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It's hard to answer your question without knowing more about your situation. By investing in Vanguard Index 500, your 7% fixed income would disappear, along with the associated income taxes. Instead, you'd get the fund's small ordinary dividend, an unpredictable capital gains distribution and a lower tax bill. If you need the 7% income currently, rather than letting the investment ride for at least five years, I believe that the stock market is not the place for your money. If you'd be satisfied with taking no more than 3% or 4% from your index holdings to help with living expenses and income taxes, then the recommendation of a five year waiting period would not apply. You could start those little withdrawals right away with reasonable confidence that you won't erode your capital.

I have most of my retirement assets in the Vanguard Index 500, which has done well for me in the 6.5 years of my retirement and for years before that as well. Picking stocks instead of going with the indexes does not appeal to me, for all the much-discussed reasons.

Chips, inveterate indexer and subscriber to Efficient Market Theory
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