On a somewhat related note, a couple years ago there was a great Wall Street Journal article on prison inmates using canned mackerel as currency: http://online.wsj.com/article/SB122290720439096481.html The gist is that the inmates aren't allowed to possess cash and get paid into an escrow account th...

The standard line is that you should take market risk proportional to your "need" and "ability" to bear that risk.  This is a paradox because the wealthy have little need (already rich) and great ability (chop $1 billion in half and you're still rich).  Conversely accumulators ha...

Conservative is always better. You can spend more later if it is too low. I'm early retired and try to keep things around 3% to be safe. Although some years it has been more like 4%. But going over 4% would get me nervous with any portfolio. Thanks. History indicates that investing - as in stocks, ...

According to iShares' website, they've "refined" IAU: http://us.ishares.com/special/goldshares.htm They now list the expense ratio as .25 instead of .40.  There may be other "refinements"  ::) but I'm not familiar enough with the fund to pick them out. Now IAU is far and away the...

What rate of distribution can a permanent portfolio support indefinitely? My wife and I are interested in early retirement, which means we need investment income that can be sustained indefinitely .  Due to the stability of the permanent portfolio and the flexibility of our spending habits, I think ...

Thanks KevinW. I'm starting to understand how simplicity (i.e., holding: physical gold, treasuries directly, and cash through term deposits) reduces the amount of instances where things can go wrong. Yeah.  I'm coming to realize that this bulletproofing is helpful in two ways.  First, there is the ...

The currency exchange and commodity exchange are very efficient markets, so I would expect the currency risk on a foreign-denominated gold ETF to be negligible under normal circumstances.  If it were possible to profit by buying Canadian gold with currency A, selling the gold for currency B, and exc...

That sounds reasonable.  Though if you're using option 3, to get to a 4x25 allocation you'll need more than just the bond fund in the 401(k).  It sounds like the 401(k) has a viable stock fund, and I doubt it has a gold fund, so you're probably looking at 401(k): 50% intermediate bond fund 20% stock...

I am also nearly completely tax sheltered and have given this some thought.  I've come up with several alternatives: Only use accounts to the extent that they support a pure PP .  In your case that would probably mean that you only use the 401(k) to hold some of your stock allocation; from now on yo...

1. Using the pre-packaged fund (PRPFX) seems simpler but I suppose carries the risk of putting all your money behind one fund manager.  Is it recommended to diversify on your own and buy the four classes separately?  Is this how most people use it in practice? You are correct that there is some cou...

I think the PP is a turn key solution for the individual investor.  I don't think it is necessary to hold cash outside of the PP.  When people say "the PP has WAY too much cash", I think about how everyone should have an emergency fund and about 25% of one's liquid assets sounds about rig...

I helped a family member do damage control on a similar situation, so your friend has my sympathy.  This stuff isn't pretty. I agree with Dave Ramsey's home buying guidelines* ( http://www.daveramsey.com/article/how-much-house-can-you-afford/ ): - pay off all debt and have an emergency fund** before...

I think your personal attitude toward working longer is the biggest factor in a decision like this.  I know people that hate work and would put delaying retirement 6 years in the same boat as a prison sentence.  Then again I know others that could've retired years ago but choose to keep working beca...

Financial advisors tend to suggest building up a liquid cash reserve of 3-12 months' expenses before investing.  In effect, the advice is to hold two portfolios: an "emergency" portfolio of 100% cash, and an "everything else" portfolio of a volatile mix of stocks and bonds. Is a ...

Wow.

Does this simulation account for expenses?  Leveraged funds tend to have some pretty high expense ratios.

From the Bond FAQ: You only want to own the highest quality long term bonds you can buy.   By definition, total bond market funds such as BND and AGG have intermediate duration and include bonds with credit and/or call risk.  The FAQ goes into a great deal of depth on why this is bad in the context ...

I would like to have all my investments at one broker and I think VG is a smart choice. I am also a Vanguard fan.  I think their mutual structure keeps their interests aligned with investors' interests, which is valuable in the long run. Another alternative is to buy individual Treasury bills and b...

Thanks for the advice.  I think this will probably be the route I take until I have more sheltered space.  In essence it will be akin to having 2 PP in my portfolio. Sort of, I suppose I'd say that you have one big permanent portfolio that's split in two.  The split happens at the boundary between ...

1. I have 60k to invest and only 5k available sheltered space for 2010. 2. Gains from assets in my tax-sheltered space cannot be Distributed to balance assets in the taxable portion of the portfolio as an 'early withdrawal' penaly would occur. So, I could only add new fnds to balance, but again run...

Any thoughts on how to go forward here?  Should I just put everything in taxable?  Buy PRPFX in taxable and create a 4x25 PP in my IRA with smaller amounts for rebalancing?  Hold just stocks with Vanguard and purchase the other asset classes individually via Treasury Direct, etc.? You can think of ...

I'm not craigr but I'll assume that it's OK for the peanut gallery to pipe up since this is a forum. First, in my opinion international stocks are necessary for a traditional stock/bond index fund portfolio, but are redundant in a Permanent Portfolio.  A conventional stock/bond index fund portfolio ...

So basically you're saying we're in a confused environment which is why the performance of the four assets doesn't quite match HB's model?  I ask because as I listen to his radio show he makes it clear that gold is meant to bolster the portfolio in times of inflation.  Well, inflation has not appea...

I think the cash and gold provide protection when stocks and bonds are not able to. This protection can add gains to the portfolio. I guess I can relate to the idea of allocating some resources to protection instead of production.  In the business world I see that companies have a lot of resources ...

Thanks for digging that up! I'd like to try to understand the "zero will increase in price at a rate roughly equivalent to the interest you would have earned on Treasury bonds" part better.  I noticed you plugged the "Investment Strategy in an Uncertain World" compendium of Harry...

The tax treatment is a good point.  I am a tax-sheltered investor so I forgot about that.  The convenience factor of the cash coupon payments is valid, too, but that seems less compelling to an accumulator such as myself. I was reminded of zeroes because I was revisiting the possibility of using Van...