In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

General Discussion on the Permanent Portfolio Strategy

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eldrinsson
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by eldrinsson » Sun Jan 14, 2018 1:53 pm

whatchamacallit wrote:Why borrow at a rate of return higher than you know you will receive on at least half your portfolio?

If your mortgage rate is 2%. You would be earning an effective 2% tax free on extra payments since your regular payments are with after tax kronor and you don't have to realize the 2% saved as a gain.. I imagine that is quite a deal in your interest rate environment.
I am actually paying of my mortgage faster (3extra months of payments per year) - this is outside the 15% of salary that i put straight into long term portfolio saving at the moment. But you have a point i guess... I've been thinking quite a lot about this and I see it like this: If I have a possibility of investing money in a reasonably safe (low overall volatility) portfolio that gives at least 4-5% in return over all, then as long as the rates are as low as they are right now (we have very low mortgage rates because of the overall rate level + my wife works at a bank so have employee benefit rates 8) I'm actually making money on the part that I'm not using to amortize - and if the mortgage rates go up - then I can use that money + my "profit" to pay of parts of the mortgage.

Yes, it's a risk and thinks can turn around fast, but this is how doing right now...
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by AnotherSwede » Sat Feb 24, 2018 3:08 am

Eldrinsson,
What did you settle for?

Do you have suggestions for gold ETFs that are allowed? SPDR is no longer.
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by ochotona » Sat Feb 24, 2018 8:29 am

Here is another thought for stocks.

In portfoliovisualizer.com, there is a tool for correlation.

Maybe you can put in symbols of different single-country or regional ETFs and see what correlates best to Sweden.
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by AnotherSwede » Tue Feb 27, 2018 12:27 am

"what correlates best to Sweden."

Thank you, but I am not sure I trust correlations.

I have since years used global stocks over domestic, I think that is good diversification.

Bonds are harder, there is no domestic alternative and I don't trust EU or the euro. But maybe I should just accept our fate is connected to the euro, and in the end we will join the euro. And what happens after the euro?

Gold is also hard, since new year we can't use SPDR GLD.
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by LazyInvestor » Wed Feb 28, 2018 9:52 am

For most of my European colleagues who live in high taxation big social welfare countries, I'd suggest to take into account what they have guaranteed from government as their fixed income. When they do this they realize that PP is way too conservative for them. Most of them have quite big chunk of value in terms of guaranteed retirement and welfare net compared to their savings. IMO, many average income Europeans from developed EU countries should be probably 100% stocks.

For example, if you're expecting pension of 2K EUR/month in todays money, that's 24K/year and at 3-4% safe withdrawal rate that represents 600-800K EUR in terms of fixed income. Compare this to the amount that you have to invest and you'll be able to better judge how aggressive you should really go.
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by AnotherSwede » Thu Mar 01, 2018 1:04 pm

LazyInvestor wrote:IMO, many average income Europeans from developed EU countries should be probably 100% stocks.

For example, if you're expecting pension of 2K EUR/month in todays money, that's 24K/year and at 3-4% safe withdrawal rate that represents 600-800K EUR in terms of fixed income.
I am not to far off with my current 75/25 global/gold.

We actually get government pension savings reported as a krona-denominated figure every year. Nowhere near the amount you mention, but nowhere near halfway through working life either.
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by eldrinsson » Fri Mar 02, 2018 4:10 am

AnotherSwede wrote:Eldrinsson,
What did you settle for?

Do you have suggestions for gold ETFs that are allowed? SPDR is no longer.
After thinking and reading and thinking and reading.... I decided not to go for the strict PP at the moment and maybe not even in the future , this because of several reasons:

- I've had a very hard time to to find long-term-bonds that is logically connected to the the Swedish economy/currency (No swedish long term bonds available) and the low-interest-rate environment itself make long-term-bonds questionable if one is starting a porfolio right now - not much leverage left... (Craig wrote: "No juice left VS the risk: viewtopic.php?f=1&t=8730&hilit=currency ... 36#p155362 )

- The currency issue adds another layer of risk and I've seen examples of the assets not playing their parts well together because of that, there is a Swedish blogger/investor (rikatillsammans.se) that follows the PP portfolio and it had a big "unexplained" drop last year because of currency fluctuations - it simlpy adds another layer of risk that feels unsafe to me....

- The swedish wellfare system + building a good base-level pension from work and state + 12+ months of union safety net in case of unemployment + a big enough personal cash-reserve + good personal and work insurance policys: With all this I feel reasonbly safe that I'm well insured for most personal circumstances or accidents and would not really need the stability "safety-net/ safe-pension" approach of PP to sleep well at night (also pointed out by LazyInvestor earlier in this thread) or to ride out a long bear market.

With all this said, I will however definitely apply some of the principles, i will have bonds in some form, and gold as safetynet for unforseen political disaster/war and hopefully as a asset that can play well in future economic turmoil.

So at the moment my portfolio looks like this: 70/30 Global Stock/Swedish Short-medium-term-bonds, My total amount invested are still quite low (below 100 000Sek/$12000) but when it grows in the coming years I'm thinking about going for something like 70/15/15 - Global Stock / Global bond market (if possible to buy in Sweden) / Gold (mostly physical and a EFT for balancing reasons)

You might wonder why I have bonds at all in the ongoing market - but it is simply my sleep-well-factor - I think I would be to nervous having a 75/25 stock/gold portfolio - So to be able to let go of worrying I have that part. ;)

About your question @AnotherSwede: I haven't found a good way to buy gold right now except physical bullions in other countries or physical and store safely myself. I will simply wait and watch an hope that a good alternative shows up in the coming future. I think in the long run I will go with what I said above - a majority physical storage in a differnt country, and a some in a EFT for portfolio balancing reasons... I'm waiting for the update over at rikatillsammans.se to see what they will suggest for the gold part of their PP portfolio.
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by AnotherSwede » Fri Mar 02, 2018 8:03 am

eldrinsson wrote: - I've had a very hard time to to find long-term-bonds that is logically connected to the the Swedish economy/currency


I think I would be to nervous having a 75/25 stock/gold portfolio - So to be able to let go of worrying I have that part. ;)


I haven't found a good way to buy gold right now except physical bullions in other countries or physical and store safely myself. I will simply wait and watch an hope that a good alternative shows up in the coming future.

I'm waiting for the update over at rikatillsammans.se to see what they will suggest for the gold part of their PP portfolio.
I am not worried about (market value of) gold, more worried about the markets and insane governments :)

But I am worried about everything else regarding gold: off shore vaults, obscure ETFs, fake physical, theft.

Thinking long term, around retirement 5M savings (real), probably more, would be 100+ ounces at home. Possibly uninsured.

If no alternative shows up I might even let ratio slide to 90/10 (decent cash buffer). In backtesting even 10% does a lot to soften crashes. If I can sell off gold to buy stocks that just have crashed 60% is another matter.
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by boglerdude » Sat Mar 03, 2018 1:24 am

Mortgages are 100 years in Sweden?

Is that good or bad...
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by AnotherSwede » Sat Mar 03, 2018 6:53 am

boglerdude wrote:Mortgages are 100 years in Sweden?..
Mortgages are until hell freezes over.

Until last year or so it was the norm to not pay off the loan, then rules changed to pay 2% a year down to 70%, then 1% down to 50, then optional.

Infinite mortgage, interest rates close to zero and 15+ years of increasing RE prices has made people just divide what they can afford to pay monthly with interest and arrive at what they can borrow. Which is an amount you can never pay back.

Couple this with low income spread and above 70% income taxes on the margin and it becomes hard to really get ahead economically.
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by AnotherSwede » Sat Mar 03, 2018 11:19 pm

I don't think it is a coincident that all options except consuming, and saving in risky assets with no real return except price increase is removed.
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by boglerdude » Sun Mar 04, 2018 12:33 am

Sweden is presented as a utopia in American media...so whats the other side of your argument

You can sell a house in Sweden for a fortune and retire to a less expensive country (ie any other country)?
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by AnotherSwede » Sun Mar 04, 2018 1:28 am

Current crop of 65-70-year olds has been able to retire on 70-80% of salary and have enjoyed at least 5x real house price increase. House bought with no money down so that is infinite return on investment.

There is limitations on taking out pension outside of europe I think. And Spain/Portugal that used to be a popular place to retire at (until old age forced them home to enjoy free health care) is not that much cheaper anymore.


But this is not the future for the younger swedes. Being born in the 70s I can see my pension prognosis getting way worse every year.

I expect pension being needs tested when I am 65-ish. That is: if you are needed in the job market you don't get to retire.


I have enjoyed a good part of the real estate bubble (unfortunately I didn't buy the most expensive I could afford to borrow when I was 22-24), but for those around 20 now real estate doesn't look very funny.

You don't expect swedish/any real estate doing another 3x increase compared to wages?


No, I wouldnt prefer living in the US.
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by AnotherSwede » Sun Mar 04, 2018 1:44 am

I just went to minpension.se and did a government approved pension prognosis.

If I go at 65 I will get 50.4% of what I earnt last year. This has been dropping like a rock from 65-70% not many years ago.
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by AnotherSwede » Mon Mar 12, 2018 3:17 pm

So, Xetra-Gold and ETFS Physical Swiss Gold is recommended now.

https://rikatillsammans.se/ombalanserin ... ljen-2018/
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by eldrinsson » Thu Mar 15, 2018 5:16 am

AnotherSwede wrote:So, Xetra-Gold and ETFS Physical Swiss Gold is recommended now.

https://rikatillsammans.se/ombalanserin ... ljen-2018/
Yes, seems so. I'm still thinking that when my portfolio is big enough, physical gold and EFTs for balancing reasons might be the way to go for me.

How did you have yours?
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by AnotherSwede » Fri Mar 16, 2018 3:06 am

eldrinsson wrote: How did you have yours?
About 75% GLD ETF, 25% physical.

I am thinking about maybe doing kind of euro/global Golden butterfly, inspired by rikatillsammans. Seems likely to beat mortgage interest over 3-5 years.

75% equity is starting to affect sleeping, at least during the day ;)
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by juandelarocha » Thu May 31, 2018 12:55 pm

AnotherSwede wrote:
Sun Mar 04, 2018 1:28 am
Current crop of 65-70-year olds has been able to retire on 70-80% of salary and have enjoyed at least 5x real house price increase. House bought with no money down so that is infinite return on investment.

There is limitations on taking out pension outside of europe I think. And Spain/Portugal that used to be a popular place to retire at (until old age forced them home to enjoy free health care) is not that much cheaper anymore.

You sure about that? I live in Spain, my parents own a house in Costa del Sol -a place full of swedes and norwegians- and most of them live the whole year in Spain. Most of them too suffer from different diseases and are totally covered in Spanish hospitals for free due to European and bi-lateral agreements regarding health insurance (as well as when any given European gets ill and can be covered in any given European hospital for free).

-sorry for the offtopic-

Regarding gold, I went for Xetra Gold. Seems to be the most safe and easy solution to cover that part of the permanent portfolio. In terms of Bonds, why don't you try the 2046 German bond? To me has been working fine during the las 5 years...
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Re: In a small country (Sweden) that has severe limitations, what is the "next best" to Permanent Portfolio?

Post by dualstow » Thu May 31, 2018 1:48 pm

juandelarocha wrote:
Thu May 31, 2018 12:55 pm
I live in Spain, my parents own a house in Costa del Sol
Looks absolutely beautiful.
-sorry for the offtopic-
Oops, me too.
RIP Marcello Gandini
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