Anything wrong with placing 90% of a lump sum retirement into a single fund like the Wellesley fund from Vanguard? The 40/60 split ... stocks to bonds seems conservative enough and if the market ever comes back it is my understanding I can roll it into the Wellington fund 60/40 split. The other 10% could go into Money Market for near term living expenses. Would it be too simple to pick just "one" fund? What about placing everything with one company? Would you split a lump sum between several companies for safety? Thanks for your input. Jack.

If you are going to put 90% of a lump sum distribution in a single fund, Vanguard is a very good place to put it, and Wellesley sounds fine.

Much depends on how large the amounts you are talking about and how important they are to your retirement. If less than $100K, one fund is fine. If more than say $200K, perhaps two funds would be better.

On the one hand you want to simplify the paperwork if you can. On the other, if the amounts are large enough so fees are not a concern, a second account provides you some practical diversification. So suppose one has a computer problem and your funds are not available for a few days. The other account at another firm gives you some options.

Putting a large lump sum of money into the stock market at one time is always a concern. But is that money invested now? If so, moving from that account (as in a 401K) to another with similar investments avoids the risk. Otherwise, putting the funds into something like a money market and moving chunks into stock investments at intervals of one to three months is one way to avoid putting it all in at a price that could turn out to be too high.

Best of luck to you.

"Much depends on how large the amounts you are talking about and how important they are to your retirement. If less than $100K, one fund is fine. If more than say $200K, perhaps two funds would be better".

It is "31 years worth" of pension. It represents 70% of my retirement excluding Social Security so I would not want to loose a lot of it.

"The other account at another firm gives you some options."

A little more security as I look at it also.

"Putting a large lump sum of money into the stock market at one time is always a concern. But is that money invested now? If so, moving from that account (as in a 401K) to another with similar investments avoids the risk. "

It is not invested the same way. It will be a lump sum calculated on how much "The Company" would have to put into an annuity to pay me "X" amount of my salary for my expected life span based on the current rate of a 30 year Treasury. So my Lump sum is at a 41 year high.

a 7 1/2% return on the lump would equal the annuitized payment but I would still have the lump sum left for my estate. (or more if I can do it as well as some of the other fine folks at Fooldom)

Thanks for your input and good luck to you also. Jack

Jack, in the situation you describe a laddered maturity bond portfolio is one thing you might want to look at. They can be very safe and no fees as in a mutual fund. Fot that you probably would want to use a discount broker.

Fools would usually suggest 5 yrs of expenses in that bond portfolio, but you could go up to 50% of your funds--especially if the interest income covers your living expenses. The rest can be in stocks for inflation protection.

You probably have these funds in a rollover IRA account. If you are over 59-1/2, you will want to set up a distribution plan. If you are under 59-1/2 you may want to set up a 72(t) distribution plan.

Seems like you are on the right track.

Fool on!!

A lot of good questions, and as mentioned you're on the right track to successful retirement investing.

The Wellesley fund is a great choice for someone of retirement age. If you're going to be drawing down the principal from this investment to live on, however, you may want to ladder (as mentioned) part of the fixed income in bonds or CDs. Then you know exactly how much you'll have to cover next year's living expenses, and when you're going to get it. Also, the Wellesley doesn't provide international diversification, which you must have. I'd put 25% of your stock investment in international equities.

>>if the market comes back I can roll it into the Wellington 60/40
What your saying is, "Stocks are cheap now, but when they become expensive again I'll overweight them in my portfolio". I wouldn't do this- you won't have much luck trying to time the market.

>>What about placing everything with one company?
I recommend this. The securities industry is so regulated that you're not at risk of losing your investment due to fraud or bankruptcy by a major fund provider. Also, the more money you have with a single institution, the more perks you get. If you make Admiral at Vanguard, for example, your expenses are sharply reduced.

I don't agree with Paul that you should slowly drip the stock portion of your investment into the market. (I also think dollar cost averaging is an obnoxious myth, but maybe I just don't understand it). Decide the % you wish to allocate to stocks, invest the whole thing now, and remain fully invested.

Nick

Also, the Wellesley doesn't provide international diversification, which you must have. I'd put 25% of your stock investment in international equities.

I'm grappling with this right now. Can you tell me why you think we must have international equities in our portfolio, especially right now, considering the state of the world? Also, most recent things I've heard is that international diversification is not as important as it used to be because so many American companies do business overseas that the markets are more and more moving in tandem.

My situation is:

I have a Roth at TIAA-CREF. Half in Bond Plus, Half in the International Equity fund. I also have a Roth at Scottrade, where I hold Vanguard Total Stock Mkt index (VTSMX).

I need to liquidate my TIAA holdings and transfer them to my Scottrade Roth. (TIAA is going to start instituting low-balance fees, and Scottrade doesn't trade TIAA funds, so I can't transfer-in-kind.)

I had not planned on buying bond funds right now because they're so high, but I have to invest this money somewhere, and putting it into my VTSMX leaves me with no bond diversification at all.

So I was thinking about giving up international and doing one of several things:

1. invest 1/2 into Vanguard Total Bond Mkt index (VBMFX), & 1/2 into Vanguard Reit Index
2. invest all into VBMFX
3. invest all into VTSMX and hold off on bonds until economy recovers (I have 20 year investment timeline.)
4. invest all into Dodge & Cox Income Fund (DODIX) (I believe this holds some real estate, but I'm not sure.)

So, given that I had all but decided on giving up on international, I'm really curious about your thoughts on needing it. (and anyone else's too.)

Thanks,
Caat

Yes, you're right, US stocks offer some international diversification, but the US market doesn't have 100% correlation with international markets, so you can add diversification, and possibly reduce risk, by adding international stocks. Think of the world as one big market. If you just own US stocks, you are ignoring half of that market.

I wouldn't try to guess whether bond funds are "high" or "low" right now. Nor would I try to time the economy. Just put your age-10 in VBMFX, the rest in US and foreign stocks. I diversify into real estate by owning a home, but REITs may be a good idea, too.

Nick

1. My personal asset-allocation in retirement will have about 20-25% in REITs (e.g. Vanguard REIT index fund, VGSIX).

2. I'd also seriously consider winning Vanguard funds like Health Sciences (large-growth) and Capital Opportunities (medium cap- blend). These will complement and diversify a large-value oriented fund like Wellington fund very well.

The rest can very well be in Wellington.

HTH,
-dr.nonlinear-

Jack254,

Making the right decisions is very important in protecting & growing ur retirement fund. Here's a good resource for u to read before making any decisions: "Getting started in Retirement Planning" by Ronald M Yolles, JD,CFA; Murray Yolles, JD, MBA. IBN 0-471-38310-4. The book is written for all ages.

Your on the right track. I have read many of the financial investment booklets from Harold Evensky to Bruce Temkin. This book is easy to read, balanced, and invaluable tool to aid you in your retirment journey. One of the best I've read. I strongly recommend you review this material in addition to the information provided on this board.

Be wise & you will do well. Many happy investing returns.

RT

Ya Know ... this retirement planning is more work than work. :-) Thank you all for your input. Paul, your one note mentioned rule 72t. That was a couple of hours reading all in itself. If I understand it correctly I can take a disbursement based on my life expectancy but I can't change the draw for five years. (5 yr rule) Then when social security kicks in I can take a reduced amount. (age 58 to 63 +/-). Or I could just leave it all sit for a year and a half and do what I want. Does that sound correct? Yobria, I understand about the sell low buy high. Perhaps the Wellington would be better. The Wellesley caries 52 stocks if I remember correctly and they are all high dividend paying companies. I will have to look to see what the Wellington carries. At my age and the way I will have to take the lump sum I will have to do something with it in a short amount of time. dr.nonlinear ... REIT's have had a nice run over the past three years. 13%?? Do you think it will last or fall back to a more realistic 4%? Homes in my area (Chicago - North) seem over valued. The Health Sciences could be a winner considering the baby boomers are heading into retirement. It sure wouldn't hurt. You think the 60/40 split is the best? 40/60 too conservative? RT, thanks again for the book info. I'll try to get a copy in the next day or two. Sorry for the long post. Thanks again. Jack.

Jack,

What do you mean REITs have had a good run? Take a look at this chart:

http://quote.fool.com/Chart/chart.asp?osymb=&osymbols=vgsix&symbols=vgsix&currticker=VGSIX&time=5yr&uf=0&compidx=aaaaa%7E0&ma=0&symb=vgsix&freq=1dy&lf=1&comp=&type=128&sid=16908

I think you are confusing record single-family home prices for REIT performance. REITs have had a decent setback of late and I believe are ready to be attractive buys.

Off the top of my head, I'd do this:
Final allocation:
VGSIX 20%
Health sci 10%
Capital opp 10%
Wellington 40%

I'd build up these positions, dollar-cost averaging over 6 months. Keep the final 20% in short-term corporates (I believe Vanguard has a fund for that).

HTH,
-dr.nonlinear-

Hi HTH, If you bought in an 2000 you would have had a nice ride up until last summer but if you bought in 5 years ago it would not have done real well. That is how I read it. The REIT should apply to appartment complexes, shopping malls etc. right? There are a lot of vacancies around here. Looking at the chart, if you bought 5 years ago it doesn't look like it would have been a good investment yet if you look at the Vanguard snapshot they show an average of about 13% (I think) since inception. If that isn't exact forgive me I have an awful lot of numbers floating around in my head right about now. That was a bar chart I picked up on at their web site. Is your Health and Capital at Vanguard also?

Yobria said:

Also, the Wellesley doesn't provide international diversification, which you must have. I'd put 25% of your stock investment in international equities.

I wanted to check on the 25% quoted for international equities and went back to check on John Bogle. His rule of thumb recommendation : "Limit international holdings to no more than one-fifty of the equity portfolio".

So if you are 60/40 with 60 being stocks it sounds like 1/5th of 60% or not more than 12% of your holdings should be in inernational holdings??

Jack