Search found 715 matches

by FinanceFun
Fri Nov 09, 2012 9:55 am
Forum: Investing - Theory, News & General
Topic: [looking for tax advantaged space]
Replies: 18
Views: 3271

Re: Taxmagedon - Where to hide!

Sensationalism sells. Just look at view count after 1 day. :) And its the language of my generation - something I have been banned for here before since the old folks who moderate have no tolerance for the way my generation talks. lol
by FinanceFun
Thu Nov 08, 2012 4:35 pm
Forum: Investing - Theory, News & General
Topic: Fess up, Bogleheads - what is your portfolio?
Replies: 78
Views: 10045

Re: Fess up, Bogleheads - what is your portfolio?

Straight from my IPS:


• US Total Stock Market – 23% (VTI, VV)
• US Small Cap Value – 12% (IJS, VBR)
• REIT – 10% (VNQ)
• International Large Cap –12% (VEU, VXUS)
• International Small Cap Value – 6% (VSS)
• Emerging Market Equities – 12% (EEM, VWO)
• Intermediate Term Bond – 15% (PTTRX, BND, EE-Bonds, BSV, VWITX)
• Inflation Bonds – 5% (iBonds, TIP)
• Short Tem – 5% (BSV)

I am no more then 1% off on any of these, and less than 0.6% off of my target 75/25 base allocation.
by FinanceFun
Thu Nov 08, 2012 1:29 pm
Forum: Investing - Theory, News & General
Topic: Why is holding LT Treasury fund shares dangerous?
Replies: 15
Views: 2624

Re: Why is holding LT Treasury fund shares dangerous?

For every %1 rise in interest rates, a bond fund/index will LOSE its duration in NAV.

BSV (Short term) - 2.68 duration, will lose 2.68% for every 1% rise in rates
BND (intermediate term) - 5.12 duration, will lose 5.12% for every 1% rise in rates
VGLT (Long term) - 16.4 duration, will lose 16.4% for every 1% rise in rates
EDV (Extended duration) - 24.5 duration, will lose 24.5% for every 1% rise in rates
by FinanceFun
Thu Nov 08, 2012 1:20 pm
Forum: Investing - Theory, News & General
Topic: [looking for tax advantaged space]
Replies: 18
Views: 3271

[looking for tax advantaged space]

[trolling thread title changed by admin alex] **************** Updated ******************** Making adjustments per feedback. The purpose is to identify account types and limits for Tax Advantaged growth of assets. So things like tax loss harvesting is not applicable. Tax Year 2013 For an employed individual: - 401K/403B - $17,500 - IRA - $5,500 - iBonds - $10,000 - EEBonds - $10,000 - HSA $3,250 individual, $6,450 family If government worker, 457b - $17,500 If with child and wanting 529 add: $14,000 per child, per parent (aggregate caps apply) ---- AND iBonds: $10,000, EEBonds: $10,000 per child. Set up a Trust - $10,000 iBonds, $10,000 EE-Bonds If small business or self employed, the 401k can max out at $50,000 per individual 401k rules. ...
by FinanceFun
Wed Nov 07, 2012 11:43 am
Forum: Personal Investments
Topic: Annoying... [waiting for rebalancing target]
Replies: 4
Views: 867

Re: Annoying...

livesoft wrote:Do not forget that an RBD requires a drop of at least 2.5% which does not really appear to be happening except maybe for IJS.

And didn't everybody rebalance on September 14th?
It didnt trigger my REIT rebalance back then. Only happened today. Which I like very much. If I allowed myself free will within my IPS, I would have wanted to make that exact move (and maybe some bonds too).
by FinanceFun
Wed Nov 07, 2012 11:28 am
Forum: Personal Investments
Topic: Annoying... [waiting for rebalancing target]
Replies: 4
Views: 867

Re: Annoying...

Ooops. I lied. My sub-AA trigger to move from REIT to US Stock got hit! YAY!!!!!
by FinanceFun
Wed Nov 07, 2012 11:19 am
Forum: Personal Investments
Topic: Annoying... [waiting for rebalancing target]
Replies: 4
Views: 867

Annoying... [waiting for rebalancing target]

Looking like a RBD. Wanting to pull the trigger on a rebalance... Haven't hit my rebalance band. :annoyed I guess I just have to wait it out.
by FinanceFun
Thu Oct 25, 2012 8:09 am
Forum: Personal Investments
Topic: Any Major concerns with using TBM and PTTRX and VFIDX?
Replies: 10
Views: 1633

Re: Any Major concerns with using TBM and PTTRX and VFIDX?

Max out iBonds. One of the only "free-lunch's" out there.
by FinanceFun
Sun Oct 21, 2012 9:15 pm
Forum: Personal Finance (Not Investing)
Topic: Total Net Worth approach to the efficient frontier
Replies: 26
Views: 2676

Re: Total Net Worth approach to the efficient frontier

You are obviously trolling. You are also fabricating the positions of Graham and Bogle. I guess the head boglehead admin and e Wall Street journal must be lying. All it took was a simple google search. http://www.bogleheads.org/forum/viewtopic.php?p=1445536 ://online.wsj.com/article/SB10000872396390444592704578064422164043676.html "Taking Social Security into account can also affect how much investment risk you are comfortable with. John Bogle, the founder of Vanguard Group, has long maintained that Social Security should be considered as part of a bond allocation, which means a person could allocate a greater portion of his retirement portfolio to stocks." Keep digging... China can't be far. You're being illogical. The question ...
by FinanceFun
Sun Oct 21, 2012 5:04 pm
Forum: Investing - Theory, News & General
Topic: Reason for REIT Outperformance
Replies: 8
Views: 2007

Re: Reason for REIT Outperformance

The case for REIT. I have 13% of my AA in VNQ. 1 - TSM does not adequately reflect the contribution of real estate to GDP. So for those who want to reflect the real economy, TSM only strategies look like a bet against real estate. 2 - Diversification. For most of history, REIT's have had stock like performance, but have had a diversification benefit due to their correlations to TSM. Some here point to the recent real estate induced bubble, and subsequent bust, to claim that this correlation benefit is a thing of the past. I believe that the recent history is more a function of cheap money driving the bubble/bust cycle, and that the diversification benefit will reappear as real estate reverts to its mean relative to GDP. 3 Inflation protecti...
by FinanceFun
Sun Oct 21, 2012 4:26 pm
Forum: Personal Finance (Not Investing)
Topic: Total Net Worth approach to the efficient frontier
Replies: 26
Views: 2676

Re: Total Net Worth approach to the efficient frontier

I admit it, I'm a novice investor, but I'm having a lot of trouble accepting this concept of counting illiquid assets as FI. If I can't rebalance with it, then it is not actionable and IMO should not be counted. The most logical, actionable, considerations of SS I've read have been: (1) Consider it to be a reduction in your FI needs---to delay going broke. (2) Consider it to be an inflation-indexed delayed annuity taken at age 70---to delay going broke. As for my house? I'm not going to sell it (or get a reverse mortgage) to rebalance my investments as that just unnecessarily complicates things---too much action, too little return---for a ratio on paper. If 75/25 is my desired AA, then so be it. Only my opinion matters. I don't need to fud...
by FinanceFun
Sun Oct 21, 2012 3:03 pm
Forum: Personal Finance (Not Investing)
Topic: Total Net Worth approach to the efficient frontier
Replies: 26
Views: 2676

Re: Total NW approach to the efficient frontier

I think John Bogle attempts to give broad guidance, with examples but the examples aren't the guidance itself. I think he said that you should move to less volatile assets as you grow older and suggested "age in bonds" as a rough idea. When it was pointed out to him that this would tilt people's portfolios too much towards bonds, he said that one should consider other sources of non-volatile income such as Social Security and pensions. I can't find anywhere he ever said to calculate the NPV of Social Security, much less how to do it, or, for that matter, how to include it in asset allocation calculations. In any case, the NPV calculation of the value of a pension or Social Security requires estimating the life expectency of the r...
by FinanceFun
Sun Oct 21, 2012 2:56 pm
Forum: Personal Finance (Not Investing)
Topic: Total Net Worth approach to the efficient frontier
Replies: 26
Views: 2676

Re: Total Net Worth approach to the efficient frontier

555 wrote:You are obviously trolling. You are also fabricating the positions of Graham and Bogle.
I guess the head boglehead admin and e Wall Street journal must be lying. All it took was a simple google search.

http://www.bogleheads.org/forum/viewtopic.php?p=1445536

http://online.wsj.com/article/SB1000087 ... 43676.html

"Taking Social Security into account can also affect how much investment risk you are comfortable with. John Bogle, the founder of Vanguard Group, has long maintained that Social Security should be considered as part of a bond allocation, which means a person could allocate a greater portion of his retirement portfolio to stocks."

Keep digging... China can't be far.
by FinanceFun
Sun Oct 21, 2012 1:50 pm
Forum: Personal Finance (Not Investing)
Topic: Total Net Worth approach to the efficient frontier
Replies: 26
Views: 2676

Re: Total NW approach to the efficient frontier

Things become much simpler if you limit asset allocation calculations to just liquid investments. Here's why: 1. It's very, very difficult to compute the present value of things like Social Security and pensions. To begin with, there is setting up the basic model. You have to worry about things like spousal benefits, dependent benefits, and survivor benefits. In the case of pension, you have to worry about vesting periods and various kinds of thresholds. Then, you have to so the actual calculations which involve life expectancy tables and assumptions about internal rates of return. 2. Asset allocation practice requires rebalancing to your target. If you include things like your house and your pension, what do you do when a stock market cra...
by FinanceFun
Sun Oct 21, 2012 1:41 pm
Forum: Personal Finance (Not Investing)
Topic: Total Net Worth approach to the efficient frontier
Replies: 26
Views: 2676

Re: Total NW approach to the efficient frontier

And how does future salary relate to a ratio view of your personal balance sheet? That's for you to figure out. You were the one bringing up the idea of a more holistic approach. But you left a gaping hole. Anyway, there is nothing new in these ideas, and they've been discussed many times on this forum. But however you approach it, it should at least be self-consistent. I don't agree with your points that future salary belongs in a balance sheet ratio. So that's on you, not I, to figure out. You include future Social Security income, but not future salary. That's ridiculous. This conversation is a waste of time. What a joke. Challenge a Ballance sheet ratio with an income statement line item, then when challenged to defend run away in a ta...
by FinanceFun
Sun Oct 21, 2012 11:59 am
Forum: Personal Finance (Not Investing)
Topic: Total Net Worth approach to the efficient frontier
Replies: 26
Views: 2676

Re: Total NW approach to the efficient frontier

555 wrote:
FinanceFun wrote:And how does future salary relate to a ratio view of your personal balance sheet?
That's for you to figure out. You were the one bringing up the idea of a more holistic approach. But you left a gaping hole.

Anyway, there is nothing new in these ideas, and they've been discussed many times on this forum. But however you approach it, it should at least be self-consistent.
I don't agree with your points that future salary belongs in a balance sheet ratio. So that's on you, not I, to figure out.
by FinanceFun
Sun Oct 21, 2012 11:40 am
Forum: Personal Finance (Not Investing)
Topic: Total Net Worth approach to the efficient frontier
Replies: 26
Views: 2676

Re: Total NW approach to the efficient frontier

555 wrote:
FinanceFun wrote:
555 wrote:You forgot the bigget elephant in the room, human capital.
Would that not be implied? You start with a high NPV for SS, indicating that you need to add risk when young to balance the equation. As you get older and your portfolio is more substantial, then you pair risk as NPV of SS becomes less impactfull.
It doesn't make sense to consider future SS, but not future salary.
And how does future salary relate to a ratio view of your personal balance sheet?
by FinanceFun
Sun Oct 21, 2012 10:54 am
Forum: Personal Finance (Not Investing)
Topic: Total Net Worth approach to the efficient frontier
Replies: 26
Views: 2676

Re: Total NW approach to the efficient frontier

555 wrote:You forgot the bigget elephant in the room, human capital.
Would that not be implied? You start with a high NPV for SS, indicating that you need to add risk when young to balance the equation. As you get older and your portfolio is more substantial, then you pair risk as NPV of SS becomes less impactfull.
by FinanceFun
Sun Oct 21, 2012 10:52 am
Forum: Personal Finance (Not Investing)
Topic: Total Net Worth approach to the efficient frontier
Replies: 26
Views: 2676

Re: Total NW approach to the efficient frontier

First we start with the idea from Ben Graham, Jake Bogle, and others, that a 50% allocation to equities and a 50% allocation to fixed income is optimally placed on the efficient frontier. There is a great deal of detail on why this is in this forum and I wont go into it here. I didn't read the rest of your post as this point is not correct. An efficient frontier portfolio is anything from the MVP (minimum variance portfolio), i.e. risk/ return graph where the curve is bowed as much as it can be to the left (minimum volatility), to the highest returning asset allocation, i.e. furthest point to the top right. Anywhere along there is considered efficient. Since we don't know returns going into the future of ANY asset class you are just guessi...
by FinanceFun
Sun Oct 21, 2012 7:55 am
Forum: Personal Finance (Not Investing)
Topic: Total Net Worth approach to the efficient frontier
Replies: 26
Views: 2676

Re: Total NW approach to the efficient frontier

johnny72 wrote:The only impression I got from reading your entire post was that you wanted an excuse to have a very large allocation toward equities so you sat down and came up with one.
There was no pre-determination of outcome. Take it as face value, and avoid false assumptions. Thanks.

For the record, I am age - 8 in bonds.
by FinanceFun
Sun Oct 21, 2012 7:31 am
Forum: Personal Finance (Not Investing)
Topic: Total Net Worth approach to the efficient frontier
Replies: 26
Views: 2676

Total Net Worth approach to the efficient frontier

************** The problem I am seeking to solve is the disposition of primary residence equity and emergency fund within a single balance sheet ratio. I adopted Jack Bogles advocated position, then added these two disputed areas. I included justifications for my changes and examples of how this ratio can bevaluable in decision making. Hard stop. *********** Having been around here for a while, and being voracious reader, I have seen most questions about investing and personal finance answered with a degree of unanimity. Outliers clearly exist, especially when talking about theory and slice n dice - the FF (Fama/French) 3 factor model constant debate comes to mind. But decisions on these outliers are minutia. Nearly meaningless in the face ...
by FinanceFun
Fri Oct 19, 2012 9:31 am
Forum: Personal Investments
Topic: Absolute Return Portfolio
Replies: 19
Views: 2107

Re: Absolute Return Portfolio

Of course they are pushing it heavily. They are hitting you up for HUGE fee's, astronomical in fact, and so there is plenty of commissions incentive for them to sell it to you. It has NOTHING to do with your sister-in-laws best interest, and EVERYTHING to do with the paycheck of the slime-balls pushing this stuff on her.

RUN AWAY! FAST!

:shock:
by FinanceFun
Fri Oct 19, 2012 8:00 am
Forum: Personal Investments
Topic: How do you fund your... [IRA and I-Bonds]
Replies: 25
Views: 2728

Re: How do you fund your...

gkaplan wrote:Neither poll option is appropriate in my circumstances.
what would be. Happy to add options that i did not think of.
by FinanceFun
Fri Oct 19, 2012 7:58 am
Forum: Non-US Investing
Topic: Permanent Portfolio in Europe/Germany
Replies: 70
Views: 15303

Re: Permanent Portfolio in Europe/Germany

CASH (25%) 25% on a saving account at 2% nominal annual return Cash does not earn 2%. If you are lucky, maybe 1%. In a savings account, 0.5%. So re-calibrate expectations here. I hate to move so far back up the thread, but I need to make one comment about this post and PP cash. One of the suggested tweaks that I have long advocated for PP investors is to consider using U.S. I Series savings bonds for a portion of the cash holdings in the PP. U.S. savings bonds meet all the requirements for PP cash--they are issued by the U.S. government and are full faith and credit forms of debt. For PP cash purposes, though, I-Bonds do some interesting things, and right now they provide a higher yield than the 10 year treasury bond is providing, and do s...
by FinanceFun
Fri Oct 19, 2012 7:54 am
Forum: Personal Investments
Topic: How do you fund your... [IRA and I-Bonds]
Replies: 25
Views: 2728

How do you fund your... [IRA and I-Bonds]

I have historically funded from income. But I am thinking of changing to contribute from taxable on the first of the year, using BSV or others low volatility holding instrument.
by FinanceFun
Thu Oct 18, 2012 2:14 pm
Forum: Investing - Theory, News & General
Topic: The Permanent Portfolio -- A Gem
Replies: 51
Views: 13856

Re: Gold in "The Permanent Portfolio"

thebogledude: My collection of Investment Gems does not "endorse" gold. Boglehead William Bernstein wrote an excellent review of The Permanent Portfolio on Amazon and he specifically mentioned the part about gold. This is what Bill wrote: First, I need to get my own personal biases out in the open: I think that the Harry Browne Permanent Portfolio (HBPP) is a highly unconventional but effective low-risk, low-return portfolio. I also believe that very few of its new fans will have the long-term discipline to stick with it when two of its riskiest and least conventional components, long Treasuries and gold, underperform, as they inevitably must at some point. I'm not speculating in a vacuum here: the HBPP was similarly quite popula...
by FinanceFun
Thu Oct 18, 2012 9:39 am
Forum: Investing - Theory, News & General
Topic: Harry Browne’s Permanent Portfolio
Replies: 130
Views: 21635

Re: Harry Browne’s Permanent Portfolio

Craigr, thanks so much!! I have to read this book, I'm definitely going to pick-it up this weekend. If I do the PP, I would have to do it outside of my 401K because we do not have a Gold option. I appreciate the fact that you explained it so easily. In the book we go into 401(k) implementation options, and there are a couple of wrinkles of which you may not be aware that might be helpful to you in implementing the PP with 401(k) balances making up a significant part of your savings. 401(k) plan work is what I do during the day to pay the bills, so this is an area I have spent a lot of time thinking about in the context of the PP and we tried to address it as fully as possible in the book. If you decide to read the book, keep an eye out for...
by FinanceFun
Wed Oct 17, 2012 5:08 pm
Forum: Non-US Investing
Topic: Permanent Portfolio in Europe/Germany
Replies: 70
Views: 15303

Re: Permanent Portfolio in Europe/Germany

The risk is not in losing 50%. PP cuts off the fat tail risk well. The risk is a decade of negative real returns, and the impact that all those paper cuts have in accumulation.

Fact is 50% of the PP has been in a raging bull market (long bonds, gold), and it is less likely that that bull market continues then reverses. A headwinds from gold and long term tres has the very real possibility if negative real returns.

If you have all the money you need for your goals, PP makes sense. If you need real returns to meet your goals, it makes far less sense.

Would mediumtex and craigr agree?
by FinanceFun
Wed Oct 17, 2012 7:39 am
Forum: Investing - Theory, News & General
Topic: The Permanent Portfolio -- A Gem
Replies: 51
Views: 13856

Re: The Permanent Portfolio -- A Gem

The Permanent Portfolio Fund gives you bang for the buck if gold is in a bull market. If not, the fund hardly appreciates. Also, the expense ratio of 0.71% is rather high for what amounts to a passive fund. All the manager seeems to do is rebalance the AA. Easy money.... for the manager. It's simple enough to build it yourself with very low expenses. It cuts off the fat tail risk, but is likely to put-put along near inflation without a tailwind from gold and long treasuries. Gold is well above its historical mean. Long treasuries are at an all time high (or low if looking at yield). For someone in retirement or with no need for real returns, it could be appropriate, as could a number of lazy style portfolios. What irks me about this PP hoo...
by FinanceFun
Tue Oct 16, 2012 3:16 pm
Forum: Non-US Investing
Topic: Permanent Portfolio in Europe/Germany
Replies: 70
Views: 15303

Re: Permanent Portfolio in Europe/Germany

For others, though, I think that they have found the PP to be a good tool for meeting their investment objectives. What investment objectives? Capital preservation and consistently positive inflation-adjusted returns. I agree with Capital Preservation. I do not agree with the inflation-adjusted returns. Cash will underperform, Bonds will likely underperform, and Gold and Equities are volatile. Gold has deviated to the expensive side of the historical mean, while equities have deviated to the cheap side of historical p/e. So those positive returns will rely on one expensive volatile asset, and one cheaper volatile asset, with a drag of 50% of the portfolio. Good luck! Sometimes people sort of see what they want to see in these discussions. ...
by FinanceFun
Tue Oct 16, 2012 2:55 pm
Forum: Non-US Investing
Topic: Permanent Portfolio in Europe/Germany
Replies: 70
Views: 15303

Re: Permanent Portfolio in Europe/Germany

Interest in a gold heavy portfolio when it was cheap (before its run-up over the last few years) was about as widespread as a natural gas and Japanese stock heavy portfolio is today. Buy low, sell high. That's what the PP does. It buys low and sells high in a mechanical fashion that looks brilliant in retrospect but often looks very strange as it is happening. Well of course the strategy is brillant in retrospect - those are the only ones that get discussed excitedly on internet forums. Unfortunately those are also the ones most likely to be overvalued today. In this example, 3/4 of the fund assets (gold, bonds, cash) are quite expensive by historical standards. What's cheap today is what should be exciting, not what was cheap yesterday. S...
by FinanceFun
Tue Oct 16, 2012 2:53 pm
Forum: Non-US Investing
Topic: Permanent Portfolio in Europe/Germany
Replies: 70
Views: 15303

Re: Permanent Portfolio in Europe/Germany

For others, though, I think that they have found the PP to be a good tool for meeting their investment objectives. What investment objectives? Sometimes people sort of see what they want to see in these discussions. If a person doesn't want to see the finer points concerning the PP, I can't make them see them, but I can point to the actual returns that the strategy has provided, and they have averaged around 9.5% for the last 40 years. Past performance is the least reliable predictor of future returns. Seems to me I am the one arguing the finer points, and you are the one saying "look if you invested in tulips from 1620 - 1660 you would be worth more then Bill Gates!" But maybe I take your quotes to literal? Is the PP about to st...
by FinanceFun
Tue Oct 16, 2012 2:19 pm
Forum: Non-US Investing
Topic: Permanent Portfolio in Europe/Germany
Replies: 70
Views: 15303

Re: Permanent Portfolio in Europe/Germany

After running my own PP for several years, I have become mostly willy-resistant. I just let the PP do its thing and I do mine. This is a commentary on buy-hold-rebalance, and has nothing to do with PP. You could just as easily have a portfolio of pork bellies and rabbits feet, and still make the same comment. Your other post is full of cherry picked time frames "gold doesn't look frothy when you look at it over 10 years," and full of recentcy bias... Unless of course you think long term treasuries are going to replicate the returns they gained going from ~18% to 3% over 30 years, and that gold will continue its Tulip-like run of the last 10 year - and ignore all the rest of gold history which suggests gold follows inflation with ...
by FinanceFun
Tue Oct 16, 2012 11:09 am
Forum: Personal Consumer Issues
Topic: Anyone ever successfully live in an "asbestos house" guilt
Replies: 17
Views: 2664

Re: Anyone ever successfully live in an "asbestos house" gui

So you want to "band aid" over an environmental hazard, assume you performed the removal correctly without training or proper equipment, and pass the house on to a new owner without any validation that the environmental hazard has been cleaned - and with full knowledge that this hazard has already claimed 1 life.

All to save $25k.

I guess we know how much you value the lives of others. < $25k by my math.
by FinanceFun
Tue Oct 16, 2012 10:28 am
Forum: Non-US Investing
Topic: Permanent Portfolio in Europe/Germany
Replies: 70
Views: 15303

Re: Permanent Portfolio in Europe/Germany

I'm a fan of the PP concept and own some gold ETF. But the idea of buying and hoarding gold coins and gold bars in the amount advised by the PP kinda gives me the willys. I'm old enough to remember back in the 1970s, when the price of everything was going up and up, a guy living in an upscale subdivision who dug up his backyard to bury a huge petrol tank to store his own diesel fuel for his diesel automobile. I can't help wondering what happened to the resale value of his property after the craziness ebbed. He coulda just bought energy stocks or oil futures instead... :oops: At least one of the PP assets should be giving you the willys at all times. If it didn't give you the willys there would be no mechanism to buy low and sell high. That...
by FinanceFun
Tue Oct 16, 2012 8:15 am
Forum: Non-US Investing
Topic: Permanent Portfolio in Europe/Germany
Replies: 70
Views: 15303

Re: Permanent Portfolio in Europe/Germany

So in summary: - I dont like gold as an investment, and for those who do the vast majority keep exposure to ~10% - Your equities are poorly diversified, focusing on mega-caps. Needs global diversification, and at least a market-weighting of the SmB and HmL factors. - Bond fund duration should be short if its loaded up with core-euro zone debt - Cash expectations need be revised downward Dear FinanceFun, Your remarks show that you have stumbled into this thread without being familiar with the concept of Harry Browne's permanent portfolio. Hello and welcome to this thread. :-) Here's a short overview: http://crawlingroad.com/blog/2008/12/18/the-permanent-portfolio-allocation/ If you are sceptical about the permanent portfolio (which is the n...
by FinanceFun
Tue Oct 16, 2012 6:45 am
Forum: Non-US Investing
Topic: Permanent Portfolio in Europe/Germany
Replies: 70
Views: 15303

Re: Permanent Portfolio in Europe/Germany

M - I dont post much here anymore, since the moderators are ... lets say a bit zealous... But I do read for my own edification. I am making an exception here as I see a number of major flaws in your plan that need highlighting. Hi, As I recently received some requests via PM, I would like to give you all an update on the final composition of my European Permanent Portfolio. The portfolio is completely built on ETF/ETCs (except for the cash part) and looks like this: GOLD (25%) 25% on db Physical Gold Euro Hedged ETC (DE000A1EK0G3) There have been a number of debates on Gold. Personally, I dont invest in pretty yellow rocks, preferring legally obliged cash flows or earnings. Many here would differ, but VERY few would be at 25%. Most would ca...
by FinanceFun
Fri Sep 28, 2012 8:12 am
Forum: Investing - Theory, News & General
Topic: Investment Policy Statement
Replies: 9
Views: 1565

Re: Investment Policy Statement

Just one thing about your savings policy - as income increases, your tax expense will most certainly increase as well, and the rate of increase may be higher than you currently expect. Life events, like a home purchase, marriage, having a kid will all impact your tax expense and savings rate. Yup. That adds volatility to my picture. But its not the most volatile factor. My income is highly variable (between $180k and $400k per year), so the variability in savings rate, tax rate, and aggregate savings dollars is big. My solution has been to target a 30% savings rate, and maintain expenses at a point where I can still hit that rate at my lowest expected income. This is why I ended up with 55% gross savings rate last year, and ~52% this year ...
by FinanceFun
Fri Sep 28, 2012 8:08 am
Forum: Investing - Theory, News & General
Topic: Investment Policy Statement
Replies: 9
Views: 1565

Re: Investment Policy Statement

Added this for survivability in the Asset Allocation section: In the event that others are managing this portfolio, the Detailed Target Allocation will be as follows: Stocks : US Total Stock Market (VTI) will be 70% of the Base Target Allocation for Equities / International Total Stock Market (VEU)will be 30% of the Base Target Allocation for Equities Fixed Income : BND will be 70% of the Base Target Allocation for Fixed Income / iBonds will be 30% of the Base Target Allocation for Fixed Income Example: If the Base Target Allocation is 50/50. Then for the 50% of investment dollars allocated to equities, 70% of those investment dollars will be held in US Total Stock Market (VTI) and 30% of those funds will be in International Total Stock Mar...
by FinanceFun
Fri Sep 28, 2012 7:37 am
Forum: Investing - Theory, News & General
Topic: Investment Policy Statement
Replies: 9
Views: 1565

Re: Investment Policy Statement

Draft 2: Made the lexicon easier to read. Added a change control policy to more tightly restrict emotional changes. Added a Savings policy to depict income flows to investments. Thoughts? Investment Philosophy I follow a small number of simple investment principles that have been shown over time to produce risk-adjusted returns far greater than those achieved by the average investor. Many of these ideas are distilled from Nobel prize-winning financial economics research on topics like Modern Portfolio Theory and the Capital Asset Pricing Model. • Invest Early and Often • Never Bear too much, nor too little risk • Diversify • Never try to time the market • Keep costs low • Minimize taxes • Stay the course Change Control Policy This plan will...
by FinanceFun
Fri Sep 28, 2012 6:53 am
Forum: Investing - Theory, News & General
Topic: Investment Policy Statement
Replies: 9
Views: 1565

Re: Investment Policy Statement

To respond to the questions:

- I am 33
- I currently follow this policy statement (just newly written) and have a mid-six figure portfolio
- We maintain a budget
- We save 35% - 55% of our gross income annually
- A portion of the house savings will come from the 80/20. A portion from checking. I can take an 80% hit to equities and still TLH, sell bonds in tax advantaged for equities, and easily make the 20% down. So I don't segregate entirely.
- The agressiveness of my allocation is based on ability to take risk. At 33 years old, with ~2x my salary in savings and a 35%-55% savings rate, I feel comfortable taking on more risk
by FinanceFun
Thu Sep 27, 2012 9:13 pm
Forum: Investing - Theory, News & General
Topic: Investment Policy Statement
Replies: 9
Views: 1565

Investment Policy Statement

All - Finally got around to drafting an initial investment policy statement. Borrowed much verbiage from the Wiki. Would like to solicit feedback. Investment Philosophy I follow a small number of simple investment principles that have been shown over time to produce risk-adjusted returns far greater than those achieved by the average investor. Many of these ideas are distilled from Nobel prize-winning financial economics research on topics like Modern Portfolio Theory and the Capital Asset Pricing Model. • Invest Early and Often • Never Bear too much, nor too little risk • Diversify • Never try to time the market • Keep costs low • Minimize taxes • Stay the course This plan will be reviewed annually to account for new objectives, changes in...
by FinanceFun
Sun Aug 05, 2012 11:27 am
Forum: Personal Investments
Topic: PTTRX (Pimco Total Return) vs TBM
Replies: 32
Views: 8724

PTTRX (Pimco Total Return) vs TBM

I have access to Pimco Total Return fund at a 0.46% ER, and a TBM at 0.06% ER. I have been leaning towards simply going with Pimco for the following reasons: - Exposure to international/EM bonds properly hedged for currency - Leverage being used to capitalize on short term borrowing rates to amplify returns - Better exposure to corporate bonds, and MBS - Limited exposure to Treasuries, hedging the interest rate risk of central banks In my mind, active management in the current global debt market situation - where intervention from governments is impeding efficient markets - makes sense IF the ER is close. Two questions: 1: Am I clearly wrong in my thought process? If so, how? 2: Would you invest in PTTRX at 0.46% ER or in TBM at 0.06%? Why?
by FinanceFun
Sat Aug 04, 2012 2:05 pm
Forum: Investing - Theory, News & General
Topic: You just WON the lottery [investing hypothetical]
Replies: 20
Views: 3367

You just WON the lottery [investing hypothetical]

And have a one time $100m chunk of change headed your way. What strategy would you use to:

- Take in the money (personal, Trust, divided among family)
- Invest the money (what would be your AA)
- Spend the money (what would you buy)
- Distribute the money (Charities, Family etc)
by FinanceFun
Sat Aug 04, 2012 7:08 am
Forum: Investing - Theory, News & General
Topic: International Equities - increasing or decreasing risk?
Replies: 112
Views: 10817

Re: International Equities - increasing or decreasing risk?

I do think that globalization is increasing positive correlations among equity markets. No data to back this up, but "feel" it's correct.
by FinanceFun
Fri Aug 03, 2012 3:18 pm
Forum: Personal Investments
Topic: Net Worth CAGR (KPI)
Replies: 10
Views: 2190

Re: Net Worth CAGR (KPI)

LH wrote:Internal rate of return is very easy to do on spreadsheet and is superior.
Would you mind elaborating? Again, this is NOT my strong suit. I am a strategist, and generally have people who take care of calculations/details... So I am rather inept. :oops:
by FinanceFun
Fri Aug 03, 2012 1:51 pm
Forum: Personal Investments
Topic: Net Worth CAGR (KPI)
Replies: 10
Views: 2190

Re: Net Worth CAGR (KPI)

Right now I am 16 days into the calculation. in that time my NW has grown 2.02%. The Net Worth CAGR is 57.81%.
by FinanceFun
Fri Aug 03, 2012 1:18 pm
Forum: Personal Investments
Topic: Net Worth CAGR (KPI)
Replies: 10
Views: 2190

Re: Net Worth CAGR (KPI)

#Cruncher wrote:
FinanceFun wrote:Net Worth CAGR = (Starting NW / Current NW)^(1/(Number of Days/365)))-1
A couple of errors in your formula:
  1. Starting & Current net worth are reversed.
  2. You have one too many right parentheses at the end.
It would also be simpler to write it as:
Net Worth CAGR = (Current NW / Starting NW) ^ (365 / Number of Days) - 1

Typo on the swap of Current / Starting. Thanks for catching it. I am not the best at math or excel.
by FinanceFun
Fri Aug 03, 2012 12:26 pm
Forum: Personal Investments
Topic: Other options besides Roth and 401K?
Replies: 39
Views: 5770

Re: Other options besides Roth and 401K?

People always miss:

EE-Bonds
by FinanceFun
Fri Aug 03, 2012 11:11 am
Forum: Personal Investments
Topic: Net Worth CAGR (KPI)
Replies: 10
Views: 2190

Net Worth CAGR (KPI)

Posted in the wrong forum previously.

For a long time I have been tracking the performance of my portfolio, and managing my AA. Separately I have been tracking savings rate. Then about two weeks ago I modified the spreadsheet I use to combine these two measures into a single Key Performance Indicator, Net Worth CAGR.

Net Worth CAGR = (Starting NW / Current NW)^(1/(Number of Days/365)))-1

Obviously this measure becomes more useful as time goes by, a short term look will be massively skewed... but to me it is a very interesting KPI to track.

Thought I would share.