The following are two long-term displays on Vanguard’s Wellington (VWELX) and Wellesley Income (VWINX) Funds. For decades I have used these two funds as templates for how every conservative investor over the age of 50 should invest. Take your pick—60/40 stocks/bonds or 40/60 stocks/bonds.
My chart on Wellington shows that since World War II, only once has the fund undergone two consecutive down years. And following that single exception came two of the better years in Wellington’s history. Beyond that single negative example, there has been only one heavy-duty down year.
But as you can see, the year after was a biggie. The lesson learned is to stay the course. Maintain your balance with the patience of Job, and do not be comparing your progress to that of some benchmark. Benchmarks are often moving targets that do not have a unique temperament, as you do. If you stay balanced with a proper mix of dividend-paying big blue-chip stocks and interest-paying short- and intermediate-term fixed income, you will achieve satisfactory and consistent long-term total returns.
This is exactly the strategy I deploy, and there is no chance I will change course in the future. Not after a near 50-year track record of comfort and suitable returns. “Comfort” is the word we hear most often at our family investment counsel firm. Clients correctly believe that at Richard C. Young & Co. Ltd., we are consistent with our risk-adverse balanced approach. We stay on track, period.
With my plan, you will enjoy some great years, some OK years, and some unpleasant years. That’s what balance is about. You are willing to give on the upside as a tradeoff for not getting taken apart on the downside.