Gyroscopic Investing

Hello,

First time post.  Found this forum from a link at the Bogleheads forum.

I'm looking at using my Roth IRA (at Vanguard) for the bond portion of the PP. 

It is currently Target Retirement 2030.

My preference is to keep it at Vanguard, if reasonably possible. I'd also like to keep it all in one fund. if reasonably possible.

The information I've read indicates that the iShares TLT is the best.

Other Vanguard funds that appear close are Vanguard Long-Term Government Bond ETF (VGLT), Vanguard Extended Duration Treasury ETF (EDV), and Vanguard Long Term Treasury Fund (VUSTX/VUSUX).

Would it be best to get the iShares TLT through Vanguard brokerage, or are any of the Vanguard organic funds acceptable?

Any guidance the PP veterans can give me would be appreciated.

Thanks,

Dave

Welcome aboard, Dave!

Technically, TLT is the only Long Term Treasury fund that was endorsed by Harry Browne (as an alternative to owning Treasuries directly). If you compare VUSTX against TLT during 2008, you'll see why VUSTX isn't good enough for a 4x25 Permanent Portfolio (VUSTX isn't always 100% pure Treasuries).

EDV is considered to be too powerful for a 4x25 PP. (A portfolio of 10% EDV/90% PRPFX can be used to offset the lack of LTTs in PRPFX — as MediumTex has recommended).

If you are serious about cutting costs as much as possible, you should consider owning the Treasury bonds directly through a bond desk. As much as I love Vanguard (and they used to have all of my money) I soon realized that their bond desk is a ripoff. I moved my IRAs to Fidelity which has no-fee transactions for all auction and secondary market Treasury transactions. So, now I pay zero in fees and expenses for my Treasuries. (I believe Schwab also offers free Treasury bond transactions)

If done right, you can create a Permanent Portfolio with an expense ratio of less than 2 basis points. Once you add it up, you'll wonder why you pay Vanguard or TLT to do something you can easily do for free, and without counterparty risk.

I will also recommend that you read through craigr's fantastic FAQ, which will answer almost all of your questions:

https://web.archive.org/web/20160324133 ... folio/faq/

Thanks!

I think Medium Tex once claimed that 50% VGLT and 50% EDV works okay.

Although it's probably best to just use TLT if you can.