same as the past. There is a possibility that even if you get 95% or 100% from CFireSim or FireCalc, your strategy could still fail. And a possibility that your strategy could succeed, even if it would have only worked 10% of the time in the past.
rhusky....i checked this out...super interesting stuff.....YOU ROCK!!....If things are the same going forward ...seems 100% stocks is a good way to go if you can take the heat and pressure of down years....

rkhusky
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by rkhusky » Thu Mar 01, 2018 8:12 am

roadracer711 wrote:
Wed Feb 28, 2018 8:25 pm
rhusky....i checked this out...super interesting stuff.....YOU ROCK!!....If things are the same going forward ...seems 100% stocks is a good way to go if you can take the heat and pressure of down years....
True, if the future is the same as the past. What if it's not? It all depends on how much your quality of life depends on your portfolio. If the market drops by 50% and there is no end in sight and it looks like you won't be able to pay your bills if the market doesn't rebound in the next couple of years, how do you respond? Are you willing to risk eviction and having to live in a shelter and get your food from a food pantry?

Also note the difference in success rates between 100% stocks and 50% stocks with $10K withdrawal - not much difference. Is the couple of percent difference worth the significantly more risk?

On the other hand, if the market drops by 50% and you can handle dropping your withdrawal rate to $5K/yr, then maybe you can weather the storm.

roadracer711
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Fri Mar 02, 2018 7:17 pm

Sandtrap wrote:
Wed Feb 28, 2018 10:55 am
Read:>>>>>
Risk Tolerance (what is your "sleep factor"?)
https://www.bogleheads.org/wiki/Risk_tolerance
Asset Allocation (what is right for you?)
https://www.bogleheads.org/wiki/Asset_allocation
Consider:>>>>>
Retirement Income Fund (VTINX) (30/70) ER (.13)
Wellesley Income Fund - Investor Shares (VWINX) (35/65) ER (.22)
Wellesley Income Fund - Admiral Shares (VWIAX) (35/65) ER (.15)
LifeStrategy Conservative Growth (VSCGX) (40/60) ER (.12)
Balanced Index Fund (VBIAX) (60/40) ER (.07)
Wellington Fund - Investor Shares (VWELX) (65/35) ER (.25)
Wellington Fund - Admiral Shares (VWENX) (65/35) ER ( .16)
Note the "expense ratios". Also Consider Lower costs in Admiral shares.

Read:>>>>>
Outstanding write up on the 64/40 allocation by Bernstein.
http://web.archive.org/web/20061214061 ... in6040.pdf
R. Ferri on Bernstein's 60/40
http://www.etf.com/sections/index-inve ... nopaging=1

You can also enter your funds and/or fund combinations here to get an idea of how the allocations project into future returns and risk. It is not a predictor because the future is unknown, but does give an idea of how different funds and allocations have performed in the past for comparison.
ONLINE FINANCIAL TOOLS
PORFOLIO VISUALIZERS, PROJECTIONS, AND ANALYSIS
https://www.portfoliovisualizer.com
Firecalc. Retirement. How long will your money last?
https://www.firecalc.com

j :D
Wow WOW... Sandtrap.....thanks for all the details and links....Holy cow.....you basically wrote a book.... YOU TOTALLY ROCK!! You should be a teacher or a financial Planner. I will go over all of this...every inch of it...thank you for all the details and the hard work...i will use it..!!
I hope you make billions in your investments!!!!

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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by TBillT » Fri Mar 02, 2018 8:10 pm

The VSMGX (Life Strategy Moderate) is an interesting fund because it mimics the overall USA+International Stock+Bond markets, which is an overall market approach some like. I have not used the fund yet but I probably will soon.

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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by Sandtrap » Fri Mar 02, 2018 8:49 pm

TBillT wrote:
Fri Mar 02, 2018 8:10 pm
The VSMGX (Life Strategy Moderate) is an interesting fund because it mimics the overall USA+International Stock+Bond markets, which is an overall market approach some like. I have not used the fund yet but I probably will soon.
True, But as a "fund of funds" it has a higher expense ratio at .13 than holding the underlying funds: Total Stock, Total International, Total Bond, Total International Bond, separately in Admiral shares. The OP has 250k so would more than qualify for the fund valuations needed for Admiral Shares at reduced costs compared to "Investor" shares.
Also, not everyone is on board with Total International as part of the basic "Bogle Portfolio".
Some thoughts.
j :D

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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by Nightowl99 » Fri Mar 02, 2018 9:00 pm

When you read about the LifeStrategy Moderate Growth Fund on Vanguard's website, you can see what it's comprised of by clicking on the "Portfolio & Management" tab and scrolling down. You'll see something like this:

Ranking by Percentage Fund Percentage

1) Vanguard Total Stock Market Index Fund Investor Shares 35.9%
2) Vanguard Total Bond Market II Index Fund Investor Shares* 28.1%
3) Vanguard Total International Stock Index Fund Investor Shares 24.3%
4) Vanguard Total International Bond Index Fund Investor Shares 11.7%
Total: 100.0%

Anyway, it adds up to 60.23% in stocks. You could replicate the effect of having this fund by buying the funds it's invested in, if you didn't mind spending the time re-balancing it occasionally. That would possibly save you a little in terms of the expense ratio fees. You may also be interested in searching for "Financial Engines" on their website. It's a computerized program that may give you some helpful ideas to consider.

This is just my opinion, but If the investor is age 66, then a lower allocation to stocks may be advisable if you're worried about stocks being high priced and volatile lately. Maybe a lower percentage devoted to stocks would result in less of a loss when the market declines, for example, 50% in stocks, or even as little as 44% (110 minus the age of 66 = 44). I could be too conservative in my thinking about this, though. If you want to have 60% in stocks, maybe it would be a good idea to keep enough cash in something more stable, to cover a couple of year's expenses, a small amount in c.d.s or treasuries, so that you don't have to sell stocks at a loss when the market goes down, as it tends to do from time to time.

roadracer711
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Sat Mar 03, 2018 12:04 pm

Guys,
Question 1
I checked into the performance of the Total Bond Market Index fund and the SP 500 over a 30 year period. So without looking at the amount of the drops in the market. The SP500 failed to beat the Total Bond Fund only 7 years out of the 30 year time frame. this is very good. so if one is willing to wait out the bad years. still taking out the normal 10K a year out of the 250K in good and bad years. a portfolio of 90% stocks and 10% bonds . would work right? or even 100% stocks should work? and one would be farther ahead in gains.and potentially be able to raise how much they take out of the account over a life time. Now the monkey wrench is that no one can predict if the future will be similar to the past.
What are your thoughts on this?

Question 2
I was thinking of changing out 10 percent of the SP500 above to 10% of total international stock . IN this way 10% international, 10% bonds, 80% us total stock. if i went with the above. or 10%international stock and 90% total us stock funds what are your thoughts?

Question 3
A lot of you on here are at retirement age, I am in my 40s.
since you are at the goal line where my family is and where i will be eventually.
we also have a towne house rental mortgage 990 dollars and 1500 dollars rent. for my 66 year old family member, is it better to keep this and use the income off of it. or sell it and take the proceeds and put it in to the scenerios above in question 1? or what other ideas do you have to work this?

Question 4

Everyone here that is at retirement age.
in hindsight do you wish you had bought some houses in you younger years and held them and paid them off and used that as retirement income? or if not paid off maybe close to paid off when you retired and then use whats left as income?
For people that have rental houses or have had rentals. as you now have hit reitement are you using those for rental income or did you sell them took the proceeds and invested in mutual funds and used that as income?

Question 5
the people that have rental houses now while they are retired, how is that working out for you? are you managing or do you have a property manager? whats your recommendation on how to handle a rental house when in retirement? what has worked for you and what hasnt?

thanks for all the feedback thus far...i read all the wisdom you guys share.....and there is a lot of people on this site that have done great things with their investments....

Roadracer

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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Sat Mar 03, 2018 12:09 pm

Also if taking the 250K in my example. and investing in REiT index fund, Vanguard High income corporate... how have you guys used those funds and similar with Vanguard for your retirement portfolio? how has it worked for you?

I realize a lot of you on here are way older than I am, i value your knowledge, experience and success in making it to retirement...many have not ...you have done well in your lives....

dbr
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by dbr » Sat Mar 03, 2018 12:18 pm

roadracer711 wrote:
Sat Mar 03, 2018 12:09 pm
Also if taking the 250K in my example. and investing in REiT index fund, Vanguard High income corporate... how have you guys used those funds and similar with Vanguard for your retirement portfolio? how has it worked for you?

I realize a lot of you on here are way older than I am, i value your knowledge, experience and success in making it to retirement...many have not ...you have done well in your lives....
People use them, but running around picking funds is not how to build an investment plan.

roadracer711
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Sat Mar 03, 2018 12:25 pm

dbr wrote:
Sat Mar 03, 2018 12:18 pm
roadracer711 wrote:
Sat Mar 03, 2018 12:09 pm
Also if taking the 250K in my example. and investing in REiT index fund, Vanguard High income corporate... how have you guys used those funds and similar with Vanguard for your retirement portfolio? how has it worked for you?

I realize a lot of you on here are way older than I am, i value your knowledge, experience and success in making it to retirement...many have not ...you have done well in your lives....
People use them, but running around picking funds is not how to build an investment plan.
Right. Most of what i have read on the site here , no one has mentioned these as part of any type of portfolio...seems most stick to the broad index funds. With these its more complicated how to decide on the percent of the portfolio to put into them. how have you inputed them into your investment plan?

dbr
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by dbr » Sat Mar 03, 2018 12:41 pm

roadracer711 wrote:
Sat Mar 03, 2018 12:25 pm
dbr wrote:
Sat Mar 03, 2018 12:18 pm
roadracer711 wrote:
Sat Mar 03, 2018 12:09 pm
Also if taking the 250K in my example. and investing in REiT index fund, Vanguard High income corporate... how have you guys used those funds and similar with Vanguard for your retirement portfolio? how has it worked for you?

I realize a lot of you on here are way older than I am, i value your knowledge, experience and success in making it to retirement...many have not ...you have done well in your lives....
People use them, but running around picking funds is not how to build an investment plan.
Right. Most of what i have read on the site here , no one has mentioned these as part of any type of portfolio...seems most stick to the broad index funds. With these its more complicated how to decide on the percent of the portfolio to put into them. how have you inputed them into your investment plan?
Actually there has been lots of discussion of REITs and High Yield Bonds with debate on both sides.

https://www.google.com/search?sitesearc ... rg&q=reits

https://www.google.com/search?sitesearc ... ield+bonds

You can read and make up your own mind.

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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by pkcrafter » Sat Mar 03, 2018 2:24 pm

roadracer, you have stated family member has 250k in total assets, is that correct?

You also stated expenses are 1500 to 2000/month. In another post you said:
if during the down turn she takes out her planned normal of 12k.
Is this the target withdrawal after starting SS?

It looks to me like relative cannot wait 4 years to start SS if expenses are 18000/year (1500/mo) because with total assets of 250k her initial withdrawal rate would be 7.2%. Your relative does have need to take risk, but she does not have ability, and I suspect if she really understood what risk can do, she would also not have willingness. How much will SS be if she takes it now?

Also, relative does not have ability to be at 100% stocks. 40% equity max would be my recommendation, and even that is risky considering the amount of assets she has. Lifestrategy conservative is a reasonable option. Another option is target retirement income at 30% stock. Both are compromises between risk and potential return.

I'm not sure about this option, but family member could possibly get ~1000/month for life with a single premium immediate annuity (SPIA) of 200k. You might possibly reduce the purchase and go for supplemental income. 100k period certain would provide about $670 monthly income for 15 years.

I would like more input from those more experienced with SPIAs.


https://www.immediateannuities.com/in-t ... nuity.html

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

TBillT
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by TBillT » Mon Mar 05, 2018 11:47 am

roadracer711 wrote:
Sat Mar 03, 2018 12:04 pm
Guys,
Question 4

Everyone here that is at retirement age.
in hindsight do you wish you had bought some houses in you younger years and held them and paid them off and used that as retirement income? or if not paid off maybe close to paid off when you retired and then use whats left as income?
For people that have rental houses or have had rentals. as you now have hit reitement are you using those for rental income or did you sell them took the proceeds and invested in mutual funds and used that as income?

Roadracer
I don't know what the serious BogleHeads would say, but I like having the mortgage interest deduction which to date has allowed FORM 1040 Sch A itemizing of deductions. Of course the new tax law potentially throws a monkey wrench into the plans of many itemizers. But I am inclined to maybe even get a new house to bump up the interest deduction...not just for that reason as we may just want a new place. But I look at itemized deductions as a way to allow taking more "income" (eg; moving money out of Rollover IRA to Roth IRA).

PFInterest
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by PFInterest » Mon Mar 05, 2018 12:22 pm

roadracer711 wrote:
Mon Feb 26, 2018 11:23 pm
Hello,

My family member is retiring, she is 66. she has 250K in Primecap and SP500 index.
I am looking to help her set up a good retirement portfolio that is less risky then the current set up.
I have researched the following funds

VWINX Wellesly Income fund vs VWENX Wellington fund vs VTCIX Vanguard Tax-Managed Capital Appreciation vs VTINX Vanguard Target Retirement Income Fund vs VHDYX Vanguard High Dividend Yield Index Fund

They all seem pretty good. what percentage of each should i get with the 250K? what would be the optimal ratio of a couple of them or all of them, where i maximize gains with minimum risk? what would be the optimal way to go?

I have also looked at just getting a total stock market index and the total bond index. how would this compare to the above 5 mutual funds? what would be the ratio of total stock market index to the total bond index i should be looking to get into with the 250k? again to get the most income per month with growth of capital..

I am really stuck here as the funds above seem really good all of them but some do peform better over time but then they have huge drops when the market tanks.....

can anyone assist?
you didnt say where the money is.

roadracer711
Posts: 29
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Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Wed Mar 07, 2018 10:33 am

rkhusky wrote:
Thu Mar 01, 2018 8:12 am
roadracer711 wrote:
Wed Feb 28, 2018 8:25 pm
rhusky....i checked this out...super interesting stuff.....YOU ROCK!!....If things are the same going forward ...seems 100% stocks is a good way to go if you can take the heat and pressure of down years....
True, if the future is the same as the past. What if it's not? It all depends on how much your quality of life depends on your portfolio. If the market drops by 50% and there is no end in sight and it looks like you won't be able to pay your bills if the market doesn't rebound in the next couple of years, how do you respond? Are you willing to risk eviction and having to live in a shelter and get your food from a food pantry?

Also note the difference in success rates between 100% stocks and 50% stocks with $10K withdrawal - not much difference. Is the couple of percent difference worth the significantly more risk?

On the other hand, if the market drops by 50% and you can handle dropping your withdrawal rate to $5K/yr, then maybe you can weather the storm.
Good points. Thanks. Weslley Income seems like a good bet

roadracer711
Posts: 29
Joined: Mon Feb 26, 2018 11:10 pm

Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Wed Mar 07, 2018 10:34 am

PFInterest wrote:
Mon Mar 05, 2018 12:22 pm
roadracer711 wrote:
Mon Feb 26, 2018 11:23 pm
Hello,

My family member is retiring, she is 66. she has 250K in Primecap and SP500 index.
I am looking to help her set up a good retirement portfolio that is less risky then the current set up.
I have researched the following funds

VWINX Wellesly Income fund vs VWENX Wellington fund vs VTCIX Vanguard Tax-Managed Capital Appreciation vs VTINX Vanguard Target Retirement Income Fund vs VHDYX Vanguard High Dividend Yield Index Fund

They all seem pretty good. what percentage of each should i get with the 250K? what would be the optimal ratio of a couple of them or all of them, where i maximize gains with minimum risk? what would be the optimal way to go?

I have also looked at just getting a total stock market index and the total bond index. how would this compare to the above 5 mutual funds? what would be the ratio of total stock market index to the total bond index i should be looking to get into with the 250k? again to get the most income per month with growth of capital..

I am really stuck here as the funds above seem really good all of them but some do peform better over time but then they have huge drops when the market tanks.....

can anyone assist?
you didnt say where the money is.
Right now money is in Primecap Fund, SP 500, Total Stock, and Vangurd Healthcare

roadracer711
Posts: 29
Joined: Mon Feb 26, 2018 11:10 pm

Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Wed Mar 07, 2018 10:36 am

TBillT wrote:
Mon Mar 05, 2018 11:47 am
roadracer711 wrote:
Sat Mar 03, 2018 12:04 pm
Guys,
Question 4

Everyone here that is at retirement age.
in hindsight do you wish you had bought some houses in you younger years and held them and paid them off and used that as retirement income? or if not paid off maybe close to paid off when you retired and then use whats left as income?
For people that have rental houses or have had rentals. as you now have hit reitement are you using those for rental income or did you sell them took the proceeds and invested in mutual funds and used that as income?

Roadracer
I don't know what the serious BogleHeads would say, but I like having the mortgage interest deduction which to date has allowed FORM 1040 Sch A itemizing of deductions. Of course the new tax law potentially throws a monkey wrench into the plans of many itemizers. But I am inclined to maybe even get a new house to bump up the interest deduction...not just for that reason as we may just want a new place. But I look at itemized deductions as a way to allow taking more "income" (eg; moving money out of Rollover IRA to Roth IRA).
I like it. Totally agree. my question on your way of thought. if your tax rate in retirement will be low 15% or so. will the depreciations, tax deductions, etc. help?

roadracer711
Posts: 29
Joined: Mon Feb 26, 2018 11:10 pm

Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Wed Mar 07, 2018 10:38 am

pkcrafter wrote:
Sat Mar 03, 2018 2:24 pm
roadracer, you have stated family member has 250k in total assets, is that correct?

You also stated expenses are 1500 to 2000/month. In another post you said:
if during the down turn she takes out her planned normal of 12k.
Is this the target withdrawal after starting SS?

It looks to me like relative cannot wait 4 years to start SS if expenses are 18000/year (1500/mo) because with total assets of 250k her initial withdrawal rate would be 7.2%. Your relative does have need to take risk, but she does not have ability, and I suspect if she really understood what risk can do, she would also not have willingness. How much will SS be if she takes it now?

Also, relative does not have ability to be at 100% stocks. 40% equity max would be my recommendation, and even that is risky considering the amount of assets she has. Lifestrategy conservative is a reasonable option. Another option is target retirement income at 30% stock. Both are compromises between risk and potential return.

I'm not sure about this option, but family member could possibly get ~1000/month for life with a single premium immediate annuity (SPIA) of 200k. You might possibly reduce the purchase and go for supplemental income. 100k period certain would provide about $670 monthly income for 15 years.

I would like more input from those more experienced with SPIAs.


https://www.immediateannuities.com/in-t ... nuity.html

Paul
Forcast is that SS would be $1000 a month...

roadracer711
Posts: 29
Joined: Mon Feb 26, 2018 11:10 pm

Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Wed Mar 07, 2018 10:39 am

dbr wrote:
Sat Mar 03, 2018 12:41 pm
roadracer711 wrote:
Sat Mar 03, 2018 12:25 pm
dbr wrote:
Sat Mar 03, 2018 12:18 pm
roadracer711 wrote:
Sat Mar 03, 2018 12:09 pm
Also if taking the 250K in my example. and investing in REiT index fund, Vanguard High income corporate... how have you guys used those funds and similar with Vanguard for your retirement portfolio? how has it worked for you?

I realize a lot of you on here are way older than I am, i value your knowledge, experience and success in making it to retirement...many have not ...you have done well in your lives....
People use them, but running around picking funds is not how to build an investment plan.
Right. Most of what i have read on the site here , no one has mentioned these as part of any type of portfolio...seems most stick to the broad index funds. With these its more complicated how to decide on the percent of the portfolio to put into them. how have you inputed them into your investment plan?
Actually there has been lots of discussion of REITs and High Yield Bonds with debate on both sides.

https://www.google.com/search?sitesearc ... rg&q=reits

https://www.google.com/search?sitesearc ... ield+bonds

You can read and make up your own mind.
I had a look at your links...didnt expect that much negativity on both....some like these funds but most do not....

roadracer711
Posts: 29
Joined: Mon Feb 26, 2018 11:10 pm

Re: VWINX vs VWENX vs VTCIX vs VTINX vs VHDYX with 250K

Post by roadracer711 » Tue Mar 13, 2018 10:00 am

I had a relook at everyones posts on here and did some research.

The 3 fund portfolio or the 2 fund portfolio seem really good.

on both of those what do you think if one took the stock side of the portfolio lets say its 50% stock and of that 50% put 25% in Healthcare fund and 25% in Prime Cap Capital opportunity? other 50% of portfolio would be total bond fund

or 20% in healthcare and 20% in prime cap and 10% in international? other 50% of portfolio would be total bond fund?

or to be more conservative 60% total bond fund. 10% total international fund.... 15% in prime cap capital opportunity 15% Health care fund?

Has anyone tried any of these ratios for the long term in the past ? how has it worked for you?

I like the primecap and health care, they have been my best performers since started investing 20 years ago. They are the only managed funds that have survived over the years as i was trying different fund families and funds over the years... how have you done with these? seems like these 2 are the only ones i have seen out perform the SP500...consistantly...

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