How do you invest the Cash portion?

Discussion of the Cash portion of the Permanent Portfolio

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pugchief
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Re: How do you invest the Cash portion?

Post by pugchief » Tue Dec 10, 2019 7:47 pm

Kbg wrote:
Tue Dec 10, 2019 4:34 pm
Don’t forget, the govt can print money. So getting your money back is not really the issue. Far more likely problems are legal delays and in the ZA (new acronym for Zombie Apocalypse) inflationary devaluation.

To me for the first and most likely problem, treasury direct is a no brainer. Just you and your government, no middlemen of any kind.
Ha. Customer service on that site is notoriously awful. Imagine what it will be like with millions of people calling and emailing during the ZA. Good luck getting your money out. Cash in hand is the only thing that will be of value. And guns. And barter-able items.
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Re: How do you invest the Cash portion?

Post by vnatale » Tue Dec 10, 2019 9:43 pm

Kbg wrote:
Tue Dec 10, 2019 4:34 pm
Don’t forget, the govt can print money. So getting your money back is not really the issue. Far more likely problems are legal delays and in the ZA (new acronym for Zombie Apocalypse) inflationary devaluation.

To me for the first and most likely problem, treasury direct is a no brainer. Just you and your government, no middlemen of any kind.
Except, from what I now know, one cannot use Treasury Direct for any retirement accounts? And, are not bonds at the top of the list to be put in retirement accounts due to all the income from them being ordinary income? Certainly true for Treasury Bills. I guess one could argue the long-term bonds should not be in a retirement account you believe most of the return from them is going to come in the form of capital gains.

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Re: How do you invest the Cash portion?

Post by mathjak107 » Wed Dec 11, 2019 2:26 am

old school thinking used to say that bonds should go in retirement accounts . the fact is taking up valuable space in tax advantaged accounts at these low yields is a waste . michael kitces found that as little as a 2% dividend over the long term wipes out any tax advantage in a taxable account. fund turnover makes it worse .

as kitces points out

"Executive Summary
In an environment where generating portfolio alpha is difficult, strategies like managing assets on a household basis to take advantage of asset location opportunities to generate “tax alpha” are becoming more and more popular. The caveat, however, is that making effective asset location decisions is not easy, either.
For instance, while the traditional asset location strategy “rule of thumb” is that tax-inefficient bonds go into an IRA, while equities eligible for preferential tax rates go into a brokerage account, the reality is that for investors with long time horizons the optimal solution may be the opposite. Once stock dividends and portfolio turnover are considered, the ongoing “tax drag” of the portfolio can be so damaging to long-term returns that placing equities into an IRA may be more efficient, even though they are ultimately taxed at higher rates!
In fact, it turns out that almost any level of portfolio turnover will eventually tilt equities towards being held in IRAs given a long enough time horizon (and especially while today’s low interest rates result in almost no benefit for bonds to gain tax-deferred growth inside of retirement accounts). Which means in the end, good asset location decisions depend not only on returns and tax efficiency, but an investor’s time horizon as well!

https://www.kitces.com/blog/asset-locat ... e-horizon/
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Re: How do you invest the Cash portion?

Post by jhogue » Wed Dec 11, 2019 9:08 am

pugchief wrote:
Tue Dec 10, 2019 7:47 pm
Kbg wrote:
Tue Dec 10, 2019 4:34 pm
Don’t forget, the govt can print money. So getting your money back is not really the issue. Far more likely problems are legal delays and in the ZA (new acronym for Zombie Apocalypse) inflationary devaluation.

To me for the first and most likely problem, treasury direct is a no brainer. Just you and your government, no middlemen of any kind.
Ha. Customer service on that site is notoriously awful. Imagine what it will be like with millions of people calling and emailing during the ZA. Good luck getting your money out. Cash in hand is the only thing that will be of value. And guns. And barter-able items.
I am not predicting a Zombie Apocalypse.
I am predicting another banking liquidity crisis.
“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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Re: How do you invest the Cash portion?

Post by dualstow » Wed Dec 11, 2019 9:08 am

Yeah, I regret that I took the bogleheads' advice to put bonds in tax deferred.
I changed course some years ago.
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Re: How do you invest the Cash portion?

Post by mathjak107 » Thu Dec 12, 2019 3:24 am

i moved away from boglehead advice a long time ago ... the problem is they see things only one way and only support and high five those who think like they do . in fact as a company i think vanguard is terrible in both company policies and customer service based on my experiences .

the biggest obstacle most people have is believing their own bull sh*t ...


they never sleep with the enemy so they never learn there may be better ways of doing things and what they believe may be wrong , outdated or just old school thinking .

when you can argue for or against something equally well , then you likely have enough information to make an informed decision . but most people don't do this . they only learn and hang with others with the same views and that can end up being short sighted
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Re: How do you invest the Cash portion?

Post by sophie » Thu Dec 12, 2019 8:36 am

dualstow wrote:
Fri Dec 06, 2019 2:04 pm
sophie wrote:
Fri Dec 06, 2019 9:52 am
Unfortunately, neither Vanguard nor Fidelity provide checkwriting from an individual fund - only from an account. I don't know where you'd go to find such a beast.
Sophie, I have checkwriting from many of my Vanguard funds, even a long-term muni bond fund.
I think they used to provide this, in fact I know for a fact that Fidelity did - but no longer. You probably will be able to keep your checkwriting arrangement going, but if you want to apply for them now the websites make it clear that it only applies to an account.

No idea why that is...might be a new rule that came down the pike, since it seems to be universal. I couldn't find any Treasury MM with checkwriting directly to the fund, anywhere. If anyone knows of one I'd like to hear about it.
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Re: How do you invest the Cash portion?

Post by dualstow » Thu Dec 12, 2019 10:25 am

sophie wrote:
Thu Dec 12, 2019 8:36 am
No idea why that is...might be a new rule that came down the pike, since it seems to be universal. I couldn't find any Treasury MM with checkwriting directly to the fund, anywhere. If anyone knows of one I'd like to hear about it.
Are you just going by the second bullet point on this page?
https://personal.vanguard.com/us/whatwe ... eckwriting

It's not that I don't believe you, but I don't see it. Maybe you're right that it's just grandfathered in. That would be weird, though.
Breonna Taylor grand jury ruling is in. Stay safe tonight, NYC pp’ers
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Re: How do you invest the Cash portion?

Post by Kbg » Sat Dec 14, 2019 11:49 pm

I never understood the bonds in tax advantaged accounts thing and particularly Roths. I’d much rather shelter higher growth rates and pay taxes on lower growth items unless one is going to buy and hold for a really long time on something that doesn’t pay a dividend like BRK stock.

Side note, apparently in Europe they have ETFs that auto reinvest dividends in the underlying and do not distribute them which ends up sheltering (and growing) your initial investment. Wonder if that is illegal in the states...what an awesome approach.
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Re: How do you invest the Cash portion?

Post by Kbg » Sun Dec 15, 2019 12:02 am

pugchief wrote:
Tue Dec 10, 2019 7:47 pm
Kbg wrote:
Tue Dec 10, 2019 4:34 pm
Don’t forget, the govt can print money. So getting your money back is not really the issue. Far more likely problems are legal delays and in the ZA (new acronym for Zombie Apocalypse) inflationary devaluation.

To me for the first and most likely problem, treasury direct is a no brainer. Just you and your government, no middlemen of any kind.
Ha. Customer service on that site is notoriously awful. Imagine what it will be like with millions of people calling and emailing during the ZA. Good luck getting your money out. Cash in hand is the only thing that will be of value. And guns. And barter-able items.
I think we mix bad scenarios by degrees here. In a true ZA I’m planning on 50 acres of land I own and my ability to produce food on it and hope in my 70s I’m not following a plow horse but get to sit in my a/c cooled tractor cabin. I’m pretty sure any government entity will outgun me if they are serious about confiscating my stuff and I hope my neighbors of many years are just working their land.

Short of that, I’d much rather have the USG doing the electronic accounting with my name as the owner vs. a brokerage intermediary. Perhaps I’m too sanguine but I chose not to live my life in fear and be an optimist. My biggest financial worry is how do I set my wife up to deal with our assets when I’m gone if I pass before her.

On TD...why would I need customer service? I assume you figured out it was a self service site for buying and holding govt bonds for their duration before you purchased any right? If that wasn’t obvious you should be more deliberate before doing something like TD in the future.
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Re: How do you invest the Cash portion?

Post by Kriegsspiel » Sun Dec 15, 2019 6:46 am

Do you mean you already own 50 acres that you farm, or that you want to in the future?
I hated all the things I had toiled for under the sun, because I must leave them to the one who comes after me. Who knows whether that person will be wise or foolish? Yet they will have control over all the fruit of my toil into which I have poured my effort and skill under the sun. . . Nothing is better for a man than to eat and drink and enjoy his work.
- Ecclesiastes
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Re: How do you invest the Cash portion?

Post by pugchief » Sun Dec 15, 2019 8:03 am

Kbg wrote:
Sun Dec 15, 2019 12:02 am
pugchief wrote:
Tue Dec 10, 2019 7:47 pm
Kbg wrote:
Tue Dec 10, 2019 4:34 pm
Don’t forget, the govt can print money. So getting your money back is not really the issue. Far more likely problems are legal delays and in the ZA (new acronym for Zombie Apocalypse) inflationary devaluation.

To me for the first and most likely problem, treasury direct is a no brainer. Just you and your government, no middlemen of any kind.
Ha. Customer service on that site is notoriously awful. Imagine what it will be like with millions of people calling and emailing during the ZA. Good luck getting your money out. Cash in hand is the only thing that will be of value. And guns. And barter-able items.

On TD...why would I need customer service? I assume you figured out it was a self service site for buying and holding govt bonds for their duration before you purchased any right? If that wasn’t obvious you should be more deliberate before doing something like TD in the future.
I don't use TD, nor would I. I was merely pointing out in terms of the conversation that ZA and TD are probably not a good mix, IMO. At least with Fidelity there is somebody you could talk to or that would respond to email, even if the wait would likely be prolonged.
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