prpfx and tlt

[sk55]

hi guys i would like to buy prpfx, how much tlt do i need to buy to come close to normal PP.

i need to use TLT cause its commision free.

thanks

[Pointedstick]

I believe a 90/10 ratio was thrown around. FYI, You can get EDV commission-free through Vanguard and TDAmeritrade.

[sk55]

i going to be holding this in taxable. Wasn't there a discussion that EDV was worse to hold then TLT in taxable?

[Reub]

The wise MT says 10% EDV is optimum. I would guess that a 15% holding in TLT would accomplish the same goal.

[Pointedstick]

Neither are great to hold in taxable, but it's true that EDV has a history of paying big end-of-year gains. It's also still a possibility with TLT. I personally hold EDV in a taxable account and while I have been called nuts, I prefer its higher volatility over TLT.

[MediumTex]

This is more art than science, but I would think that an 85% PRPFX / 15% TLT mix, rebalanced annually, would probably work pretty well.

15% in TLT gives you around 50% in treasuries across the whole TLT/PRPFX portfolio.

Whatever you do, just make sure you understand the concept and strategy behind what you are doing.  If you don't really understand the strategy, it's not nearly as much fun.

[steve]

Neither are great to hold in taxable, but it's true that EDV has a history of paying big end-of-year gains. It's also still a possibility with TLT. I personally hold EDV in a taxable account and while I have been called nuts, I prefer its higher volatility over TLT.

I agree neither are great to hold in a taxable account, but what is an investor to do if they do not have enough space in a tax advantaged account. I hold a combination of EDV and VGLT in a taxable account. I look at the big year end distribution from EDV as a mini rebalance.  EDV was not around for Harry Browne to give an opinion on it , I wish I could hear him talk about it.  I listened to what he has said about zero coupon bonds but EDV is different in that it pays dividends and not the phantom type that regular zeros pay. At least with EDV you get the money in advance of your tax bill.