Advice before deployment

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

Post Reply
User avatar
Executive Member
Executive Member
Posts: 689
Joined: Sat Sep 18, 2010 4:26 pm

Advice before deployment

Post by BearBones » Mon Oct 04, 2010 9:42 pm

Thanks many times over to CraigR for creating and administering this site. Thanks as well to Clive, MediumTex and all other contributors for your posts and comments. This is truly an invaluable work of generosity.

Thanks in part to this site, I am preparing to take back the management of my own investments after years of procrastinating. Exciting but intimidating! Shown are drafts of both a PP and a VP that I would appreciate readers’ feedback on. Both portfolios will likely be deployed by year-end. The VP will then be shifted to a more reasonable 10-15% cash position by 2013, dollar cost averaging into stocks and precious metals. As I become more comfortable with this, I may move money from VP to PP (but not vice versa, as per HB's recommendation).

                  VEHICLE                      TAXABLE            TAX DEFERRED
Cash        SHV                          4
              SHY                                                    5
              I-Bonds                      1
LT Bonds  TLT                                                    10
Stocks      VTI                            10
Gold        IAU                                                    2
              PHYS                          2
              Bullion                        6

Cash        Bank, US                    10
              Bank, Canada              7
              VMSXX (Tax Ex MM)      4
              Tax Ex ST Bond ((VSWUX) 3
Metals      CEF                            2
              Silver Bullion                2
Stocks      VEU (International)        6
              VSS (Int SC)                2
              AAXJ (Asia)                  2
              XOP (Energy)              2
Productive Land                          20

1.  Is the PP pure enough in form? Others on the site have written about the substitution of TLT for actual treasuries.  Not as sure with the substitution of IAU and PHYS for some tangible bullion, but this provides more convenient liquidity as well as the tax efficiency of PHYS (as well as CEF).
2.  I only have 17% of portfolio in tax-deferred accounts. Are the assets divided appropriately to minimize taxes while still allowing for rebalancing?
3.  Any problems or better suggestions for the ETFs, funds and other vehicles I have chosen (in either account)?

I hope that this is of some help to others. Thanks for any feedback provided.
User avatar
Lone Wolf
Executive Member
Executive Member
Posts: 1416
Joined: Wed Aug 11, 2010 11:15 pm

Re: Advice before deployment

Post by Lone Wolf » Wed Oct 06, 2010 8:10 am

This certainly looks like a nice setup to me.  I actually have such a high % of my net worth in the PP that the long-term bonds fill up my entire tax-deferred space, so I think your setup (including some SHY and just enough gold for one tax-deferred rebalance) is superior to what I've got.  I like the I-bonds as well.  Hard to know whether to put those under "taxable" or "tax-deferred", eh?  :)

I think that throwing in some IAU \ GLD \ SGOL \ PHYS is fairly common, although it's not a Harry Browne-approved maneuver.  IMO doing the IAU in tax-deferred really is a great idea.  MediumTex suggested this to me as a good way of at least putting off any payment of the "collectibles" tax if a rebalance comes along and I think it's a great idea.  (Bummer for me that I currently have no available tax-deferred space with which to put it into practice.)

Also, the fact that you classify your bank cash as being in your VP makes me wonder if I'm classifying my CDs and savings accounts improperly (I consider those part of the PP's cash portion, although I make sure that they're outsized by the SHV \ SHY \ I-bond "full faith and credit" instruments.)  :-\

I don't have any feedback on your VP but the PP looks good to me.  I do make my PP a much, much bigger % vs. my VP than you do but then, I've very little taste for speculation.  :)
Post Reply