Gyroscopic Investing

Hi all,

i know that this question is pretty personal, and depends on different variables, but as a normal rule, i was wondering is there is some kind of general rule (scientific, economist or market investor advisor) advising about how much percentage of your personal savings you should invest when you start fo the first time PP, and how much per month (%) you should increase the capital from your monthly salary.

thank you very much for your time and advises,

Arturo

It all depends on you and your willingness to forgo current consumption in exchange for greater future consumption, and what your goals are for the money you save. I've found the data here to be very enlightening: http://www.mrmoneymustache.com/2012/01/ ... etirement/

Personally, when I found about the PP, I converted my 401k and Roth IRA, and started a taxable one with a few thousand dollars I had wasting space in a savings account. Right now, more than half of my monthly savings go into various PPs, while what remains goes into savings accounts for short-term goals or toward the purchase of company stock.

Pointedstick wrote: It all depends on you and your willingness to forgo current consumption in exchange for greater future consumption, and what your goals are for the money you save. I've found the data here to be very enlightening: http://www.mrmoneymustache.com/2012/01/ ... etirement/

Personally, when I found about the PP, I converted my 401k and Roth IRA, and started a taxable one with a few thousand dollars I had wasting space in a savings account. Right now, more than half of my monthly savings go into various PPs, while what remains goes into savings accounts for short-term goals or toward the purchase of company stock.

so you are investing in differents PP's? Is this called uncorrelated "permanent portfolio's" portfolio investment? :-). Impresive. By the way, i think that, as you said, its a good option having half of your savings invested on PP and the other half in saving account for cash or short term goal necessities.

In terms of PP compounding returns, what is better? providing monthly savings into PP, or just one contribution one time per year as the value of adding up to 12 months savings?

thank you very much for your answers

I have several PPs for the different tax treatments. One is in my 401k, one is split between my wife and my Roth IRAs, one is taxable, and one is in the form of the PERM fund. They're all standard 25X4 portfolios with the same asset classes. I use different funds for each of them out them to reflect what's most efficient that that account type (e.g. my Taxable PP with TDAmeritrade gives me no commission fees for VTI, SHY, and EDV, so those are what I use for stocks, cash, and bonds, respectively), and also for their intended uses. PERM is for medium-term house savings, the taxable PP is for early retirement, and the tax-advantaged ones are for a conventional retirement.

I contribute monthly. In my 401k PP, it's easier for me to contribute evenly to all the assets every month, so I do that. With the others, I contribute to the lagging asset. Both work. Contributing year-round is probably going to make you more than contributing once per year. You'd be missing out on that whole year's worth of compounding!

@Pointedstick

thanks for your opinions.

If I remember correctly from HB's book, he said the PP was the place to put all the money you couldn't afford to lose. Having lost a lot with the stock market meltdown in 2008 (at least on paper) it didn't take me long to go all in with 100 percent of my investments in the PP which is where I am today.

As to how much to save, I'm at about 60% of my income but I'm an old fart getting ready to retire and trying to catch up. My advice to a younger person would be to save all you can. You won't regret it when you get to be as old as me.

Clive wrote: 'at least on paper' is key. The main attraction of the PP for many seems to me to be its low volatility over shorter periods of time (a year or two), modest potential reward. Volatility is the enemy of short term investors, but can be a substantial benefit to longer term investors. If you're in for the longer term, shorter term volatility is just a means to potentially add more when down, profit take when up. That can compound over time to significant amounts (9% or 10% annualised real (after inflation) compared to perhaps 2% to 5% for the PP. That's a lot to pass on for the comfort of relatively stable volatility over shorter periods of time).

I think I accidentally came to the same conclusion when I decided to use the PERM fund as a sort of supercharged savings account for short-to-medium-term goals.

Pointedstick wrote:
I think I accidentally came to the same conclusion when I decided to use the PERM fund as a sort of supercharged savings account for short-to-medium-term goals.

I was interested as to why you'd use PERM. Is it just because it is a fund that it is then very easy to just hold money in that? I guess you wouldn't see the cogs moving inside so from the outside, it just looks like it works as a high-yield savings account (but can lose a bit of money potentially as well).

1NV35T0R (Greg) wrote:

Pointedstick wrote:
I think I accidentally came to the same conclusion when I decided to use the PERM fund as a sort of supercharged savings account for short-to-medium-term goals.

I was interested as to why you'd use PERM. Is it just because it is a fund that it is then very easy to just hold money in that? I guess you wouldn't see the cogs moving inside so from the outside, it just looks like it works as a high-yield savings account (but can lose a bit of money potentially as well).

Right on all counts! And I chose it over PRPFX because of its lower ER and the fact that eTrade offers commission-free trades with it, making it even more like a super savings account.

Pointedstick wrote:

1NV35T0R (Greg) wrote:

Pointedstick wrote:
I think I accidentally came to the same conclusion when I decided to use the PERM fund as a sort of supercharged savings account for short-to-medium-term goals.

I was interested as to why you'd use PERM. Is it just because it is a fund that it is then very easy to just hold money in that? I guess you wouldn't see the cogs moving inside so from the outside, it just looks like it works as a high-yield savings account (but can lose a bit of money potentially as well).

Right on all counts! And I chose it over PRPFX because of its lower ER and the fact that eTrade offers commission-free trades with it, making it even more like a super savings account.

I don't know if I can open up any more accounts, I've got too many as is to opening up an eTrade just for PERM haha. I think outside of credit card accounts I have over a dozen but are all nicely documented in mint.com.

Even right now I just opened a Bank of America checking account so I can swap my direct deposit over to get $100 bonus hah. It's my little side job to find little bonuses like this here and there.

Hi,

I am thinking to make the following:

50% Cash savings account in Portugal

10% in PIMCO type funds

30% in EU PP

10% in VP - LAZY portfolio

What you experts think about this group?


Thank you all!