Guidance

[tochas]

Below are my current investments. I would like to increase the amount held in the PP. Can someone help me work through some of the options? I have come up with the following:

Current

HBPP
30K ea. in SPY, GLD and TLT (15K of TLT is in an IRA)
30K in Ally savings account

CDs
55K in laddered CDs (10K coming due in 3-2013 and another 10K in 4-2013)

IT-TE Muni
55K in VWIUX

Proposed

HBPP
43.3K ea. in SPY, GLD and TLT
30K in Ally savings account and CD coming due in 4-2013

CDs
55K 35K in laddered CDs after 10K coming due in 3-2013 and 4-2014

IT-TE Muni
65K in VWIUX (10K from 3-2013 CD)

[AdamA]

Do you need the CD's and the muni's for income?

[tochas]

Do you need the CD's and the muni's for income?

I consider the CDs and Muni's as my EF. 100K is approximately 2 years of unemployment insurance.

[AdamA]

Do you need the CD's and the muni's for income?

I consider the CDs and Muni's as my EF. 100K is approximately 2 years of unemployment insurance.

I'd make it all one big PP.  You might consider overweighting the cash portion, though. 

[TripleB]

Below are my current investments. I would like to increase the amount held in the PP. Can someone help me work through some of the options? I have come up with the following:

Current
HBPP
30K ea. in SPY, GLD and TLT (15K of TLT is in an IRA)
30K in Ally savings account

CDs
55K in laddered CDs (10K coming due in 3-2013 and another 10K in 4-2013)

IT-TE Muni
55K in VWIUX

I question why you have so little in tax-sheltered accounts and so much in taxable investments. My advice is to figure out a way to max out your tax-sheltered options going forward, even/especially if it means living off your taxable savings. For example, suppose you made $40k per year and couldn't really afford to contribute to a 401k. I would max out the 401k and then take the $17k you did contribute to the 401k, that you needed for living expenses, out of your taxable savings. Basically slowly funneling more money into tax-shelters.

With regards to allocation, I'd go:

$57.5k into Directly Held Long-Term Treasury Bonds ($15k in your IRA, $42.5k held at Treasury Direct)
$57.5k into T-Bills, ($17.5k at your brokerage and $40k held at Treasury Direct)
$10k of SGOL in brokerage
~30 1-ounce gold coins in a safe deposit box
$57.5k Vanguard Total Stock Market Mutual Fund Admiral, Held at VG.

Buy 30 year new auction Bonds at Treasury Direct and then at the 20 year mark, transfer them to your brokerage account, sell them, and then buy new Bonds at Treasury Direct... assuming T-Direct doesn't allow secondary market transactions in 10 years (which they don't allow now).

[Pointedstick]

For example, suppose you made $40k per year and couldn't really afford to contribute to a 401k.

That's an easy one. Max out your 401k anyway, take the standard deduction, and now your taxable income is only 17.5k, meaning you will pay negative income tax due to the bazillions of deductions and credits available to low-income people. That will nicely supplement the 22.5k you have left to live on, which is easily enough for a comfortable lifestyle in all but the highest cost-of-living areas with a little optimizations (e.g. paying $10/mo for your smartphone using a prepaid SIM rather than the $80/mo contract).


Also, TripleB's recommended allocation is excellent.

[buddtholomew]

Below are my current investments. I would like to increase the amount held in the PP. Can someone help me work through some of the options? I have come up with the following:

Current
HBPP
30K ea. in SPY, GLD and TLT (15K of TLT is in an IRA)
30K in Ally savings account

CDs
55K in laddered CDs (10K coming due in 3-2013 and another 10K in 4-2013)

IT-TE Muni
55K in VWIUX

I question why you have so little in tax-sheltered accounts and so much in taxable investments. My advice is to figure out a way to max out your tax-sheltered options going forward, even/especially if it means living off your taxable savings. For example, suppose you made $40k per year and couldn't really afford to contribute to a 401k. I would max out the 401k and then take the $17k you did contribute to the 401k, that you needed for living expenses, out of your taxable savings. Basically slowly funneling more money into tax-shelters.

With regards to allocation, I'd go:

$57.5k into Directly Held Long-Term Treasury Bonds ($15k in your IRA, $42.5k held at Treasury Direct)
$57.5k into T-Bills, ($17.5k at your brokerage and $40k held at Treasury Direct)
$10k of SGOL in brokerage
~30 1-ounce gold coins in a safe deposit box
$57.5k Vanguard Total Stock Market Mutual Fund Admiral, Held at VG.

Buy 30 year new auction Bonds at Treasury Direct and then at the 20 year mark, transfer them to your brokerage account, sell them, and then buy new Bonds at Treasury Direct... assuming T-Direct doesn't allow secondary market transactions in 10 years (which they don't allow now).

I max 401K contributions and invest these funds in a 50/50 mix of stocks and bonds. The recommended allocation is to sell the munis and CDs and invest the proceeds in VTSMX, direct held long-term treasuries, t-bills and physical gold. There is also a smidgen held in SGOL within the IRA. I would then be 100% PP.

Is there a problem with SPY, TLT and GLD? Also do CDs and Muni funds not have a place in one's portfolio?

[One day at a time]

Pointed stick,

How are doing $10 a month smart phone cell service with a pre-paid SIM?

Thanks.

[Pointedstick]

Pointed stick,

How are doing $10 a month smart phone cell service with a pre-paid SIM?

Thanks.

http://www.airvoicewireless.com/

Ting works too, but you're limited to Android phones you have to purchase from them.

[TripleB]

Is there a problem with SPY, TLT and GLD? Also do CDs and Muni funds not have a place in one's portfolio?

Read CraigR's CrawlingRoad site or his book. He explains why CDs and Muni funds are not good for the PP, although you can put anything into a Variable Portfolio if you'd like.

SPY is the SP500 index. It holds 500 stocks, all large cap. Total Stock Market (TSM) holds 5000 stocks, a mix of mid and small cap included in with the SP500 so you get a bit more diversification for the same expense ratio. I prefer to hold TSM as a mutual fund within Vanguard, due to having less layers between me and the assets, so less possibility of shenanigans.

Same for TLT and GLD - if you can hold direct bonds and direct gold coins, it's better than an ETF because you directly hold the assets. Lower expense ratio and less room for shenanigans. You know you have the assets as opposed to having a digital certificate (an ETF) which claims to hold the assets for you.

As far as GLD itself, I like SGOL or IAU better, and I like splitting between the two for a bit more diversification. Also, I think most of your gold should be in gold coins, but I like a little gold in those two ETFs because then it makes rebalancing easier.

[foglifter]

Pointed stick,

How are doing $10 a month smart phone cell service with a pre-paid SIM?

Thanks.

http://www.airvoicewireless.com/

Ting works too, but you're limited to Android phones you have to purchase from them.

$10 plan doesn't include data if I'm reading it right.

[Pointedstick]

Pointed stick,

How are doing $10 a month smart phone cell service with a pre-paid SIM?

Thanks.

http://www.airvoicewireless.com/

Ting works too, but you're limited to Android phones you have to purchase from them.

$10 plan doesn't include data if I'm reading it right.

It does indeed, at 33¢/Mb. At that price, it's definitely not a plan for data hogs, but I've been able to curb my data use almost entirely, since between home and work, 99% of the time the phone is on a wifi network. Most of my non-wifi-data usage is for GPS, which doesn't use up that much.