Gyroscopic Investing

I have now transferred all my IRA money into a Vanguard account and also have a Vanguard brokerage account. I have 80K sitting just waiting to be allocated.  I'm thinking of splitting it up into 2 investments with one being this month (Sept '12) and the last one in Oct '12.

I am feeling it would be nice to have at least 2 funds in each categtory.  Below is where I am leaning and I want your input:

Stock portion
VTSAX and VTI  (are both these necessary?)

Bond portion
I have 4 choices:  TLT, EDV, VUSTX, VGLT and Purchase Direct LT Bonds

Gold portion   
IAU, SGOL, GTU

Cash portion   
VFISX and SHY   

My real dilemma is in the Bond and Gold portions.  I'm leaning to the TLT and EDV in the bonds and the only one I know for sure is the IAU in the gold.
Does the EDV qualify as a "Harry Browne" investment?

Thanks!

Gebo wrote: I have now transferred all my IRA money into a Vanguard account and also have a Vanguard brokerage account. I have 80K sitting just waiting to be allocated.  I'm thinking of splitting it up into 2 investments with one being this month (Sept '12) and the last one in Oct '12.

I am feeling it would be nice to have at least 2 funds in each categtory.  Below is where I am leaning and I want your input:

Stock portion
VTSAX and VTI  (are both these necessary?)

Bond portion
I have 4 choices:  TLT, EDV, VUSTX, VGLT and Purchase Direct LT Bonds

Gold portion   
IAU, SGOL, GTU

Cash portion   
VFISX and SHY   

My real dilemma is in the Bond and Gold portions.  I'm leaning to the TLT and EDV in the bonds and the only one I know for sure is the IAU in the gold.
Does the EDV qualify as a "Harry Browne" investment?

Thanks!

Instead of TLT or any of the other choices for bonds I would just buy LTT's directly through Vanguard or Fidelity. You might have to dig a little to find out how (there is a good, brief tutorial here for Fidelity) but I can assure you, once you do you will discover that it is very easy and will never go back if you decide to stay with the plan. There is no sense paying fees even though they are very small with TLT. It all adds up in the long run.

Along the same lines you'll get a lot of recommendations here to own physical gold. I agree in principle but just haven't gone that route yet. Mostly because it isn't as easy as LTT's and I'm a lazy investor.

Stocks, I stick mostly with VTI unless I don't have that option available (as in a company 401k). Cash, I go with SHY and whatever money market funds I need to park cash in while I'm accumulating it. I like to keep it simple.

Proportion taxable vs tax-deferred?

I "can't" buy physical gold as all my money is in an IRA and I don't want to pay the 10% penalty.  Unless someone has a better idea....

I have separate savings for emergency.

I don't need any cash from this account so I can go a little "riskier" with my cash.  This is my IRA.

This is all tax-deferred.  It was a rollover from a work 401K.

This money will not be touched (other than to rebalance) for at least 10 years but more like 15.  It is in a traditional IRA.

Gebo wrote: I am feeling it would be nice to have at least 2 funds in each categtory.

I would not split everything up. Just complicated things. Reconsider if this grows into the 7 digits.

Here would be my picks:
Stock portion: VTSAX or VTI but not both. VTI is ETF of VTSAX, so essentially the same with same ER. I prefer being able to buy/sell in mid-day, so I use VTI.

Bond portion, in order of preference: Direct LT Bonds > TLT > EDV (at least for pure HB PP; would be interested in others opinions)

Gold portion: If not physical, IAU (would be curious as to other's opinions). High trading volume and low ER. GTU has advantages for taxable act, but I would not want to deal with premium/discount issues if just in an IRA.

Cash portion: SHY. VFISX has slightly higher ER and is not as pure treasuries (at least the last time I checked; see my post from June here: http://gyroscopicinvesting.com/forum/ht ... 576#p36576
[/quote]

Thanks for the advice.  I still am leaning on splitting up every account allocation into 2 funds.  It will just make me feel better...

The VFISX is 100% Treasuries with .20 ER and the SHY ER is .15

You should do whatever makes you sleep at night, of course, but know that splitting up your stocks across two funds both run by Vanguard, one of which is just an ETF class of the other, doesn't actually gain you anything at all. If you wanted to split each asset up into two funds or ETFs, each of which was an offering by a different company (VFISX and SHY, for example), that I could see because you're getting a bit of institutional diversification.

Gebo wrote: I "can't" buy physical gold as all my money is in an IRA and I don't want to pay the 10% penalty.  Unless someone has a better idea....

The physical gold could be purchased outside of the IRA if you structure it correctly. 

Existing $80K: Instead of splitting it $20K to each category, you could invest $26,667 in each of Stock, Treasuries, and Cash.  Then purchase $26,667 in physical gold outside of the IRA.  Or perhaps $23,333 in each of Stock, Treasuries, and Cash plus $10,000 of a gold ETF.  Then purchase $13,333 of physical gold.  Or perhaps $21,667 in each of Stock, Treasuries, and Cash plus $15,000 of a gold ETF.  Then purchase $6,667 in physical gold.  You get the idea.

New contributions: With a $5K IRA limit, you could contribute $1,250 to each of the 4 categories within the IRA.  Or you could contribute $1,667 to Stock, Treasuries, and Cash (in the IRA) while also purchasing $1,667 worth of physical gold (outside of the IRA).  Obviously the cash outlay is different, but it allows you to fully fund the IRA while also maintaining the 4x25 method.  And remember that the gains of the appreciation of the physical gold (if any) would be taxable.  But at least you'd have physical gold.

Jimbojones,

I would do your strategy in a heartbeat if I had the cash to purchase the gold but I don't have the cash.  All my "funds" are in IRA's.  Maybe down the road....