Sorry if has already been discussed. I am new to the Permanent Portfolio idea and am falling in love with it. I love Harry Browne (partly because of his political leanings) but had never really studied his investing ideas.
My two questions:
1) What is the most common way of holding the permanent portfolio? I understand there are a lot of ways to do it, different funds, physical gold vs. ETFs, etc. From my reading it appears that the most common way is the following:
Cash - SHY or Money Market Fund
Gold - Physical or GLD, SGOL, or IAU
Long-term bonds - TLT
Stocks - VTI
I was just curious what people thought the most common funds/allocation was. Before I throw my life savings into an investment strategy it's nice to know that other people at least find some sense in the funds/ETFs that I am buying.
2) What do you think is better as far as re-investing? Do most people re-invest dividends and interest or just use them at the end of the year for re-balancing?
Thanks for the feedback, and thanks Craigr for a great site.
PP and reinvesting?
Moderator: Global Moderator
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Brad243480
Re: PP and reinvesting?
Welcome to the forum!
I'd suggest you read first ALL PP FAQ articles and Craigr's regular blog posts about PP. For example, he recently added a link to a great article exploring gold ETF investment options. Believe me you'll have many of your questions answered.
Another suggestion is to read the BH PP thread (can take a few days actually).
I'd suggest you read first ALL PP FAQ articles and Craigr's regular blog posts about PP. For example, he recently added a link to a great article exploring gold ETF investment options. Believe me you'll have many of your questions answered.
Another suggestion is to read the BH PP thread (can take a few days actually).
"Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep in reserve."
- Talmud
- Talmud
Re: PP and reinvesting?
Here is how CraigR answered me recently about your question #2:
recommends NOT reinvesting dividends and interest. Have them all swept into a cash account. As money accrues throughout the year the proceeds can then buy into lagging asset classes at certain times. Makes bookkeeping easier because you do not have a bunch of tiny share lot purchases going on and makes rebalancing more efficient
recommends NOT reinvesting dividends and interest. Have them all swept into a cash account. As money accrues throughout the year the proceeds can then buy into lagging asset classes at certain times. Makes bookkeeping easier because you do not have a bunch of tiny share lot purchases going on and makes rebalancing more efficient
Re: PP and reinvesting?
And of course this is especially true for the taxable accounts.hogtied wrote: Here is how CraigR answered me recently about your question #2:
recommends NOT reinvesting dividends and interest. Have them all swept into a cash account. As money accrues throughout the year the proceeds can then buy into lagging asset classes at certain times. Makes bookkeeping easier because you do not have a bunch of tiny share lot purchases going on and makes rebalancing more efficient
"Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep in reserve."
- Talmud
- Talmud
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PP4me
Re: PP and reinvesting?
I use SPY, TLT, IAU,SHY
SPY - low cost, very liquid, available in 401k
TLT - priced daily, easy to buy & sell, holds only long-dated treasuries
IAU - priced daily, easy to buy & sell, no storage issues, can use IRA money, lowest cost gold ETF
SHY - higher return than treasury money market funds, not greatly affected by interest rate changes
I too love this portfolio . . .
Its amazing to put these four tickers in a real-time portfolio and watch how diversification works in real time. At any point in the day some are up and others are down but the ones that are up usually carry the portfolio. If it works by the minute, day, week, month, decade and lifetime, it sure helps you stay the course.
Everytime I think oh, oh, this bad thing is going to happen in the market, I run the scenario through my mind and realize that the permanent portfolio will protect me. For example, lets say I think stocks are going to drop to 800 on the S&P . . . well if that happens, bonds and gold will probably go up in a flight to safety. I see that happen real time on a daily basis when stocks drop and bonds or gold go up and hold the portfolio value. Therefore, I know if stocks drop to 800, the bonds and gold will protect my portfolio. The more you get to know this portfolio, the more you like it.
SPY - low cost, very liquid, available in 401k
TLT - priced daily, easy to buy & sell, holds only long-dated treasuries
IAU - priced daily, easy to buy & sell, no storage issues, can use IRA money, lowest cost gold ETF
SHY - higher return than treasury money market funds, not greatly affected by interest rate changes
I too love this portfolio . . .
Its amazing to put these four tickers in a real-time portfolio and watch how diversification works in real time. At any point in the day some are up and others are down but the ones that are up usually carry the portfolio. If it works by the minute, day, week, month, decade and lifetime, it sure helps you stay the course.
Everytime I think oh, oh, this bad thing is going to happen in the market, I run the scenario through my mind and realize that the permanent portfolio will protect me. For example, lets say I think stocks are going to drop to 800 on the S&P . . . well if that happens, bonds and gold will probably go up in a flight to safety. I see that happen real time on a daily basis when stocks drop and bonds or gold go up and hold the portfolio value. Therefore, I know if stocks drop to 800, the bonds and gold will protect my portfolio. The more you get to know this portfolio, the more you like it.