Gyroscopic Investing

I've just finished both Harry Browne's 'Fail-Safe Investing...' and  'The Permanent Portfolio'.  Both were excellent and convincing and I'm ready to implement the Permanent Portfolio.  The following topic might have already been discussed. 

I have two separate retirement accounts with the same company: a 401k and profit sharing acct.  They are administered through different companies, though.

Is it better to set-up each account as an individual, mini-PP or to combine them as a whole?  The 401k offers good flexibility and can be 100% directed into a brokerage account while the PS limit is 50%.  The 401k is funded monthly and the PS is yearly. I want simplicity and am leaning toward keeping them separate. Any advice would be appreciated.

Hello and welcome to the forum! There's plenty to learn on here, just typing "newbie" into the search bar can really help just even in the beginning. Also looking at all the sticky'ed threads would probably help.

To answer your question, I'd probably go with the separate. Main reason is I'm assuming it is a lot easier to move funds around in your 401k than in the profit sharing account, or at least being able to have faster flexibility of where you put your new contributions. Having more or less a whole PP in the 401k means you have an easier chance of rebalancing versus if you have 2 of the assets in one account and 2 in the other, it might be more difficult to transfer holdings quickly and evenly, especially if they are growing at different rates.

I've been using the PP fully since about September of 2012 and started moving from a very stock-heavy portfolio to this since May of 2012. Good luck and happy foruming!

Thank you Greg.  Good advice.  One additional question.  Are there any advantages or disadvantages in using ETFs versus no load index funds if the costs are roughly the same? 

colorado4 wrote: Thank you Greg.  Good advice.  One additional question.  Are there any advantages or disadvantages in using ETFs versus no load index funds if the costs are roughly the same?

I'm assuming you're talking about no load mutual funds that track an index? (i.e. VTSAX vs. VTI "Total Stock Market"). The only differences I see would be one with the ETF you can purchase at any time during the day versus the mutual fund only once a day and ETFs are better for small purchases. Those are really the only benefits I'd see to an ETF.

Otherwise, the mutual fund would allow you to purchase an exact dollar amount of a fund and you don't have the bid/ask spreads that you would with an ETF. Normally for an actively traded fund these don't really matter but for lower liquidity funds, it can make a difference if you are buying and selling a lot. (also buying and selling a lot is more suited to ETFs vs a mutual fund since normally there are time restrictions on mutual funds).