Newbie implementing PP in India

[krod16]

Hi,

I'm from India. I read up on The Permanent Portfolio and got interested in it. I don't have much experience in investing except reading up books and websites. Would be nice to know if anyone from India has already used or is using PP successfully?

I have already started investing using PP but I am keeping it simple and just using Mutual Funds. Are these funds good enough?
Cash:
DSPBR Treasury Bill Direct-G
UTI G-Sec Short-term Direct-G
Bonds:
HDFC Gilt Long-term Direct-G
ICICI Pru Gilt Inv PF Direct-G
Gold
HDFC Gold Direct-G
ICICI Pru Regular Gold Savings Direct-G
Stocks
HDFC Index Nifty Direct
ICICI Pru Index Direct

About the Indian markets:
Most of the PP examples and books are based on the US environment. So I don't have any Indian references I can look up. Right now the Indian stock markets is hot and expect to continue. Active investing is a big thing here to beat the markets as the stock market in India has not matured. So most investors will consider me a fool for investing passively. And investing more than 10% in gold is a big no no here though we tend to import a lot of it for use as jewelry.

I will be trying to save around 50% of my income every month and invest it using PP.
I intend to reach financial independence and use PP for it. Can one achieve it using PP?

[stuper1]

You live in an enlightened place.  In the U.S.A., investing more than 3% in gold is a big no no.

Whether you can achieve financial independence with the PP depends on your savings rate versus your spending rate.  You probably have a better chance of reaching independence with the PP than with most other strategies.

[goodasgold]

Welcome to the Permanent Portfolio list, krod16! And I envy your planned 50% savings rate.

With regard to India-based investing, you might make an inquiry to the Bogleheads list, as it has many more non-U.S. subscribers than this list. The only drawback is that many BH folks are adamantly opposed to the PP philosophy, so to avoid controversy it may be advisable to avoid mentioning the "g word" (gold) to the Bogleheads.

In my opinion, the Permanent Portfolio philosophy is a variation of the Boglehead approach, but few of the strict BH people see it that way. Their loss is our gain.

[krod16]

Thank you for the replies.

Will check out the Bogleheads forums.

[dualstow]

Would be nice to know if anyone from India has already used or is using PP successfully?

Although the details are dated, the answer is definitely yes. Check out the radio archives at Craig's site, crawlingroad.com. They're worth listening to, and eventually you will come across the show that has a caller from India who asked Harry Browne questions about implementing the pp strategy there. (Again, it's dated, so the info in that show might not still be useful for you, but it might be nice to hear the proof).

[barrett]

I will be trying to save around 50% of my income every month and invest it using PP.
I intend to reach financial independence and use PP for it. Can one achieve it using PP?

krod16,

If you can really pull off a 50% savings rate, that is great. It will also get you used to living on way less than you make which is good practice for being frugal later in life.

Here in the US a PP certainly would have worked very well to achieve financial independence over the last 30-40 years. We all hope that will hold true in the future. Nothing is guaranteed but the PP offers real diversity whereas many other approaches don't.

I think many of us would be interested to get periodic updates if you do decide to implement the IPP. Yeah, it's looks like stocks have been on a tear over there, and also that the Rupee has generally gained strength against the US Dollar in the last ten years or so (good for gold in Rupee terms if that continues). Good luck with whatever you decide!

[Tyler]

I will be trying to save around 50% of my income every month and invest it using PP.
I intend to reach financial independence and use PP for it. Can one achieve it using PP?

I declared victory on financial independence this year, and have all of my money in the PP. 

That said, investing did not build my nest egg.  Working hard and saving did.  If you can save 50% or more of your income, you're already on the right track.  Where the PP really shines is in protecting your savings and helping it compound at a steady, sustainable rate to power the financial independence you build.  I'm sure you'll do great!

[Pointedstick]

I declared victory on financial independence this year, and have all of my money in the PP.

Congrats Tyler! That's awesome! You should start a thread about it so we can all congratulate you.

[MachineGhost]

You cannot achieve financial independence through investing.  It has to come from a business or a career, self-employed or employed.

[barrett]

That said, investing did not build my nest egg.  Working hard and saving did.

You cannot achieve financial independence through investing.  It has to come from a business or a career, self-employed or employed.

Maybe you can't completely achieve financial independence through investing, but it sure helps if you are talking about a long enough timeline. Just a rough mental calculation tells me that about half of what I have been able to accumulate has come from investing (impressively mediocre investing at that!) but I am 56 years old. My wife is probably at about 90% accumulated through her career and 10% through investing at this point, having started the game here in the US just a few years ago. Compounding, even at a puny rate, can make a big impact over time.

That being said, we are talking about Harry Browne's rule #1, and that should at least be the way most people approach reaching financial independence... meaning that one should rely on one's career to build wealth, not on winning the investing lottery.

[barrett]

Tyler, that was a good post and now you have de-posted it! Anyway, a couple more things... First of all, that is great that you reached such an important goal. Another thing that I have been mulling over is that many folks would like to be financially independent but they never really lay out what that means to them. I kind of fall into that category... relying on feel more than actual numbers. But you and PS get me to thinking in more concrete ways on this stuff which is really good.

[Tyler]

Sometimes I over-think things.  Here's the original post. 

------

Don't get me wrong -- I completely agree that wise investing is a big help in reaching your financial goals.  But, IMHO, for financial independence saving has to come first.  The reasons are twofold:

1) Investing is not the magic shortcut to riches that some people make it out to be.  I squirm every time I hear someone suggest that young people should leverage up on risky investments because that's how you get rich, and maybe you can get more conservative when you inevitably acquire your millions.  More often than not, those people end up very disappointed.

2) Even when someone gets lucky and hits on a stock or cashes out a bunch of options, if they've always lived essentially paycheck to paycheck (even as those paychecks grew) then they'll never be financially independent.  Their expenses will simply scale with the income and they'll never escape the treadmill.  Saving over time not only builds wealth, but also establishes discipline and helps you separate happiness from cash flow.

-----

EDIT -- I was originally holding out while I looked for this post:

http://gyroscopicinvesting.com/forum/ot ... #msg100178

The key point to the chart is that yes, investments absolutely help over time.  But savings rate is not only a more powerful factor, but also more directly in your control.

[Tyler]

BTW -- thanks, guys. 

Another thing that I have been mulling over is that many folks would like to be financially independent but they never really lay out what that means to them. I kind of fall into that category... relying on feel more than actual numbers. But you and PS get me to thinking in more concrete ways on this stuff which is really good.

I'm certainly not deserving of my own thread, but that topic definitely is!

[dualstow]

Saving is such an integral part of investing for me that I sometimes forget there are people out there who invest without saving (either because there is no new money coming in to save or because they like spending). If daytrading is a get-rich-quick plan, then the pp, boglehead style investing and lazy portfolios are a get-rich-slow plan, far more Jimmy Buffett than Warren Buffett. And getting rich slow requires saving.

[krod16]

I will be trying to save around 50% of my income every month and invest it using PP.
I intend to reach financial independence and use PP for it. Can one achieve it using PP?

krod16,

If you can really pull off a 50% savings rate, that is great. It will also get you used to living on way less than you make which is good practice for being frugal later in life.

Here in the US a PP certainly would have worked very well to achieve financial independence over the last 30-40 years. We all hope that will hold true in the future. Nothing is guaranteed but the PP offers real diversity whereas many other approaches don't.

I think many of us would be interested to get periodic updates if you do decide to implement the IPP. Yeah, it's looks like stocks have been on a tear over there, and also that the Rupee has generally gained strength against the US Dollar in the last ten years or so (good for gold in Rupee terms if that continues). Good luck with whatever you decide!

Thanks barrett.

I will be going ahead with PP and will try to give updates here. I've been working in Norway temporarily so my salary has increased (temporarily). I will be investing these new funds every month. I've hit a small roadblock though as I need to get hold of an NRE bank account to avoid taxation issues back in India before I invest any further.

[krod16]

You cannot achieve financial independence through investing.  It has to come from a business or a career, self-employed or employed.

Thanks MachineGhost.

For me Financial Independence does not mean that I will stop working. It just means I would like to be more in control of the number of hours I work and spend more time for myself and my family without having to go through the 9 to 5 grind till I retire.

[krod16]

So I started investing using the permanent portfolio last month.
This is how it looks after a month on 13-Dec-2014.

[barrett]

Thanks for posting your early results, krod16. I am curious how long your long bonds are there in India. Does the Indian government issue a 30-year bond? I looked at some figures online and it looks like (at least officially) inflation has come down considerably there in India in the last year or so.

[krod16]

Thanks for posting your early results, krod16. I am curious how long your long bonds are there in India. Does the Indian government issue a 30-year bond? I looked at some figures online and it looks like (at least officially) inflation has come down considerably there in India in the last year or so.

Yes we do have bonds maturing after 30 years.
http://www.bseindia.com/markets/debt/se ... C&crpage=4

As you see below, the average inflation this year is way lower than the previous years. Some factors involved may be a new stable government that is pro growth, oil prices having dropped.
2014 6.65 % 
2013 10.92 %
2012 9.30 % 
2011 8.87 % 
2010 12.11 %

[Reub]

Are your numbers correct? Are the decimal points in the wrong place?

[krod16]

Are your numbers correct? Are the decimal points in the wrong place?

Yes, the inflation numbers are correct 
And it's expected to be a part of the Indian economy for a long time.

[barrett]

Are your numbers correct? Are the decimal points in the wrong place?

Reub, You are asking about the numbers in krod16's returns chart, correct? It seems like to get the "total return", the monthly gains or losses are just multiplied by 12 to calculate a yearly return.

[krod16]

Are your numbers correct? Are the decimal points in the wrong place?

Reub, You are asking about the numbers in krod16's returns chart, correct? It seems like to get the "total return", the monthly gains or losses are just multiplied by 12 to calculate a yearly return.

The "total returns" in the chart are the XIRR to calculate an annualized return.

[krod16]

Portfolio update for 15-01-2015.

[MachineGhost]

Portfolio update for 15-01-2015.

Nice!  What was the inflation rate?