Comments on: The Permanent Portfolio Allocation http://crawlingroad.com/blog/2008/12/18/the-permanent-portfolio-allocation/ The Permanent Portfolio, Investing, Finance and Random Thoughts. Wed, 02 May 2012 07:34:52 +0000 hourly 1 http://wordpress.org/?v= By: Safe. Stable. Simple | Crawling Road http://crawlingroad.com/blog/2008/12/18/the-permanent-portfolio-allocation/#comment-851 Safe. Stable. Simple | Crawling Road Thu, 18 Mar 2010 22:17:13 +0000 http://crawlingroad.com/blog/?p=189#comment-851 [...] Risks are taken where they should be and avoided where they add nothing to the bottom line. A portfolio invested this way can hold assets that are “risky” but own them in a way where the risks wash out over [...] [...] Risks are taken where they should be and avoided where they add nothing to the bottom line. A portfolio invested this way can hold assets that are “risky” but own them in a way where the risks wash out over [...]

]]> By: Permanent Portfolio - Back to Basics | Crawling Road http://crawlingroad.com/blog/2008/12/18/the-permanent-portfolio-allocation/#comment-850 Permanent Portfolio - Back to Basics | Crawling Road Mon, 15 Mar 2010 01:01:46 +0000 http://crawlingroad.com/blog/?p=189#comment-850 [...] The Permanent Portfolio Allocation [...] [...] The Permanent Portfolio Allocation [...]

]]> By: craigr http://crawlingroad.com/blog/2008/12/18/the-permanent-portfolio-allocation/#comment-841 craigr Thu, 04 Mar 2010 04:05:00 +0000 http://crawlingroad.com/blog/?p=189#comment-841 There is a bond FAQ I have posted that talks about this. Most all brokers can buy bonds for you. You can also buy from treasury direct. Lastly there is one etf and a couple funds that can be used as outlined the FAQ. There is a bond FAQ I have posted that talks about this. Most all brokers can buy bonds for you. You can also buy from treasury direct. Lastly there is one etf and a couple funds that can be used as outlined the FAQ.

]]> By: LEN http://crawlingroad.com/blog/2008/12/18/the-permanent-portfolio-allocation/#comment-837 LEN Wed, 03 Mar 2010 17:22:12 +0000 http://crawlingroad.com/blog/?p=189#comment-837 CRAIG, HOW DO YOU OWN THE BONDS DIRECTLY? DO YOU MEAN IN AN INDEX FUND VS. THE ETF'S? THANKS FOR THE HELP! CRAIG, HOW DO YOU OWN THE BONDS DIRECTLY? DO YOU MEAN IN AN INDEX FUND VS. THE ETF’S? THANKS FOR THE HELP!

]]> By: The Dollar is Crashing!! | Crawling Road http://crawlingroad.com/blog/2008/12/18/the-permanent-portfolio-allocation/#comment-820 The Dollar is Crashing!! | Crawling Road Tue, 23 Feb 2010 18:27:54 +0000 http://crawlingroad.com/blog/?p=189#comment-820 [...] to ignore all of the financial news and just stick to a simple diversified portfolio that can take care of you whether the dollar is sinking or flying. Tags: Investing This entry [...] [...] to ignore all of the financial news and just stick to a simple diversified portfolio that can take care of you whether the dollar is sinking or flying. Tags: Investing This entry [...]

]]> By: craigr http://crawlingroad.com/blog/2008/12/18/the-permanent-portfolio-allocation/#comment-819 craigr Tue, 23 Feb 2010 17:23:16 +0000 http://crawlingroad.com/blog/?p=189#comment-819 The IRA should hold the bonds and some cash first as they are the most tax heavy and you want to shelter them. I would keep some cash, stocks and gold in the taxable savings if you have no room left after you put your bonds in. If you still have room then I'd put in the stocks to shelter the dividend distributions. But you will probably still want some money outside the IRA to handle living expenses in early retirement along with rebalancing. For our living expenses during the year we tap into our "cash" allocation and once a year or so we'll rebalance to bring it back to where it needs to be if it is too low. This way we don't have to touch the other assets and incur capital gains until absolutely necessary. I would not own preferred stocks at all (I'm assuming that's what you meant) unless it is part of your variable play money portfolio. You want your bonds to be US Treasury long term bonds. You want your cash to be US Treasury money market or possibly US Treasury Short Term Treasury. You don't want to take any type of credit risk with you bonds and preferreds will not behave like bonds at all. If you are a US investor you really want to own only US Treasury bonds and US Treasury Bills for your bonds and cash respectively. Gabelli Global Gold is a mining company/natural resources fund and is not the same as gold bullion. I would not use that as a substitute for gold because mining stocks can move in the market for much different reasons than gold bullion. It may be something for your variable portfolio if you want to gamble though. Also that fund charges an outrageous 1.45% a year expense ratio and I'd never buy any fund that charges more than 1% a year and that's pushing it. I don't own any fund that charges more than 0.25% a year. A low expense ratio is a major driver in overall fund performance. Keeping that cost as low as possible is guaranteed money in the bank. The IRA should hold the bonds and some cash first as they are the most tax heavy and you want to shelter them. I would keep some cash, stocks and gold in the taxable savings if you have no room left after you put your bonds in. If you still have room then I’d put in the stocks to shelter the dividend distributions. But you will probably still want some money outside the IRA to handle living expenses in early retirement along with rebalancing. For our living expenses during the year we tap into our “cash” allocation and once a year or so we’ll rebalance to bring it back to where it needs to be if it is too low. This way we don’t have to touch the other assets and incur capital gains until absolutely necessary.

I would not own preferred stocks at all (I’m assuming that’s what you meant) unless it is part of your variable play money portfolio. You want your bonds to be US Treasury long term bonds. You want your cash to be US Treasury money market or possibly US Treasury Short Term Treasury. You don’t want to take any type of credit risk with you bonds and preferreds will not behave like bonds at all. If you are a US investor you really want to own only US Treasury bonds and US Treasury Bills for your bonds and cash respectively.

Gabelli Global Gold is a mining company/natural resources fund and is not the same as gold bullion. I would not use that as a substitute for gold because mining stocks can move in the market for much different reasons than gold bullion. It may be something for your variable portfolio if you want to gamble though. Also that fund charges an outrageous 1.45% a year expense ratio and I’d never buy any fund that charges more than 1% a year and that’s pushing it. I don’t own any fund that charges more than 0.25% a year. A low expense ratio is a major driver in overall fund performance. Keeping that cost as low as possible is guaranteed money in the bank.

]]> By: Name (required)LEN http://crawlingroad.com/blog/2008/12/18/the-permanent-portfolio-allocation/#comment-818 Name (required)LEN Tue, 23 Feb 2010 13:00:33 +0000 http://crawlingroad.com/blog/?p=189#comment-818 CRAIG, THANKS FOR YOUR ANSWER. I AM CONTEMPLATING EARLY RETIREMENT AND TRYING TO GET MY "DUCKS" LINED UP. I WILL HAVE A ROTH IRA TO WITHDRAW FROM IN A COUPLE OF YEARS ALONG WITH MY PERSONAL SAVINGS. ARE THERE DIFFERENCES IN HOW YOU WOULD TREAT THE IRA VS. REGULAR SAVINGS? FOR THE BONDS, WOULD YOU USE BOND MUTUAL FUNDS, OR OWN INDIVIDUAL SECURITIES SUCH AS PREFERRED'S? AS FAR AS THE GOLD, WOULD YOU CONSIDER GABELLI GLBL GOLD (GGN), WHICH HAS A HIGH MONTHLY INCOME RETURN AS PART OF YOUR 25%? ALOT OF QUESTIONS FROM ME AND I SINCERELY APPRECIATE YOUR HELP. I CURRENTLY HAVE DIVIDEND STOCKS, MLP'S IN NATURAL GAS PIPELINES AND PREFERRED STOCKS WITH A FEW CORPORATE BONDS. CRAIG,
THANKS FOR YOUR ANSWER. I AM CONTEMPLATING EARLY RETIREMENT AND TRYING TO GET MY “DUCKS” LINED UP. I WILL HAVE A ROTH IRA TO WITHDRAW FROM IN A COUPLE OF YEARS ALONG WITH MY PERSONAL SAVINGS. ARE THERE DIFFERENCES IN HOW YOU WOULD TREAT THE IRA VS. REGULAR SAVINGS?
FOR THE BONDS, WOULD YOU USE BOND MUTUAL FUNDS, OR OWN INDIVIDUAL SECURITIES SUCH AS PREFERRED’S? AS FAR AS THE GOLD, WOULD YOU CONSIDER GABELLI GLBL GOLD (GGN), WHICH HAS A HIGH MONTHLY INCOME RETURN AS PART OF YOUR 25%? ALOT OF QUESTIONS FROM ME AND I SINCERELY APPRECIATE YOUR HELP. I CURRENTLY HAVE DIVIDEND STOCKS, MLP’S IN NATURAL GAS PIPELINES AND PREFERRED STOCKS WITH A FEW CORPORATE BONDS.

]]> By: craigr http://crawlingroad.com/blog/2008/12/18/the-permanent-portfolio-allocation/#comment-817 craigr Tue, 23 Feb 2010 02:36:10 +0000 http://crawlingroad.com/blog/?p=189#comment-817 The major index funds that are ETFS are from iShares and Vanguard. If you stick to either of those two providers you should be OK. iShares offers their total stock index fund as the Russell 3000 (Ticker: IWV). Vanguard offers it as Ticker VTI. iShares 20+ year bond fund is Ticker TLT. iShares treasuries for cash can be either Ticker SHV (very short term treasuries more like a treasury money market fund) or Ticker SHY (1-3 year maturity Treasury). iShares also offers a gold ETF as Ticker IAU but there is also a competitor under the ticker GLD. It would not be unreasonable if you wanted to just use ETFs to split the providers up for additional safety. So you could use VTI for your stocks. TLT for your bonds. SHY/SHV for the cash and GLD for the gold. That would spread your money across three different ETF companies. While your money should not be at risk in an ETF due to the structure and regulations on them, it's not a bad idea to spread the money a little just in case a problem develops that we don't expect. If you can, use the ETFs only for the stocks and cash. For the bonds it's better if you hold them directly and same for the gold. Since there are logistical problems with holding physical gold though, many people may decide to do a hybrid of some physical and some in ETFs. The major index funds that are ETFS are from iShares and Vanguard. If you stick to either of those two providers you should be OK. iShares offers their total stock index fund as the Russell 3000 (Ticker: IWV). Vanguard offers it as Ticker VTI. iShares 20+ year bond fund is Ticker TLT. iShares treasuries for cash can be either Ticker SHV (very short term treasuries more like a treasury money market fund) or Ticker SHY (1-3 year maturity Treasury). iShares also offers a gold ETF as Ticker IAU but there is also a competitor under the ticker GLD.

It would not be unreasonable if you wanted to just use ETFs to split the providers up for additional safety. So you could use VTI for your stocks. TLT for your bonds. SHY/SHV for the cash and GLD for the gold. That would spread your money across three different ETF companies. While your money should not be at risk in an ETF due to the structure and regulations on them, it’s not a bad idea to spread the money a little just in case a problem develops that we don’t expect.

If you can, use the ETFs only for the stocks and cash. For the bonds it’s better if you hold them directly and same for the gold. Since there are logistical problems with holding physical gold though, many people may decide to do a hybrid of some physical and some in ETFs.

]]> By: Name (required)LEN NOUD http://crawlingroad.com/blog/2008/12/18/the-permanent-portfolio-allocation/#comment-816 Name (required)LEN NOUD Tue, 23 Feb 2010 02:30:47 +0000 http://crawlingroad.com/blog/?p=189#comment-816 CRAIG, WHAT ETF'S DO YOU USE FOR YOUR PERMANENT PORTFOLIO? ARE YOU MORE COMFORTABLE WITH THEM VS. INDEX FUNDS? CRAIG, WHAT ETF’S DO YOU USE FOR YOUR PERMANENT PORTFOLIO? ARE YOU MORE COMFORTABLE WITH THEM VS. INDEX FUNDS?

]]> By: Why these assets? | Crawling Road http://crawlingroad.com/blog/2008/12/18/the-permanent-portfolio-allocation/#comment-776 Why these assets? | Crawling Road Tue, 09 Feb 2010 10:05:29 +0000 http://crawlingroad.com/blog/?p=189#comment-776 [...] Now, as a recap we know that the Permanent Portfolio holds four core assets: [...] [...] Now, as a recap we know that the Permanent Portfolio holds four core assets: [...]

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