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Old 10-16-2013, 04:00 AM
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Quote:
Originally Posted by gustavo View Post
The OP was talking about 5% income. Total Stock, VTI only yields 1.97%. Total Bond, BND is 2.97% and Total International stock, VXUS is 3.17%. Note a high overlap in VTI and VXUS which lowers diversification and increases volatility. Perhaps a fund like Vanguard emerging market ETF (VWO 3.36%) meets the need for international exposure without overlap. However, the yield on this portfolio is much less than the required 5%. The individual stock(s) are better than the insurance company annuities.
Those 3 funds have very little overlap. And that is only when you have the exact same % of each. And yield and total return are apples and oranges. YTD total return (yield plus growth) for that fund mix is 12.379%. The return for the past 34 years is 7.36%. Way above his 5% requirement.

I personally prefer to spread my risk over 10,000 plus different stocks and bonds then over one or a small hand full of stocks only. This approach has a significantly lower risk factor then an annuity, a single stock, or a small group of very good stocks.
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