holding portion of portfolio overseas

[murphy_p_t]

there is a useful discussion about holding gold overseas, "goldmoney.com" in the gold section.

my question: what are people using to hold cash & stocks in a geographical diverse way?

one way i know of is to use goldmoney.com for part of cash holding (although this is not guaranteed by something like FDIC & is not in government paper, but rather a pooled bank deposit)

(i pose this question as a US resident, thinking that 25% (gold portion) geographical diversity may be insufficient)



also, did HB share any thoughts on how to determine what amount is sufficient geographic diversity. i'm particularly interested in his view, considering his libertarian outlook.

[craigr]

I think it is not a bad idea to use at least two brokers/mutual fund companies to hold the stocks. The bonds could also be split this way as well. At some point though you create logistical problems especially for survivors if you should pass away, get ill, injured, etc.. So some diversification is good, but too much and you could make it very hard to manage your finances if you are incapacitated.

But no I wouldn't put all my funds in just one company as is commonly advocated on sites like Bogleheads (who commonly tell people to put all the money at Vanguard only for instance). While yes these institutions have procedures in place to deal with calamities (either manmade or other) it's just a good idea to spread the risk around. IMO.

[TripleB]

I agree with Craig on splitting assets between institutions. Here's a few examples where this serves effective risk mitigation:

1) The security of one of your accounts becomes compromised. The brokerage/institution agrees to solve the problem, but it will take a period of time to reverse transfers and get your money back to you. Having a second account gives you a buffer during this uncertain time period.

2) An extraordinary event is occurring and you wish to participate. This happened recently where the stock market dropped around 10% in a few minutes. Many brokerages were unable to process trades. If you had multiple accounts, you could have logged into the one that was operational and capitalized on the flash-crash. Many trades during this time period were reversed after the fact, however, it's still worth mentioning.

3) A geographic catastrophe may occur that causes localized internet outages in certain regions. Having multiple institutions spread geographically may allow you to have access to one or more of your accounts.

4) One of your institutions may "piss you off" and you can divert the money to another, without taking the time to open a new account first. Then open a new account later, to re-split assets appropriately.