How to save money not part of your portfolio?

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Mr. Contrary
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How to save money not part of your portfolio?

Post by Mr. Contrary » Thu Apr 07, 2022 10:35 am

I make a comfortable salary and have low living expenses, and seem to have an excess of 1k-2k/month.

I don't really want to invest this money, as there are some medium term goals I want to save for (3-5 years), but I"m not sure where to put the money in the interim. The tricky part is that I may not end up needing the money at all and I would be better off (probably) investing it. Also just want to generally save, but I am a very conservative person by nature.

So far, here is my thinking:
Cash? Eaten up by inflation
Bonds? Rates too low/risk return profile not worth it to me
Stocks? Too risky
Crypto? Too volatile

Ibonds are already maxed out each year.

I'm leaning towards more gold, but even that can be subject to massive drops.

I'm fresh out of ideas.
Don
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Re: How to save money not part of your portfolio?

Post by Don » Thu Apr 07, 2022 12:13 pm

Mr. Contrary wrote:
Thu Apr 07, 2022 10:35 am
I make a comfortable salary and have low living expenses, and seem to have an excess of 1k-2k/month.

I don't really want to invest this money, as there are some medium term goals I want to save for (3-5 years), but I"m not sure where to put the money in the interim. The tricky part is that I may not end up needing the money at all and I would be better off (probably) investing it. Also just want to generally save, but I am a very conservative person by nature.

So far, here is my thinking:
Cash? Eaten up by inflation
Bonds? Rates too low/risk return profile not worth it to me
Stocks? Too risky
Crypto? Too volatile

Ibonds are already maxed out each year.

I'm leaning towards more gold, but even that can be subject to massive drops.

I'm fresh out of ideas.
Keep your powder dry for 6 months, or so.
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Xan
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Re: How to save money not part of your portfolio?

Post by Xan » Thu Apr 07, 2022 12:38 pm

Welcome, Mr Contrary! I take it from your avatar that you have recently moved from California to Texas?

Personally, I think the PP would be a pretty good place to put this money. You see a potential issue with each asset class: buying them all is a pretty good hedge.
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Re: How to save money not part of your portfolio?

Post by Mr. Contrary » Thu Apr 07, 2022 2:56 pm

Xan wrote:
Thu Apr 07, 2022 12:38 pm
Welcome, Mr Contrary! I take it from your avatar that you have recently moved from California to Texas?

Personally, I think the PP would be a pretty good place to put this money. You see a potential issue with each asset class: buying them all is a pretty good hedge.
Thanks Xan. Long time lurker and former member here who posted a handful of times under a different account (forgot my old email/username. Was not someone anyone would remember).

Moved from California to Texas about 20 years ago when I was a kid. I miss my home state (for the climate and topography, and culture) and will always be a Californian at heart (I call myself a refugee), but somewhat glad to be in Texas due to the usually more sensible economic and political environment (though I'm more of an independent myself). I wish California would be restored to its former glory in some ways (but don't want to go off-topic here). Another time perhaps for the other subforum :)

Thanks for the suggestion, you know for some reason I never thought of the PP as a savings vehicle even though its been right under my nose. I think you might have hit the nail on the head.

Do most PP'ers calculate their asset allocation, and allocate 25/25/25/25 across ALL of their assets? I.e., should I include my 6 months emergency savings in the bank as part of my cash? Or do most keep this separate?

I currently don't have a PP at this point, but if you added all my assets, I'd probably be closer to a golden butterfly (lacking in the gold department).
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Re: How to save money not part of your portfolio?

Post by Xan » Thu Apr 07, 2022 5:59 pm

Thanks for the backstory, and welcome to posting!
Mr. Contrary wrote:
Thu Apr 07, 2022 2:56 pm
Thanks for the suggestion, you know for some reason I never thought of the PP as a savings vehicle even though its been right under my nose. I think you might have hit the nail on the head.

Do most PP'ers calculate their asset allocation, and allocate 25/25/25/25 across ALL of their assets? I.e., should I include my 6 months emergency savings in the bank as part of my cash? Or do most keep this separate?

I currently don't have a PP at this point, but if you added all my assets, I'd probably be closer to a golden butterfly (lacking in the gold department).
I think most consider their emergency fund to be part of their cash allocation. I certainly do, and would argue pretty strongly for it. Mathjak argues strongly against it. Maybe it would be an interesting poll question.
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Re: How to save money not part of your portfolio?

Post by vnatale » Thu Apr 07, 2022 9:17 pm

Mr. Contrary wrote:
Thu Apr 07, 2022 10:35 am

I make a comfortable salary and have low living expenses, and seem to have an excess of 1k-2k/month.

I don't really want to invest this money, as there are some medium term goals I want to save for (3-5 years), but I"m not sure where to put the money in the interim. The tricky part is that I may not end up needing the money at all and I would be better off (probably) investing it. Also just want to generally save, but I am a very conservative person by nature.

So far, here is my thinking:
Cash? Eaten up by inflation
Bonds? Rates too low/risk return profile not worth it to me
Stocks? Too risky
Crypto? Too volatile

Ibonds are already maxed out each year.

I'm leaning towards more gold, but even that can be subject to massive drops.

I'm fresh out of ideas.


For certain as much as you could put into iBonds If you do a search on iBonds in this forum you will find much about them.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: How to save money not part of your portfolio?

Post by Xan » Thu Apr 07, 2022 9:19 pm

Mr. Contrary wrote:
Thu Apr 07, 2022 10:35 am
Ibonds are already maxed out each year.
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Re: How to save money not part of your portfolio?

Post by vnatale » Thu Apr 07, 2022 9:23 pm

Xan wrote:
Thu Apr 07, 2022 9:19 pm

Mr. Contrary wrote:
Thu Apr 07, 2022 10:35 am
Ibonds are already maxed out each year.



Wow! I had to read that initial post from him three times before I finally caught that line! I don't know what it had been such a blind spot for me!
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: How to save money not part of your portfolio?

Post by vnatale » Thu Apr 07, 2022 9:25 pm

Mr. Contrary wrote:
Thu Apr 07, 2022 10:35 am

I make a comfortable salary and have low living expenses, and seem to have an excess of 1k-2k/month.

I don't really want to invest this money, as there are some medium term goals I want to save for (3-5 years), but I"m not sure where to put the money in the interim. The tricky part is that I may not end up needing the money at all and I would be better off (probably) investing it. Also just want to generally save, but I am a very conservative person by nature.

So far, here is my thinking:
Cash? Eaten up by inflation
Bonds? Rates too low/risk return profile not worth it to me
Stocks? Too risky
Crypto? Too volatile

Ibonds are already maxed out each year.

I'm leaning towards more gold, but even that can be subject to massive drops.

I'm fresh out of ideas.


Before I finally get into the Permanent Portfolio I've maintained a barbell approach. 50 / 50. NO risk on one end and moderate to high risk on the other.

The no risk is 100% short-term U.S. Treasuries ... paying practically nothing.

The moderate to high risk are all index funds with Vanguard. Not doing well this year. Did tremendously last year.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: How to save money not part of your portfolio?

Post by coasting » Fri Apr 08, 2022 1:12 am

Xan wrote:
Thu Apr 07, 2022 5:59 pm
Mr. Contrary wrote:
Thu Apr 07, 2022 2:56 pm
Do most PP'ers calculate their asset allocation, and allocate 25/25/25/25 across ALL of their assets? I.e., should I include my 6 months emergency savings in the bank as part of my cash? Or do most keep this separate?
I think most consider their emergency fund to be part of their cash allocation. I certainly do, and would argue pretty strongly for it. Mathjak argues strongly against it. Maybe it would be an interesting poll question.
Because of the large allocation to cash, I find that a separate emergency fund is not necessary when using the PP. You could say I consider emergency fund to be embedded in the PP cash allocation. I'm in agreement with Xan.
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Re: How to save money not part of your portfolio?

Post by Xan » Fri Apr 08, 2022 8:55 am

coasting wrote:
Fri Apr 08, 2022 1:12 am
Xan wrote:
Thu Apr 07, 2022 5:59 pm
Mr. Contrary wrote:
Thu Apr 07, 2022 2:56 pm
Do most PP'ers calculate their asset allocation, and allocate 25/25/25/25 across ALL of their assets? I.e., should I include my 6 months emergency savings in the bank as part of my cash? Or do most keep this separate?
I think most consider their emergency fund to be part of their cash allocation. I certainly do, and would argue pretty strongly for it. Mathjak argues strongly against it. Maybe it would be an interesting poll question.
Because of the large allocation to cash, I find that a separate emergency fund is not necessary when using the PP. You could say I consider emergency fund to be embedded in the PP cash allocation. I'm in agreement with Xan.
This feature really does juice the PP's effective returns in a stealthy way: typically, other portfolios it's compared against do NOT include the emergency fund that people must have off to the side.
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Re: How to save money not part of your portfolio?

Post by whatchamacallit » Fri Apr 08, 2022 11:45 am

I also consider all savings a part of portfolio.

Stocks are the most tax efficient asset outside of a retirement account.

If you are able to, you can move stocks to cash inside retirement account to keep you in balance.
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