Gyroscopic Investing

I am new here and starting a PP with my wife's and my IRAs.  I am locked into a REIT that pays 6% from healthcare real estate that I got into with a former financial adviser.  Should I ignore that as part of the PP or should I figure it into one of the categories, and which one?  The REIT is not traded on any exchanges and I have heard I would take a loss if I try to sell it.  It is about 12% of our portfolio now.  I've been hoping they would take it public so I could sell it.

Also I just read here about splitting across accounts. How many here do that, or do four categories in each account, or for each persons accounts.  I feel that if one of the accounts is lagging I'll feel badly about that and want to interfere with it.  Which would work against the PP most likely.  But fees should be cheaper.  Or I could have different PP for each of us and use funds in one and ETFs in the other to be more diversified.

I just learned about this last week after firing another money manager that was loosing more money for me.  The PP sounds great.  Looking forward to the new book.  Should I buy the last edition?  I think I understand PP from all I've read on line.

TIA,

jallenaz wrote: I am new here and starting...

Congrats on finding the site.  You'll get a lot of help here.

jallenaz wrote: I am locked into a REIT that pays 6% from healthcare real estate that I got into with a former financial adviser.  Should I ignore that as part of the PP or should I figure it into one of the categories, and which one?  The REIT is not traded on any exchanges and I have heard I would take a loss if I try to sell it.  It is about 12% of our portfolio now.  I've been hoping they would take it public so I could sell it.

I would either consider it a separate investment, or I would sell it at a loss and put the money into the PP.

jallenaz wrote: Also I just read here about splitting across accounts.  How many here do that? 

I split across accounts. 

jallenaz wrote: I feel that if one of the accounts is lagging I'll feel badly about that and want to interfere with it. 

Don't do that!  Just keep the big picture in mind. 

jallenaz wrote: Looking forward to the new book.  Should I buy the last edition?  I think I understand PP from all I've read on line.

There is no last edition.  Craig and Medium Tex are writing a new book about the PP.  My understanding is that, in edition to explaining the strategy in its entirety, they will try to address certain issues that have come up since Harry Browne's death (i.e., international diversity, precious metals ETFs, etc).

I would recommend reading Fail Safe Investing, by Harry Browne, but, to be honest, what really sold me on the strategy were Craig's Podcasts, which you can download on this site. 

jallenaz,

Welcome. I recommend reading the three main FAQs from top to bottom:

https://web.archive.org/web/20160324133 ... ation-faq/
https://web.archive.org/web/20160324133 ... ation-faq/
https://web.archive.org/web/20160324133 ... ation-faq/

Splitting across accounts works well. Personally, I reserve my retirement accounts for mostly holding Long Term Bonds and a small amount of stocks and ETF gold for rebalancing. My non-retirement holdings are mostly physical gold and stocks.

jallenaz wrote: I am new here and starting a PP with my wife's and my IRAs.  I am locked into a REIT that pays 6% from healthcare real estate that I got into with a former financial adviser.  Should I ignore that as part of the PP or should I figure it into one of the categories, and which one?  The REIT is not traded on any exchanges and I have heard I would take a loss if I try to sell it.  It is about 12% of our portfolio now.  I've been hoping they would take it public so I could sell it.

Is the "loss" a market loss or some kind of contract break penalty fee? If it's a market loss, I'd just cut my losses, sell, and fold the proceeds into the PP. If it's a fee that exists now, but will go away soon, I'd consider the REIT a variable portfolio until the fee goes away.

jallenaz wrote: How many here do that, or do four categories in each account, or for each persons accounts.

I have one PP spread over three accounts, and my wife has a separate account spread over two accounts. Our employer plans don't have enough flexibility to implement a 4x25 by themselves so spreading is required. I have us run independent portfolios so that my wife is qualified to manage all our investments by herself, in case that's ever necessary.

KevinW wrote: Is the "loss" a market loss or some kind of contract break penalty fee? If it's a market loss, I'd just cut my losses, sell, and fold the proceeds into the PP. If it's a fee that exists now, but will go away soon, I'd consider the REIT a variable portfolio until the fee goes away.

I don't know how to go about selling the REIT yet.  I think I it would be a lower share price I would get.  I'm trying to look into it.  If they ever get it listed on an exchange I might make out well selling it then.  Not sure if that is their goal or not.  I think I'll hang onto it awhile.

KevinW wrote: I have us run independent portfolios so that my wife is qualified to manage all our investments by herself, in case that's ever necessary.

That's a really good idea.  My wife hates this investing.  She does well with the monthly bill paying and all and works in accounting, but don't talk to her about investing.  Could lead to divorce after 37 years.

I think I'll download some podcasts to listen to on my drive to work.  This should be making investing so much easier for me.  Great info and help here too.

jallenaz wrote:
I think I'll download some podcasts to listen to on my drive to work.  This should be making investing so much easier for me.  Great info and help here too.

Keep us updated.  It always interesting to hear how things work out for people. 

Thanks to everyone that responded here.  I'm figuring out which accounts will hold what and how much.  I might be back, but it all seems like if you just stick to the plan and use common sense you should be all right.

AdamA wrote:

jallenaz wrote: Looking forward to the new book.  Should I buy the last edition?  I think I understand PP from all I've read on line.

There is no last edition.  Craig and Medium Tex are writing a new book about the PP.  My understanding is that, in edition to explaining the strategy in its entirety, they will try to address certain issues that have come up since Harry Browne's death (i.e., international diversity, precious metals ETFs, etc).

I would recommend reading Fail Safe Investing, by Harry Browne, but, to be honest, what really sold me on the strategy were Craig's Podcasts, which you can download on this site. 

Adam's recommendations above are good.

As for our book, I think that we just tried to take everything we have learned about the PP over the last several years (which is a lot more than just a description of how to implement it) and put it into an interesting and readable format.

jallenaz wrote: I am new here and starting a PP with my wife's and my IRAs.  I am locked into a REIT that pays 6% from healthcare real estate that I got into with a former financial adviser.  Should I ignore that as part of the PP or should I figure it into one of the categories, and which one?  The REIT is not traded on any exchanges and I have heard I would take a loss if I try to sell it.  It is about 12% of our portfolio now.  I've been hoping they would take it public so I could sell it.

Welcome to the site.

Depending on the REIT there are many issues involved, but yes it could cost you money to get out. Just make sure it can't cost you more money than invested if it goes south. You may want to ask to see what is involved in selling it. There may also be some nuanced tax details you may want to discuss with a qualified professional who is more knowledgeable about your personal situation before you do anything!

Also I just read here about splitting across accounts. How many here do that, or do four categories in each account, or for each persons accounts.  I feel that if one of the accounts is lagging I'll feel badly about that and want to interfere with it.  Which would work against the PP most likely.  But fees should be cheaper.  Or I could have different PP for each of us and use funds in one and ETFs in the other to be more diversified.

Depends. Some people want simplicity and will keep it all at one brokerage. I generally advise against this, but I understand the desire. If you decide to do this, then use different funds for each piece at least (so don't use all Vanguard if you can split it up a little for example). Maybe use Vanguard for the stocks, iShares for the short term treasury cash, own the long term bonds directly and hold some gold bullion elsewhere or maybe mixed with a fund if you must.

But if you do decide to use more than one brokerage you could just run the identical portfolio at each (with different funds), or split up the assets  in a way that makes sense to you.

I just learned about this last week after firing another money manager that was loosing more money for me.  The PP sounds great.  Looking forward to the new book.  Should I buy the last edition?  I think I understand PP from all I've read on line.

As stated you could check out Fail Safe investing, download the podcasts (Harry Browne's as well which I have on my site), and/or wait for the book. But there are enough people and resources here to get you solid footing and up and running.

-- Craig

Thanks for the comments Craig. 

I'll look into selling the REIT if I can get out of it without too much of a loss.  Right now we have most of the accounts at Fidelity.  Once I have everything invested I'll look into moving some of the funds to another broker.

There is a Simple IRA I have with my work with American Funds.  I will move all of that into a money market fund.  The short term bond fund American Funds offers sounds a bit risky.  Moving money into a fund that has not been producing any income was difficult for me, but maybe it will start producing some when something changes.  That is the point of these categories.  That's not the full cash allocation. We will use SHY for most of that I think.

I'll use TLT until I get all the funds moved where they need to be.  Then look into individual bonds. This is taking a while because I have to wait another month or pay the penalty for not holding a fund for 60 days.  These are some bond funds we were in. It will all come together eventually.

I'll download some of those podcasts to listen to on my commute to and from work.

jallenaz wrote: I just learned about this last week after firing another money manager that was losing more money for me.  The PP sounds great. 

As simple as the PP appears, it is really quite a nuanced approach to investing, and actually has a pretty comprehensive philosophy embedded in it.

Like a decoder ring with a time lock on it, however, some of the more subtle aspects of the PP have a way of slowly coming into focus over time.  From an intellectual perspective, this journey can be quite stimulating, assuming you are the kind of person to whom the PP makes sense.

Unlike other investment strategies, most of which never even identify the transitory nature of human institutions as the most basic challenge to an investor, the PP starts with answers to the big questions such as: "How do I protect myself from the disruptive events in history that tend to wipe away wealth like one might erase a chalkboard?"  Once it addresses these big questions, it works back to more pedestrian matters such as the uses and limitations of backtesting data and minimizing volatility while generating reliable inflation-adjusted returns.

Welcome aboard, and good luck setting up your portfolio.  I have mine split across 2 accounts: 401k and taxable.  What I do for tax efficiency is try to keep all of the long term bonds and cash in the 401k and the stocks and gold in the taxable account.  It doesn't always work out, and I have had to buy a little bit of gold and stocks in the 401k for rebalancing, but by doing it this way I can prevent taxable events as much as possible.

If you split it properly and have enough new contributions coming in that you can avoid rebalancing (just add to the lagging asset) then you can be pretty tax efficient.

Good luck!

I just learned about this last week after firing another money manager that was losing more money for me.

Like most investment strategies, the PP has taken its share of lumps in the past couple of months.  The PP is a very strange houseguest at first, and it takes a few months to get used to it.  You might indeed do well starting a PP now, but you might also have some buyers' remorse if you jumped in too quickly.  Do consider if you're moving a bit too fast.

Also I just read here about splitting across accounts.

I also have my PP spread over taxable and tax-deferred accounts.  I have some of each asset in taxable but am concentrating on accumulating cash (I bonds) and gold (physical and GTU) there, two tax deferred brokerage accounts that have stocks/gold and bonds/gold, respectively, and the rest in accounts in tightly controlled tax-deferred plans that are limited to short term and long term bonds and stock funds.  With this arrangement, I should be able to avoid a tax hit during rebalancing.

Let me suggest that you do all your liquidating and asset rolling first.  Take advantage of the time to do some more reading & research on the PP.  Then when all the pending transfers have settled, sit down with a spreadsheet and a pot of coffee and have at it.  Post questions as needed.

Good luck!