Vanguard Wellesley

[HanSolo]

Just noticed the following (belatedly)...

Just because a fund has a good track record and has "income" in the name doesn't mean it doesn't have any less risk than other funds holding 30%-40% equities.

Yes, of course. Nobody said or implied otherwise. I take it to mean that the fund focuses on income (for example, dividend stocks). This may be of interest to investors with an income objective.

Again, the prospectus and the fund profile page are pretty clear about that. We can only hope that people read it.

[thedaybeforetoday]

Not looking to withdraw until 2027. Want a conservative fund that hopefully averages 4 or 5 percent. Have other more aggressive funds for growth. Just want portion of portfolio less risky.

Which raises the question do you mean you will start taking small withdrawals for many years starting in 2027 or do you want to withdraw all of this money in 2027 for some specific reason. There is a world of difference in the thinking between those two ideas and people sometimes get confused about that.

Having a conservative fund as part of a portfolio held from now to your demise is completely different from having a conservative fund held from now to 2027.

I would be taking small withdrawals starting in 2027. The intent is to hold the fund long term as long as the performance is acceptable.

Since you have offered us a good sense of what's unacceptable performance, could you offer a working definition of the bolded statement above please?

[tibbitts]

My purpose in having a [small] allocation to bonds, is/was to tamp down on volatility. That's it. My investment horizon is infinite. I'm not worried about sequence of returns risk. I expect far lower volatility from my bonds-allocation than from stocks. 50% annual drop in stocks would be harrowing, but not unexpected. 10% annual drop in bonds would be both harrowing, and unexpected. I would rather lose 50% in my stock funds, than 10% in my bond funds. What 2022 made me realize, is that in the non-equity portion of my portfolio, I am OK with gaining 0%, provided that I am nearly certain of losing 0%.

My bond funds are/were mainly tax-exempt short-term and intermediate-term. Other than in Wellington (not Wellesley), I've never dabbled in corporate bonds, international bonds or anything long-term. Even so, the bond portion of my allocation got walloped. Going forward, I won't make any changes, letting the bond funds just drift, as I hate selling and hate realizing capital gains. But I'll never invest in bonds again. The non-equity portion of my portfolio will be in money-markets. This portion will shrink, presumably, as the equity portion will (presumably) keep growing faster.

It's easier to be okay with getting 0% when you aren't actually getting 0%, especially when you aren't getting it for year after year while longer-term and/or lower-quality debt is returning at least something, and inflation is eating away your portfolio. I was fortunate to have my "cash-like" investments have guaranteed minimum nominal or real returns (basically annuities or I-bonds) during several time in the last few years, although it still wasn't a productive time for investing for me.

[jasperhobbs]

My purpose in having a [small] allocation to bonds, is/was to tamp down on volatility. That's it. My investment horizon is infinite. I'm not worried about sequence of returns risk. I expect far lower volatility from my bonds-allocation than from stocks. 50% annual drop in stocks would be harrowing, but not unexpected. 10% annual drop in bonds would be both harrowing, and unexpected. I would rather lose 50% in my stock funds, than 10% in my bond funds. What 2022 made me realize, is that in the non-equity portion of my portfolio, I am OK with gaining 0%, provided that I am nearly certain of losing 0%.

My bond funds are/were mainly tax-exempt short-term and intermediate-term. Other than in Wellington (not Wellesley), I've never dabbled in corporate bonds, international bonds or anything long-term. Even so, the bond portion of my allocation got walloped. Going forward, I won't make any changes, letting the bond funds just drift, as I hate selling and hate realizing capital gains. But I'll never invest in bonds again. The non-equity portion of my portfolio will be in money-markets. This portion will shrink, presumably, as the equity portion will (presumably) keep growing faster.

It's easier to be okay with getting 0% when you aren't actually getting 0%, especially when you aren't getting it for year after year while longer-term and/or lower-quality debt is returning at least something, and inflation is eating away your portfolio. I was fortunate to have my "cash-like" investments have guaranteed minimum nominal or real returns (basically annuities or I-bonds) during several time in the last few years, although it still wasn't a productive time for investing for me.

I would hope for 4-5% average return

[tibbitts]

My purpose in having a [small] allocation to bonds, is/was to tamp down on volatility. That's it. My investment horizon is infinite. I'm not worried about sequence of returns risk. I expect far lower volatility from my bonds-allocation than from stocks. 50% annual drop in stocks would be harrowing, but not unexpected. 10% annual drop in bonds would be both harrowing, and unexpected. I would rather lose 50% in my stock funds, than 10% in my bond funds. What 2022 made me realize, is that in the non-equity portion of my portfolio, I am OK with gaining 0%, provided that I am nearly certain of losing 0%.

My bond funds are/were mainly tax-exempt short-term and intermediate-term. Other than in Wellington (not Wellesley), I've never dabbled in corporate bonds, international bonds or anything long-term. Even so, the bond portion of my allocation got walloped. Going forward, I won't make any changes, letting the bond funds just drift, as I hate selling and hate realizing capital gains. But I'll never invest in bonds again. The non-equity portion of my portfolio will be in money-markets. This portion will shrink, presumably, as the equity portion will (presumably) keep growing faster.

It's easier to be okay with getting 0% when you aren't actually getting 0%, especially when you aren't getting it for year after year while longer-term and/or lower-quality debt is returning at least something, and inflation is eating away your portfolio. I was fortunate to have my "cash-like" investments have guaranteed minimum nominal or real returns (basically annuities or I-bonds) during several time in the last few years, although it still wasn't a productive time for investing for me.

I would hope for 4-5% average return

5% real from Wellesley would be somewhat extraordinarily high, not that it hasn't happened in the past. 5% nominal doesn't tell you much so it might be excellent or might be a disaster.

[Softballer]

There is a new managed fund by T-Rowe PRCFX (Capital Appreciation and Income) that has a similar allocation as Wellesly. Its ~60/40 sister fund (PRWCX Capital Appreciation) seemed to navigate the bond crash better than its VG analog Wellington. It may be a good complement to Wellesly.

[GaryA505]

There is a new managed fund by T-Rowe PRCFX (Capital Appreciation and Income) that has a similar allocation as Wellesly. Its ~60/40 sister fund (PRWCX Capital Appreciation) seemed to navigate the bond crash better than its VG analog Wellington. It may be a good complement to Wellesly.

Thanks, I didn't know about that one. David Giroux is one of the managers. ER is very high at 1.7% but I expect that will drop as the fund accumulates more assets.

[Softballer]

There is a new managed fund by T-Rowe PRCFX (Capital Appreciation and Income) that has a similar allocation as Wellesly. Its ~60/40 sister fund (PRWCX Capital Appreciation) seemed to navigate the bond crash better than its VG analog Wellington. It may be a good complement to Wellesly.

Thanks, I didn't know about that one. David Giroux is one of the managers. ER is very high at 1.7% but I expect that will drop as the fund accumulates more assets.

According to the info sheet 1.7% is the gross ER. The net ER is 0.65% after a waiver that expires 5/25. I assume as AUM grows, this will shrink.
https://www.troweprice.com/personal-inv ... nt-summary

[GaryA505]

There is a new managed fund by T-Rowe PRCFX (Capital Appreciation and Income) that has a similar allocation as Wellesly. Its ~60/40 sister fund (PRWCX Capital Appreciation) seemed to navigate the bond crash better than its VG analog Wellington. It may be a good complement to Wellesly.

Thanks, I didn't know about that one. David Giroux is one of the managers. ER is very high at 1.7% but I expect that will drop as the fund accumulates more assets.

According to the info sheet 1.7% is the gross ER. The net ER is 0.65% after a waiver that expires 5/25. I assume as AUM grows, this will shrink.
https://www.troweprice.com/personal-inv ... nt-summary

Yeah, good catch. I see it's available at Fidelity.

[jasperhobbs]

My purpose in having a [small] allocation to bonds, is/was to tamp down on volatility. That's it. My investment horizon is infinite. I'm not worried about sequence of returns risk. I expect far lower volatility from my bonds-allocation than from stocks. 50% annual drop in stocks would be harrowing, but not unexpected. 10% annual drop in bonds would be both harrowing, and unexpected. I would rather lose 50% in my stock funds, than 10% in my bond funds. What 2022 made me realize, is that in the non-equity portion of my portfolio, I am OK with gaining 0%, provided that I am nearly certain of losing 0%.

My bond funds are/were mainly tax-exempt short-term and intermediate-term. Other than in Wellington (not Wellesley), I've never dabbled in corporate bonds, international bonds or anything long-term. Even so, the bond portion of my allocation got walloped. Going forward, I won't make any changes, letting the bond funds just drift, as I hate selling and hate realizing capital gains. But I'll never invest in bonds again. The non-equity portion of my portfolio will be in money-markets. This portion will shrink, presumably, as the equity portion will (presumably) keep growing faster.

It's easier to be okay with getting 0% when you aren't actually getting 0%, especially when you aren't getting it for year after year while longer-term and/or lower-quality debt is returning at least something, and inflation is eating away your portfolio. I was fortunate to have my "cash-like" investments have guaranteed minimum nominal or real returns (basically annuities or I-bonds) during several time in the last few years, although it still wasn't a productive time for investing for me.

I would hope for 4-5% average return

5% real from Wellesley would be somewhat extraordinarily high, not that it hasn't happened in the past. 5% nominal doesn't tell you much so it might be excellent or might be a disaster.

And what conservative investment would average 4-5%?

[tibbitts]

My purpose in having a [small] allocation to bonds, is/was to tamp down on volatility. That's it. My investment horizon is infinite. I'm not worried about sequence of returns risk. I expect far lower volatility from my bonds-allocation than from stocks. 50% annual drop in stocks would be harrowing, but not unexpected. 10% annual drop in bonds would be both harrowing, and unexpected. I would rather lose 50% in my stock funds, than 10% in my bond funds. What 2022 made me realize, is that in the non-equity portion of my portfolio, I am OK with gaining 0%, provided that I am nearly certain of losing 0%.

My bond funds are/were mainly tax-exempt short-term and intermediate-term. Other than in Wellington (not Wellesley), I've never dabbled in corporate bonds, international bonds or anything long-term. Even so, the bond portion of my allocation got walloped. Going forward, I won't make any changes, letting the bond funds just drift, as I hate selling and hate realizing capital gains. But I'll never invest in bonds again. The non-equity portion of my portfolio will be in money-markets. This portion will shrink, presumably, as the equity portion will (presumably) keep growing faster.

It's easier to be okay with getting 0% when you aren't actually getting 0%, especially when you aren't getting it for year after year while longer-term and/or lower-quality debt is returning at least something, and inflation is eating away your portfolio. I was fortunate to have my "cash-like" investments have guaranteed minimum nominal or real returns (basically annuities or I-bonds) during several time in the last few years, although it still wasn't a productive time for investing for me.

I would hope for 4-5% average return

5% real from Wellesley would be somewhat extraordinarily high, not that it hasn't happened in the past. 5% nominal doesn't tell you much so it might be excellent or might be a disaster.

And what conservative investment would average 4-5%?

If there was a conservative investment that would consistently yield 4-5% real, most of us would probably invest in it. But I wish you wouldn't say "4-5%" without specifying nominal or real.

[jasperhobbs]

It's easier to be okay with getting 0% when you aren't actually getting 0%, especially when you aren't getting it for year after year while longer-term and/or lower-quality debt is returning at least something, and inflation is eating away your portfolio. I was fortunate to have my "cash-like" investments have guaranteed minimum nominal or real returns (basically annuities or I-bonds) during several time in the last few years, although it still wasn't a productive time for investing for me.

I would hope for 4-5% average return

5% real from Wellesley would be somewhat extraordinarily high, not that it hasn't happened in the past. 5% nominal doesn't tell you much so it might be excellent or might be a disaster.

And what conservative investment would average 4-5%?

If there was a conservative investment that would consistently yield 4-5% real, most of us would probably invest in it. But I wish you wouldn't say "4-5%" without specifying nominal or real.

Wellesley 10 year cumulative average was 5 16%. I know past returns are not a guarantee on future earnings but I would be happy with that.

[tibbitts]

I would hope for 4-5% average return

5% real from Wellesley would be somewhat extraordinarily high, not that it hasn't happened in the past. 5% nominal doesn't tell you much so it might be excellent or might be a disaster.

And what conservative investment would average 4-5%?

If there was a conservative investment that would consistently yield 4-5% real, most of us would probably invest in it. But I wish you wouldn't say "4-5%" without specifying nominal or real.

Wellesley 10 year cumulative average was 5 16%. I know past returns are not a guarantee on future earnings but I would be happy with that.

l have no idea what "5 16%" means or if you're talking about nominal or real returns.

[jasperhobbs]

5% real from Wellesley would be somewhat extraordinarily high, not that it hasn't happened in the past. 5% nominal doesn't tell you much so it might be excellent or might be a disaster.

And what conservative investment would average 4-5%?

If there was a conservative investment that would consistently yield 4-5% real, most of us would probably invest in it. But I wish you wouldn't say "4-5%" without specifying nominal or real.

Wellesley 10 year cumulative average was 5 16%. I know past returns are not a guarantee on future earnings but I would be happy with that.

l have no idea what "5 16%" means or if you're talking about nominal or real returns.

5.16% is what it says the 10 year average is. Nominal or real don't know. Your the expert so look it up and educate me.

[tibbitts]

And what conservative investment would average 4-5%?

If there was a conservative investment that would consistently yield 4-5% real, most of us would probably invest in it. But I wish you wouldn't say "4-5%" without specifying nominal or real.

Wellesley 10 year cumulative average was 5 16%. I know past returns are not a guarantee on future earnings but I would be happy with that.

l have no idea what "5 16%" means or if you're talking about nominal or real returns.

5.16% is what it says the 10 year average is. Nominal or real don't know. Your the expert so look it up and educate me.

Now that I know you're saying 5.16% over the last 10 years, that would make real returns about 2% during that time. I owned the fund for many years, until a few years ago, so it's not like I don't think it's a reasonable investment, and 2% is a very reasonable return for a roughly 35/65 allocation over that period. That's very similar to the returns from broad-based equity and fixed-income index funds in a similar ratio during that period. But 2% is not 5%, and it would have been easy for you to just specify nominal or real. Wellesley in fact returned more than 5% real during the 1990s for example, and you'd presumably have been unhappy if you'd only received 5% nominal during that time.

[cjcerny]

OP,

We don’t have magical investing powers here. No one does. If the markets go in the tank tomorrow, we’re all at their whims. If you’re really hooked on the idea of find a product that will pay you close to 5% annually long term, I would suggest shopping for a SPIA—that’s the only product, other than maybe a long term treasury or TIPS, that would offer you the kinds of guarantee you seek.

Wellesley and Wellington are great funds, but their management teams don’t possess any dark voodoo magic that will help them to avoid market storms. If you are OK with moving forward without a guarantee, then Wellesley is a fine choice, as would any allocation of one third stocks and two thirds bonds would be.

[jasperhobbs]

My plan in retirement is a 2% withdrawal rate and cash cushion to not draw in a down time. So an overall average of funds conservative and more risky of 4% or more would be fine.

[AlwaysLearningMore]

There is a new managed fund by T-Rowe PRCFX (Capital Appreciation and Income) that has a similar allocation as Wellesly. Its ~60/40 sister fund (PRWCX Capital Appreciation) seemed to navigate the bond crash better than its VG analog Wellington. It may be a good complement to Wellesly.

Interesting, thank you for pointing out this fund. According to MorningStar it has less than 1% foreign equities.
https://www.morningstar.com/funds/xnas/prcfx/portfolio


Edit: Seeing the very low foreign equities allocation in the new TRP fund you mentioned, I looked up the allocation of the T Rowe Price Capital Appreciation fund and fund that it is currently less than 2% foreign equity. According to the website, this fund can invest up to 25% in foreign securities. It's approximately 60/40.

https://www.troweprice.com/personal-inv ... -portfolio

Lots of folks here express that foreign equities are currently a good place to look for capital appreciation compared to the US. Looks like this manager feels otherwise?

[Softballer]

There is a new managed fund by T-Rowe PRCFX (Capital Appreciation and Income) that has a similar allocation as Wellesly. Its ~60/40 sister fund (PRWCX Capital Appreciation) seemed to navigate the bond crash better than its VG analog Wellington. It may be a good complement to Wellesly.

Interesting, thank you for pointing out this fund. According to MorningStar it has less than 1% foreign equities.
https://www.morningstar.com/funds/xnas/prcfx/portfolio


Edit: Seeing the very low foreign equities allocation in the new TRP fund you mentioned, I looked up the allocation of the T Rowe Price Capital Appreciation fund and fund that it is currently less than 2% foreign equity. According to the website, this fund can invest up to 25% in foreign securities. It's approximately 60/40.

https://www.troweprice.com/personal-inv ... -portfolio

Lots of folks here express that foreign equities are currently a good place to look for capital appreciation compared to the US. Looks like this manager feels otherwise?

Someone on another thread found this podcast with the fund manager. It was from before the PRCFX fund came out but maybe it will give some insight into his stock picking?
https://www.morningstar.com/podcasts/th ... d6b1f4e551

[GaryA505]

Someone at Portfolio Visualizer said data for PRCFX will be added to PV later this month.

[AlwaysLearningMore]

There is a new managed fund by T-Rowe PRCFX (Capital Appreciation and Income) that has a similar allocation as Wellesly. Its ~60/40 sister fund (PRWCX Capital Appreciation) seemed to navigate the bond crash better than its VG analog Wellington. It may be a good complement to Wellesly.

Interesting, thank you for pointing out this fund. According to MorningStar it has less than 1% foreign equities.
https://www.morningstar.com/funds/xnas/prcfx/portfolio


Edit: Seeing the very low foreign equities allocation in the new TRP fund you mentioned, I looked up the allocation of the T Rowe Price Capital Appreciation fund and fund that it is currently less than 2% foreign equity. According to the website, this fund can invest up to 25% in foreign securities. It's approximately 60/40.

https://www.troweprice.com/personal-inv ... -portfolio

Lots of folks here express that foreign equities are currently a good place to look for capital appreciation compared to the US. Looks like this manager feels otherwise?

Someone on another thread found this podcast with the fund manager. It was from before the PRCFX fund came out but maybe it will give some insight into his stock picking?
https://www.morningstar.com/podcasts/th ... d6b1f4e551

Listened to most of it, heard him talk about the risks of FX and China at least a couple of times. He has scant non-US equity holdings in those funds, he must not be impressed with the potential for appreciation in most of ex-US. His funds seem to have done well.

[GaryA505]

There is a new managed fund by T-Rowe PRCFX (Capital Appreciation and Income) that has a similar allocation as Wellesly. Its ~60/40 sister fund (PRWCX Capital Appreciation) seemed to navigate the bond crash better than its VG analog Wellington. It may be a good complement to Wellesly.

Interesting, thank you for pointing out this fund. According to MorningStar it has less than 1% foreign equities.
https://www.morningstar.com/funds/xnas/prcfx/portfolio


Edit: Seeing the very low foreign equities allocation in the new TRP fund you mentioned, I looked up the allocation of the T Rowe Price Capital Appreciation fund and fund that it is currently less than 2% foreign equity. According to the website, this fund can invest up to 25% in foreign securities. It's approximately 60/40.

https://www.troweprice.com/personal-inv ... -portfolio

Lots of folks here express that foreign equities are currently a good place to look for capital appreciation compared to the US. Looks like this manager feels otherwise?

Someone on another thread found this podcast with the fund manager. It was from before the PRCFX fund came out but maybe it will give some insight into his stock picking?
https://www.morningstar.com/podcasts/th ... d6b1f4e551

Listened to most of it, heard him talk about the risks of FX and China at least a couple of times. He has scant non-US equity holdings in those funds, he must not be impressed with the potential for appreciation in most of ex-US. His funds seem to have done well.

I have held PRWCX for many years and I consider it to be one of my best holdings.

While I am impressed by David Giroux's track record, I often find myself wondering when he will run out of his stash of "magic pixie dust", "secret sauce", or whatever else it is that he has.

When I have mentioned elsewhere on this forum that Giroux will someday retire, people point out that the fund did very well even before he was manager.

[Softballer]

There is a new managed fund by T-Rowe PRCFX (Capital Appreciation and Income) that has a similar allocation as Wellesly. Its ~60/40 sister fund (PRWCX Capital Appreciation) seemed to navigate the bond crash better than its VG analog Wellington. It may be a good complement to Wellesly.

Interesting, thank you for pointing out this fund. According to MorningStar it has less than 1% foreign equities.
https://www.morningstar.com/funds/xnas/prcfx/portfolio


Edit: Seeing the very low foreign equities allocation in the new TRP fund you mentioned, I looked up the allocation of the T Rowe Price Capital Appreciation fund and fund that it is currently less than 2% foreign equity. According to the website, this fund can invest up to 25% in foreign securities. It's approximately 60/40.

https://www.troweprice.com/personal-inv ... -portfolio

Lots of folks here express that foreign equities are currently a good place to look for capital appreciation compared to the US. Looks like this manager feels otherwise?

Someone on another thread found this podcast with the fund manager. It was from before the PRCFX fund came out but maybe it will give some insight into his stock picking?
https://www.morningstar.com/podcasts/th ... d6b1f4e551

Listened to most of it, heard him talk about the risks of FX and China at least a couple of times. He has scant non-US equity holdings in those funds, he must not be impressed with the potential for appreciation in most of ex-US. His funds seem to have done well.

It sounds like he follows a GARP (growth at a reasonable price) strategy. It must be that currently mostly US stocks fall under his version of that strategy, but that can change over time.

[GaryA505]

There is a new managed fund by T-Rowe PRCFX (Capital Appreciation and Income) that has a similar allocation as Wellesly. Its ~60/40 sister fund (PRWCX Capital Appreciation) seemed to navigate the bond crash better than its VG analog Wellington. It may be a good complement to Wellesly.

Interesting, thank you for pointing out this fund. According to MorningStar it has less than 1% foreign equities.
https://www.morningstar.com/funds/xnas/prcfx/portfolio


Edit: Seeing the very low foreign equities allocation in the new TRP fund you mentioned, I looked up the allocation of the T Rowe Price Capital Appreciation fund and fund that it is currently less than 2% foreign equity. According to the website, this fund can invest up to 25% in foreign securities. It's approximately 60/40.

https://www.troweprice.com/personal-inv ... -portfolio

Lots of folks here express that foreign equities are currently a good place to look for capital appreciation compared to the US. Looks like this manager feels otherwise?

Someone on another thread found this podcast with the fund manager. It was from before the PRCFX fund came out but maybe it will give some insight into his stock picking?
https://www.morningstar.com/podcasts/th ... d6b1f4e551

Listened to most of it, heard him talk about the risks of FX and China at least a couple of times. He has scant non-US equity holdings in those funds, he must not be impressed with the potential for appreciation in most of ex-US. His funds seem to have done well.

It sounds like he follows a GARP (growth at a reasonable price) strategy. It must be that currently mostly US stocks fall under his version of that strategy, but that can change over time.

So maybe the new fund PRCFX will be "GARP lite".

[HanSolo]

Does the above have something to do with Wellesley?

Someone want to start a T. Rowe Price thread?

[GaryA505]

Does the above have something to do with Wellesley?

Someone want to start a T. Rowe Price thread?

I was wondering when someone would bring that up. They are just similar funds.

[Electron]

Returns from Wellesley Income fund really have been disappointing on an absolute basis going back to the end of 2021.

We all know about the negative returns in the bond market so that is one factor. Those returns were largely the result of the pandemic and the response by the Federal Reserve. Rates were driven down to very low levels across the yield curve. Low or negative returns were inevitable once yields moved back up and especially in a period of rising inflation.

The other factor affecting Wellesley was the performance of value stocks. The rising interest rates hit a number of value sectors such as banks and utilities. Growth stocks had taken the lead over value. That included technology stocks and especially the Magnificent Seven that we hear about all the time in the news.

It looks like Wellesley has now turned the corner. Here is an interesting comparison chart showing the ratio of Vanguard Growth Index fund to Vanguard Value Index fund.

https://schrts.co/SyuzCKJR

Growth is outperforming value when the ratio is rising. You can see the recent shift towards Value that started on February 9.

Wellesley Income fund should perform much better going forward. Higher bond yields are one important factor. A second factor is the broadening of the market rally with a rotation to sectors that have not participated to the same extent as technology.

[bertilak]

be careful here. Without knowing what type of annuity the "advisor" is trying to sell you, an advisor who's suggesting annuities is usually not a fiduciary and likely is trying to get paid to sell you something (an insurance product).

Do you use this advisor for your other assets? If so, you should know this advisor likely does not have to put your interests ahead of him and may be more salesman than advisor.

From my written investment advice to my wife:

[Ignore unsolicited advice and stay the course ...]

Most investment advisors are primarily salesmen (and this includes those giving free advice or “news” on the radio or the Internet). Being salesmen is what they train for, what they have tools for, and what they are good at. They can make any proposal sound good.

There is always another idea with a better salesman, who is usually masquerading as an impartial, independent, expert.

[note: this does NOT apply to Vanguard advisors.]

P.S. An annuity is not an inherently bad idea. It can be a simple answer to a difficult question.

P.P.S. Back when all my investments were in an IRA, I held 50/50 Wellesley/Wellington. I traded them for stock and bond funds when I wanted to split things across traditional and tax advantaged accounts.

[Sageegirl]

I have been holding Wellesley in my IRA for quite a few years. Yes, the returns have certainly not been stellar but just lately I have seen it recover some $65K of the losses. At age 85 it still seems a good fit for me and I plan to keep it going forward.

[rick_sru]

" Try backtesting a 55% VWENX, 40% VVWIAX, and 5% VISVX (small cap). It should have a higher return and less volatility then the VBIAX and especially the VSMGX.

I think all of the responses above this post were respectful, educational, and also correct. If you're looking for educated opinions you came to the right place. If you're looking for pompoms and cheerleaders that will validate your past decisions you didn't.

As to your question, I do not think Welsey is appropriate for a 62 year old. I believe 65% bonds is too many bonds for any age bracket. I may be in the minority in that thinking, but you asked.

I vastly prefer something closer to a 60% stocks 40% bonds allocation for ones entire life. Its a single AA that can take you from cradle to grave.

So something like this:
VBIAX Vanguard Balanced Index Fund Admiral Shares

or this:
VSMGX Vanguard LifeStrategy Moderate Growth Fund
[/quote]
I'll respectfully disagree only to the extent that the target date income funds at Vanguard (and most target date funds) get to 30/70 around 7 years past the target date and stay there the rest of one's life. Vanguard has determined that a 30/70 portfolio can at least keep with inflation, historically between 3-4% and last for 25 year withdrawals with a high degree of probability (somewhere between 93%-100% certain):


[/quote]

[Lawrence of Suburbia]

The Vanguard web page for Wellesley says it's yield is 4%; Morningstar says 3.42%. Which might be more trustworthy? (I'm guessing Morningstar, being a pessimist).

[AlwaysLearningMore]

" Try backtesting a 55% VWENX, 40% VVWIAX, and 5% VISVX (small cap). It should have a higher return and less volatility then the VBIAX and especially the VSMGX.

I think all of the responses above this post were respectful, educational, and also correct. If you're looking for educated opinions you came to the right place. If you're looking for pompoms and cheerleaders that will validate your past decisions you didn't.

As to your question, I do not think Welsey is appropriate for a 62 year old. I believe 65% bonds is too many bonds for any age bracket. I may be in the minority in that thinking, but you asked.

I vastly prefer something closer to a 60% stocks 40% bonds allocation for ones entire life. Its a single AA that can take you from cradle to grave.

So something like this:
VBIAX Vanguard Balanced Index Fund Admiral Shares

or this:
VSMGX Vanguard LifeStrategy Moderate Growth Fund

I'll respectfully disagree only to the extent that the target date income funds at Vanguard (and most target date funds) get to 30/70 around 7 years past the target date and stay there the rest of one's life. Vanguard has determined that a 30/70 portfolio can at least keep with inflation, historically between 3-4% and last for 25 year withdrawals with a high degree of probability (somewhere between 93%-100% certain):


[/quote]
[/quote]

The thrift Savings Plan L income fund (designed for retirees) is also bond heavy.
https://www.tsp.gov/funds-lifecycle/l-income/

[Lawrence of Suburbia]

The Vanguard web page for Wellesley says it's yield is 4%; Morningstar says 3.42%. Which might be more trustworthy? (I'm guessing Morningstar, being a pessimist).

Google says 3.42% as well, Yahoo says 3.48% (close enough). Vanguard must not update their website too often ...

[RunMarkRun]

Tough crowd here.

It’s true, as someone once told me, help doesn’t always have a smile on it’s face

If ever I wanted to be able to like a post, it's this one.

[RunMarkRun]

Not sure what the comment "tough crowd" means, but will take an anecdotal shot as a retired person. Over time during the accumulation years, we looked at bonds solely as protection, and there was a general relationship that bonds held steady or moved upward some when stocks did the reverse, so they performed as expected. Over the more recent past it appears to us, as long-term investors, that bonds have increasingly been purchased with higher expectations for return with expectations for minimal volatility. Moving from accumulation to anticipating disbursal phases brings different issues into focus, specifically preservation and personal "duration" estimates. As other posters have said, bond funds are currently doing just what they are supposed to do, but the difference may be the volatility that "feels" new for some. Quite literally, we compare bond fund duration to our own, something never in the picture previously. At age 81, is it reasonable to hold a fund that is "losing money" that will recover in about six years or so, perhaps sooner if interest rates drop? That is a question we have answered based on our circumstances. If the volatility and duration issues are primary, then you may currently be interested in CD's or some other asset with predictable return based on your own circumstances.

Tim

Tim, paragraphs are your friend. Please break up this block of text so people can read it.

[RunMarkRun]

Tim
[/quote]

No offense meant with tough crowd comment but this forum does seem to have a lot of long term posters that are not real welcoming to newcomers. I guess I have to earn my stripes.
[/quote]

Agreed. Why is it that way?

[FactualFran]

The Vanguard web page for Wellesley says it's yield is 4%; Morningstar says 3.42%. Which might be more trustworthy? (I'm guessing Morningstar, being a pessimist).

They are both trustworthy but use different approaches.

The Vanguard web site lists the 30 day SEC yield as of 07/31/2024 as 4.00%. It is the result of a calculation defined by the SEC that involves what has happened over the prior 30 days.

The Morningstar web site list the TTM (Through The Month) Yield as 3.42%. It is the result of a calculation that involves the prior 12 months. With the Wellesley Income fund through the end of August 2024, the fund made total of $0.9079 per share in income distributions, made a $0.329576 capital gain distribution, and had the ending NAV was 26.25. Morningstar calculates the TTM Yield as 0.9079/(26.25+0.329676).

[Lawrence of Suburbia]

The Vanguard web page for Wellesley says it's yield is 4%; Morningstar says 3.42%. Which might be more trustworthy? (I'm guessing Morningstar, being a pessimist).

They are both trustworthy but use different approaches.

The Vanguard web site lists the 30 day SEC yield as of 07/31/2024 as 4.00%. It is the result of a calculation defined by the SEC that involves what has happened over the prior 30 days.

The Morningstar web site list the TTM (Through The Month) Yield as 3.42%. It is the result of a calculation that involves the prior 12 months. With the Wellesley Income fund through the end of August 2024, the fund made total of $0.9079 per share in income distributions, made a $0.329576 capital gain distribution, and had the ending NAV was 26.25. Morningstar calculates the TTM Yield as 0.9079/(26.25+0.329676).

Ahhh, thanks for that. SEC vs. TTM trips me up a lot; I gotta learn to pay closer attention to the fine print

[Artsdoctor]

Tim

No offense meant with tough crowd comment but this forum does seem to have a lot of long term posters that are not real welcoming to newcomers. I guess I have to earn my stripes.
[/quote]

Agreed. Why is it that way?
[/quote]

It shouldn't be too tough although sometimes it can appear that way. Overall, given the subject matter, the superb moderation, and the wide variety of personalities, I think it's a relatively civil place.

You're always welcome here.

[FellsGuy]

If you are only pulling 2% per year out of this it’s pretty easy 5 years of 2% in. Money Market FZDXX, the remainder 60% FXAIX 40% FXNAX then never think of this again…
If this 2% portfolio blows up you’ll have plenty of company at the misery saloon.

[GaryA505]

I think of it this way. It's good to be on a forum where are least some (maybe a lot) of the people are smarter and/or more informed than me.

If I post something stupid (I have) or naive (I have) it's almost guaranteed that someone will jump in to save the day.

[Lawrence of Suburbia]

It shouldn't be too tough although sometimes it can appear that way. Overall, given the subject matter, the superb moderation, and the wide variety of personalities, I think it's a relatively civil place.

You're always welcome here.

Yes, I'm always gratified by how civil Bogleheads is, compared to many other forums. Kudos to all the moderators!

[mrmass]

Tim


No offense meant with tough crowd comment but this forum does seem to have a lot of long term posters that are not real welcoming to newcomers. I guess I have to earn my stripes.


Agreed. Why is it that way?

One reason is that newcomers post questions without providing the information needed to answer intelligently. They often ask a specific question, (and often these questions are important to them) without providing any additional context.

Contex such as what is the rest of their portfolio made up of? Their income, expenses, etc. This context is needed to give a good answer.

[Electron]

The yield quoted by Morningstar was mentioned recently. TTM stands for Trailing Twelve Months.

https://www.morningstar.com/investing-d ... onth-yield

It's nice to see Wellesley performing much better recently. The rally in bonds is certainly a factor along with strength in defensive sectors such as Utilities, Banks, and Healthcare.

[BuglheadLuvsLondon]

It shouldn't be too tough although sometimes it can appear that way. Overall, given the subject matter, the superb moderation, and the wide variety of personalities, I think it's a relatively civil place.

You're always welcome here.

Yes, I'm always gratified by how civil Bogleheads is, compared to many other forums. Kudos to all the moderators!

hello - as I have hidden in the shadows for many years, I have always been impressed by the civility and high level of discourse on this site. It is like no other.

[dkturner]

The Vanguard web page for Wellesley says it's yield is 4%; Morningstar says 3.42%. Which might be more trustworthy? (I'm guessing Morningstar, being a pessimist).

I don’t know about pessimist. I would characterize your comment as realistic, not pessimistic.

[Lawrence of Suburbia]

The Vanguard web page for Wellesley says it's yield is 4%; Morningstar says 3.42%. Which might be more trustworthy? (I'm guessing Morningstar, being a pessimist).

I don’t know about pessimist. I would characterize your comment as realistic, not pessimistic.

If I won $300,000,000 in the Powerball lottery, I'd immediately start moaning about the taxes due