How much of your assets do you put in PRPFX?

[moda0306]

It appears that the expense ratio is .82%.

The un-rebalanced PP, today, would have about a .5% tax drain with dividends and interest.  I don't see how the PRPFX could win given that .82% "starting point."

[Reub]

But you are still faced with purchasing the gold, storing it, worrying about it being lost or stolen, and the problem of liquidation. For me, PRPFX is a better solution.

[moda0306]

But you are still faced with purchasing the gold, storing it, worrying about it being lost or stolen, and the problem of liquidation. For me, PRPFX is a better solution.

Or do an ETF like GTU, IAU or GLD.

[LifestyleFreedom]

If you are using the PP in retirement, consider keeping up to 5 years of total living expenses in cash/money market outside of your PP.  This will ensure that you can live through any significant market downturn and not have to withdraw assets of the PP while the economy recovers.  You can just rebalance as necessary.

How many years of living expenses you have set aside is up to your comfort level. 

I agree with the approach of having "several years" of living expenses stashed away in cash or "near cash" assets.

Because I'm test-driving the Permanent Portfolio at this time (via PRPFX), I have a very small portion of my investment assets in the mutual fund.  I'm using Permanent Portfolio at a micro level rather than as the overall framework for my investment portfolio, in other words.

My goal is to keep my year 3, year 4, and year 5 projected living expenses in PRPFX (I'm nowhere near there yet).  I noticed that PRPFX dropped 25% when the stock market dropped 50% during the 2008-2009 meltdown.  On the other hand, PRPFX has returned about 7% a year since its inception in the early 1980s.  If the market tanks again (the planning premise I'm using has at least one more meltdown occurring during the next ten years), I'll have a couple of years before I have to start withdrawing from the mutual fund.  My year 1 and year 2 money will be in checking and savings accounts when I reach my goal.  I'm selling some of my index funds on the blips to help raise the money I'll need to build this 5-year cushion.

I like to stress-test my approach to learn how it might hold up under various scenarios.  I'm building a dividend growth portfolio in one of my Roth IRAs.  Dividends depend on the underlying business and economy and not on what Mr. Market thinks.  The companies in my dividend growth portfolio are headquartered in the U.S., but do a significant portion of their business outside the United States.  They also have a history of growing their dividends over a long period of time and have a "wide moat" that suggests they will be able to increase their prices during inflationary times and maintain prices during deflationary times.  If the market tanks while I'm retired, I'll use these dividends as necessary to make up for cash shortfalls.

I discovered after I semi-retired a few years ago that I got bored when I didn't have a strong economic motivation to get out of bed every day.  So I plan on having "profitable hobbies" in retirement (i.e., retirement businesses where I don't lose money, but I don't necessarily have a goal of making a lot of money either).  Every dollar of this kind of income means one less dollar that has to come from my investments for paying living expenses.

I will be using Social Security during retirement.  If Social Security becomes means-tested, I hope it's one test I'm able to fail.

My future is centered about staying in the United States.  I do have a vague "Plan D" of going outside the U.S. if necessary, but I haven't thought through the details.  I prefer the devil I know to the devil I don't know when it comes to planning my future.

[Pkg Man]

I discovered after I semi-retired a few years ago that I got bored when I didn't have a strong economic motivation to get out of bed every day.  So I plan on having "profitable hobbies" in retirement (i.e., retirement businesses where I don't lose money, but I don't necessarily have a goal of making a lot of money either).  Every dollar of this kind of income means one less dollar that has to come from my investments for paying living expenses.

I think this is very smart.  Not only does it slow the rate of decay of your savings, it also keeps you active.  I plan to do the same when I retire.

[julian]

I keep all of my PP in PRPFX. This gives me greater tax efficiency, reduces my risk of having assets stolen or lost, and increases the liquidity of my assets. It will also allow me to draw down in a systematic way upon entering retirement in another year without having to rebalance any bands.

Not so. Taking money from the PRPFX is the same as rebalancing every month which will kill your returns. The single biggest reason for the 4x25 is when u are in retirement.

[longeyes]

Well, at some point you have to cash out if you're in retirement.  What's to stop you from withdrawing a given percentage of PRPFX, say, yearly?

[Gumby]

But you are still faced with purchasing the gold, storing it, worrying about it being lost or stolen, and the problem of liquidation. For me, PRPFX is a better solution.

Let's not fool ourselves. Gold can be also stolen from anywhere. Even a mutual fund or ETF can have its gold stolen, confiscated, "misplaced," or mismanaged. Funds are not immune to theft or worry.

It really comes down to overall expenses and the amount of time you plan on holding a fund or ETF. If you really wanted to, with a few phone calls and a little bit of effort, you could set up an equally secure purchase/storage/liquidation strategy and even insure it for cheaper than typical fund expenses. And the longer you self-store the gold, the more money you'll keep and compound over the long run.

[julian]

Well, at some point you have to cash out if you're in retirement.  What's to stop you from withdrawing a given percentage of PRPFX, say, yearly?

You can and that is annual rebalancing. With HBPP you use the cash portion and rebalance if the cash drops to 15%. This gives the other 3 assets a longer time horizon to grow. This is also much more tax efficient.

[moda0306]

You can and that is annual rebalancing. With HBPP you use the cash portion and rebalance if the cash drops to 15%. This gives the other 3 assets a longer time horizon to grow. This is also much more tax efficient.
[/quote]

Yes, if your Cash is throwing out 2%, Bonds 4.6%, and Dividend yield is 1.75%, that's a 2.09% portfolio income yield at 4x25.  That should all be going into cash, and you pull out of cash in retirement until 15%, then sell your highest assets back down to get cash back up to 25%.  This will help keep things as tax-efficient as possible.  I have yet to think about mixing tax-deferred accounts into the picture (especially if you overweight them to bonds), but that's the overall strategy.