MangoMan wrote:
Wouldn't it be better to just use PRPFX? I think the 0.2 difference in ER would be offset by the bid/ask spread on PERM. I know you have mentioned that you trade PERM free at etrade, but you can trade PRPFX free at Schwab [and probably most other large Fund Supermarkets like Fidelity although I have not checked lately].
Perhaps you're right, but I just don't like PRPFX. Its composition makes it far from a "real" PP, it's actively managed, and the ER is too high for me. I kinda like rooting for the new guy too
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
Pointedstick wrote:
The wide spreads are indeed annoying. Every block I buy is down 0.2% - 0.3% immediately.
Again, I'm personally willing to tolerate these issues because I don't consider my PERM funds really a part of my PP; I consider it to be my super-duper savings account. Even if after the ER, the spreads, and any possible end-of-year taxable distributions, I've underperformed a 4x25 HBPP by several percentage points, I'm betting it will probably still be better than the 0.75% I would have made had I kept the money in my savings account.
I read your post pointedstick and thought you must have an ing savings account because I also just dropped to .75%. Boooo.
Incidentally, I use PRPFX as short term savings as well. Even if it underperforms the 4x25 PP because of the expense ratio, it still beats any cash savings vehicle you could name. Although, I'm thinking that once the PP gets large enough that the cash position is substantially bigger than emergency fund needs, it would be simpler still just to use that.
"Democracy is two wolves and a lamb voting on what to have for lunch." -- Benjamin Franklin
I'm trying to figure out what to do with two sizable and frequently-contributed-to chunks of money: the quarterly income tax due January 15th and the final payment due April 15th. Assuming that I know what the amount will be and have the cash, is it worth taking any risk at all for some extra reward, or should I just leave it in a savings account?
Xan wrote:
I'm trying to figure out what to do with two sizable and frequently-contributed-to chunks of money: the quarterly income tax due January 15th and the final payment due April 15th. Assuming that I know what the amount will be and have the cash, is it worth taking any risk at all for some extra reward, or should I just leave it in a savings account?
I'm in that situation too and I just leave it in a savings account. Of course, the sum isn't that large for me. If we're talking about $100,000, then you may want to reconsider.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
sophie wrote:
Ally is up to 0.95%, which is kinda nice.
Incidentally, I use PRPFX as short term savings as well. Even if it underperforms the 4x25 PP because of the expense ratio, it still beats any cash savings vehicle you could name. Although, I'm thinking that once the PP gets large enough that the cash position is substantially bigger than emergency fund needs, it would be simpler still just to use that.
Are you aware of the 90% PRPFX/10% EDV strategy that we have discussed in the past?
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
Xan wrote:
I'm trying to figure out what to do with two sizable and frequently-contributed-to chunks of money: the quarterly income tax due January 15th and the final payment due April 15th. Assuming that I know what the amount will be and have the cash, is it worth taking any risk at all for some extra reward, or should I just leave it in a savings account?
I'm in that situation too and I just leave it in a savings account. Of course, the sum isn't that large for me. If we're talking about $100,000, then you may want to reconsider.
sophie wrote:
Ally is up to 0.95%, which is kinda nice.
Incidentally, I use PRPFX as short term savings as well. Even if it underperforms the 4x25 PP because of the expense ratio, it still beats any cash savings vehicle you could name. Although, I'm thinking that once the PP gets large enough that the cash position is substantially bigger than emergency fund needs, it would be simpler still just to use that.
Are you aware of the 90% PRPFX/10% EDV strategy that we have discussed in the past?
MediumTex:
Would you please so kind as give me the links? I searched and couldn't find the discussion.
You mean to use PRPFX/EDV for Cash part of PP?
thanks in advance.
sophie wrote:
Ally is up to 0.95%, which is kinda nice.
Incidentally, I use PRPFX as short term savings as well. Even if it underperforms the 4x25 PP because of the expense ratio, it still beats any cash savings vehicle you could name. Although, I'm thinking that once the PP gets large enough that the cash position is substantially bigger than emergency fund needs, it would be simpler still just to use that.
Are you aware of the 90% PRPFX/10% EDV strategy that we have discussed in the past?
Yes...in fact I'm using this. It's a bit of added complexity which you don't have to deal with when you buy PERM. And once you have two funds, I guess why not just have 4, and implement a separate but equal PP. I just figured that for short term savings there's nothing wrong with using just PRPFX, which will still accomplish the goal of preserving your $$ while beating the returns you might get from a savings account.
edamat, here's a link to the bogleheads discussion of the PRPFX/EDV strategy. It's not on this board.
clacy wrote:
I personally would just go with a 4 x 25% split with the following ETF's:
25% VTI (total US stock market)
25% TLT (20+ yr US treasuries)
25% SHY (1-3 yr US treasuries)
25% GLD (gold etf)
See how PERM performs and at least give it time to pick up some liquidity. If it more or less tracks the PP over the next year, then you could make the switch for simplicity's sake.
As I'm talking about on another thread - I'm perplexed about what to do with medium-term house savings. PERM and PRPFX have their downsides. This option seems intriguing, but the idea of a gold ETF rather than actual gol worries me a bit and don't know much about SHY or TLT. Curious what MediumTex or CraigR would think about the best approach for medium-term house savings?
My options as I see it now are what's described above, PERM, PRPFX or splitting 50/50 between PERM and PRPFX.
If house savings is <= 25% of your liquid net worth, I would put the house savings in a taxable T-bill mutual fund and treat it as part of your overall PP. It's simplest to have all of your liquid wealth in one PP. And in the current low interest rate environment, there is very little penalty for keeping a big chunk of cash in taxable. When you buy the house it may trigger a rebalance; no big deal.
Otherwise I would probably put the house fund into PERM in a taxable E*Trade account since PERM is commission-free there. Yes, PERM has its issues, but try this thought experiment: if TSHTF so badly that PERM blows up, are you still going to be interested in using this money to buy a house in the US?
Thanks KevinW. My fear of PERM is not so much about TSHF in terms of the economy as much as it is about it being a new fund and something going very wrong with it's management and the fund collapsing. PRPFX has a long track record that PERM does not. That said, I certainly like the asset allocation of PERM much more.
I'm considering spreading the risk and putting half in each or a 40/60 split.
Say what you will, but PERM sure seems to be tracking well with the HBPP since inception... these both start and end on the day the fund began trading. Note the scales are not the same, however...
FWIW, Tom, I too wanted to put my medium-term house savings in an HBPP. The thin trading volume on PERM made me too nervous, so I ended up just setting up my own 4x25.
KevinW made a good point that it's simplest just to consider your house savings part of your overall PP's cash allocation if it's less than 25% of your liquid assets. But my own opinion is that sometimes, there's more than just simplicity to consider. In my own case, I wanted my medium-term house savings to grow--to work for me--as I accumulate it over the next few years.
House savings held as cash for more than a couple of years will hardly grow at all, and in fact it will steadily shrink in purchasing power due to inflation.
Hm - a lot to think about. Thanks everyone for all the input. I had already made up my mind to avoid PERM before revisiting this thread due the lack of volume and the risk that it could close and find it liquidating. That got re-affirmed here so I feel confident about that.
I was going to go with PRPFX - but what MediumTex just said makes me question that approach. Unfortunately my house savings is more than my total HBPP total, which is for retirement so I can't just park it in cash. I'm a bit nervous about dumping that much money into the HBPP since I will need to withdraw in a short period of time - not as simple as just selling a fund and it's a big step into gold at high prices (though I get just going all in for diversification - it's the fact that I may need to withdraw in a period of a few years that makes me nervous, wouldn't care if it were longer term). Since my current HBPP is for retirement, I hold my treasuries and cash in roth and traditional iras. For medium term, I wouldn't want to get hit with penalties for withdrawing, so the tax efficiency of it could suffer if I went with the traditional HBPP approach. Selling a lot of gold at once and to get my cash back for a house also makes me worry about the tax situation on that.
Guess I need to mull it over even more. One thing is sure, I'm gonna leave it in cash until at least end of January and think on it until all this fiscal cliff stuff is over - perhaps the markets will drop and offer a good buying opportunity.
While there's no guarantee that any ETF (or any other investment, for that matter) will continue operating indefinitely, a good rule of thumb is to stick with ETFs with more than $100 million in assets. The vast majority (89%) of ETFs that have closed had less than $20 million in assets. Bigger ETFs do close from time to time, but the only ETFs with more than $100 million in assets that closed have done so either to re-launch as new funds or for regulatory reasons. Investing in larger ETFs means that your fund is more likely to survive.
Given that I have some money in PERM, what would happen to it if PERM were hypothetically to close? Would I just get a check in the mail? Would the sum still be subject to capital gains taxes?
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
SmallPotatoes wrote:
Every time I read PERM it conjures images of curlers and hairspray.
I used PRPFX until I got more comfortable with the HBPP and now I'm all in (gold bullion, long bonds through brokerage, cash in bank/mm/safe in basement, and a dozen Blue Chip company stocks with a little S&P 500 ETF for rebalancing). My annual ER is approximately ~0.05 BP and there is basically total transparency in my investments as well as sound leadership.
PERM if you have to, but nothing compares to the real thing.
Sounds like if you have all that going on you don't have to worry too much about your investments. I should think it would be difficult to rebalance your bullion in any sizeable amount, but maybe that is what your SPY is for. Again, if you use SPY to rebalance your bullion you are probably in a different league.
Last edited by Gofish on Sun Jan 06, 2013 12:49 pm, edited 1 time in total.
I have been ill and have spent very little time on the internet for over a month but I too would be interested if anyone has some observations on PERM's performance.
Trumpism is not a philosophy or a movement. It's a cult.
Take a look at the past year's returns. The YTD number is misleading, because the fund happened to be down quite a bit at the end of the year.
However...I go with MT's analysis on this one. You're paying someone a pretty hefty expense ratio to save the trouble of buying 4 ETFs and rebalancing every couple of years. Compared to most "slice & dice" portfolios, the traditional PP is not so difficult to implement. I do own a chunk of 90% PRPFX/10% EDV mainly for historical reasons - it's how I got introduced to the PP - but I'm debating between keeping it as a separate intermediate-savings fund, and just selling it and sticking with a pure 4x25 PP.
"Democracy is two wolves and a lamb voting on what to have for lunch." -- Benjamin Franklin
