Best Allocation: Living off just the interest

General Discussion on the Permanent Portfolio Strategy

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jhogue
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Re: Best Allocation: Living off just the interest

Post by jhogue » Mon Jun 04, 2018 8:46 am

Dieter wrote:
Sat Jun 02, 2018 1:45 am
Interesting. Thanks JHogue.
Dieter,
I see you proposed a nicely diversified position within Cash, but I wonder if you will really be happy with only 10% Cash overall. Where will the $ come for a new car? big vacation?? unexpected medical bills or repairs???

And that is too say nothing about keeping your powder dry. What will you do if LTTs drop below your rebalancing band? Sell stocks??
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
Dieter
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Re: Best Allocation: Living off just the interest

Post by Dieter » Mon Jun 04, 2018 11:45 pm

It all depends....And remember, this is hypothetical -- 10% of $20M is more than my total retirement accounts are going to be when I retire..... At my levels, probably 20% cash (roughly where my retirement accounts are at now as I'm market timing a bit and shortened my duration / increased credit quality (reduced TBM) / actually have ok options in 401k as of late for "cash" / MM / Stable Value Fund.....)

What is target income? Expect to sell some as bands breached or only live off of income? How much spending flexibility?

If really shooting for income:
3% Yield from Vanguard Dividend Yield Idx Inv
1.99% from VG SCV (or go Mid-Cao Val for 2.21%)
(No idea of VG Intl fund yields -- not listed where I checked....)
2.99% LTT
0% Gold (no gold if want to optimize for income?)
2+%? cash. Not going to do the math.... VG Fed MM yields 1.7%; VG STT yields 2.45%. Creative use of IBonds (2.5%), CDs, diff durations, etc, can probably bump up
Land -- no clue....

2%ish yield on low end ($10M) kicks off 200k/yr.

If need more, sell winner / keep in balance....

If LTT drops below rebalance band (nice yield bump), from winning asset. Which yeah, might be cash if LTT, Gold, Stocks tank all at once. Which might be why the rich per info JHogue posted have more in cash just in case....
Dieter
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Re: Best Allocation: Living off just the interest

Post by Dieter » Tue Jun 05, 2018 3:39 pm

For cash ideas (not all PP pure I'm sure) -- http://www.mymoneyblog.com/best-interes ... -2018.html

(Not MY money blog :)

And at $20M total portfolio, might also look at Muni Money Market -- don't remember if they included that). Federal / Prime MM from VG better fory at my bracket even in a high tax state.
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jhogue
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Re: Best Allocation: Living off just the interest

Post by jhogue » Tue Jun 05, 2018 4:44 pm

Dieter wrote:
Tue Jun 05, 2018 3:39 pm
For cash ideas (not all PP pure I'm sure) -- http://www.mymoneyblog.com/best-interes ... -2018.html

(Not MY money blog :)

And at $20M total portfolio, might also look at Muni Money Market -- don't remember if they included that). Federal / Prime MM from VG better fory at my bracket even in a high tax state.
1. mymoneyblog can't be all bad- at least it mentions I bonds as a possible option for Cash.

2. PP investors need to stay away from municipal bonds and their funds and stick with U.S. Treasury debt only. When the market goes south and you really need your cash, that is when the Treasury debt holders will be standing ahead of all the FDIC-insured CD and municipal bond holders. It isn't some doomsday fantasy that Harry Browne made up. Anyone who studies it will realize that the history of banking is a repetitive tale of boom and bust. For more about the perils and illiquidity of municipal bonds, see Puerto Rico.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
banker22
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Re: Best Allocation: Living off just the interest

Post by banker22 » Mon Jun 18, 2018 12:32 pm

Why wouldn't you just go 100% global equity index fund with a 2-3% dividend yield?
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