How do you invest the Cash portion?

Discussion of the Cash portion of the Permanent Portfolio

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vnatale
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Re: How do you invest the Cash portion?

Post by vnatale » Tue Sep 10, 2019 7:27 pm

It seems that if one is a single person (with no trust) then the I Bond limit is $10,000 plus $5,000 via using a tax refund (which would, of course, require one to overpay taxes by at least $5,000)?

Vinny

boglerdude wrote:
Fri Jul 05, 2019 3:27 am
Welcome to the forum OP
I use ibonds and Orion's 4% checking
With some effort you can buy more than 10k ibonds or EE bonds each year
https://www.bogleheads.org/forum/viewtopic.php?t=213142
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vnatale
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Re: How do you invest the Cash portion?

Post by vnatale » Tue Sep 10, 2019 7:31 pm

What are you defining as "the core"?

Thanks

Vinny
dualstow wrote:
Fri Jul 05, 2019 7:35 am
Vanguard Treasury Money Market for the core;
ladder of treasury bills and short-term treasury notes bought directly thru Vanguard.
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vnatale
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Re: How do you invest the Cash portion?

Post by vnatale » Tue Sep 10, 2019 7:33 pm

Thank you for the response. And regarding point #2 below. I fully understand that a major component of the Permanent Portfolio is safety with cash, thus the many exhortations to invest strictly in U.S. Treasury securities. I would NOT be tempted to chase cash.

Vinny
jhogue wrote:
Fri Jul 05, 2019 2:57 pm
Welcome to the forum.

I think the above suggestions will probably work out just fine for you.

That said, consider the following points:

1. Keep in mind that the purpose of Cash in the PP is to always hold the safest and most liquid asset possible in case one of the three volatile assets exceeds its 35/15 bands and needs to be rebalanced. Cash will smooth out your portfolio returns over time.

2. Investors in the HBPP have discovered that one of the four assets will almost invariably lags the others. Right now, that lagging asset is Cash. That makes it tempting to make the mistake of chasing yields in Cash by trying to substitute higher-yielding securities like unbreakable CDs or intermediate term Treasurys in place of more liquid, shorter-duration Treasurys. Don’t do it.
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Re: How do you invest the Cash portion?

Post by anato » Wed Sep 11, 2019 2:14 pm

vnatale wrote:
Tue Sep 10, 2019 7:20 pm
1) I Bonds. The limit is $10,000? Plus, if you overpay your taxes by $5,000 you can purchase another $5,000 with your tax refund? Is that what you do?
Yep, I try to overpay taxes. Then $10k for each one of me, my wife and 2 kids... so plenty of room there. It would mean my additional contributions for the year are north of $200k (never happened :-\)
vnatale wrote:
Tue Sep 10, 2019 7:20 pm
2) Can you give more description of: "1-3-6 months TBills in auto-roll at Fidelity"
Just that: I buy TBills at Fidelity, and I select auto-roll, so then they mature Fidelity uses the proceedings to buy more of the same duration.
vnatale wrote:
Tue Sep 10, 2019 7:20 pm
3) Obviously you have no concern regarding FDLXX when I wrote:
No concerns, as close as cash I can get without having to bother selling TBills for each and every expense.
vnatale wrote:
Tue Sep 10, 2019 7:20 pm
4) Not following this what you wrote (primarily what the abbreviations represent): "(whichever has the best interest rate at the moment), ITOT, IJS (I have a Golden Butterfly, not a pure PP) o IAU."
They are iShares ETFs, which trade for free at Fidelity
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Re: How do you invest the Cash portion?

Post by dualstow » Wed Sep 11, 2019 2:37 pm

Just the bulk of holdings. I don’t keep a fixed percent in one or the other. When the auction for 2-yr notes came out earlier this year I jumped on it because the potential rate was 2.75%*.
I like the treasury money market because I can sell notes to the sweep account and then the the next day purchase stocks, gold, bonds or cash. I tend to hold all bills and notes to maturity, although it would be easy enough to sell the if I were in a jam.

*9128285B2 2-year notes. Know that the advertised rate for an auction issue is merely a guideline. You don’t know what you’ve got until the auction is done. That’s why — as I said in the response to your pm — many people prefer the secondary market. I think we have a stickied guideline to buying treasuries, btw.
vnatale wrote:
Tue Sep 10, 2019 7:31 pm
What are you defining as "the core"?

Thanks

Vinny
dualstow wrote:
Fri Jul 05, 2019 7:35 am
Vanguard Treasury Money Market for the core;
ladder of treasury bills and short-term treasury notes bought directly thru Vanguard.
I kind of wish PointedStick were here to say something about McGlockton/Drejka
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