My investment plan: 4x25% Harry Browne Permanent Portfolio (PP) with a 20% Variable Portfolio (VP)
20% VTSAX (Vanguard Total Stock Market Admiral Index)
20% 30Y treasury notes purchased directly
20% GLD transitioning into 16% American Eagles & 4% GLD when I can store the coins
20% Cash composed of Rewards Checking > I Bonds > SHY
VP: 10% VGSLX (Vanguard REIT Admiral Index) because I own no real estate and speculatively believe real estate is going up.
VP: 1% x 10 hand picked dividend stocks or stocks where I have an information advantage (technology).
Annual 15%/35% rebalancing bands for the PP. Rebalance out of the VP but not into it.
IRA priority: 30Y > REIT > SHY
My goal is to maximize the probability of supporting a 4% (or maybe 3%) annual withdrawal for 50 years.
I'd love to hear your feedback! Comments, critiques, encouragement, suggestions, things you wish you knew when you were starting out, etc.
Feedback on my PP Plan
Moderator: Global Moderator
Re: Feedback on my PP Plan
Here are the symbols from above:
Symbol, Expense Ratio, Stocks/Bonds/Cash, yield
Here are more specific details about how I will implement the above plan. Currently I have:
(going forward, the Vanguard accounts will drop as a percentage of assets, while the 401k will grow)
IRA Plan:
Roth & Traditional => 100% 30Y notes (this will sum to 21.6% initially, but I'm okay with that)
Work 401k, Here are my limited choices:
Symbol, Expense Ratio, Stocks/Bonds/Cash, yield
From these choices, I see nothing comparable to GLD, nothing comparable to SHY (except maybe the terrible 0% yield Cash fund), nothing comparable to TLT, and nothing comparable to the REIT. Thus by process of elimination, the only thing I can do in my 401k is try to replace the Total Stock Market fund.
Given these choices, I was thinking RWMEX is the best play, but I would love feedback here.
401k => 100% RWMEX as closest thing to VTSAX
(Whenever I leave this job I will be rolling the 401k into Vanguard)
I will create a Taxable Vanguard Account with:
20% of assets in GLD (but sell most of this and buy physical coins when I'm able to store them, probably in a few months)
7.1% of assets in VTSAX (to go with 12.9% RWMEX)
10% of assets in VGSLX
Cash Plan:
1) Leave $2k-3k in 0% checking account for convenience
2) Create a Rewards Checking account (4% yield, able to invest up to $10k).
3) As many I Bonds as possible ($10k/yr)
4) SHY in the taxable Vanguard account with whatever is left (if anything).
I don't know how to do the I Bonds and hand picked stocks, but it'd be nice if they could all be in one place (Vanguard).
There's a lot for me to learn here, but it's exciting to be learning. For example, I'm assuming I will be able to easily sell what's currently in my Roth IRA and then use that money to buy 30Y notes.
I'm also concerned that I might not be optimizing the tax-efficiency correctly. I appreciate all your help.
Symbol, Expense Ratio, Stocks/Bonds/Cash, yield
Code: Select all
VTSAX 0.07% 100/0/0 Large Blend, 1.92% yield ($10k minimum investment)
TLT 0.15% 0/100/0 20Y+ Treasuries, 3.95% yield
SHY 0.15% 0/96/4 1-3 Year Treasuries, 0.95% yield
GLD 0.40% 100% Physical Gold Bullion, 0.00% yield
VGSLX 0.13% 100% REIT, 3.17% yield ($10k minimum investment)Code: Select all
07.6% of assets in Vanguard Roth IRA
14.0% of assets in Vanguard Traditional IRA
12.9% of assets in Work 401kIRA Plan:
Roth & Traditional => 100% 30Y notes (this will sum to 21.6% initially, but I'm okay with that)
Work 401k, Here are my limited choices:
Symbol, Expense Ratio, Stocks/Bonds/Cash, yield
Code: Select all
RAFEX 0.77% 93/0/7 Growth, 0.46% yield
RLBEX 0.67% 64/33/3 Balanced, 0.79% yield
RADXX 0.44% Cash Equivalent, 0.00% yield
RDATX 0.90% 43/47/8 Target 2010
RDBTX 0.93% 54/37/7 Target 2015
RDCTX 0.94% 63/29/7 Target 2020
RDDTX 0.95% 77/15/7 Target 2025
RDETX 0.97% 81/12/7 Target 2030
RDFTX 0.97% 82/10/7 Target 2035
RDGTX 0.97% 84/9/7 Target 2040
RDHTX 0.97% 84/9/7 Target 2045
RDITX 0.97% 84/9/7 Target 2050
RDJTX 0.97% 84/9/7 Target 2055
RMFEX 0.71% 86/7/7 Dividend Stocks, 2.73% yield
RIREX 0.70% 67/25/7 International, 3.82% yield
RWIEX 0.83% 94/2/4 International, 2.48% yield
RSLEX 1.09% 90/2/8 Small Cap World, 0.68% yield
RBFEX 0.66% 0/91/9 Bonds, 3.67% yield
RGAEX 0.68% 88/3/8 Growth, 0.79% yield
RICEX 0.68% 92/2/5 Growth/Income, 1.91% yield
RNGEX 0.90% 89/5/6 Growth, 0.53% yield
RWMEX 0.72% 97/0/3 Large Value Growth/Income, 2.38% yieldGiven these choices, I was thinking RWMEX is the best play, but I would love feedback here.
401k => 100% RWMEX as closest thing to VTSAX
(Whenever I leave this job I will be rolling the 401k into Vanguard)
I will create a Taxable Vanguard Account with:
20% of assets in GLD (but sell most of this and buy physical coins when I'm able to store them, probably in a few months)
7.1% of assets in VTSAX (to go with 12.9% RWMEX)
10% of assets in VGSLX
Cash Plan:
1) Leave $2k-3k in 0% checking account for convenience
2) Create a Rewards Checking account (4% yield, able to invest up to $10k).
3) As many I Bonds as possible ($10k/yr)
4) SHY in the taxable Vanguard account with whatever is left (if anything).
I don't know how to do the I Bonds and hand picked stocks, but it'd be nice if they could all be in one place (Vanguard).
There's a lot for me to learn here, but it's exciting to be learning. For example, I'm assuming I will be able to easily sell what's currently in my Roth IRA and then use that money to buy 30Y notes.
I'm also concerned that I might not be optimizing the tax-efficiency correctly. I appreciate all your help.
Last edited by akratic on Wed Dec 01, 2010 4:44 pm, edited 1 time in total.
Re: Feedback on my PP Plan
The REIT funds throw off a lot of dividends so be careful holding it in your taxable account. There are some tricks though relating to return on capital from REITs that you may want to discuss with a CPA to lower your tax bill.
Those 401(k) funds are typical. Typically bad. The expense ratios are very high which is an unfortunate case for most retirement plans.
Looking at your options RWMEX may not be too bad. It basically is mirroring the S&P 500 even though the expense ratio is very high.
Have you thought about asking your 401(k) plan administrator if they offer a brokerage window? If so you could buy a much cheaper Vanguard ETF for the stocks and buy bonds directly.
Tax efficiency is pretty straight forward. The funds you want to shelter first are Bonds and Cash. Next are the stocks. Gold is last. I would keep some cash outside the retirement plan for emergencies.
I think you are on the right track even if your fund choices aren't the best. At least they are tracking the market pretty well which is hard for many actively managed funds to do.
Those 401(k) funds are typical. Typically bad. The expense ratios are very high which is an unfortunate case for most retirement plans.
Looking at your options RWMEX may not be too bad. It basically is mirroring the S&P 500 even though the expense ratio is very high.
Have you thought about asking your 401(k) plan administrator if they offer a brokerage window? If so you could buy a much cheaper Vanguard ETF for the stocks and buy bonds directly.
Tax efficiency is pretty straight forward. The funds you want to shelter first are Bonds and Cash. Next are the stocks. Gold is last. I would keep some cash outside the retirement plan for emergencies.
I think you are on the right track even if your fund choices aren't the best. At least they are tracking the market pretty well which is hard for many actively managed funds to do.