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EUROPEAN PP family
Posted: Sat Nov 17, 2012 4:37 am
by frugal
Hello,
I would like to know you all that are using or thinking to use a PERMANENT PORTFOLIO living in a EUROPEAN country.
Say "Hi!" here in this topic and share your experience.
Thank you very much for your posts!
Cheers.
Re: EUROPEAN PP family
Posted: Sat Nov 17, 2012 6:22 am
by k9
Hi!
In France : 33 cash (governmental saving account + bank notes), 33 gold bullions, 33 stocks (currently on a worldwide index).
No LT bond for the reason I explained in the thread about cash : I don't trust France's ability to pay back as it cannot print money, a default would not benefit gold a lot (France is not big enough) and buying German bonds doen't feel good to me.
Maybe I'll change my mind on this point, but currently I prefer paying back small amounts of my mortgage regularly as it actually achieves the same effect (I'm investing on my own debt).
Re: EUROPEAN PP family
Posted: Sat Nov 17, 2012 9:02 am
by frugal
Hi,
I am now in Portugal, which is more risky.
I was thinking to have a portfolio like Marc. But cash in germany pays very very bad.
Here we can find CD up to 4-5%/year.
Regards
Re: EUROPEAN PP family
Posted: Sat Nov 17, 2012 9:06 am
by AdamA
frugal wrote:
Here we can find CD up to 4-5%/year.
Careful...there's a reason those rates are so high!
Re: EUROPEAN PP family
Posted: Sat Nov 17, 2012 9:11 am
by frugal
AdamA wrote:
frugal wrote:
Here we can find CD up to 4-5%/year.
Careful...there's a reason those rates are so high!
Yes, more risky.
But my account is under protection of State guarantee fund...
Regards
Re: EUROPEAN PP family
Posted: Sat Nov 17, 2012 10:12 am
by Pointedstick
Keep in mind that financial guaranteed from governments that can't print dollars are actually guarantees to raise taxes or beg for foreign aid with strings attached when they inevitably mismanage things and come up short. As AdamA said, there's a reason those rates are so high.
Re: EUROPEAN PP family
Posted: Sat Nov 17, 2012 2:25 pm
by frugal
Slotine wrote:
Pointedstick wrote:
Keep in mind that financial guaranteed from governments that can't print dollars are actually guarantees to raise taxes or beg for foreign aid with strings attached when they inevitably mismanage things and come up short. As AdamA said, there's a reason those rates are so high.
I took a look at portugal's state guarantees as I think the types of limits on guarantees for GICs, CDs, etc are applicable to everyone.
http://www.fgd.pt/en-us/FAQs/Pages/default.aspx
Like most places, there's a set limit on it. € 100,000 in each bank for him in particular. Furthermore, there are usually limits on how fast you actually get your money back. There are several provisions (#11) that state when you're not going to see your money back anytime soon, which effectively is a lockout above and beyond any term you've agreed to. There's usually a strong risk in times of stress that a participating bank is also withdrawn from coverage which also shows up in the spread.
If you're stretching for the yield, understand those risks and spread your allocations across several unrelated banks and treasuries. If you're drawing on the cash, then liquidity during a crisis should definitely be ranked higher in priority than yield.
It is hard to accept, after so many years with good CD's interest rates, to transfer it to negative or almost ZERO interest German short term bonds.
Portugal always had difficulties and is not a rich country, so we are used to it...
Please help me to understand better the advantages.
THANK YOU!
Re: EUROPEAN PP family
Posted: Sat Nov 17, 2012 2:41 pm
by Pointedstick
The reason why the safety of cash is so important is because in a banking crisis, you may be locked out of your accounts and unable to access funds. All the money in the world sitting in a nice 4% savings account doesn't mean a thing if you can't get it when the banks are on fire!
But I understand your conundrum, frugal. Honestly, if I were Portuguese, I don't think I would be able to resist either. And even now, I still keep some money in a 1% interest savings account that I consider separate from my PP cash, which are in practically 0% t-bills. Perhaps what you could do is consider the high-interest CDs to be outside of your PP or in your VP, and only use the safer German bonds in the PP.
Re: EUROPEAN PP family
Posted: Tue Nov 20, 2012 7:33 am
by dkalder
To get back to the original topic:
For a German PP holder, the capital gains tax ("Abgeltungssteuer") is the killer, because it scalps every rebalancing. In a high-inflation environment, the tax might even "take care" of all real gains. As the tax will certainly even rise further in the future, someone setting up an efficient official German PP fund could get some clients, as internal fund-rebalancing is then tax free.
Re: EUROPEAN PP family
Posted: Thu Nov 22, 2012 5:40 am
by Thomas Hoog
Hi
I'm a Dutch follower of the PP since about 2002.
Even got a website (in Dutch) for the results:
http://www.verstandig-beleggen.nl/
However you can read the grahics and the assetallocation
Gerard
Re: EUROPEAN PP family
Posted: Thu Nov 22, 2012 9:26 am
by k9
Currently in France, about 45% of capital gains are taxed. If you take inflation into consideration, almost all your gains are eaten by taxes. You can put stocks into special tax-friendly accounts (provided you don't sell them for a few years), but you can't do that for bonds. That's a rebalancing killer...
OTOH, zero coupon bonds are not taxed until you sell them. That makes them the obvious choice for LT bonds for French citizen (for those who choose to include them).
Re: EUROPEAN PP family
Posted: Sat Feb 23, 2013 9:18 am
by frugal
Hello, how are you?
I am using EU-PP and one of my biggest problems is the default of my country - Portugal.
My brokers account is portuguese, and the assets are all ETFs.
My fear is that Portugal enters in default, bailout. If this happens I don't know if my portfolio is safe on the portuguese broker.
Can you please advice.
Thank you and best regards!
Re: EUROPEAN PP family
Posted: Sat Feb 23, 2013 9:42 am
by MachineGhost
frugal wrote:
Thank you and best regards!
You need to open brokerage accounts in the USA or Germany. It is not difficult to do. Stop worrying and just go do it!
Re: EUROPEAN PP family
Posted: Wed Feb 27, 2013 3:09 pm
by frugal
MachineGhost wrote:
frugal wrote:
Thank you and best regards!
You need to open brokerage accounts in the USA or Germany. It is not difficult to do. Stop worrying and just go do it!
Dear
MachineGhost,
you are right, but I have the feeling that foreign countries can block my accounts one day.
Imagine that my country goes out of EURO and then I want to withdraw the money on my account in US or Germany, and I'm not allowed.
Thank you for comment.
Re: EUROPEAN PP family
Posted: Sat Jun 14, 2014 7:27 am
by Loafer
Dual citizen currently living in US. May start a pp in italy. What about a pan-european pp?
No idea where to begin.
Re: EUROPEAN PP family
Posted: Sat Jun 14, 2014 9:11 am
by Loafer
Desert wrote:
tonymonto wrote:
Dual citizen currently living in US. May start a pp in italy. What about a pan-european pp?
No idea where to begin.
Is there any reason you wouldn't just go with a "standard" PP?
Money is in italy. Don't want to pay big foreign exchange fees, and like geographic diversification, in case i've got to make a change of residence in future.. Already have US pp.
If you don't plan to live in the U.S. in the future, you could set up something more global:
Equities: VT (world stock index)
Gold: The usual, ETF's or physical
Cash: Local cash of the country you reside in
LTT: I'd still want this in U.S. treasuries, regardless of residence
Money in italy. Don't want to pay big foreign exhange fees. Geographic diversification, for US troubles and if need to move in future. Already have US pp.
Re: EUROPEAN PP family
Posted: Sun Jun 15, 2014 1:05 am
by frugal
tonymonto wrote:
Desert wrote:
tonymonto wrote:
Dual citizen currently living in US. May start a pp in italy. What about a pan-european pp?
No idea where to begin.
Is there any reason you wouldn't just go with a "standard" PP?
Money is in italy. Don't want to pay big foreign exchange fees, and like geographic diversification, in case i've got to make a change of residence in future.. Already have US pp.
If you don't plan to live in the U.S. in the future, you could set up something more global:
Equities: VT (world stock index)
Gold: The usual, ETF's or physical
Cash: Local cash of the country you reside in
LTT: I'd still want this in U.S. treasuries, regardless of residence
Money in italy. Don't want to pay big foreign exhange fees. Geographic diversification, for US troubles and if need to move in future. Already have US pp.
Nice, you can have both.
Go for it!
Re: EUROPEAN PP family
Posted: Sun Jun 15, 2014 1:24 am
by Loafer
Money in italy. Don't want to pay big foreign exhange fees. Geographic diversification, for US troubles and if need to move in future. Already have US pp.
[/quote]
Nice, you can have both.
Go for it!
[/quote]
Being in Portugal, your cash is in Euros. Why isn't the rest of your portfolio in PanEuropean instruments, instead of Portuguese?
Re: EUROPEAN PP family
Posted: Sun Jun 15, 2014 1:27 am
by Loafer
frugal wrote:
tonymonto wrote:
Desert wrote:
Is there any reason you wouldn't just go with a "standard" PP?
If you don't plan to live in the U.S. in the future, you could set up something more global:
Equities: VT (world stock index)
Gold: The usual, ETF's or physical
Cash: Local cash of the country you reside in
LTT: I'd still want this in U.S. treasuries, regardless of residence
Your global plan doesn't make sense to me. You're mixing world stocks with local currency and US Bonds. And, if gold should be stored away from the jurisdiction of your PP, do you have a safe box on Mars?
Re: EUROPEAN PP family
Posted: Sun Jun 15, 2014 1:46 am
by frugal
tonymonto wrote:
Money in italy. Don't want to pay big foreign exhange fees. Geographic diversification, for US troubles and if need to move in future. Already have US pp.
Nice, you can have both.
Go for it!
[/quote]
Being in Portugal, your cash is in Euros. Why isn't the rest of your portfolio in PanEuropean instruments, instead of Portuguese?
[/quote]
Example?
Thank you.
Re: EUROPEAN PP family
Posted: Sun Jun 15, 2014 7:45 am
by Loafer
Being in Portugal, your cash is in Euros. Why isn't the rest of your portfolio in PanEuropean instruments, instead of Portuguese?
[/quote]
Example?
Thank you.
[/quote]
IIRC, one should ideally have all PP instruments in the investor's home economy. Except for physical gold, which should be stored abroad.
So, you living in Portugal, are part of the European Union. Portugal is just a state, like California is a state of the USA. A person in California would make a PP of US bonds, US currency and US stock index.
Likewise, a person is Portugal would make a PP of EU bonds, EU currency and EU Stock index. Store your physical gold in Switzerland or the US, I guess.
Holding EU currency, but Portugal stocks and bonds, seems inconsistent. No?
(Disclaimer: I'm not an investment advisor, and anything I say that sounds intelligent shouldn't be confused with good advice.)
Re: EUROPEAN PP family
Posted: Tue Jun 17, 2014 6:20 am
by frugal
No, are Global EUROPEAN all the assets
