/biz/ - Business & Finance

[Anonymous No.1118349]

A friend told me about "Fail-Safe Investing: Lifelong Financial Security in 30 Minutes".
This is the startegy:
>25% in U.S. stocks, to provide a strong return during times of prosperity. For this portion of the portfolio, Browne recommends a basic S&P 500 index fund such as VFINX or FSKMX.
>25% in long-term U.S. Treasury bonds, which do well during prosperity and during deflation (but which do poorly during other economic cycles).
>25% in cash in order to hedge against periods of “tight money” or recession. In this case, “cash” means a money-market fund. (Note that our current recession is abnormal because money actually isn’t tight — interest rates are very low.)
>25% in precious metals (gold, specifically) in order to provide protection during periods of inflation. Browne recommends gold bullion coins.

I argued that with negative interest rates and the recession coming up (that could be also a krach), this method may not be as safe as it sounds. Also, cryptocurrencies may be a game changer against fiat currencies. What do you guys think about it?

[Anonymous No.1118418]

bump

[iHaz !MILLiOnz/Q No.1118475]

>>1118349
>>25% in stocks
>>25% in bonds
>>25% in cash
>>25% in gold
It's called the "Permanent Portfolio" and its been debunked by a raft of academics and analysts since the book came out in 1999. It's an interesting thought-experiment to highlight the importance of asset class diversification, but it's not a good blueprint for an actual long-term portfolio.

[Anonymous No.1118604]

>>1118349
all you need is what people parrot most of the time


focus on reducing or removing all unnecessary dept first (pay off bills, avoid spending and creating new debt)

once debt is low, save up money in checkings/savings accounts set aside for rough times

once savings is secure (at least 6 months worth of living expenses) buy in to a total stock index fund. Since it holds every stock on the stock market, there is no reason to hold individual stocks and also has the lowest rates.

Continue to contribute to this fund over time monthly, automatically to make it seamless.

Once this is done, set up a 2nd Bond index fund, which will be your slow dividend gainer over time.

Once you have these two, everything else is unecessary because you can rebalance these two funds to suit your needs. Feeling uneasy about stocks? Transfer some of the Stock index fund to your bond fund, or vise versa.

You technically don't have to move anything as it doesn't matter the longer you leave it in there. Just contribute to both so they continue to grow and make sure to set the dividends to buy new shares.

20 to 30 years down the line you can set the dividends to transfer as income to your checking/savings.

[Anonymous No.1118610]

>pumping money into shitty fiat markets

fucking baby boomers I swear to god

[Anonymous No.1118629]

>>1118349
>75% in assets with negative real returns.

yeah good luck with tha.

[Anonymous No.1118632]

>>1118349
>Also, cryptocurrencies may be a game changer against fiat currencies. What do you guys think about it?

Nope, that's dumb. If the asset hasn't even lived through one business cycle, you have no idea how it will respond.

[Anonymous No.1118639]

>>1118349
Buy any Dave Ramsey book and read it.