Most Secure Way to Reasonable Hold PP Assets??

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

Post Reply
coinstar
Associate Member
Associate Member
Posts: 36
Joined: Mon Jan 05, 2015 8:02 pm

Most Secure Way to Reasonable Hold PP Assets??

Post by coinstar » Mon Jul 13, 2015 12:33 am

Heres a topic I haven't seen much discussed on in one cohesive thread. Assuming we decide the PP is perfect as-is, without tweaking allocations or juicing returns with different product mixes, how does it make the most sense to hold each asset in the most secure way possible with the lowest cost. In the sense of cost, I include complexity and cost of time and effort to maintain as well as any actual holding costs.

Heres some random thoughts to get this started:

1) Holding individual treasury bonds, individual treasury bills, and physical gold bullion is more secure than ETFs because you remove at least one layer of the counter party risk by holding directly.

2) Having assets at multiple institutions hedges you against temporary or permanent loss at that institution by splitting things up. So if your Vanguard account gets frozen or hacked, its only a portion of your overall assets. On the flip size, if you split your assets into 100 institutions with 1% in each, the headache of maintenance makes this cost prohibitive. How do you find the best balance?

3) Having more than $250k in a Solo 401k in the US is a risky proposition. Once assets reach that point, you must file an annual report to the IRS. One can only assume this is to facilitate confiscation of IRA assets exceeding $250k when things in the US become like Greece.

4) Having too much money in IRAs/401k can be risky overall as CraigR points out because of the general looming threat of wealth confiscation by government. One can easily see a "solution" to government shortfalls is to mandate all IRA assets above $X be turned into the government in exchange for a guaranteed government-backed retirement bond.

5) Gold bullion is the most complicated of all assets IMHO. You want physical but there's really no great place to put it. Chase Bank recently banned gold bullion (and cash) from safe deposit boxes and other banks will likely follow suit. Greece has frozen SDB access and will likely seize any gold in them. Having gold at home risks theft. You can get a safe, but even if you spend $1,000+ on a really good safe like for guns, it needs to be bolted into concrete to be secure. That basically rules out the ability for a renter and possibly condo-owner from securely storing gold at home. You can secure it at a specialized vault but there's counterparty risk. I think I'd rather have an ETF than a "vault service." The state of Texas recently voted (last month) to started their own depository for gold. I'm looking for a place to buy a home and settle down and if I choose Texas, this may be an option for at least some portion of the gold.

6) Equities would be best held as individual equities instead of ETFs due to counterparty risk and annual expense ratios. However, unless you have significant assets ($50MM+), you can't really buy enough individual stocks to match a good ETF and get good diversification. What I'm considering is getting one of the brokerages that offer 50 or 100 free trades each year, and selecting about 30 large cap stocks and buying equal amounts of each. That would be half of my PP equities. The other half would be an ETF. As long as the 30 stocks are in different industries, you'll get really good diversification and if you set dividends to reinvest, won't have any annual expenses. Biggest problem? Getting 30 different sets of voting and annual/quarterly shareholder reports in the mail. I only hold a few individual stocks and getting that crap in the mail really bothers me. I think I've gotten a dozen things from GTU in the last few months alone from the takeover issue. Second biggest problem is while your 30 stocks will be close to the index, it won't match it. So you'll be 1/2 percent up or down and then think you're a genius and decide to gamble away in the VP or you'll be down 1/2 percent and second guess yourself and sell all 30 and switch back to an ETF and have all sorts of transaction costs involved. Probably best to just hold ETFs for all of the equity portion, and possibly split across 2 or 3 different ones. Like Fidelity, Vanguard and Schwab.

7) Having stocks in a taxable account seems great from a tax perspective but also one of liquidity. If the government starts getting to the point of desperation, its easier to get the money out of your taxable brokerage than it is get it from your IRA/401k. CraigR discusses this on the forums.

8) Im torn on how to split and count assets between taxable, tax-deferred, and tax-exempt (Roth) retirement accounts. Some folks on here like a mini-PP in each. Since my goal is to has as much in tax-exempt and taxable as possible, and as little in tax-deferred as possible, I tend to put the cash in the tax-deferred 401k, and put the gold, stocks, and bonds in the Roth and taxable accounts. It's possible cash will beat out all other assets for a year or two or three but in the long run, it shouldn't. And if it does, so what? I still have a solid PP set up. But I think the likelihood is that it won't, so it seems to me cash in 401k, some stocks/bonds/gold ETFs in Roth, and gold coins and stocks held in taxable.
rickb
Executive Member
Executive Member
Posts: 762
Joined: Mon Apr 26, 2010 12:12 am

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by rickb » Wed Jul 15, 2015 2:16 pm

Here's my opinions for portfolios up to about $5M.

Gold - physical coins, insured, kept in a safe deposit box (multiple boxes at different banks).  If banks stop allowing gold in safe deposit boxes then gold is an issue.  IMO, home storage even in a safe cemented to the floor is crazy.  I haven't looked into private vaulting companies.  Some people here object to them because of the tracking error, but I think GTU and PHYS are fairly reasonable options (more reasonable than the ETFs because of how many moving parts the ETFs involve).

Stock - low cost mutual fund (not ETF)

LTT - individual bonds held either at Treasury Direct or a brokerage that doesn't charge for buying/selling (includes at least Vanguard and Fidelity).  Selling bonds at TD is kind of a pain (you have to transfer them to a brokerage) and also a pain for your heirs when you die (TD requires a Medallion stamp).

Cash - treasury backed MM (good luck finding one), individual bond ladder (or I-bonds) held at Treasury Direct or a brokerage, or if you must one of the ETFs like SHV or SHY

For rebalancing purposes it's quite handy to have stock/LTT/cash accounts all at a single brokerage or fund family (like Vanguard or Fidelity), although institutional diversification is a good idea.  With 4 accounts (two different banks for the gold, and stock/LTT/cash accounts at, say, both Vanguard and Fidelity) you can limit your exposure to any one institution to about 3/8 of your total.  Less is better, but there's definitely a tradeoff between convenience and how many accounts you have to deal with.
Libertarian666
Executive Member
Executive Member
Posts: 5994
Joined: Wed Dec 31, 1969 6:00 pm

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by Libertarian666 » Thu Jul 16, 2015 12:17 pm

rickb wrote: Here's my opinions for portfolios up to about $5M.

Gold - physical coins, insured, kept in a safe deposit box (multiple boxes at different banks).  If banks stop allowing gold in safe deposit boxes then gold is an issue.  IMO, home storage even in a safe cemented to the floor is crazy.  I haven't looked into private vaulting companies.  Some people here object to them because of the tracking error, but I think GTU and PHYS are fairly reasonable options (more reasonable than the ETFs because of how many moving parts the ETFs involve).
How about Global Gold? Yes, the expense ration is a bit painful (0.5% for reasonable amounts) but it solves the other problems, other than the obvious one of their turning out to be crooks, which I think is pretty unlikely.
rickb
Executive Member
Executive Member
Posts: 762
Joined: Mon Apr 26, 2010 12:12 am

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by rickb » Fri Jul 17, 2015 9:31 am

Libertarian666 wrote:
rickb wrote: Here's my opinions for portfolios up to about $5M.

Gold - physical coins, insured, kept in a safe deposit box (multiple boxes at different banks).  If banks stop allowing gold in safe deposit boxes then gold is an issue.  IMO, home storage even in a safe cemented to the floor is crazy.  I haven't looked into private vaulting companies.  Some people here object to them because of the tracking error, but I think GTU and PHYS are fairly reasonable options (more reasonable than the ETFs because of how many moving parts the ETFs involve).
How about Global Gold? Yes, the expense ration is a bit painful (0.5% for reasonable amounts) but it solves the other problems, other than the obvious one of their turning out to be crooks, which I think is pretty unlikely.
They look interesting - at least at first glance similar to allocated storage at Perth Mint, but significantly cheaper (Perth's allocated storage is 1% per year).  Perth Mint has been around longer and is government owned.

GoldMoney.com and BullionVault are also somewhat similar.
jsnikeris
Junior Member
Junior Member
Posts: 13
Joined: Wed Apr 15, 2015 3:34 pm

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by jsnikeris » Fri Jul 17, 2015 10:34 am

rickb wrote: Stock - low cost mutual fund (not ETF)
What's your reasoning for preferring mutual funds over ETFs?
rickb
Executive Member
Executive Member
Posts: 762
Joined: Mon Apr 26, 2010 12:12 am

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by rickb » Sat Jul 18, 2015 10:23 am

jsnikeris wrote:
rickb wrote: Stock - low cost mutual fund (not ETF)
What's your reasoning for preferring mutual funds over ETFs?
Mutual funds have fewer moving parts, and specifically their pricing mechanism is simpler.  The price of a mutual fund is the daily NAV.  The price of an ETF is whatever anyone is willing to pay for it - this tends to stay close to the NAV since the authorized participants can arbitrage any difference that comes up, but the price is not directly tied to the NAV.
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by vnatale » Fri Apr 10, 2020 6:57 pm

coinstar wrote:
Mon Jul 13, 2015 12:33 am
Heres a topic I haven't seen much discussed on in one cohesive thread. Assuming we decide the PP is perfect as-is, without tweaking allocations or juicing returns with different product mixes, how does it make the most sense to hold each asset in the most secure way possible with the lowest cost. In the sense of cost, I include complexity and cost of time and effort to maintain as well as any actual holding costs.

Heres some random thoughts to get this started:

1) Holding individual treasury bonds, individual treasury bills, and physical gold bullion is more secure than ETFs because you remove at least one layer of the counter party risk by holding directly.

2) Having assets at multiple institutions hedges you against temporary or permanent loss at that institution by splitting things up. So if your Vanguard account gets frozen or hacked, its only a portion of your overall assets. On the flip size, if you split your assets into 100 institutions with 1% in each, the headache of maintenance makes this cost prohibitive. How do you find the best balance?

3) Having more than $250k in a Solo 401k in the US is a risky proposition. Once assets reach that point, you must file an annual report to the IRS. One can only assume this is to facilitate confiscation of IRA assets exceeding $250k when things in the US become like Greece.

4) Having too much money in IRAs/401k can be risky overall as CraigR points out because of the general looming threat of wealth confiscation by government. One can easily see a "solution" to government shortfalls is to mandate all IRA assets above $X be turned into the government in exchange for a guaranteed government-backed retirement bond.

5) Gold bullion is the most complicated of all assets IMHO. You want physical but there's really no great place to put it. Chase Bank recently banned gold bullion (and cash) from safe deposit boxes and other banks will likely follow suit. Greece has frozen SDB access and will likely seize any gold in them. Having gold at home risks theft. You can get a safe, but even if you spend $1,000+ on a really good safe like for guns, it needs to be bolted into concrete to be secure. That basically rules out the ability for a renter and possibly condo-owner from securely storing gold at home. You can secure it at a specialized vault but there's counterparty risk. I think I'd rather have an ETF than a "vault service." The state of Texas recently voted (last month) to started their own depository for gold. I'm looking for a place to buy a home and settle down and if I choose Texas, this may be an option for at least some portion of the gold.

6) Equities would be best held as individual equities instead of ETFs due to counterparty risk and annual expense ratios. However, unless you have significant assets ($50MM+), you can't really buy enough individual stocks to match a good ETF and get good diversification. What I'm considering is getting one of the brokerages that offer 50 or 100 free trades each year, and selecting about 30 large cap stocks and buying equal amounts of each. That would be half of my PP equities. The other half would be an ETF. As long as the 30 stocks are in different industries, you'll get really good diversification and if you set dividends to reinvest, won't have any annual expenses. Biggest problem? Getting 30 different sets of voting and annual/quarterly shareholder reports in the mail. I only hold a few individual stocks and getting that crap in the mail really bothers me. I think I've gotten a dozen things from GTU in the last few months alone from the takeover issue. Second biggest problem is while your 30 stocks will be close to the index, it won't match it. So you'll be 1/2 percent up or down and then think you're a genius and decide to gamble away in the VP or you'll be down 1/2 percent and second guess yourself and sell all 30 and switch back to an ETF and have all sorts of transaction costs involved. Probably best to just hold ETFs for all of the equity portion, and possibly split across 2 or 3 different ones. Like Fidelity, Vanguard and Schwab.

7) Having stocks in a taxable account seems great from a tax perspective but also one of liquidity. If the government starts getting to the point of desperation, its easier to get the money out of your taxable brokerage than it is get it from your IRA/401k. CraigR discusses this on the forums.

8) Im torn on how to split and count assets between taxable, tax-deferred, and tax-exempt (Roth) retirement accounts. Some folks on here like a mini-PP in each. Since my goal is to has as much in tax-exempt and taxable as possible, and as little in tax-deferred as possible, I tend to put the cash in the tax-deferred 401k, and put the gold, stocks, and bonds in the Roth and taxable accounts. It's possible cash will beat out all other assets for a year or two or three but in the long run, it shouldn't. And if it does, so what? I still have a solid PP set up. But I think the likelihood is that it won't, so it seems to me cash in 401k, some stocks/bonds/gold ETFs in Roth, and gold coins and stocks held in taxable.
I love the near encyclopedic posts like this one. Full of excellent content while still asking thought provoking questions.

Vinny
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
User avatar
jalanlong
Executive Member
Executive Member
Posts: 829
Joined: Mon Jul 01, 2019 7:30 am

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by jalanlong » Sat Apr 11, 2020 6:47 pm

I am drawn to the idea of holding a basket of 30 individual stocks. But how do you go about doing it without bias slipping in? Either because you don’t like a specific company for whatever reason or you have a bad feeling about an industry etc. And once you start stock picking then you may deviate from the market. The last thing you want to do is have your hand-picked portfolio drop while the market is rising.
Kbg
Executive Member
Executive Member
Posts: 2815
Joined: Fri May 23, 2014 4:18 pm

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by Kbg » Sat Apr 11, 2020 8:01 pm

Be careful with this line of thought. If you randomly bought 30 stocks across the range of sectors and market caps the odds are extremely high you are going to get your performance clock cleaned by a large cap index. You DO need a methodology for stock purchase if going to 30 individual stocks.

Think of the S&P 500 as an American Corporate Fight Club...only the best, strongest companies get to be in the club and they have to stay that way to stay in the club. There is a reason the S&P 500 is really difficult to beat over extended periods of time.

Having noted the above, there are some pretty simple things that have outperformed the S&P 500 for as long as the index has been around but you have to be more engaged and actively manage. (Don't ask me what.)
tarentola
Senior Member
Senior Member
Posts: 100
Joined: Wed Aug 17, 2011 6:55 am

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by tarentola » Sun Apr 12, 2020 3:54 pm

Be careful with this line of thought. If you randomly bought 30 stocks across the range of sectors and market caps the odds are extremely high you are going to get your performance clock cleaned by a large cap index. You DO need a methodology for stock purchase if going to 30 individual stocks.
Kbg - I have to ruefully agree, from bitter experience. About five years ago I bought a portfolio of about 30 shares, mostly US, some UK and just two European (I am mostly a Euro investor and have a Euro PP). This is a dividend growth portfolio, and I put some effort into selecting the stocks and the spread across sectors. Five-year performance of my portfolio, dividends included: +12%, Dow +33%, MSCI Europe -12%. So I would have been better off with a US index - but not a European index.

Now that I have a pension for day-to-day expenses, I am less interested in dividend income and would be quite happy to rely on capital growth, so I am tempted to simplify life by cashing in the whole lot and replacing it with an index fund. I agree that the S&P 500 is hard to beat, like a Fight Club: natural selection operates and it contains the most successful companies, by definition. Hard to beat the most successful companies.
User avatar
Hal
Executive Member
Executive Member
Posts: 1349
Joined: Tue May 03, 2011 1:50 am

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by Hal » Sun Apr 12, 2020 5:16 pm

jalanlong wrote:
Sat Apr 11, 2020 6:47 pm
I am drawn to the idea of holding a basket of 30 individual stocks. But how do you go about doing it without bias slipping in? Either because you don’t like a specific company for whatever reason or you have a bad feeling about an industry etc. And once you start stock picking then you may deviate from the market. The last thing you want to do is have your hand-picked portfolio drop while the market is rising.
Suggest you read Benjamin Grahams book "The Intelligent Investor".
Especially the part on Defensive vs Enterprising Investors

https://www.youtube.com/watch?v=VJGxnsssCa8
tarentola
Senior Member
Senior Member
Posts: 100
Joined: Wed Aug 17, 2011 6:55 am

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by tarentola » Mon Apr 13, 2020 1:11 am

To continue from my previous post:

Even apparently safe companies are not immune from big losses. Tupperware: kitchen goods, household name. Mattel: children's toys including the famous Barbie and Ken. What could possibly go wrong? in the five years that I have owned them, quite a lot, apparently: -96% and -66% respectively. An oil major like Royal Dutch Shell: -42%. Utilities for widows and orphans: Centrica (former British Gas) -89%.

On the other hand, people are abandoning fast food, aren't they? McDonalds +120%. And retail is dying: Walmart +60% when I sold it last January. Financials are dangerous: Visa +73%.

For a PP or other multi-asset class investor, individual shares require more research, paperwork and decisions. Including the rebalancing dilemma: if shares are down, do you rebalance into the weakest or the strongest, and by how much to each? If shares are up, which do you sell and how much of each?

Dividends are much more stable than share prices. Individual dividend-paying shares could be a good idea for an investor who is content to passively take dividends and is not immediately concerned about capital value, like a landlord getting rent for a property. But for me as a PP investor, individual shares require lot of work for a result that is by no means guaranteed to beat the index.
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 4052
Joined: Sun Sep 16, 2012 5:28 pm

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by Kriegsspiel » Mon Apr 13, 2020 8:05 am

tarentola wrote:
Mon Apr 13, 2020 1:11 am
To continue from my previous post:

Even apparently safe companies are not immune from big losses. Tupperware: kitchen goods, household name. Mattel: children's toys including the famous Barbie and Ken. What could possibly go wrong? in the five years that I have owned them, quite a lot, apparently: -96% and -66% respectively. An oil major like Royal Dutch Shell: -42%. Utilities for widows and orphans: Centrica (former British Gas) -89%.

On the other hand, people are abandoning fast food, aren't they? McDonalds +120%. And retail is dying: Walmart +60% when I sold it last January. Financials are dangerous: Visa +73%.

For a PP or other multi-asset class investor, individual shares require more research, paperwork and decisions. Including the rebalancing dilemma: if shares are down, do you rebalance into the weakest or the strongest, and by how much to each? If shares are up, which do you sell and how much of each?

Dividends are much more stable than share prices. Individual dividend-paying shares could be a good idea for an investor who is content to passively take dividends and is not immediately concerned about capital value, like a landlord getting rent for a property. But for me as a PP investor, individual shares require lot of work for a result that is by no means guaranteed to beat the index.
The impression that I'm getting from everything in this post is "why not just buy a dividend ETF like Vanguard's VYM (and pay them a very small cut to do some managing) instead of individual companies?"
You there, Ephialtes. May you live forever.
tarentola
Senior Member
Senior Member
Posts: 100
Joined: Wed Aug 17, 2011 6:55 am

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by tarentola » Mon Apr 13, 2020 9:09 am

"why not just buy a dividend ETF like Vanguard's VYM (and pay them a very small cut to do some managing) instead of individual companies?"
Dividend ETFs are relatively new and have a rather undistinguished history. It seems that you get a considerably better return from holding the individual constituents oneself, as the ETFs tend to have frictional costs. See for example https://seekingalpha.com/article/431912 ... contender
And they don't beat the index. Compare the 5-year performances: VYM+10%, yield 2.93%; SPY+31%, yield 2.05%.
Kbg
Executive Member
Executive Member
Posts: 2815
Joined: Fri May 23, 2014 4:18 pm

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by Kbg » Mon Apr 13, 2020 1:11 pm

I'm a fan of the Nasdaq 100 for indexing and it is my choice for the PP.

Yes you do have to look past the performance issue during the tech bubble...other than that, it is clearly a better performing index than the S&P 500.
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by vnatale » Sun Oct 17, 2021 10:10 am

coinstar wrote:
Mon Jul 13, 2015 12:33 am



5) Gold bullion is the most complicated of all assets IMHO. You want physical but there's really no great place to put it. Chase Bank recently banned gold bullion (and cash) from safe deposit boxes and other banks will likely follow suit. Greece has frozen SDB access and will likely seize any gold in them. Having gold at home risks theft. You can get a safe, but even if you spend $1,000+ on a really good safe like for guns, it needs to be bolted into concrete to be secure. That basically rules out the ability for a renter and possibly condo-owner from securely storing gold at home. You can secure it at a specialized vault but there's counterparty risk. I think I'd rather have an ETF than a "vault service." The state of Texas recently voted (last month) to started their own depository for gold. I'm looking for a place to buy a home and settle down and if I choose Texas, this may be an option for at least some portion of the gold.




The above was written over six years ago.

Have any of you experienced the "bank not allowing gold in safety deposit boxes" trend?

I finally looked at the Terms & Conditions for Safety Deposit Boxes that my bank sent to me last April 2020 (but which were written August 2015) and the below is all it had to say about Prohibited Items:

"21. Prohibited Contents You shall not use the Safe Deposit Box, or permit it to be used, to hold any explosive, hazardous liquid, or offensive property, any property whose possession is prohibited by law or public regulation, or any property which may become a nuisance to the Bank or its other Renters. If we have reason to believe that such material is being stored in the Safe Deposit Box, we may forcibly open the Safe Deposit Box, remove and dispose of that material, with or without notice, at your expense."
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
johnnywitt
Senior Member
Senior Member
Posts: 147
Joined: Fri May 08, 2020 6:06 pm

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by johnnywitt » Wed Nov 03, 2021 5:08 pm

rickb wrote:
Fri Jul 17, 2015 9:31 am
Libertarian666 wrote:
rickb wrote: Here's my opinions for portfolios up to about $5M.

Gold - physical coins, insured, kept in a safe deposit box (multiple boxes at different banks).  If banks stop allowing gold in safe deposit boxes then gold is an issue.  IMO, home storage even in a safe cemented to the floor is crazy.  I haven't looked into private vaulting companies.  Some people here object to them because of the tracking error, but I think GTU and PHYS are fairly reasonable options (more reasonable than the ETFs because of how many moving parts the ETFs involve).
How about Global Gold? Yes, the expense ration is a bit painful (0.5% for reasonable amounts) but it solves the other problems, other than the obvious one of their turning out to be crooks, which I think is pretty unlikely.
They look interesting - at least at first glance similar to allocated storage at Perth Mint, but significantly cheaper (Perth's allocated storage is 1% per year).  Perth Mint has been around longer and is government owned.

GoldMoney.com and BullionVault are also somewhat similar.
I would have rather stored my Gold in Il Duce's Italy than in Modern day Australia Mate. At least Mussolini was honest about the Country's Fascism, Australia... not so much.

I honestly was 100% unaware of the requirement to have to report to the IRS my 401k, or IRA if over 250k. Common sense would dictate that this is the red line for a Bail In of some sort, a "Corralito" or some other nefarious "You Go Brandon" type of shenanigan's.
johnnywitt
Senior Member
Senior Member
Posts: 147
Joined: Fri May 08, 2020 6:06 pm

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by johnnywitt » Wed Nov 03, 2021 5:21 pm

rickb wrote:
Sat Jul 18, 2015 10:23 am
jsnikeris wrote:
rickb wrote: Stock - low cost mutual fund (not ETF)
What's your reasoning for preferring mutual funds over ETFs?
Mutual funds have fewer moving parts, and specifically their pricing mechanism is simpler.  The price of a mutual fund is the daily NAV.  The price of an ETF is whatever anyone is willing to pay for it - this tends to stay close to the NAV since the authorized participants can arbitrage any difference that comes up, but the price is not directly tied to the NAV.
Also, with a MF you don't have bid/ask spreads as well. On the other hand, it makes it harder to rebalance accurately because you don't know what you have until like 2 hrs after the Mkt close and then while you wait all day to rebalance something dramatic can happen to the market. Good and bad I guess like everything.
johnnywitt
Senior Member
Senior Member
Posts: 147
Joined: Fri May 08, 2020 6:06 pm

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by johnnywitt » Wed Nov 03, 2021 5:28 pm

rickb wrote:
Wed Jul 15, 2015 2:16 pm
Here's my opinions for portfolios up to about $5M.

Gold - physical coins, insured, kept in a safe deposit box (multiple boxes at different banks).  If banks stop allowing gold in safe deposit boxes then gold is an issue.  IMO, home storage even in a safe cemented to the floor is crazy.  I haven't looked into private vaulting companies.  Some people here object to them because of the tracking error, but I think GTU and PHYS are fairly reasonable options (more reasonable than the ETFs because of how many moving parts the ETFs involve).

Stock - low cost mutual fund (not ETF)

LTT - individual bonds held either at Treasury Direct or a brokerage that doesn't charge for buying/selling (includes at least Vanguard and Fidelity).  Selling bonds at TD is kind of a pain (you have to transfer them to a brokerage) and also a pain for your heirs when you die (TD requires a Medallion stamp).

Cash - treasury backed MM (good luck finding one), individual bond ladder (or I-bonds) held at Treasury Direct or a brokerage, or if you must one of the ETFs like SHV or SHY

For rebalancing purposes it's quite handy to have stock/LTT/cash accounts all at a single brokerage or fund family (like Vanguard or Fidelity), although institutional diversification is a good idea.  With 4 accounts (two different banks for the gold, and stock/LTT/cash accounts at, say, both Vanguard and Fidelity) you can limit your exposure to any one institution to about 3/8 of your total.  Less is better, but there's definitely a tradeoff between convenience and how many accounts you have to deal with.
PHYS is a Closed End Trust and does a poor job of tracking the spot price. Go watch Evidence Based Wealth (belangp) on YT and he demonstrates this
I sold my PHYS after watching this. I am not casting aspersions on Sprott here because maybe there is a place for a Gold Trust in a taxable brokerage acct. because allegedly you don't pay the collectibles tax rate, just long term capital gains like any other trust.
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by vnatale » Wed Nov 03, 2021 6:34 pm

johnnywitt wrote:
Wed Nov 03, 2021 5:08 pm



I honestly was 100% unaware of the requirement to have to report to the IRS my 401k, or IRA if over 250k. Common sense would dictate that this is the red line for a Bail In of some sort, a "Corralito" or some other nefarious "You Go Brandon" type of shenanigan's.


You are referring to this? It only applies to 401 (k)'s, not IRA's. And, whoever you set up the 401(k) with should have informed you of this requirement.

"The Internal Revenue Service (“IRS”) Form 5500-EZ is an annual information return that is required to be filed by every “One-Participant Plan” (owners and their spouses), also known as a Solo 401 (k) Plan, with plan asset value in excess of $250,000 as of December 31 of the previous tax year."
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
User avatar
mathjak107
Executive Member
Executive Member
Posts: 4456
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by mathjak107 » Thu Nov 04, 2021 2:58 am

johnnywitt wrote:
Wed Nov 03, 2021 5:28 pm
rickb wrote:
Wed Jul 15, 2015 2:16 pm
Here's my opinions for portfolios up to about $5M.

Gold - physical coins, insured, kept in a safe deposit box (multiple boxes at different banks).  If banks stop allowing gold in safe deposit boxes then gold is an issue.  IMO, home storage even in a safe cemented to the floor is crazy.  I haven't looked into private vaulting companies.  Some people here object to them because of the tracking error, but I think GTU and PHYS are fairly reasonable options (more reasonable than the ETFs because of how many moving parts the ETFs involve).

Stock - low cost mutual fund (not ETF)

LTT - individual bonds held either at Treasury Direct or a brokerage that doesn't charge for buying/selling (includes at least Vanguard and Fidelity).  Selling bonds at TD is kind of a pain (you have to transfer them to a brokerage) and also a pain for your heirs when you die (TD requires a Medallion stamp).

Cash - treasury backed MM (good luck finding one), individual bond ladder (or I-bonds) held at Treasury Direct or a brokerage, or if you must one of the ETFs like SHV or SHY

For rebalancing purposes it's quite handy to have stock/LTT/cash accounts all at a single brokerage or fund family (like Vanguard or Fidelity), although institutional diversification is a good idea.  With 4 accounts (two different banks for the gold, and stock/LTT/cash accounts at, say, both Vanguard and Fidelity) you can limit your exposure to any one institution to about 3/8 of your total.  Less is better, but there's definitely a tradeoff between convenience and how many accounts you have to deal with.
PHYS is a Closed End Trust and does a poor job of tracking the spot price. Go watch Evidence Based Wealth (belangp) on YT and he demonstrates this
I sold my PHYS after watching this. I am not casting aspersions on Sprott here because maybe there is a place for a Gold Trust in a taxable brokerage acct. because allegedly you don't pay the collectibles tax rate, just long term capital gains like any other trust.
Looking at returns on phys they don’t differ much from Gld at all
User avatar
jalanlong
Executive Member
Executive Member
Posts: 829
Joined: Mon Jul 01, 2019 7:30 am

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by jalanlong » Thu Nov 04, 2021 9:41 am

mathjak107 wrote:
Thu Nov 04, 2021 2:58 am
johnnywitt wrote:
Wed Nov 03, 2021 5:28 pm
rickb wrote:
Wed Jul 15, 2015 2:16 pm
Here's my opinions for portfolios up to about $5M.

Gold - physical coins, insured, kept in a safe deposit box (multiple boxes at different banks).  If banks stop allowing gold in safe deposit boxes then gold is an issue.  IMO, home storage even in a safe cemented to the floor is crazy.  I haven't looked into private vaulting companies.  Some people here object to them because of the tracking error, but I think GTU and PHYS are fairly reasonable options (more reasonable than the ETFs because of how many moving parts the ETFs involve).

Stock - low cost mutual fund (not ETF)

LTT - individual bonds held either at Treasury Direct or a brokerage that doesn't charge for buying/selling (includes at least Vanguard and Fidelity).  Selling bonds at TD is kind of a pain (you have to transfer them to a brokerage) and also a pain for your heirs when you die (TD requires a Medallion stamp).

Cash - treasury backed MM (good luck finding one), individual bond ladder (or I-bonds) held at Treasury Direct or a brokerage, or if you must one of the ETFs like SHV or SHY

For rebalancing purposes it's quite handy to have stock/LTT/cash accounts all at a single brokerage or fund family (like Vanguard or Fidelity), although institutional diversification is a good idea.  With 4 accounts (two different banks for the gold, and stock/LTT/cash accounts at, say, both Vanguard and Fidelity) you can limit your exposure to any one institution to about 3/8 of your total.  Less is better, but there's definitely a tradeoff between convenience and how many accounts you have to deal with.
PHYS is a Closed End Trust and does a poor job of tracking the spot price. Go watch Evidence Based Wealth (belangp) on YT and he demonstrates this
I sold my PHYS after watching this. I am not casting aspersions on Sprott here because maybe there is a place for a Gold Trust in a taxable brokerage acct. because allegedly you don't pay the collectibles tax rate, just long term capital gains like any other trust.
Looking at returns on phys they don’t differ much from Gld at all
I like PHYS (and CEF) because sometimes on weeks when metals are taking it on the chin, the funds can trade at a discount for a few days and you can get even more bang for your buck when rebalancing.
johnnywitt
Senior Member
Senior Member
Posts: 147
Joined: Fri May 08, 2020 6:06 pm

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by johnnywitt » Thu Nov 04, 2021 4:21 pm

jalanlong wrote:
Thu Nov 04, 2021 9:41 am
mathjak107 wrote:
Thu Nov 04, 2021 2:58 am
johnnywitt wrote:
Wed Nov 03, 2021 5:28 pm
rickb wrote:
Wed Jul 15, 2015 2:16 pm
Here's my opinions for portfolios up to about $5M.

Gold - physical coins, insured, kept in a safe deposit box (multiple boxes at different banks).  If banks stop allowing gold in safe deposit boxes then gold is an issue.  IMO, home storage even in a safe cemented to the floor is crazy.  I haven't looked into private vaulting companies.  Some people here object to them because of the tracking error, but I think GTU and PHYS are fairly reasonable options (more reasonable than the ETFs because of how many moving parts the ETFs involve).

Stock - low cost mutual fund (not ETF)

LTT - individual bonds held either at Treasury Direct or a brokerage that doesn't charge for buying/selling (includes at least Vanguard and Fidelity).  Selling bonds at TD is kind of a pain (you have to transfer them to a brokerage) and also a pain for your heirs when you die (TD requires a Medallion stamp).

Cash - treasury backed MM (good luck finding one), individual bond ladder (or I-bonds) held at Treasury Direct or a brokerage, or if you must one of the ETFs like SHV or SHY

For rebalancing purposes it's quite handy to have stock/LTT/cash accounts all at a single brokerage or fund family (like Vanguard or Fidelity), although institutional diversification is a good idea.  With 4 accounts (two different banks for the gold, and stock/LTT/cash accounts at, say, both Vanguard and Fidelity) you can limit your exposure to any one institution to about 3/8 of your total.  Less is better, but there's definitely a tradeoff between convenience and how many accounts you have to deal with.
PHYS is a Closed End Trust and does a poor job of tracking the spot price. Go watch Evidence Based Wealth (belangp) on YT and he demonstrates this
I sold my PHYS after watching this. I am not casting aspersions on Sprott here because maybe there is a place for a Gold Trust in a taxable brokerage acct. because allegedly you don't pay the collectibles tax rate, just long term capital gains like any other trust.
Looking at returns on phys they don’t differ much from Gld at all
I like PHYS (and CEF) because sometimes on weeks when metals are taking it on the chin, the funds can trade at a discount for a few days and you can get even more bang for your buck when rebalancing.
Yes, it's true that sometimes with CEF that you buy at a discount to NAV; however, most Folks that buy PM's most likely seek to track the SPOT.
There are valid reasons to own a Trust, as I stated earlier: not trying to raise hackles- just awareness, as I was unaware, till I watched BelangP on his YT channel illustrate.
User avatar
seajay
Executive Member
Executive Member
Posts: 430
Joined: Mon Aug 09, 2021 11:11 am

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by seajay » Mon Nov 15, 2021 5:19 pm

For up to say $4M, a crafted/hollow home weight training barbell bar at recent gold prices can hold getting on for $1M of half ounce American Eagles. There are many places things can be hidden in plain sight around the home. A nice large O ring curtain rail, fake plumbing ...etc. If you own a modest sized property with a rear garden, when was the last time thieves spent time digging that up? The risks are that if you insure or broadcast that you own gold. T-Bills for cash, fully protected no matter how much is deposited. Long dated treasury bonds. S&P500 stock index.

$4M+ and much the same, except holding some gold securely offshore.
Kbg
Executive Member
Executive Member
Posts: 2815
Joined: Fri May 23, 2014 4:18 pm

Re: Most Secure Way to Reasonable Hold PP Assets??

Post by Kbg » Tue Nov 16, 2021 8:51 am

If one is serious about safety of financial assets in the modern world, I'd suggest no more than 500K spread around as many brokerages as you need and passing on the agreements you need to sign that enables your brokerage to lend out your shares.
Post Reply