Author Topic: I opened a taxable account today!  (Read 5299 times)

RH

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I opened a taxable account today!
« on: January 07, 2015, 01:13:11 PM »
Kinda a big deal for me. I typically max out my 401K and Roth IRA each year. With any leftover funds, I pay down my mortgage principal. Now with the leftover funds, they'll be going into a Vanguard account each month, specifically the Wellington fund. Set it and forget it! I'll eventually use the money in this taxable account to live off when I roll over my 401K to Roth.

GGNoob

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Re: I opened a taxable account today!
« Reply #1 on: January 07, 2015, 01:31:58 PM »
Congrats :)

Cheddar Stacker

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Re: I opened a taxable account today!
« Reply #2 on: January 07, 2015, 01:33:09 PM »
Nice work! Did you pay off your mortgage or just change gears?

Cookie78

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Re: I opened a taxable account today!
« Reply #3 on: January 07, 2015, 01:37:03 PM »
Congrats. :)

I'm looking forward to this day too.

RH

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Re: I opened a taxable account today!
« Reply #4 on: January 07, 2015, 01:44:09 PM »
"Nice work! Did you pay off your mortgage or just change gears?"

Just changed gears. My principal balance went down to $99K...that was a psychological goal for me.

I'm excited about funds being invested each and every month - regardless if the market is up, down, or sideways.

Nubs

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Re: I opened a taxable account today!
« Reply #5 on: January 07, 2015, 02:35:43 PM »
RH, why did you choose the wellington fund?  Just wondering, as I have looked at it before as well. 

ysette9

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Re: I opened a taxable account today!
« Reply #6 on: January 07, 2015, 02:49:47 PM »
Yay! I opened my Vanguard account just a couple of months ago as well and it does feel great. Good luck and congrats as well on getting your mortgage principle down to such a nice, low number.

RH

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Re: I opened a taxable account today!
« Reply #7 on: January 07, 2015, 03:03:30 PM »
"RH, why did you choose the wellington fund?  Just wondering, as I have looked at it before as well. "

It's just a nice balanced fund. Morningstar ranks it highly and I have family members in the finance world that use this as their 'set it and forget it' fund. I'm happy with an average of 8-9%/yr.

"This Gold-rated moderate allocation fund is a great option for investors who want to participate in the growth of the market while protecting on the downside.
The fund has been a top performer in the moderate-allocation category over the short and long term--plus, its 10- and 15-year returns through late September 2014 have beaten the S&P 500 Indexes."

http://www.morningstar.com/cover/videocenter.aspx?id=666658



lizzzi

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Re: I opened a taxable account today!
« Reply #8 on: January 08, 2015, 07:14:22 AM »
Just wondered if anybody had any thoughts about the advantages/disadvantages of this as opposed to what I have: 80% VTSAX and 20% VBTLX. (Both in Admiral shares). Mine is also a set-it-and-forget-it lazy person's portfolio.

lizzzi

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Re: I opened a taxable account today!
« Reply #9 on: January 08, 2015, 08:02:12 AM »
I realize the stock/bond allocation is different in VWELX. But, other than that, any thoughts on the pros and cons of VTSAX/VBTLX vs. VWELX?

lizzzi

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Re: I opened a taxable account today!
« Reply #10 on: January 08, 2015, 10:00:09 AM »
It looks like VTSAX/VBTLX just gives you a broader exposure to the market, and if you adjusted allocation to approximately one-third stock fund and two-thirds bond fund, your risk would be about the same as VWELX. The difference, as far as I can see, is that VWELX at the moment has 97 stocks and 775 bonds. VTSAX has 3804 stocks, and VBTLX has 6948 bonds. So wouldn't the broader exposure be better? Or do people feel that VWELX has higher quality holdings?

Cheddar Stacker

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Re: I opened a taxable account today!
« Reply #11 on: January 08, 2015, 10:06:27 AM »
lizzzi, I love that you are comfortable having a conversation with yourself. : )

More exposure tends to lead to less volatility which is good. Depending on the holdings, it can also lead to lower or higher returns. What you are doing is fine as long as you are comfortable with it. One version might have a better 5/10/15 year return so might be more appealing to some, but that trend could also reverse in the future.

RH

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Re: I opened a taxable account today!
« Reply #12 on: January 08, 2015, 10:21:20 AM »
Hi lizzzi,

Your allocation looks good too. I just hold a few more bonds, but I do think stocks will have a good year in 2015 though (low oil prices, people spending more), so you could end up better off.





skyrefuge

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Re: I opened a taxable account today!
« Reply #13 on: January 08, 2015, 10:24:33 AM »
Mine is also a set-it-and-forget-it lazy person's portfolio.

No, "set-it-and-forget-it" doesn't only mean "no stock picking". It also means "no manual rebalancing".  Yours is not a "set-it-and-forget-it" portfolio because you will need to rebalance to maintain your allocation, whereas rebalancing is performed automatically on your behalf by Wellington's fund managers.

Not that that makes Wellington a better choice (or a worse choice), just that the auto-rebalancing is one of the big (maybe the biggest?) differences between the two approaches. Whether that auto-rebalancing is worth the extra cost of Wellington is a personal issue, and whether the active-management of Wellington is superior to a passive approach is unknown.

A closer analog to "a passive version of Wellington" would maybe be Vanguard LifeStrategy Moderate Growth Fund, which holds an allocation of 60% stock index funds and 40% bond index funds.
« Last Edit: January 08, 2015, 10:29:02 AM by skyrefuge »

lizzzi

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Re: I opened a taxable account today!
« Reply #14 on: January 08, 2015, 02:07:10 PM »
Right, sky refuge. I rebalance monthly when I add to the funds…just put the money in whichever fund needs it to keep the allocation the way I want it.

Cheddar Stacker…I knew someone was going to tease!    : D