# Lifestyles & Discussion > Personal Prosperity >  Is this a good spread for 401k, your thoughts

## Lord Xar

I also have liquid and in hand metals. This is just for "401k". your thoughts?

*Stock Investments*

Large Cap
FID GROWTH COMPANY  ------- 42.82%

Mid-Cap
FID LOW PRICED STK 	-------  2.91%

Small Cap
COL SM CAP IDX Z  ------------- 25.24%

International
THORNBURG INT VAL R5  ----- 29.03%


*breaks down as follows:*

domestic stocks : 66.29%
foreign stocks : 31.29%
short-terms: 1.4%
other: ~1%


Overall, I am seeing this return: *Personal Rate of Return from 01/01/2013 to 11/20/2013 is 24.1%*

note: I modified my percentages midyear to push more foreign and small cap.

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## angelatc

How old are you?

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## oyarde

> I also have liquid and in hand metals. This is just for "401k". your thoughts?
> 
> *Stock Investments*
> 
> Large Cap
> FID GROWTH COMPANY  ------- 42.82%
> 
> Mid-Cap
> FID LOW PRICED STK 	-------  2.91%
> ...


What is the 3 yr , 5 yr and 10 yr return on the International ? Myself I would probably use less Large Cap , way less International and use more Small & Mid Cap. You did very, very well this year , that is one year and extremely unlikely to continue I would guess .

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## mad cow

> How old are you?


This.
It looks all right if these are what your company offers and you are young.

It looks fantastic if your company either matches or adds to your donations and you are young.

If you are old,maybe more income than growth stocks,more bonds and maybe some PM's as a hedge against inflation.

Edit:what goes up 24.1% can go down 24.1%.Hence,the questions about your age.
You can afford greater risks for possible greater returns up until you have to rely on your savings to survive during your retirement.

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## oyarde

> This.
> It looks all right if these are what your company offers and you are young.
> 
> It looks fantastic if your company either matches or adds to your donations and you are young.
> 
> If you are old,maybe more income than growth stocks,more bonds and maybe some PM's as a hedge against inflation.
> 
> Edit:what goes up 24.1% can go down 24.1%.Hence,the questions about your age.
> You can afford greater risks for possible greater returns up until you have to rely on your savings to survive during your retirement.


If all else fails I can teach him to fish and hunt squirrels

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## ClydeCoulter

> If all else fails I can teach him to fish and hunt squirrels


Have you got a deer yet this year, @oyarde?

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## Lord Xar

Thanks all - I am late 30's (late late) :-)

What I am worried about is if we have huge inflation, what will happen to my savings? Granted, I don't have a large amount in there, but I put a few hundred into every paycheck (2x month). My company throws in a bit too. 

I don't want it to go to zilch if we have another crash in the next year or coming years.. so yeah, curious how I can modify these percentages to protect myself.

If i was to measure it all out, I am about**:

40% liquid
35% precious metals
25% 401k (as listed above)

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## Tod

> I also have liquid and in hand metals. This is just for "401k". your thoughts?
> 
> *Stock Investments*
> 
> Large Cap
> FID GROWTH COMPANY  ------- 42.82%
> 
> Mid-Cap
> FID LOW PRICED STK     -------  2.91%
> ...



I bailed on the market this year because I am expecting it to crash.  Currently the dow is about 450 points above where it was when I bailed.

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## mad cow

> Thanks all - I am late 30's (late late) :-)
> 
> What I am worried about is if we have huge inflation, what will happen to my savings? Granted, I don't have a large amount in there, but I put a few hundred into every paycheck (2x month). My company throws in a bit too. 
> 
> I don't want it to go to zilch if we have another crash in the next year or coming years.. so yeah, curious how I can modify these percentages to protect myself.
> 
> If i was to measure it all out, I am about**:
> 
> 40% liquid
> ...


OK,asking me for financial advise is pretty dumb,but you asked.
I would put more into the 401K,especially if your company is kicking even more into this investment,that is the definition of free money.

I also think that if you own XX% of some company,through stocks and/or bonds,that might prove better than owning 00% of any company coming out of any depression,recession or downturn or anything short of TEOTWAWKI and of course,then,we have bigger things to worry about than our stock portfolio.

If I were you,I would put much more into your 401K,maybe 20% liquid,15% PM's.
I would add XX% real estate but I see you are from L.A.,I think California real estate is pretty much a crap shoot with loaded,statist dice,but hey,if your feeling lucky...

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## brandon

Lord Xar,

You should be more concerned about the "40% liquid" you have.  Why not invest that?  Your allocations in your 401k would be too aggressive for your age if it is your only source of retirement savings.  If I were you I would put your liquid savings into a retirement fund, and add a bond fond to your 401k. The expense ratios on the funds you are holding are higher than they should be (the international one in particularly at 1.3%)  and you should check of you have better ones available in your plan.

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## CaptLouAlbano

401K's are tough because you are limited to what you can pick.  Best option is usually to spread it as wide as you can.  At your age you have plenty of years left.

Overall, I always chose a mix for investments:
25% stocks (broadly invested, index funds are good for this)
25% bonds (again broadly invested)
25% precious metals and/or commodities
25% cash (i.e. money market accounts, CD's, etc)

At the end of every year, I would balance it out; sell off whatever performed well and buy more of whatever was down that year.  Truth be told though, I became wealthy from buying income producing assets throughout my life:  real estate and businesses.  My guess is that if my wife and I worked regular jobs our whole life and just saved for retirement using the above formula, we would be OK now, but not able to live life like we do presently.

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## helmuth_hubener

Lord Xar,

You asked for advice in this thread a while back, and I tried to give you some thoughts as best I could.  Did you ever check back on that thread?

Now you are focusing on the 401k specifically.  First, I think we cannot really give the most worthwhile nuts-and-bolts advice without knowing anything about the 401k.  So if you could please let us know: *Do you have a list of what funds and other options are available to you?*  Most importantly, *does your plan allow you the possibility of setting up a brokerage window?*

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## oyarde

> Have you got a deer yet this year, @oyarde?


One.

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## helmuth_hubener

Lord Xar, are you ever coming back to this thread?  Is any of the advice people have given useful to you?

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## cubical

I would invest in the stock funds which offer the lowest expenses. 100% of mine is in a large cap index fund with an expense ratio of around .15%.

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## helmuth_hubener

> I would invest in the stock funds which offer the lowest expenses. 100% of mine is in a large cap index fund with an expense ratio of around .15%.


 What?  Shouldn't he put 100% in EuroPac?

Well, at least the index fund you're in is exclusively overseas with an emphasis in emerging markets, right?

No?

Don't you know the US equity market is headed for a bloodbath?  That it's going to collapse, and the dollar is going to be literally worthless?  Any day now!

Could it be that maybe, despite your giving me a hard time, you too understand that Peter Schiff is not necessarily right in his predictions nor in his advice?  It sounds like in your _actions_ you're totally ignoring his advice.

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## helmuth_hubener

> Personal Rate of Return from 01/01/2013 to 11/20/2013 is 24.1%


I don't know if Lord Xar is ever coming back, but I just thought I'd point out that the general rate of return in the stock market this year has been exceptionally and unusually high, historically speaking.  To have a fairly conservative portfolio (as Lord Xar's is) go up 24% in a single year is the exception, not the rule.  You shouldn't expect a 24% average return to continue, year in and year out.  You should just be thankful that you happened to get an above-average return.

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## Lord Xar

Hey Helmuth,

Sorry I haven't responded. I was just taking in the knowledge. So far, I kept my allocations the same but probably looking to change it up a little.

I have recently started putting monies, every month, towards some silver/gold.. about 5oz silver/2-3 grams of gold (in addition to putting into a 401k and some monies into a health savings account ~3k / year for that).

I probably should put some monies towards real estate but I know NOTHING about that.. and real estate where I live is outrageous and can't afford it. I perhaps have thought about buying property in more affordable areas on the United States. But again, that is a real risk for me. No management company to oversee the property etc..

My fear is losing much of my 401k, like I did previously, when it comes down crashing again.. so I don't know where to put my allocations as I move forward.

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## helmuth_hubener

> Hey Helmuth,
> 
> Sorry I haven't responded. I was just taking in the knowledge. So far, I kept my allocations the same but probably looking to change it up a little.
> 
> I have recently started putting monies, every month, towards some silver/gold.. about 5oz silver/2-3 grams of gold (in addition to putting into a 401k and some monies into a health savings account ~3k / year for that).
> 
> I probably should put some monies towards real estate but I know NOTHING about that.. and real estate where I live is outrageous and can't afford it. I perhaps have thought about buying property in more affordable areas on the United States. But again, that is a real risk for me. No management company to oversee the property etc..
> 
> My fear is losing much of my 401k, like I did previously, when it comes down crashing again.. so I don't know where to put my allocations as I move forward.


  Not a problem at all, Lord Xar.  I was just wondering if maybe you'd forgot about this thread.

*Do you have a list of what funds and other options are available to you?* 

*Does your plan allow you the possibility of setting up a brokerage window?*

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## cubical

> What?  Shouldn't he put 100% in EuroPac?
> 
> Well, at least the index fund you're in is exclusively overseas with an emphasis in emerging markets, right?
> 
> No?
> 
> Don't you know the US equity market is headed for a bloodbath?  That it's going to collapse, and the dollar is going to be literally worthless?  Any day now!
> 
> Could it be that maybe, despite your giving me a hard time, you too understand that Peter Schiff is not necessarily right in his predictions nor in his advice?  It sounds like in your _actions_ you're totally ignoring his advice.


Europac's fees are too high and I can't access them in my 401k anyways.

Yes, I do think the US dollar will be worthless or will approach being worthless.

Yes, I think the US economy is headed for a bloodbath.

Clearly you are trying to imply some of Schiff's positions here, but you are ignorant of them. My options in my 401k are cash, bonds, stocks. Schiff has said repeatedly he prefers stocks over cash and especially over bonds. He would rather have foreign stocks over US stocks.

I am in stocks. Of the 3 categories above, he would agree. If fees were lower and there was no foreign tax withholdings(which I can not reclaim on my taxes being in a tax deferred account), I would probably be mostly in foreign funds. My own personal account is a different story. Why do you think my 401k is 100% of my wealth allocation?

As Schiff says you need to find companies that cater to those who will have wealth. In his and my view, US is on its way out as a global consumer. Finding a company based out of Singapore who sells washing machines to India, Europe or China is a great example.

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## helmuth_hubener

> Europac's fees are too high and I can't access them in my 401k anyways.


 Yes, 401ks are indeed often full of shortcomings.  You have no brokerage window, I take it?  Have you ever talked to your company's retirement person or dept. about adding one?  It's always worth a try!




> Yes, I do think the US dollar will be worthless or will approach being worthless.
> 
> Yes, I think the US economy is headed for a bloodbath.


 I hope you have taken steps to protect yourself should these things happen.  And I'm sure you have.  *But I hope that you have also taken steps to make sure that just in case what you think will happen ends up being wrong, you will be protected in that case, too.*  That's all I recommend.  It seems like the wisest course, to me.




> Clearly you are trying to imply some of Schiff's positions here, but you are ignorant of them.


 While I do not know _everything_ he has ever said or written, I am not totally in the dark.




> My options in my 401k are cash, bonds, stocks. Schiff has said repeatedly he prefers stocks over cash and especially over bonds. He would rather have foreign stocks over US stocks.


 You are correct.  This is what I have heard and read him express as well.



> I am in stocks. Of the 3 categories above, he would agree.


 I too think he would.




> My own personal account is a different story. Why do you think my 401k is 100% of my wealth allocation?


 Oh, I do not.  Certainly I do not.  But do you know what options are available to Lord Xar in his 401k?  He is asking for recomendations.  I would have thought that the orthodox Schiff answer would be to recommend foreign stock funds, commodity funds, and gold miner funds, if they are available.  They may be available; we don't know.




> As Schiff says you need to find companies that cater to those who will have wealth. In his and my view, US is on its way out as a global consumer. Finding a company based out of Singapore who sells washing machines to India, Europe or China is a great example.


 Such companies will already be valued at a premium by the market, ruling out any above-average profit opportunity.  Unless you think that you know more than the market at large?  Do you know better than all the full-time brokers and traders and researchers, better than all the other millions of people looking for profit opportunities?  Are you sure?  That is what so many investment strategies come down to: a bet that you have some special knowledge or insight that the rest of the world is not privy to.  It's a risky bet to make.  Much safer to accept that you (or your guru) are actually probably _not_ the smartest man alive, and invest accordingly.

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## helmuth_hubener

....

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## Lord Xar

UPDATE based on latest thread questions:

Since last posted, now its at *26.3% growth*.

Helmuth, here is a complete list of what is available to me.
I also have the option of the following:
1. Change investments
2. Move monies between investments
3. Rebalance

Here is what is avail to me. I bolded my current allocations.

Asset Classsort down 	Subclass 	Fund Name 	Current % 	Desired %	
Blended Fund Investments 	-- 	FID FREEDOM 2010 		
Blended Fund Investments 	-- 	FID FREEDOM 2020 		
Blended Fund Investments 	-- 	FID FREEDOM 2030 		
Blended Fund Investments 	-- 	FID FREEDOM 2040 		
Blended Fund Investments 	-- 	FID FREEDOM 2050 		
Blended Fund Investments 	-- 	FID FREEDOM INCOME 		
Blended Fund Investments 	-- 	FID PURITAN 		
Bond Investments 	Stable Value 	NY Life Guaranteed Interest Account
Bond Investments 	Income 	FA STRAT INCOME A 		
Bond Investments 	Income 	PIMCO Total Return Fund Institutional Class	 
Bond Investments 	Income 	Templeton Global Bond Fund Class A 
*Stock Investments 	Large Cap 	FID GROWTH COMPANY 	50%* 
Stock Investments 	Large Cap 	SPTN 500 INDEX INST 		
Stock Investments 	Large Cap 	VANG EQUITY INC ADM 		
*Stock Investments 	Mid-Cap 	FID LOW PRICED STK   20% 	*
Stock Investments 	Mid-Cap 	MSIF MID CAP GRTH A 		
Stock Investments 	Small Cap 	BARON SMALL CAP 		
*Stock Investments 	Small Cap 	COL SM CAP IDX Z 	15% 	*
Stock Investments 	International 	INVS DEVELOP MKTS A 		
*Stock Investments 	International 	THORNBURG INT VAL R5 	15% 	*
Stock Investments 	Specialty 	INVS REAL ESTATE A 	


The reason I am fishing around, is that I saw this -- if this holds true, we are in for a ride.. and I want to be prepared and not taken to the cleaners:

*The orange colored ones are* what I searched thru my 21 listings that took the least/softest hit during the 2009 downturn.

*The light blue* is newish 2011, and seems to be a guarantee of some sort. says "Seeks to provide competitive yields and limited volatility with a guarantee of principal and accumulated interest. These guarantees are backed by the full faith and credit of New York Life Insurance Company."




*note: I understand I shouldn't "rely" on internet advice. I've been reading a bit lately and its touch going. I program for a living and it seems ALOT easier than understanding the nuances of finance!!

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## TaftFan

I am no expert but my advice is:

*Bonds are useless, unless you can find some that outpace inflation.
*Savings are even worse, just keep enough for emergency expenses, day to day transactions, and bill payments.
*Don't over invest in PM's, they could fail. Cryptocurrencies are now coming into play. 
*Mutual funds are the best bet for growth, but remember are stock market is being propped up.

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## mad cow

> UPDATE based on latest thread questions:
> 
> Since last posted, now its at *26.3% growth*.
> 
> Helmuth, here is a complete list of what is available to me.
> I also have the option of the following:
> 1. Change investments
> 2. Move monies between investments
> 3. Rebalance
> ...


Does your 401K provide for you to have cash,as in a money market account within it?

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## oyarde

> I am no expert but my advice is:
> 
> *Bonds are useless, unless you can find some that outpace inflation.
> *Savings are even worse, just keep enough for emergency expenses, day to day transactions, and bill payments.
> *Don't over invest in PM's, they could fail. Cryptocurrencies are now coming into play. 
> *Mutual funds are the best bet for growth, but remember are stock market is being propped up.


This makes it sound as if I should have spent it all on beer and liquor

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## Lord Xar

> Does your 401K provide for you to have cash,as in a money market account within it?


I don't know. I need to inquire about this. I know you can take out cash up to 50% at a fee/loan etc.. But I haven't read anything about money market account. I'll send an email to find out.

hmm. I am curious which fund performed the best during the downturn a few years ago.

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## helmuth_hubener

Awesome; thank you, Lord Xar.

Here is what you wrote as to your total portfolio allocation:

*55% cash/liquid
25% physical silver / gold
20% 401k ( 97% which are stocks )*
--> 40% large cap
--> ~31% international
--> ~26% small cap

Here is how CaptLou invests his wealth:



> 401K's are tough because you are limited to what you can pick.  Best option is usually to spread it as wide as you can.  At your age you have plenty of years left.
> 
> Overall, I always chose a mix for investments:
> *25% stocks* (broadly invested, index funds are good for this)
> *25% bonds* (again broadly invested)
> *25% precious metals* and/or commodities
> *25% cash* (i.e. money market accounts, CD's, etc)
> 
> At the end of every year, I would balance it out; sell off whatever performed well and buy more of whatever was down that year.  Truth be told though, I became wealthy from buying income producing assets throughout my life:  real estate and businesses.  My guess is that if my wife and I worked regular jobs our whole life and just saved for retirement using the above formula, we would be OK now, but not able to live life like we do presently.


Here is what I recommend:

*25% stocks
25% bonds
25% gold
25% cash*

As you can see, we're both recommending the same strategy (with some tactical variation).




> *note: I understand I shouldn't "rely" on internet advice. I've been reading a bit lately and its touch going. I program for a living and it seems ALOT easier than understanding the nuances of finance!!


You are a programmer, and thus probably have a logical and disciplined mind.  I would strongly, _strongly_ recommend you check out Harry Browne's Permanent Portfolio strategy.  It is logical.  It is brilliant.  It cuts through about a hundred layers of gook and confusion and gets to the truth.

16 Golden Rules of Investing
One-Page Summary of the Permanent Portfolio

If someone is trying to be your broker or to sell you on investment advice, *make them apply for the job.*  Ask them to send you their tax returns for the past five years showing their gains and losses in their investments.  Then, if they have has a better return than you, you might consider taking their advice.  But they _won't_ send it, because they_ haven't_ done better, because their ideas are all failed and lousy.  They're following a disproved paradigm.

The truly rich usually invest conservatively.  They do not chase yield.  They understand the impossibility of beating the market.  It is mathematically impossible to do so reliably.

*So, I recommend for the money that's precious to you that you invest it safely in the 4X25 split discussed above so that it will be protected no matter what happens.*  There's a lot of different ways to do that.  But that is the overall goal for a safe and balanced portfolio.

Right now, your 401k represents only 20% of your total portfolio.  What complicates the matter is that that could change -- _will_ change if you continue putting money into it.  So consider the future.  I would ask your company's financial person about the possibility of a brokerage window.  Many 401ks have this option, but very few people ever know about it or use it.  Ask about it.  If they don't have it, they very well may be willing to add one for you.  This will give you _much_ more wonderful flexibility, which could be very helpful down the road, especially if your 401k grows to be 25%, then 30%, then 35%, then more, of your portfolio.  With a brokerage window, you'll be able to rebalance, by buying bonds, cash, and gold within the 401k.  Without one, staying balanced and protected could be difficult.

But for now, one way you could implement the plan would be the following:

*Put 100% of the 401k into the Spartan S&P 500 Index fund.*  In your list:
Stock Investments 	Large Cap 	SPTN 500 INDEX INST	

This fund will have a lower fee than all of the rest (check for yourself).  That is a huge deal!  Interest compounds, but guess what everyone forgets: fees compound, too!  If you're losing one percent per year to fees, you're starting off crippled right out of the gate.  To even _match_ the performance of a simple index fund, you'll have to _beat_ it by a percent.  How are the fund managers going to do that?  Do they have some special insight?  Let me just tell you: they don't.  They can't beat the market -- *they are the market!*  If everyone could beat the market by one percent every year, let me tell you: everyone _would_.  You can see, then, it's mathematically impossible.

Even more importantly, this fund is not actively managed.  Not only will the higher-fee funds fail to make their fees a worthwhile price by consistently beating the market, they will usually get a lower return than the market!!  Unbelievable!    So what are you paying them for?  Exactly!  Why would you pay them good money in order to make you less return than you could without them?  This is a statistical thing -- there will be outliers and exceptions, such as your large cap growth fund this year, but over the course of many years and many funds, the actively-managed funds under-perform the market.  And there's solid, theoretical reasons why they _have_ to under-perform the market.  It's inevitable!

Just get the Spartan index fund.  Be average.  By trying to get the average, you will actually end up well above average.  What a paradox, huh?  But the vast majority of investors get returns below those of a simple index fund.  So by getting the index fund, you beat almost everyone.

*Then, outside the 401k, keep the gold.*  If you have a massive amount of silver, sell the silver and use it to buy gold instead.  Silver is a commodity metal.  Gold is a monetary metal.  Gold is the one which will protect you in a time of inflation.  Silver is not as strongly linked to inflation.  Gold is the one you want.  A little bit of silver as an emergency supply for some kind of disaster is fine -- maybe a few hundred dollars' worth at the most.

*You have a lot of cash, which is good.*  If the 55% cash represents less than 1 year of living expenses for your family, you probably should just keep it how it is and not change a thing.  Cash is a conservative investment.  But conservative is not bad.  The wealthy are conservative.  They know how to protect their wealth.  If you want to protect your wealth, do like them.  Wealthy families have about 40 percent of their assets in cash, according to a recent poll of more than 50 large family office representatives from 20 countries conducted by Citi Private Bank.

But *if your cash is more than a year's supply*, then I would recommend that you consider completing your portfolio's diversification by using some of the cash to *buy 30-year US Treasury bonds*.  They should be about 25% of your portfolio.  These will protect you in case of a time of deflation (or decreased inflation).  You can buy the bonds directly from the Treasury's auction web site, or you set up a broker account and do it through them.  I would recommend buying them directly.  There are no good bond options in your 401k (unless I missed one).

*In conclusion, the goal is to be protected in all of the four economic environments.*  You are protected right now in 3 of the four.  Your money will be safe in prosperity, inflation, and recession.  Only in a deflation will you be vulnerable to a large loss.  So I have recommended that, all else equal, you should move to cover that vulnerability if possible.  

I have also recommended tweaks to the other three asset classes.  I recommended that you improve the performance of your 25% stock allocation by switching to the Spartan S&P 500 index fund.  I recommended that you improve your 25% precious metals allocation by switching it to be exclusively gold, since you cannot count on silver to protect you from inflation.  And I recommended that you store your cash in the safest possible way: US Treasury bills or short-term notes.

And for long-term planning and flexibility, I recommended that you find out if you have a brokerage window, and if not, try to get one added.

Most importantly, I recommend that you read up on Harry Browne's Permanent Portfolio so that you can understand more thoroughly the reasoning behind these recommendations.  Then you can move forward with a deep and profound understanding of the investment world, and with confidence.  Here are the essential books:

Fail-Safe Investing
The Permanent Portfolio

And another big book if you get excited about this stuff and want to really bone up:

Why the Best-Laid Investment Plans Usually Go Wrong: And How You Can Find Safety and Profit in an Uncertain World

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## helmuth_hubener

> I don't know. I need to inquire about this.


I am sure that you can have it in cash.  That will be the default for money that you don't have in anything else.  If you were to sell one of your funds today, and not buy anything else, the money from that sale would go into the default money market fund.

Since you already have 55% of your portfolio in cash outside of the 401k, there is no particular reason to do this, in my opinion.

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## Lord Xar

You have given me alot of food for thought, thank you.

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## ErinM

Regarding bonds: What are peoples' thoughts about TIPS (Treasury Inflation-Protected Securities) vs. regular long-term bonds? (Seeing as most people here are expecting lots of inflation and a stock market crash in the not-too-distant future)

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## helmuth_hubener

> Regarding bonds: What are peoples' thoughts about TIPS (Treasury Inflation-Protected Securities) vs. regular long-term bonds? (Seeing as most people here are expecting lots of inflation and a stock market crash in the not-too-distant future)


 Would you buy fire insurance from a known arsonist?

TIPS have never been tested in a true high-inflation period.  They're untest.  They're unknown.  There's good reason to believe they won't come through.

For inflation protection, get gold instead.

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## oyarde

> Would you buy fire insurance from a known arsonist?
> 
> TIPS have never been tested in a true high-inflation period.  They're untest.  They're unknown.  There's good reason to believe they won't come through.
> 
> For inflation protection, get gold instead.


That sounds safer to me. Gold , about $1262 , Silver about $20 1/3 , copper $3.30. Box of shotgun shell $8 .All bargains

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## ErinM

Good point! I imagine you also feel the same about Roth IRAs?

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## helmuth_hubener

> Good point! I imagine you also feel the same about Roth IRAs?


 No, not really.  Is it possible that the government will go back on its word on Roths?  Yes.  Is it possible it won't?  Yes.  It doesn't have such an overwhelming incentive to tax Roths.  It does have an overwhelming incentive to fudge the CPI numbers for TIPS in a bad inflationary scenario.

We are talking about a situation where government is double-taxing retirement accounts when they promised not to.  Such a situation is not so very different than one where the government is seizing everyone's retirement accounts wholesale.  Could that happen, too?  Yes.  

In these kinds of crisis situations, what will protect you is your gold, assuming you have done your gold ownership in the right way.  Also, there are a lot of ideas and ways of doing things in the Permanent Portfolio way of thinking that will tend to protect your other asset classes as much as possible.  For instance, US Treasury bills and bonds are not likely to be seized, nor touched in any way, because as soon as the Federal government does that, they have killed the cash cow, they have no more credit lines, and immediately, overnight, they have very, very big problems.  They just signed their death sentence.  What's more, they can always just print more money, so seizing bonds and bills would just be crazy.  But, in the extremely unlikely event that they choose to do this, the government then collapses or radically changes and in the meantime during all this chaos gold will more likely than not rocket upward _more than enough_ to offset the total loss of your bonds and cash.  Even though that's 50% of your portfolio, gold will go up far more than that -- 300%, 500%, or more.  So even in the most crazy, chaotic situation you can imagine, with a Harry Browne Permanent Portfolio you would still be protected.

All non-taxable accounts -- Roths, 401ks, etc. -- are vulnerable to the same kind of risk: the risk that the government will break its non-taxation promises.  Taxable accounts are vulnerable to risks, too (for one thing, that taxes on them could keep going up, up, up).  So, I don't see that Roths are special or unique in being at risk.  Roths are not _overwhelmingly_ more risky than 401ks.  They are more risky in some ways.  A wise investor should take that into account and consideration.

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## helmuth_hubener

> (Seeing as most people here are expecting lots of inflation and a stock market crash in the not-too-distant future)


By the way, I hope that more and more people here are ceasing to expect such a thing, and instead embracing the truth: that they don't know.  In my posts, I am certainly trying to advance the progress of such good attitudes.  Hopefully, it is having some effect.

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## ErinM

Indeed. Some friends recommended that I read "The Black Swan", which was a good reminder of that! I'm becoming less gold-buggy as a result. Thanks for your posts!

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## Dianne

I'm glad someone has some enthusiasm that any investment will be good.   Me... I'm trying to figure out how to get out of this hell hole.

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## helmuth_hubener

> I'm glad someone has some enthusiasm that any investment will be good.   Me... I'm trying to figure out how to get out of this hell hole.


Do you mean you are going to relocate to outside of the US?  Or do you mean you are trying to get out of and recover from a bad investment loss or situation?

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## helmuth_hubener

Bump

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## Bastiat's The Law

What do you guys think of a Roth IRA?

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## Bastiat's The Law

> Hey Helmuth,
> 
> Sorry I haven't responded. I was just taking in the knowledge. So far, I kept my allocations the same but probably looking to change it up a little.
> 
> I have recently started putting monies, every month, towards some silver/gold.. about 5oz silver/2-3 grams of gold (in addition to putting into a 401k and some monies into a health savings account ~3k / year for that).
> 
> I probably should put some monies towards real estate but I know NOTHING about that.. and real estate where I live is outrageous and can't afford it. I perhaps have thought about buying property in more affordable areas on the United States. But again, that is a real risk for me. No management company to oversee the property etc..
> 
> My fear is losing much of my 401k, like I did previously, when it comes down crashing again.. so I don't know where to put my allocations as I move forward.


But some good farmland in the Midwest.

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## thoughtomator

> What do you guys think of a Roth IRA?


It's going to be reneged on by the government. The government will take all your money that it can take, and anything subject to capital controls like IRA and 401k accounts is its prime target. Hence "MyRA" - the instrument into which retirement savings will be forced, after a deliberate takedown of the stock market.

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## helmuth_hubener

> It's going to be reneged on by the government. The government will take all your money that it can take, and anything subject to capital controls like IRA and 401k accounts is its prime target. Hence "MyRA" - the instrument into which retirement savings will be forced, after a deliberate takedown of the stock market.


Are you certain?  Are you prepared for the possibility that this does _not_ happen?  Or are you, in fact, completely unprepared for that possibility?

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## Uriah

I looked into the Spartan S&P 500 index fund. Looks good but has a minimum investment of $10,000. I can't do that. Is there something else you recommend?

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## brandon

Just googled that fund and it says minimum is only $2,500

https://fundresearch.fidelity.com/mu...mary/315911206

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## helmuth_hubener

Uriah may have his 401k through a company other than Fidelity, and thus have a higher minimum.

Uriah, who are you through?  Do you have any funds with 500 in their names?  Most of the big brokerages nowadays have good index funds.

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## Uriah

I do not have a 401k and one is not offered at my company. I must have found outdated info. I looked it up again and it is $2500 and only $500 for an IRA. I just opened a rothIRA with TD Ameritrade and would like to use the permanent portfolio strategy as proposed by Harry Browne. I read one of his books several years ago but never took the time to start investing. I have some silver but that's it.

I don't have the capital to meet any high minimums. I could put in a few hundred every few months. My wife and I just purchased a house and we are expecting our first kid this fall so I keeping cash on hand for now.

I guess my real question is, what order should I purchase assest from each class; stock, bond, gold, and cash and what should I look for specifically in each category?

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## Uriah

I suppose we could start a new thread about the Permanent Portfolio and discuss the various options within its categories.

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## brandon

I'd recommend finding one of the target date retirement funds and just putting all your retirement savings in there. Open an account with vanguard and you can have htem automatically transfer money from your checking account to the IRA every month.

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## Zippyjuan

Gold in a IRA has some special rules.  For one, the place you have the gold IRA with must physically store the gold there for you. Some more info:
http://www.irafinancialgroup.com/preciousmetals.php  There are also some limits on the form of gold in the IRA.

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## helmuth_hubener

> I guess my real question is, what order should I purchase asset from each class; stock, bond, gold, and cash and what should I look for specifically in each category?


That's great you've set up the TDAmeritrade account and are wanting to start investing!  It should be pretty easy for you.  ZippyJuan, as usual, has given information that while it might be technically accurate is not useful or what you're looking for at all, and makes the gold part seem much scarier and more complicated than it actually is.  Of course, he doesn't believe in and would like to discourage you from gold ownership, so I suppose that goes along with his agenda.

Here's some answers to your questions.




> What order should I purchase asset from each class?


You should buy all the assets at once.  There's no reason to buy one at a time, and it defeats the purpose and design of the Permanent Portfolio.  Buy them all at the same time.  The Permanent Portfolio is a package.




> What should I look for specifically in each category?


You can set up a permanent portfolio very easily by just purchasing and maintaining 4 funds.

First, *Stocks*.  You have lots of good options for the stock portion.  Here are some:

*S&P 500 Indexes
* Vanguard S&P 500 Index Mutual Fund (Ticker: VFINX)
 State Street S&P 500 SPDR Exchange Traded Fund (Ticker: SPY)
 iShares S&P 500 Exchange Traded Fund (Ticker: IVV)
 Fidelity Spartan 500 Index Mutual Fund (Ticker: FSMKX)
 Schwab S&P 500 Index Mutual Fund (Ticker: SWPPX)

*Total Stock Market (TSM) Indexes:
* Vanguard Total Stock Market Mutual Fund (Ticker: VTSMX)
 Vanguard Total Stock Market Exchange Traded Fund (Ticker: VTI)
 iShares Russell 3000 Index Exchange Traded Fund (Ticker: IWV)
 Fidelity Spartan Total Stock Market (Ticker: FSTMX)
 Schwab Total Stock Market (Ticker: SWTSX)

I would go with one of the total stock market funds, and I would probably go with the one offering the lowest management fees through TDAmeritrade.  Just log in to your Ameritrade account, look each one up, and make your decision.  None of the above would be a bad choice.

Second, *Gold*.  Here's the main choices:

iShares Gold ETF (Ticker: IAU)
StreetTracks Gold ETF (Ticker: GLD)
Sprott Physical Gold Trust (Ticker: PHYS)
Central Gold Trust of Canada (Ticker: GTU)
Physical Swiss Gold ETF (Ticker: SGOL)
Perth Mint Gold (Ticker: PMGOLD, available on the Australian Stock Exchange only)
Central Fund of Canada (Ticker: CEF)
Canton Bank of Zürich ETF (Ticker: ZGLD)

They all have their pluses and minuses.  None of the funds are ideal.  But, they are easy.  For starting out, you can just buy either IAU or GLD and call it a day.  This is very easy.  It's just like buying a stock, or a mutual fund, except these are what's called "ETF"s.  Later, you can upgrade your protection.

*Long-term bonds*:

Here, you have really only one good fund option.  That is:

iShares Barclays 20+ Yr Treasury Bond ETF (Ticker: TLT)

Your second option is to buy long-term bonds directly, which is pretty easy.  Then you own the bonds directly, with no fund middleman.  The downside is you have to do it in $1,000 chunks.

*Cash*:

You could buy any of these tickers:

SHY, VFISX SHV, SCHO, VUSXX, FDLXX, TUZ, FSBIX, CPFXX, BIL

Or buy Treasury Bills directly, just as with the Long-term Bonds.  Set up a "ladder" to do this, so you automatically buy a new bill each time one expires.

Or it would probably be reasonably safe to just keep it in TDAmeritrade's own money market account (the default for any unassigned funds).

~~~
So, in summary, you could set up a nice Permanent Portfolio by doing this, for instance:

*$1,000 in IWV (stocks)
$1,000 in IAU (gold)
$1,000 in TLT (bonds)
$1,000 in SHY (cash)*

Or any number of combinations using the other choices I listed.  Then, because I assume you'll be adding to this account each month, set up to be automatically depositing 1/4 into IWV and 1/4 into TLT, because both of these are commission-free with TDAmeritrade, I just looked it up in my account.  The other half, put into SHY (also commission-free).  Unfortunately, there's no commission-free gold fund, so each time you buy gold you have to pay TDAmeritrade their commission, unless that's overridden by another offer or special plan you are on (the homepage makes it look like right now you can trade free for the first 3 months, for instance).  So, let's assume you're putting away $500 per month, let the cash portion build up for about 8 months until your allocation looks something like this:

$2,214.32 in IWV (stocks)
$1,000 in IAU (gold)
$2,109.11 in TLT (bonds)
$3,001.01 in SHY (cash)

Then buy $1,500 of IAU to bring things into balance again.  Just keep repeating that.  

As your investment account gets larger and larger, the gold and cash swings will become smaller and smaller, percentage-wise, and you'll fluctuate close to the 25% figures you want.  

Every once in a while, I'd say at least once a year, check and make sure that everything is around 25% -- at least 15% and no more than 35%.  If not, either sell the thing that's over and buy the thing(s) that is/are under, or, since you are in the early accumulation phase, it would probably be even better to simply reallocate the monthly allotment to buy more or exclusively the asset class that's under-allocated, which will fix the problem in short order without having to sell anything.

That's it!  It should take only a day to set up (maybe a few days of waiting if you choose to purchase the bonds or T-bills directly), and then with just a couple hours a year you're set for life!  This is a beautifully simple way to invest.

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## Brian4Liberty

> Second, *Gold*.  Here's the main choices:
> 
> iShares Gold ETF (Ticker: IAU)
> StreetTracks Gold ETF (Ticker: GLD)
> Sprott Physical Gold Trust (Ticker: PHYS)
> *Central Gold Trust of Canada (Ticker: GTU)*
> Physical Swiss Gold ETF (Ticker: SGOL)
> Perth Mint Gold (Ticker: PMGOLD, available on the Australian Stock Exchange only)
> *Central Fund of Canada (Ticker: CEF)*
> ...


I prefer the Central Funds of Canada, highlighted above. I just trust them a bit more than I would GLD, IAU, SLV...

GTU is just gold. CEF is both gold and silver.

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## Zippyjuan

Long term bonds are very risky- if interest rates rise their value could fall considerably (unless the bonds are kept until they mature) since bond prices move inversely with interest rates (higher rates mean lower bond prices). With both inflation and interest rates so low, that means higher risk.  If you do buy and hold (or use a fund which buys and holds) and inflation gets higher you start losing more money. 

First thing is to try to reduce debt if you have any.   Second, build up a reserve fund with enough money to be able to pay all of your bills for up to a year and keep that in a safe place with easy access should you for some reason find yourself out of work or be unable to work for whatever reason.  A savings account is not glamorous but you need to be able to get to that money and not have any risks of losing any of it. After that you can start looking to investments.

Then look at ways to keep the costs of investing low.  Taxes and fund or investment costs will reduce your returns.  Index funds offer the lowest costs.  The more a fund (or you) buy and sell stocks, the more costs- both in transaction costs and capital gain taxes.

Just me personally, (others here will disagree) but I think the gold bubble has not yet completely deflated even though the price of gold is off by about 30% from its high.

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## helmuth_hubener

I think PMGOLD is probably the best for USA people.  Further away is better.  Canada is too close.  But, I agree, Brian, that the Canada funds are probably better in a lot of ways than IAU and GLD.  But IAU and GLD have the cost and simplicity advantage.

Bottom line is that an ETF is *not* a great way to own gold anyway.  The actual Permanent Portfolio way is to own physical gold bullion coins directly.  At some point along the line, I would recommend "upgrading" to do it like that.

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## Brian4Liberty

> I think PMGOLD is probably the best for USA people.  Further away is better.  Canada is too close.  But, I agree, Brian, that the Canada funds are probably better in a lot of ways than IAU and GLD.  But IAU and GLD have the cost and simplicity advantage.
> 
> Bottom line is that an ETF is *not* a great way to own gold anyway.  The actual Permanent Portfolio way is to own physical gold bullion coins directly.  At some point along the line, I would recommend "upgrading" to do it like that.


Agree.

I would also point out that CEF and GTU are priced at a discount right now, so you are actually getting your metal at below market prices. I don't recall how those others (like GLD, SLV) are priced. IIRC, you don't get full value from those, so you are in essence paying a premium on the price of the metal.

GTU:
http://www.gold-trust.com/asset_value.htm

CEF:
http://www.centralfund.com/Nav%20Form.htm

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## helmuth_hubener

> First thing is to try to reduce debt if you have any.   Second, build up a reserve fund with enough money to be able to pay all of your bills for up to a year and keep that in a safe place with easy access should you for some reason find yourself out of work or be unable to work for whatever reason.  A savings account is not glamorous but you need to be able to get to that money and not have any risks of losing any of it. After that you can start looking to investments.


I actually agree with all of this.  Cash is under-rated.  I gave you all the advice you probably need to set up a Permanent Portfolio, Uriah, but I neglected to consider the question of whether you _should_.  If you don't have at least a few months of living expenses saved up, you probably should _not_.

Instead, first build up a reserve of savings in the most liquid way possible: cash.  Then add the other three components once you have that breathing room of a few months of living expenses.  You don't want to be so choose to the bleeding edge that you may have to pull the money back out of that Roth IRA and incur major penalties.

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## helmuth_hubener

Uriah, was any of this info helpful?

Did you succeed in setting up a Permanent Portfolio?

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## helmuth_hubener

In thinking about it, in fact, I think that for most small investors, with, say, less than $25,000 total, it makes sense to keep all of the cash outside the IRA (or other tax-deferred lockbox).  The cash that's in the IRA or 401k is locked up, and you can't get it out (without big penalties), which defeats a big purpose and advantage of the cash: liquidity!  So, a simple "starter" PP would be:

$6,250 in cash in a checking account

The rest in an IRA set up split three ways:
$6,250 in SPY or FSTMX (stocks)
$6,250 in TLT (bonds)
$6,250 in IAU (gold)

Done!

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## Uriah

It's taken me forever to respond to this. :P


@ helmuth_hubener 
I did find the information useful. It was just what I was looking for. Unfortunately, I have not started investing yet. I've built up a good stash of cash but I am not working and haven't for some time. Full time dad now which is great. One thing that I'm thinking of now that I'm revisiting this information and getting more serious about making my money work for me is ethical investing. There are some things I can't put my money behind profits be damned. I've been doing a little research and I can't find very good options. I've found some mutual funds but the expense ratio is too damn high. Any help on that front would be appreciated.

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## JusticeBob

Not bad but I would throw in some bonds.  It's way too stock heavy unless you got bonds in other retirement vehicles.

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## Zippyjuan

> It's taken me forever to respond to this. :P
> 
> 
> @ helmuth_hubener 
> I did find the information useful. It was just what I was looking for. Unfortunately, I have not started investing yet. I've built up a good stash of cash but I am not working and haven't for some time. Full time dad now which is great. One thing that I'm thinking of now that I'm revisiting this information and getting more serious about making my money work for me is ethical investing. There are some things I can't put my money behind profits be damned. I've been doing a little research and I can't find very good options. I've found some mutual funds but the expense ratio is too damn high. Any help on that front would be appreciated.


Lowest expenses will be in index funds.  I have a couple of those. They just buy and hold the stocks in a certain index (the more a fund trades, the more the costs including transaction costs and capital gains taxes). You can find them for any category you may want- from industry specific to total stock market.  For individual stocks, look at a DRIP (Dividend Re-Investment Plan).  I also have one of those (a utility).  

For a 401k, check if your company offers any matching.  Matching contributions is free money for you.  Also if you have an automatic investment set up, then saving for it is easier- it is taken out of your check even before you see it.

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## helmuth_hubener

> @ helmuth_hubener 
> I did find the information useful.


Thanks for letting me know.  I'm glad.




> One thing that I'm thinking of now that I'm revisiting this information and getting more serious about making my money work for me is ethical investing. There are some things I can't put my money behind profits be damned. I've been doing a little research and I can't find very good options. I've found some mutual funds but the expense ratio is too high. Any help on that front would be appreciated.


 The problem with the ethical/socially responsible mutual funds you've looked at, and any that you're likely to find, is that their ethics are going to be significantly different than your ethics, especially given that you are posting on a libertarian board.

You could make your own version of such a thing, matching your own ethical framework, with Motif.

https://www.motifinvesting.com

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