Trying best to minimize country (USA) risk in my portfolio

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Lynx310650
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Trying best to minimize country (USA) risk in my portfolio

Post by Lynx310650 » Fri Jun 26, 2020 6:34 pm

I'll definitely try to stay within forum rules here, and I will be the first to admit I'm probably paranoid. But right now the thing that constantly keeps me up at night isn't economic risk as much as political/societal risk in the USA.

I've gotten some good advice so far which I appreciate, and I decided to take a ton of risk off by going 30% stock. All my portfolio is in VTINX. Today, I came upon the "All Weather Portfolio" :
40% long-term bonds
30% stocks
15% intermediate-term bonds
7.5% gold
7.5% commodities
and done some reading up on it. I'm considering it might be superior to VTINX for my purposes, but I also have some doubts. This portfolio appear to reduce the severity of downturns while giving up upside which is good for me, but doesn't that aspect come mostly from the low allocation to stocks which VTINX already has? In terms of inflation protection VTINX also has TIPS, and doesn't owning the entire stock market also give me some exposure to miners, commodities, etc? Would having 15% of my portfolio dedicated to gold/commodities (along with the additional fees of owning more funds over just VTINX) really make a huge difference?

The next couple of questions target more directly my concerns/fears currently. Without delving into politics, I think the nature of my questions/thinking may reveal my train of thought.

I feel the need to have some "get out of Dodge" options. I don't own any physical gold, but I was thinking of buying an amount (maybe 1 pound spread out into coins) that might enable to me to at least start over somewhere else if need be. I know friends that escaped Vietnam as refugees after the war and they all had gold on them that enabled them to get out and also get started in the USA. That's kind of the idea here. Would the best option here be to buy things like American Eagles and keep them in a safe deposit box? I live in a Condo so wouldn't feel particularly safe keeping them at home.

I have ties/connections to the following countries/regions: South Korea, China, and the Eurozone. I don't want to hold any physical foreign currency because I think gold would be enough to serve a similar purpose, but I'm wondering is it possible for a US citizen to open bank accounts in those places and hold local currency that way. I wouldn't mind holding maybe a couple months' worth of expenses in the local currency there, again, just in case.

Now, I know many of you will think I'm crazy/paranoid, and honestly I agree. I know this is probably overboard, but doing some or all of these things might give me some comfort and I also don't think it would really wreck my finances, as I'm not talking about converting all my assets to gold or crypto or anything that drastic. Also, you may get a sense of the things I'm concerned with that may happen in the USA. If you think there may be better ways to go about things OR that it would all be pointless because the USA holds such a dominant position in the global economy, I'm open to that argument as well.

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Gort
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Re: Trying best to minimize country (USA) risk in my portfolio

Post by Gort » Fri Jun 26, 2020 7:24 pm

Talk to a Vanguard personal adviser.

whereskyle
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Re: Trying best to minimize country (USA) risk in my portfolio

Post by whereskyle » Fri Jun 26, 2020 7:37 pm

Lynx310650 wrote:
Fri Jun 26, 2020 6:34 pm
I'll definitely try to stay within forum rules here, and I will be the first to admit I'm probably paranoid. But right now the thing that constantly keeps me up at night isn't economic risk as much as political/societal risk in the USA.

I've gotten some good advice so far which I appreciate, and I decided to take a ton of risk off by going 30% stock. All my portfolio is in VTINX. Today, I came upon the "All Weather Portfolio" :
40% long-term bonds
30% stocks
15% intermediate-term bonds
7.5% gold
7.5% commodities
and done some reading up on it. I'm considering it might be superior to VTINX for my purposes, but I also have some doubts. This portfolio appear to reduce the severity of downturns while giving up upside which is good for me, but doesn't that aspect come mostly from the low allocation to stocks which VTINX already has? In terms of inflation protection VTINX also has TIPS, and doesn't owning the entire stock market also give me some exposure to miners, commodities, etc? Would having 15% of my portfolio dedicated to gold/commodities (along with the additional fees of owning more funds over just VTINX) really make a huge difference?

The next couple of questions target more directly my concerns/fears currently. Without delving into politics, I think the nature of my questions/thinking may reveal my train of thought.

I feel the need to have some "get out of Dodge" options. I don't own any physical gold, but I was thinking of buying an amount (maybe 1 pound spread out into coins) that might enable to me to at least start over somewhere else if need be. I know friends that escaped Vietnam as refugees after the war and they all had gold on them that enabled them to get out and also get started in the USA. That's kind of the idea here. Would the best option here be to buy things like American Eagles and keep them in a safe deposit box? I live in a Condo so wouldn't feel particularly safe keeping them at home.

I have ties/connections to the following countries/regions: South Korea, China, and the Eurozone. I don't want to hold any physical foreign currency because I think gold would be enough to serve a similar purpose, but I'm wondering is it possible for a US citizen to open bank accounts in those places and hold local currency that way. I wouldn't mind holding maybe a couple months' worth of expenses in the local currency there, again, just in case.

Now, I know many of you will think I'm crazy/paranoid, and honestly I agree. I know this is probably overboard, but doing some or all of these things might give me some comfort and I also don't think it would really wreck my finances, as I'm not talking about converting all my assets to gold or crypto or anything that drastic. Also, you may get a sense of the things I'm concerned with that may happen in the USA. If you think there may be better ways to go about things OR that it would all be pointless because the USA holds such a dominant position in the global economy, I'm open to that argument as well.
I think you need to take a deep breath. VTINX is extremely well diversified, holding all kinds of stocks and bonds. It is appropriately designed to protect investors with low risk tolerance. It already gives you everything, albeit in smaller amounts, that you are considering adding except for commodities and gold. If you want to buy some gold, buy some. But I wouldn't sell a $1 of VTINX to do it, unless you are dissatisfied with its choice of bond holdings. Stick with your plan. You are already appropriately diversified for your apparently low risk tolerance.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle

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whodidntante
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Re: Trying best to minimize country (USA) risk in my portfolio

Post by whodidntante » Fri Jun 26, 2020 7:47 pm

Lynx310650 wrote:
Fri Jun 26, 2020 6:34 pm
I know friends that escaped Vietnam as refugees after the war and they all had gold on them that enabled them to get out and also get started in the USA. That's kind of the idea here. Would the best option here be to buy things like American Eagles and keep them in a safe deposit box? I live in a Condo so wouldn't feel particularly safe keeping them at home.
John Wick kept his gold pieces buried and concreted over in his house. So when somebody messed with his dog and his Mustang, he got the pick axe and started digging. Concrete is much cheaper than a safety deposit box, and the collapse of the economy might just close the bank.
Lynx310650 wrote:
Fri Jun 26, 2020 6:34 pm

I have ties/connections to the following countries/regions: South Korea, China, and the Eurozone. I don't want to hold any physical foreign currency because I think gold would be enough to serve a similar purpose, but I'm wondering is it possible for a US citizen to open bank accounts in those places and hold local currency that way. I wouldn't mind holding maybe a couple months' worth of expenses in the local currency there, again, just in case.

Now, I know many of you will think I'm crazy/paranoid, and honestly I agree. I know this is probably overboard, but doing some or all of these things might give me some comfort and I also don't think it would really wreck my finances, as I'm not talking about converting all my assets to gold or crypto or anything that drastic. Also, you may get a sense of the things I'm concerned with that may happen in the USA. If you think there may be better ways to go about things OR that it would all be pointless because the USA holds such a dominant position in the global economy, I'm open to that argument as well.
I'll be honest. I have no idea what you are talking about. I see no likely and preparation triggering threats that will lead to a total collapse of the US economy. To me, this would be something unforeseen.

Of course it sounds crazy until it happens. Venezuela used to be considered a prosperous country. Now, people who don't smoke would rather have cigarettes than money, because cigarettes are a better store of value.

When it comes to bugging out, gas is probably more useful than gold. You can keep 20-50 gallons or so and just cycle it to keep it fresh.

A US economic collapse [... OT comments removed by admin LadyGeek].

7eight9
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Re: Trying best to minimize country (USA) risk in my portfolio

Post by 7eight9 » Sat Jun 27, 2020 8:51 am

Lynx310650 wrote:
Fri Jun 26, 2020 6:34 pm
...
I feel the need to have some "get out of Dodge" options. I don't own any physical gold, but I was thinking of buying an amount (maybe 1 pound spread out into coins) that might enable to me to at least start over somewhere else if need be. I know friends that escaped Vietnam as refugees after the war and they all had gold on them that enabled them to get out and also get started in the USA. That's kind of the idea here. Would the best option here be to buy things like American Eagles and keep them in a safe deposit box? I live in a Condo so wouldn't feel particularly safe keeping them at home.
...
If things go south to the point where you are trying to "get out of Dodge" so to speak I wouldn't be so sure that you would necessarily be able to access your safe deposit box. 500g of gold coins doesn't take up all that much space. I suspect that you could find one or two real good hiding places in your condo where you could keep it.

Regarding which coins to purchase - another thought might be Krugerrands which are well known even in the United States.
I guess it all could be much worse. | They could be warming up my hearse.

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LadyGeek
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Re: Trying best to minimize country (USA) risk in my portfolio

Post by LadyGeek » Sat Jun 27, 2020 9:23 am

I removed some off-topic comments regarding US economic stability and one post on US political stability (from a non-US perspective). As a reminder, see: Non-actionable (Trolling) Topics
If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:
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Please stay focused on the investing aspects and state your concerns in a civil, factual manner.
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michaeljc70
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Re: Trying best to minimize country (USA) risk in my portfolio

Post by michaeljc70 » Sat Jun 27, 2020 1:59 pm

What is your age? I think you will be giving up significant upside with only 30% in stocks. Commodities tend to tank in a recession so I am not sure how that will help you. 40% in LT bonds puts you at a fair amount of risk in a rising rate environment. I think you are overreacting to recent short-term events and need to stay focused on the long term. You could also buy mostly foreign stocks if you are just concerned about the US (though I am not advising that).

Topic Author
Lynx310650
Posts: 105
Joined: Fri Sep 15, 2017 1:33 pm

Re: Trying best to minimize country (USA) risk in my portfolio

Post by Lynx310650 » Sat Jun 27, 2020 6:27 pm

michaeljc70 wrote:
Sat Jun 27, 2020 1:59 pm
What is your age? I think you will be giving up significant upside with only 30% in stocks. Commodities tend to tank in a recession so I am not sure how that will help you. 40% in LT bonds puts you at a fair amount of risk in a rising rate environment. I think you are overreacting to recent short-term events and need to stay focused on the long term. You could also buy mostly foreign stocks if you are just concerned about the US (though I am not advising that).
I'm in my late 30s.

I guess if I'm worried about risks to the USA holding long term bonds denominated in USD doesn't seem like a smart idea. Seems like I should focus more internationally. Thank you

MishkaWorries
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Re: Trying best to minimize country (USA) risk in my portfolio

Post by MishkaWorries » Sat Jun 27, 2020 6:34 pm

The first thing I would suggest is to diversify your passport holdings. Is there anyway you could get a passport form another country? What type of connections do you have to the foreign countries?

With a non US passport that opens up many more international banking options.
We plan. G-d laughs.

michaeljc70
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Re: Trying best to minimize country (USA) risk in my portfolio

Post by michaeljc70 » Mon Jun 29, 2020 5:17 am

Lynx310650 wrote:
Sat Jun 27, 2020 6:27 pm
michaeljc70 wrote:
Sat Jun 27, 2020 1:59 pm
What is your age? I think you will be giving up significant upside with only 30% in stocks. Commodities tend to tank in a recession so I am not sure how that will help you. 40% in LT bonds puts you at a fair amount of risk in a rising rate environment. I think you are overreacting to recent short-term events and need to stay focused on the long term. You could also buy mostly foreign stocks if you are just concerned about the US (though I am not advising that).
I'm in my late 30s.

I guess if I'm worried about risks to the USA holding long term bonds denominated in USD doesn't seem like a smart idea. Seems like I should focus more internationally. Thank you
What currency do you trust? Euros? Yuan? Rubles? Rupee? I wouldn't be surprised if the EU doesn't exist in 25 years. The largest country in Europe is paying negative rates on bonds. You want that? It is quite easy to invest in international bonds. The Vanguard target date funds includes those. There are international bond funds that don't hedge for currency.

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climber2020
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Re: Trying best to minimize country (USA) risk in my portfolio

Post by climber2020 » Mon Jun 29, 2020 6:16 am

I think a one fund portfolio is an excellent choice in this situation.

The thing I'd worry about the most with the "all weather portfolio" that you proposed is that you'll be tempted to tinker with it based on your gut instinct predicting events that may or may not come to pass. When turbulence arrives, will you be able to objectively rebalance all those asset classes to get back to target? We saw many examples just a few months ago of people bailing on their plans when things got rough.

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