How do you invest the Cash portion?

Discussion of the Cash portion of the Permanent Portfolio

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ochotona
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Re: How do you invest the Cash portion?

Post by ochotona » Mon Jul 08, 2019 11:19 am

If I were younger, say in my 40s, I'd be buying Series EE Savings Bonds. If you hold for twenty years, they double in value, for a CAGR of 3.5%. But you have to hodl. Being in my late 50s now, I'm not sure I want to mess with TreasuryDirect when I'm in my late 70s. By that time I hope to be in HBPP autopilot Nirvana with my daughter doing the annual portfolio look.
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Kbg
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Re: How do you invest the Cash portion?

Post by Kbg » Tue Jul 09, 2019 9:23 am

I think "cash" needs to be quickly available. What is quick enough is up to the individual. While I have lots of T-Bills I manage monthly on T-Direct, it's also lots of work. I think at some point errors from mistakes resulting from an aging brain could exceed any advantage of DIY. Small bits of cash lying around from the discount to the maturity value of the bond are also a pain in the butt and means I'm not investing the "max" I could be.

Broken record spins again...simplicity is of value and perhaps worth paying for.
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Re: How do you invest the Cash portion?

Post by pmward » Tue Jul 09, 2019 9:24 am

ochotona wrote:
Mon Jul 08, 2019 11:19 am
If I were younger, say in my 40s, I'd be buying Series EE Savings Bonds. If you hold for twenty years, they double in value, for a CAGR of 3.5%. But you have to hodl. Being in my late 50s now, I'm not sure I want to mess with TreasuryDirect when I'm in my late 70s. By that time I hope to be in HBPP autopilot Nirvana with my daughter doing the annual portfolio look.
There's good likelihood you will wind up winning anyways. 3.5% might sound good in todays world, but who knows what the next 20 years may bring. The average of rolling T-Bills very well could destroy that 3.5% over 20 years.
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Maddy
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Re: How do you invest the Cash portion?

Post by Maddy » Mon Jul 29, 2019 3:25 pm

What is the critical difference between Vanguard's treasury money market fund and a short-term treasury fund? Is one more suitable for the PP than another?
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Re: How do you invest the Cash portion?

Post by dualstow » Mon Jul 29, 2019 6:06 pm

Maddy wrote:
Mon Jul 29, 2019 3:25 pm
What is the critical difference between Vanguard's treasury money market fund and a short-term treasury fund?
Is one more suitable for the PP than another?
Being both a money market fund and one that holds just treasurys, VUSXX is the ultimate cash vehicle for the pp, in my opinion. As a money market, each unit is a dollar. Put in $10,000, and know that you're going to be able to take out $10,000 (plus interest earned) when you need it- Well, you should be able to get it within a day if you sell shares to your sweep account, the Federal Money Market thing.

Prime money market fund also maintains a $1 share price, but even that fell victim to "breaking the buck" in 2008 or '09, losing money with most money market funds. It's not a terrible choice most of the time.

A short-term treasury fund has the *quality* of VUSXX, but not being a money market fund, I would think it could fluctuate in value, especially if it holds some 2-year notes. You can sell shares when you want to, but they may not always be equal to what you put in. (They might be worth *more*, and the dividends might be better than VUSXX).

So, aim for something *very* short term and even then, you might want to have your core cash in either VUSXX or just t-bills held directly by you, a fine 3rd choice.

The expense ratio (ER) between the two funds may be different. VUSXX's ER is $0.09, ie a $9 annual fee if you maintain a balance of $10,000.

And finally, you need US$50,000 to get started in VUSXX, although you don't have to maintain that balance.
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Re: How do you invest the Cash portion?

Post by Ad Orientem » Wed Aug 07, 2019 7:40 pm

vnatale wrote:
Thu Jul 04, 2019 3:05 pm

In sum, for those of you following what is proscribed in the book (with no additional enhancements) how are you fulfilling the 25% cash portion of the portfolio?

Thanks
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Re: How do you invest the Cash portion?

Post by dualstow » Wed Aug 07, 2019 8:24 pm

^ha. The only form of cash that is no good is cash under the mattress. ^
RIP Paul Volcker
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Smith1776
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Re: How do you invest the Cash portion?

Post by Smith1776 » Thu Aug 15, 2019 1:58 am

Up here in Canada it's all about the BMO Short Federal Bond Index ETF for cash, and I've got quite a few coins in that fund. It's really one of the few decent choices up here in the north.

https://www.bmo.com/gam/ca/advisor/prod ... file%2FZFS
640K ought to be enough for anybody.
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Re: How do you invest the Cash portion?

Post by dualstow » Thu Aug 15, 2019 8:10 am

Smith1776 wrote:
Thu Aug 15, 2019 1:58 am
Up here in Canada it's all about the BMO Short Federal Bond Index ETF for cash, and I've got quite a few coins in that fund. It's really one of the few decent choices up here in the north.

https://www.bmo.com/gam/ca/advisor/prod ... file%2FZFS
After all that Adam Smith talk, I got it in my head that you were in Scotland. Oops.
RIP Paul Volcker
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Re: How do you invest the Cash portion?

Post by Xan » Thu Aug 15, 2019 9:15 am

He's switched to Isaac Newton now so I'm all confused.
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Kriegsspiel
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Re: How do you invest the Cash portion?

Post by Kriegsspiel » Thu Aug 15, 2019 9:17 am

I thought that was the guy from Def Leppard.
To die, to sleep
To sleep, perchance to dream; ay, there's the rub
For in that sleep of death what dreams may come
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Re: How do you invest the Cash portion?

Post by dualstow » Thu Aug 15, 2019 11:30 am

Kriegsspiel wrote:
Thu Aug 15, 2019 9:17 am
I thought that was the guy from Def Leppard.
O0 See now if Medium Tex were here, he would rewrite "Photograph" with pp-related lyrics.
RIP Paul Volcker
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