top limit for your INVESTMENTS

[frugal]

Hello

I now understand more about PP and your minds, which i agree.

What is for you, the limit of money that you want to reach in a PP or overall in savings.
This means, when will you start to put money in other stuff a part from investments.
Saving for investment has no limit?

Let me know your aims in the longterm.

Thank you.

[k9]

As soon as my portfolio will be able to sustain me for the remaining of my life, I'll stop working and investing. I'm far from it, however.

[LifestyleFreedom]

I want my investment incomes to be several times my living expenses so that I have room to maneuver in case we go through another financial crisis.  I consider investing to be a "profitable hobby" that I will do for the rest of my life.  Having more money than I need is an easier problem for me to deal with than not having enough money.

With regards to investment strategy, most of my money (for legacy reasons) are in strategies other than the PP.  I started "alpha testing" the PP a couple years ago when I put 2% of my investment funds in the PRPFX (in a taxable account).  I recently started "beta testing" the PP a couple of months ago when I put another 5% of my investment funds in the HBPP in a retirement account (spread equally among 4 ETFs as described in The Permanent Portfolio book).  I will put more money in the HBPP in the coming years as the strategy proves itself (the HBPP strategy might work for some people on this forum, but I have to find out for myself because I have no one to blame but myself if it doesn't work).

I doubt I will put more than 40% of my investment money in the HBPP.  Even if the HBPP works as expected (it probably will), the strategy depends on a fiat currency world and the ability to own gold.  If either of these conditions change, then the HBPP strategy will have to be reevaluated.  Other investment strategies I'm using have their Achilles heels also, but I consider investment strategy to be a challenging intellectual puzzle (in addition to being a "profitable hobby").

[k9]

Even if the HBPP works as expected (it probably will), the strategy depends on a fiat currency world and the ability to own gold.  If either of these conditions change, then the HBPP strategy will have to be reevaluated.

Could you give us a hint about your strategy for these situations ?
If gold was reintroduces as the basis for money, I'd probably invest a lot in bonds (bonds producing interests in gold in an almost inflation-free world, yummy !). If gold possession was forbidden, I would very probably keep it more than ever (and maybe try to escape my country with it).

[LifestyleFreedom]

Could you give us a hint about your strategy for these situations ?

If gold possession was forbidden, I would very probably keep it more than ever (and maybe try to escape my country with it).

I would use the Talmud portfolio (which has been discussed in other threads).  I would probably use REITs and real estate funds instead of actual real estate.  Real estate is a real asset that should keep pace with inflation (but who knows).

I'm not sure how easy it is to escape with gold.  The United States is cracking down on terrorists, crime rings, and tax cheats now more than ever.  It's getting harder to get away with things.

The idea of using gold to bribe the border guards sounds enticing (for instance, "I'll give you half my gold if you let me cross the border").  But if the border guards draw their guns (for instance, "You'll give us all your gold and you will not be allowed to cross the border"), then escape becomes fruitless.

[Pointedstick]

The idea is probably not that you bribe the border guards, but that you use it to pay the smuggler or freighter captain or whatever to get your ass out of the country. If at that point he tries to shoot you, then heck, you shoot him right back and find a more reputable smuggler!

[frugal]

Hello all you,

if one day we achieve FINANCIAL INDEPENDENCY, the PP shall be 100% of our PORTOFOLIO?

Or we should change to a more conservative strategy,

like only CASH+BONDS?



Regards.

[Pointedstick]

I intend to be 100% in the PP when I achieve financial independence. Anything more conservative runs the risk of losing purchasing power to inflation (as a cash + bonds portfolio often will), and anything more volatile can experience huge drawdowns and endanger the portfolio's ability to provide financial independence.

[frugal]

Hello,

and if the HBPP starts a long BEAR period, a DRAWDOWN during the next 20 years ?

How can we REACT?

Is there any emergency stop loss?



Best and warmest regards

[k9]

Cash+bonds is not conservative IMO, it's risky mainly because of inflation. It's as unsafe a bet as 100% stocks or 100% gold, but for other reasons. Upside potential is very limited, downside potential is unlimited (hyperinflation, eventual default).

I never understood how people owning just one asset, even if that asset is dollar, could feel "safe".

[Pointedstick]

Hello,

and if the HBPP starts a long BEAR period, a DRAWDOWN during the next 20 years ?

How can we REACT?

Is there any emergency stop loss?

A 20-year PP drawdown would imply a multi-decade decline in the value of stocks, bonds, and gold, with cash unable to keep pace.

Stocks could decline that much during a prolonged period of recession/depression (e.g. Japan).

Bonds could decline that much if the central bank consistently raises the interest rate.

Gold could decline that much if the interest rate increases consistently outpace inflation.

In this case, cash is the only asset in your portfolio that would be doing well because its coupon payments would be yielding a real return (though the capital value would be flat or falling due to the constantly rising interest rate), and in any event it wouldn't be enough to offset the other assets. You would want a 100% cash portfolio, basically.

This scenario is essentially a huge, ongoing tight money recession, which are typically short. The idea of a central bank allowing one to persist for 20 years is rather unthinkable. I think people would revolt. Traditional stock-and-bond portfolios would be annihilated, and at least in the USA, people with such portfolios often have political power and own firearms.