Provides a value tilt with dividends and capitals gains I can use for expenses. Live on what I need, re-invest the rest. Never sell shares; don't even think about it anymore. VBIAX keeps me connected to index investing. Buy, hold and die.
I hold 15% of my fixed income in four- and eight-week T-Bills. The remainder is in an intermediate-term treasury index fund. I think the large allocation to cash equivalents in this higher yield environment isn't terrible and will give me some protection if interest rates go higher. Cash does reasonably well in a rising interest rate environment. And rates may indeed rise. The future is absolutely unknowable.
Wonderful article. This has nothing to do with finance, but my delightful and special grandmother lived in Lancaster at 740 N. Duke St. The apartment building is still there. I have many fond memories of staying at the Host Town Resort as a young boy, visiting her and going to Zinn's Diner, enjoying the Amish country. Thanks again for the article.
We can state as fact that your S&P 500 index fund is reflective of all investors in the market, since it holds a reasonable representation of the market, at market weight (S&P 500 performance closely matches total market performance). You then say that the S&P 500 has the risk of "being subject to the overall market sentiment" and that you own Wellington Fund to protect against this (among other things, and acknowledging that Wellington - a fine fund in my opinion - has its own risks). My question is this: if the S&P 500 index represents the market, and the Wellington managers are investors in the market, their "sentiment" is therefore reflected in market activity, just like all other investors. How, then, does owning Wellington protect you from market sentiment? Are Wellington managers immune somehow from market sentiment? Or is some other form of protection at play?
"The aggregate returns of all investors in the market must by necessity equal the total return of the market." So, no. Active management doesn't make sense. Management fees, tax consequences and other costs of frequent trading make it nearly impossible for investors to beat the market using active management. The managers do great. The investors? Not so much. Simply buy the total market at the lowest possible cost, at market weight. Then do nothing.
Great article. Thank you. I very recently retired and immediately became more comfortable with using a bond ladder to match my assets with my anticipated liabilities. I am 60 and currently have a chunk of my fixed income as a bond ladder to get me to Social Security at 70. I don't want to go through another 2022 and am no longer a big fan of total bond index funds. Thanks again. To clarify: if I were still accumulating and had a decade or more to save, I'd still be in a total bond index fund, I think. Right now I'd be buying the higher interest bonds which will pay off over the duration of the fund (as I think I understand it!)
Comments
My three-fund portfolio now that I'm retired:
- VWIAX (Vanguard Wellesley Income Fund)
- VWENX (Vanguard Wellington Fund)
- VBIAX (Vanguard Balanced Index Fund)
Provides a value tilt with dividends and capitals gains I can use for expenses. Live on what I need, re-invest the rest. Never sell shares; don't even think about it anymore. VBIAX keeps me connected to index investing. Buy, hold and die.Post: If you could buy just three funds or less, what would they be?
Link to comment from May 5, 2024
I hold 15% of my fixed income in four- and eight-week T-Bills. The remainder is in an intermediate-term treasury index fund. I think the large allocation to cash equivalents in this higher yield environment isn't terrible and will give me some protection if interest rates go higher. Cash does reasonably well in a rising interest rate environment. And rates may indeed rise. The future is absolutely unknowable.
Post: What should investors do about the possibility of higher interest rates?
Link to comment from March 24, 2024
Wonderful article. This has nothing to do with finance, but my delightful and special grandmother lived in Lancaster at 740 N. Duke St. The apartment building is still there. I have many fond memories of staying at the Host Town Resort as a young boy, visiting her and going to Zinn's Diner, enjoying the Amish country. Thanks again for the article.
Post: My Parents’ Retirement
Link to comment from March 13, 2024
Great article. Thank you. Just a note. Fidelity also offers ATM fee rebates and their FDIC checking account has an APR of 2.69%. Pretty good deal.
Post: Every Bit Helps
Link to comment from February 29, 2024
Great insights! Can be applied to so much in life. Thank you.
Post: Keeping It Simple
Link to comment from February 29, 2024
We can state as fact that your S&P 500 index fund is reflective of all investors in the market, since it holds a reasonable representation of the market, at market weight (S&P 500 performance closely matches total market performance). You then say that the S&P 500 has the risk of "being subject to the overall market sentiment" and that you own Wellington Fund to protect against this (among other things, and acknowledging that Wellington - a fine fund in my opinion - has its own risks). My question is this: if the S&P 500 index represents the market, and the Wellington managers are investors in the market, their "sentiment" is therefore reflected in market activity, just like all other investors. How, then, does owning Wellington protect you from market sentiment? Are Wellington managers immune somehow from market sentiment? Or is some other form of protection at play?
Post: Does it ever make sense to buy actively managed funds?
Link to comment from February 17, 2024
"The aggregate returns of all investors in the market must by necessity equal the total return of the market." So, no. Active management doesn't make sense. Management fees, tax consequences and other costs of frequent trading make it nearly impossible for investors to beat the market using active management. The managers do great. The investors? Not so much. Simply buy the total market at the lowest possible cost, at market weight. Then do nothing.
Post: Does it ever make sense to buy actively managed funds?
Link to comment from February 17, 2024
Great article. Thank you. I very recently retired and immediately became more comfortable with using a bond ladder to match my assets with my anticipated liabilities. I am 60 and currently have a chunk of my fixed income as a bond ladder to get me to Social Security at 70. I don't want to go through another 2022 and am no longer a big fan of total bond index funds. Thanks again. To clarify: if I were still accumulating and had a decade or more to save, I'd still be in a total bond index fund, I think. Right now I'd be buying the higher interest bonds which will pay off over the duration of the fund (as I think I understand it!)
Post: Long and Short of It
Link to comment from September 24, 2023