PP in Company IRA m - no long term bond?

[var]

Hi guys,

My company IRA has no long term bond equivelant.....

most is 10 year equivalent? will that be sufficient?

what allocation do u suggest?

i know it wont be perfect.

i am thinking maybe 50 pct spy..25 pct 10 year 25 pct money market?

thoughts?

[Hal]

This article covers the issue for you.
https://wiki.earlyretirementextreme.com ... )_lemonade

[var]

This article covers the issue for you.
https://wiki.earlyretirementextreme.com ... )_lemonade

thanks
>>
401(k) lemonade
The PP can be difficult to implement in 401(k) plans. Stock index funds and money market funds are frequently available, but suitable bond funds are rare and gold is unheard-of. When an investor's 401(k) is less than half of their total portfolio, and the plan has an acceptable stock and cash fund, the 401(k) can house the cash and stock allocations and the rest of the portfolio can go in more flexible accounts. However often the 401(k) is the majority of assets, or the plan has no acceptable cash fund, in which case implementing a PP is impossible.

In such cases the lemonade modification to the PP could be used (as in "turn lemons into lemonade"). In theory, the cash and bond allocations, which are short- and long-term treasury bonds respectively, behave equivalently to intermediate term treasury bonds. So the cash and bond allocations could be merged into one large intermediate term treasury allocation:

25% stock
25% gold
50% intermediate Treasury bonds

>>>

looks good i think i would do something like
25 stock
25% intermediate bonds
25% cash.
25 gold (elsewhere)

i feel cash allocation is needed for rebalancing of dip opportunities.

[Hal]

Try modeling both approaches on Portfolio Visualiser and Portfolio Charts. Both methods seem OK to me, but.....
Make sure your cash allocation is in Treasury Bills, or a Treasury Money Market fund.

A Relative lost a fortune when an aptly named local building society failed -> https://en.wikipedia.org/wiki/Pyramid_Building_Society

Edit: Here is a Christmas present for you

[barrett]

looks good i think i would do something like
25 stock
25% intermediate bonds
25% cash.
25 gold (elsewhere)

i feel cash allocation is needed for rebalancing of dip opportunities.

So basically 33% of stocks, intermediate bonds and cash in the 401(k), right? I do wonder if that much cash is necessary if it's really just for re-balancing purposes. I mean, selling something in a 401(k) is not a taxable event, so - at least in some situations - one could be selling intermediate treasuries to buy stocks or vice versa.

I have no idea of your age but I think that a large cash position can be beneficial in a 401(k) if one is in the withdrawal phase and taking out a large chunk of money each year.

Just tossing out ideas. Not a financial advisor!

[johnnywitt]

So, if you live in the USA, you can max out your 401k AND max out an IRA as well. Just use your IRA to hold long term treasury bond and your bullion. Since it might not balance out because you can't put as much in the IRA, you can maybe buy the EDV ETF which is 30 yr Zero's or Strips, which is what HB recommended if a person could only hold a lessor allocation to the Long Bond Treasury side of their PP.

Perfect is the enemigo of the good.

[Kriegsspiel]

I'd say just use your 401k space for stocks, or mostly for stocks, and buy gold and LTTs outside of it. If you are saving less than $20,500, then yea just buy the longest bonds and just accept it. I wouldn't stress too much.