Vanguard Wellesley fund (VWINX) for short-term investment

LinkedIn ThisIsBook
Nov 5, 2017 29 Comments

I have recently used personalcapital.com, which suggested me that i have too much money sitting in online savings account (150K) (1.3% yield) and i should consider stock market. I already have a 3-fund portfolio of 40K in vanguard other than this money) but based on this suggestion, i’m planning to put 100K of 150K to Vanguard Wellesley (VWINX). This fund is 60/40 bond/stock, ER is 0.22%, average return is 7%, and it is not very volatile (dropped only 10% in 2008, and performed comparable to vtsax last 10 years overall). Is this a good idea, has anyone used this fund? I’m planning to use this 150K for buying a house in 2-3 years, so low volatility is important, but the returns seem to be high for a fund that is not too volatile. Do you think this is a good short-term investment method, instead of using an online savings account (which returns 1.3% with no risk)?

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TOP 29 Comments
  • CareerBuilder hdTI13
    If you need the money within 2-3 years no, it is not a good idea. You could lose money. If you are okay taking that risk do so with your eyes wide open because the risk is substantial.
    Nov 5, 2017 3
  • Cisco / Other KCmL63
    This is exactly what I’m doing, just accept that your returns will be taxed, but still better than cash savings
    Nov 5, 2017 2
    • LinkedIn ThisIsBook
      OP
      Is there a no-tax option or fund? I hear about i-bonds which are no-tax, but the returns are much lower.
      Nov 5, 2017
    • Mesosphere AvcM55
      lol “no tax” option
      Nov 6, 2017
  • Microsoft Torage
    150k is way too much cash, I’d suggest about 20k
    Nov 5, 2017 5
    • LinkedIn ThisIsBook
      OP
      It is not cash, it is in savings account, which returns 1.3%. The question is: should i keep it there, or move to vwinx or vwiax, given that this is a short-term investment, and i will need the money in 2-3 years to buy a home.
      Nov 5, 2017
    • Microsoft Torage
      Why not putting it in a relatively stable and high dividend stock like MO or F?
      Nov 5, 2017
    • Microsoft jimmym
      2-3 yrs for a home? CDs
      Nov 5, 2017
    • LinkedIn ThisIsBook
      OP
      CDs return only slightly better than online savings account, which is less than 2% for 2-3 years. This is too low.
      Nov 6, 2017
    • LinkedIn ThisIsBook
      OP
      @torage, yields of those stocks are low: 4-5% each, and they are quite volatile ( By the way, are the earnings from dividends taxed using income tax or capitsl gains tax?)
      Nov 6, 2017
  • Microsoft **nutella*
    Don't invest all at once..
    Nov 5, 2017 4
    • LinkedIn ThisIsBook
      OP
      Are you suggesting setting an auto-deposit to deposit say 10K / month from this 150K? I understand advantages of dollar cost averaging to mitigate risk, but then the 150K will sit in bank account (can’t withdraw from online savings account to vanguard). Do you recommend this ( and what to do with idle cash problem)?
      Nov 5, 2017
    • Microsoft **nutella*
      Investing all in stocks at once is a gamble(huge risk/reward).. personally, I feel it's better to let my money sit in bank rather vanishing..
      Nov 6, 2017
    • LinkedIn ThisIsBook
      OP
      This is a fund with 60/40 bond/stock allocation, so i thought that mitigates the risk. I wouldn’t put this money to 100% stocks at all.
      Nov 6, 2017
    • Cisco / Mgmt Changeling
      Are these all governmental bonds or private? Not all bonds are equal.
      Nov 6, 2017
  • Microsoft jimmym
    100k will get you admiral VWIAX which is 0.15 er and they just added a global version
    Nov 5, 2017 1
    • LinkedIn ThisIsBook
      OP
      Thanks, this is good to know, i qualify for vwiax. The global one seems to not have enough history to evaluate, but i will keep it in mind.
      Nov 5, 2017
  • LinkedIn candysandy
    What about Municipal bonds
    Nov 5, 2017 1
    • Microsoft jimmym
      vwitx vwltx
      Nov 5, 2017
  • Uber / Eng
    VshV06

    Uber Eng

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    VshV06more
    0.22 ER is too high for what this fund does
    Nov 5, 2017 6
    • Uber / Eng
      VshV06

      Uber Eng

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      VshV06more
      VBTLX for the bond portion
      Nov 6, 2017
    • LinkedIn ThisIsBook
      OP
      Vbtlx is part of my vanguard three-fund portfolio. But i wouldn’t use it here, its return is 2-3% last 3 years.
      Nov 6, 2017
    • Uber / Eng
      VshV06

      Uber Eng

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      VshV06more
      2/3 of the fund you are looking at is bonds... So if you don't want bonds, I guess I don't really understand the original question and what you are trying to accomplish
      Nov 6, 2017
    • LinkedIn ThisIsBook
      OP
      Total misunderstanding here: i’m aware this fund is 60% bonds, and that’s also what i want as the shock absorber, because i need this money in 2-3 years. I was just saying that i don’t need an additional vbtlx fund on top of vwiax.
      Nov 6, 2017
    • Uber / Eng
      VshV06

      Uber Eng

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      VshV06more
      Yep. I'm saying don't get vwiax at all
      Nov 6, 2017