It really is a unique time economically.  One the one hand, we seem to be printing enough money to guarantee pretty bad inflation.  On the other, everyone is scared of debt crisis/municipal default (deflationary depression)  Either scenario seems very feasible.  Then again, markets tend to surprise ...

I'd add that buying bonds directly can be educational. 

That's true, so far, but never say never.  Who knows what will happen if some of these foreign nations decide they don't like to import our inflation.  Things can change very quickly. 

Of course, that's the nice thing about the PP...you don't have to try to guess.

Adam

The five year Treasury is at 2%.  You could consider that.  Easier to hold to maturity (shorter term), and better for tax purposes. 

Great info, Lone Wolf.  I guess it's a good idea to keep some cash in something else that's a tiny bit more liquid if you're going to use I-bonds (to rebalance).  It's more the tax benefit I like than anything else.  I am a bit skeptical of the government issuing inflation protected anything.  It's ...

So, why the higher yield for Ibonds?  Is it because you have to hold them for at least one year?  Is it b/c you lose 3 month interest payments if you sell them in under five years? 

Very interesting...do they hold up during deflationary periods?  I saw in Nov of 09 (I think) there was negative inflation.

 

You can't lose your principal with a T-bill either, so what are the questions you should ask yourself when trying to choose between the two?

Right, but what am I comparing the Ibond to?  ie, "I can get 2% + interest from the Ibond versus X% for the ? bill/bond/note?"

That's why Ibonds may be a good idea.  I'm still trying to get a handle on them, though (discussing with Moda on a separate post in the bond section). 

Moda-- I have read on them, and I think I understand how they work.  The thing is, I can't really figure out how the fixed rate is determined.  With T-bills, notes, bonds, at least you can compare the rates of various maturities and get an intuitive idea of why they are what they are.  With the Ibon...

You have roughly 120K, right?  So even if you put 39K in your stock fund that's only 32.5% of your portfolio. The others are each at 22.5%.  When not just make that the bulk or your stock fund, maybe $30-$35K, keep a little cash in the "not so great fund," and then use a T-bill account (or...

[/quote] 1. Total deferral of taxes on interest until redemption (up to 30 years) 2. Zero interest rate risk 3. Zero prinicipal risk 4. Full faith and credit of U.S. government 5. Complete liquidity (redeem at the bank on the corner any time you want) What's not to like? [/quote] Forgive the naive q...

Medium Tex--

Can you expand a bit as to why you like I-bonds?

Thanks,
Adam

It's an interesting proposal... Curious to hear what some of the more experienced guys on the site think.   The one think I would I comment on tangentially is that I would not count on the FDIC insured savings account if there's a huge deflation.  I'd want the money in treasuries, and maybe a little...

I like "Turning Hard Times Into Good Times." It's basically a gold bug show, and I don't really take any of the predictions made seriously.  However, it will give you good ideas about ways to own gold, and also just offers some very unique perspectives.  The host is a deflationist, and I l...

There's no downside that you're missing...but there's also no downside that everyone else is missing.  It's basically impossible to predict which slice n' dice portion of the market will outperform, but it usually isn't the one that's outperformed recently.  Expense ratio for MDY is .25...VTI's is ....

The threat of the US attempting to inflate away its debt is so well known that it's already priced into the bond market, no matter what the credit rating is (in my opinion).  The fact that the mainstream media is reporting it is probably all the more reason things will work out differently.   I woul...

Is the Swiss Franc considered part of the gold allocation or part of the cash allocation in this portfolio, or is just considered an asset class of its own?

Adam

"Is it worth having two asset classes in a tax advantaged account if it means having to put more assets with lower tax efficiency in a non-tax advantaged account?" That all depends on your other accounts.  My IRA has long term bonds and gold.  I didn't really want to put gold in a tax shel...

Ditto, Moda. I'd add: This issue of the total US market vs the S&P vs EM vs Pacific Rim vs Value vs Growth, etc is something everyone struggles with a bit when they first start thinking about the PP.  This is b/c mainstream portfolio theory really focuses on this type of diversification, so no o...

I don't think this potential difficulty is limited to gold. I think what Bdahl was trying to say was that if you have an IRA with only one asset class, and that asset class has a bad year, the value of the IRA will obviously take a hit as a well.  Since you can only squeeze $5000 a year into IRA (le...

I have a lot of my money in tax-deferred accounts and had/have some of the same issues. 1.  Get as close to 25% allocations as you can, but it doesn't have to be perfect.  I think it's worth it to take full advantage of the tax accounts (just my opinion).  With the amount of money you have, even if ...

Do you know anything about the short term treasury fund? It invests in an unusual short term treasury that  isn't available to the general public.  I use it for the cash portion of my fund.  I guess that's it...unless there's something else about it you think and investor should know. I will likely ...

I think it's a bad idea.  When your money is in their bank, it is subject to credit risk.  If you have your money with Gold Money, keep it in gold.  If you have it in cash, US Treasuries are really the only way to go.

Adam