Increased Liquidity when buying at Treasury Direct?

Discussion of the Cash portion of the Permanent Portfolio

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jhogue
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Re: Increased Liquidity when buying at Treasury Direct?

Post by jhogue » Tue Jan 22, 2019 9:12 am

Pugchief,

I use my Fidelity brokerage account’s “available to withdraw” window much as you do, except that I replenish for major purchases from STTs I keep on auto-roll. I also like Fidelity’s no-fee credit card with the 2% rebate. It is probably the highest rate that automatically covers all purchases. In practice, I think the major risk of using this form of “ready cash” is identity theft, which is a manageable (if growing) risk, given that the credit card company effectively insures against it.

At the same time, the ultimate form of liquidity within our current financial system theoretically should be physical cash. But similar to physical gold, during “normal times” many of us are relying on physical cash less and less. Increasingly, the pile of greenbacks I keep in my local bank safe deposit box is for “abnormal times” and is a shrinking percentage of my portfolio—even in the present era of relatively low inflation. The major risks of physical cash seem to be: 1) uninsured theft, and 2) the bank could shut its doors before I can get to my safe deposit box. In “normal times” these risks seem small and remote.

I recall Uncle Harry said we should keep some physical gold and cash near by for "abnormal times," but I don’t think he was more specific about it than that. My solution has been to self-insure against these diverse risks by having some of both forms of “ready cash” available. Perhaps our greatest challenge is how to judge “abnormal times” from “normal times”?
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
Kbg
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Re: Increased Liquidity when buying at Treasury Direct?

Post by Kbg » Tue Jan 22, 2019 1:25 pm

jhogue wrote:
Tue Jan 22, 2019 9:12 am
Pugchief,

I use my Fidelity brokerage account’s “available to withdraw” window much as you do, except that I replenish for major purchases from STTs I keep on auto-roll. I also like Fidelity’s no-fee credit card with the 2% rebate. It is probably the highest rate that automatically covers all purchases. In practice, I think the major risk of using this form of “ready cash” is identity theft, which is a manageable (if growing) risk, given that the credit card company effectively insures against it.
So long as it isn't a debit card...my brokerage offers a pretty good card that charges the margin rate and goes on margin which is good for all kinds of tax reasons. However, wouldn't touch it with a 10 foot pole.
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jhogue
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Re: Increased Liquidity when buying at Treasury Direct?

Post by jhogue » Tue Jan 22, 2019 1:46 pm

Margin loans are a form of leverage. Uncle Harry said never use leverage on PP assets. I'm with Uncle Harry on this one.

EDIT: Come to think of it, margin might be useful as a form of overdraft protection, but I still would not make a habit of it.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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