rhymenocerous wrote:401ks all have different rules depending on the employer's plan, so you will have to research what's available to you. If you are only investing in a 401k and have access to the iShares products, you could invest in IAU, which is a gold ETF.
If you have a brokerage option, meaning you can buy whatever funds you want, then you might be able to buy treasuries directly. The benefit of this is that you save the expense ratio and know exactly what your holdings are (no loaning out bonds for example).
I think I'm in a good situation. I don't think there's too many restrictions. I need to sit down with the Fidelity people and make sure what I can do, but I think the brokerage option is a likely possibility. Mainly I want to be all prepared and know exactly what I want when I sit down with them.
To me, getting a gold ETF defeats some of the purposes of the gold portion by eliminating some of the unique properties it has. Harry Browne would often talk about this. It is the one asset in the portfolio that isn't just paper/electronic promises. It's the asset you can own directly, yourself, no third-party risk. Craig R. has featured on his blog recently the idea of "off-spreadsheet risk," meaning conditions and events which do not show up on a spreadsheet. If you were, say, a Ukrainian farmer in 1932, or a German Jehovah's Witness between 1933 and 1945, gold coins were something you could stick in the sole of your shoe and escape with out of the country. All your other assets would possibly be seized and you'd have to just write off.
Now these are ridiculously extreme cases, and things of that type are not eventualities worth preparing for in any comprehensive way, in my opinion, but as Harry said, "you just never know," and the fact remains that physical gold, either in your hand or outside your country, is a good way to protect wealth in extreme circumstances. And as the Boy Scouts say: "Be Prepared." Even in less-extreme circumstances, which are much, much more likely to occur, physical gold can be a good way to protect wealth, and have some advantages over gold ETFs, I think. Holding a gold ETF introduces some risk. Not much risk; probably hardly any. But all else equal, why assume the risk? I think owning the gold myself is better.
SHV is a fine holding for t-bills, but you might also want to consider SHY, which extends the maturity to 1-3 years.
Ahh, this is the one tweak Craig R. has made to the portfolio, right? OK, thanks for the symbol! I definitely think that's an option. As you can tell from above, I've really bought into the "orthodox" Harry Browne thinking, but that does not mean I'm not open to improvement as well. I think SHY might be the best thing for the cash portion. Would there be any downsides?
For FSTMX the class you are able to buy is probably dependent upon what you 401k offers. Many 401ks offer institutional shares since they have so much money, so you might have access to the one with the lower expense ratio.
Excellent. Thanks!
Some people like to split up their stock portion by adding an international fund.
Do Harry Browne or Craig recommend that? Wouldn't that introduce currency risk? I can see reasons that doing that might undermine the PP on a deep, theoretical level. But I am open to learning more, if you think it is a better option. Please make your case.
If possible, I would start maxing out an IRA as well, which is $5.5k per year. Read up on the differences between Roth and Traditional. You can hold anything you want in here, so it may help you round out parts of your PP that are restricted by your 401k.
See, this area is where I have mass confusion. I don't even understand the difference between a 401k and an IRA.
I was under the impression that a 401k was a type of IRA.
Ah well, I'm confident I'll figure it out eventually!
