Gyroscopic Investing

Hi everyone

The Permanent Portfolio sounds like one of the best investing strategies for my lifestyle. I decided to start up my own permanent portfolio.

At the moment I have 1200 euro invested in Vanguard S&P500 UCITS ETF in Amsterdam with a return of 22%. I want to transfer this into my PP but I currently don't have the money to be fully invested in all four classes (or three) without getting too much transaction costs.

One transaction cost = 7,50 euros. If I get the limit of 2500euros I will have 0,3% lose because of transaction cost when I start my PP. (7,5 euro / 2500 euros => 0,3%)

What is the best option?

1. Sell the ETF, leave the money as cash and wait until I have all the money to be fully invested in the PP without getting too much cost (the 2500 euro limit).
2. Keep the ETF , ride the up and downs and invest another 1300 as soon I have the money with the other PP elements

Getting a total of 7500 euro (I'm actually more interested into the 33% class) is a matter of saving and generating more money ,which will take me as a student quite some time with maybe potential losses.

Another option would be to buy the PERM ETF, but then I will deal with strange currency because of the EUR/USD rate. With this option I only need 2500 to start with.

I hope you guys can help me out.

Kind regards,
Rob

I wouldn't open up a brokerage account unless having at least 10.000 EUR to invest.

Plus two months of living expenses readily available all the time in a savings account, which ought not to be invested at all.

Don't get greedy and save up some real money first.

Pfanni wrote: I wouldn't open up a brokerage account unless having at least 10.000 EUR to invest.

Plus two months of living expenses readily available all the time in a savings account, which ought not to be invested at all.

Don't get greedy and save up some real money first.

Fair point. My living expenses at the moment are quite low as I'm a student but I get what you mean. What's your best advice then? Sell the ETF , focus on myself to generate more income and then start a PP?

RobJ wrote:

Pfanni wrote: I wouldn't open up a brokerage account unless having at least 10.000 EUR to invest.

Plus two months of living expenses readily available all the time in a savings account, which ought not to be invested at all.

Don't get greedy and save up some real money first.

Fair point. My living expenses at the moment are quite low as I'm a student but I get what you mean. What's your best advice then? Sell the ETF , focus on myself to generate more income and then start a PP?

Yep. 1,200€ is not really very much money. That's the kind of sum you might need to pay the security deposit for an apartment. I'd keep it in cash, easily available for the inevitable expenses involved in living in a modern, advanced country where everything costs money. If you're a student, you're already investing in yourself right now, assuming you're not becoming terribly indebted to study something worthless. Don't do that. Study something having to do with science, computers, engineering, or maybe medicine, law, or business management. Don't waste your time learning about Renaissance painters or your country's literary tradition unless you and your family are already so rich that you don't have to worry about money.

Pointedstick wrote:

RobJ wrote:

Pfanni wrote: I wouldn't open up a brokerage account unless having at least 10.000 EUR to invest.

Plus two months of living expenses readily available all the time in a savings account, which ought not to be invested at all.

Don't get greedy and save up some real money first.

Fair point. My living expenses at the moment are quite low as I'm a student but I get what you mean. What's your best advice then? Sell the ETF , focus on myself to generate more income and then start a PP?

Yep. 1,200€ is not really very much money. That's the kind of sum you might need to pay the security deposit for an apartment. I'd keep it in cash, easily available for the inevitable expenses involved in living in a modern, advanced country where everything costs money. If you're a student, you're already investing in yourself right now, assuming you're not becoming terribly indebted to study something worthless. Don't do that. Study something having to do with science, computers, engineering, or maybe medicine, law, or business management. Don't waste your time learning about Renaissance painters or your country's literary tradition unless you and your family are already so rich that you don't have to worry about money.

Thanks for the advice!
I'm almost done with business school and one of my two internships (doing the second one right now) already gave me the opportunity to work there. Pay is not that big but it's a just starting company with a lot of potential. Although i'm more interested in starting my own business later on a different sector.

Beside that I'm always investing in my own. Learning / becoming competent in coding, computer science (had way too much during middle school so I learned that stuff) and audio production (which I want to start my business later on).

Anyway: I'm going to sell the ETF and start a plan towards the PP!

Hi from Belgium ;-)

Well I am one to think that the sooner you start, the better, so you get experience under your belt. Ok you have transaction costs, but don't forget that the sooner you invest, the more time your investings have time to increase in value.

I moved a big chunk of my assets into a PP fall last year, and since then bonds and stocks have increased 15% in value each. And Gold hasn't been bad either. Compare that to your transactions costs of 7.50€ / 300€ = 2.5% if you'd split up the funds you have available from the Vanguard ETF.

Don't forget that the European Central banks have now started QE programs, so assets should continue to move up in the near future.

Being a student, I guess your are financially supported by your parents, and so they will most likely step in for you if you have big expenses coming up. And you'll most likely still live with them some time after graduating and earning your first money from a job.

A good strategy might be to wait until you have 2000€ in funds, then divide them up in the four classes and invest in stocks, bonds and gold. Using short-term bonds for cash might be a bit of overkill though, so maybe it's better to just keep it in your bank account for now.

The price of individual shares of stocks/bonds might also be something to factor in. For example, I'm using DBXG for long-term bonds now, and one share costs around 355€ now. This might lead to an unbalanced portfolio in your case in the beginning as the individual share price might be high compared to your available funds for each asset class.