Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • El Torro
    • By El Torro 4th Jan 18, 3:38 PM
    • 254Posts
    • 243Thanks
    El Torro
    The Permanent Portfolio
    • #1
    • 4th Jan 18, 3:38 PM
    The Permanent Portfolio 4th Jan 18 at 3:38 PM
    Sorry if this has been discussed already, but I found an interesting article on Monevator about something called a Permanent Portfolio:


    http://monevator.com/the-permanent-portfolio/


    I won't reiterate everything in the article as it's worth a read by itself. I'll just highlight some of the points:


    A Permanent Portfolio is made up of:


    25% in cash
    25% in gold
    25% in shares
    25% in long-term government bonds


    The idea is to rebalance the portfolio once a year, to take advantage of when certain parts peak and dip.


    What really piqued my interest was that if you had been invested from 1970 in the UK then you would have seen an annual return of 5%. Contrast that with a portfolio that has 60% shares and 40% bonds at 5.9% annual return, though with much higher volatility. So yes, the returns are higher but the ride's a lot rougher too.


    Currently in my SIPP I have 80% shares and 20% bonds. I still have a good 20 years or so before I plan to access any money in the SIPP, but maybe adding some gold to the mix would help with the volatility, due to its negative correlation with shares? I can't really see myself holding cash in a SIPP.


    What do y'all think of the permanent portfolio?
Page 2
    • k6chris
    • By k6chris 5th Jan 18, 6:42 PM
    • 188 Posts
    • 330 Thanks
    k6chris
    So what would a UK 'Lazy' portfolio look like if you were limited to 4 'things', each was 25% and you rebalanced every year??

    25% FTSE 250 (UK based exposure)
    25% Global Equity (non-UK large)
    25% Emerging Market
    25% Cash (for rebalancing in case of pull back)

    Tin hat on, so fire away
    EatingSoup
    • bostonerimus
    • By bostonerimus 5th Jan 18, 6:54 PM
    • 1,400 Posts
    • 817 Thanks
    bostonerimus
    So what would a UK 'Lazy' portfolio look like if you were limited to 4 'things', each was 25% and you rebalanced every year??

    25% FTSE 250 (UK based exposure)
    25% Global Equity (non-UK large)
    25% Emerging Market
    25% Cash (for rebalancing in case of pull back)

    Tin hat on, so fire away
    Originally posted by k6chris
    Mine would be even lazier

    60% Global cap weighted equity
    40% Global bond index

    or whatever ratio satisfies your appetite for risk.
    Misanthrope in search of similar for mutual loathing
    • kidmugsy
    • By kidmugsy 5th Jan 18, 7:23 PM
    • 9,971 Posts
    • 6,724 Thanks
    kidmugsy
    25% cash, not all necessarily in Sterling.
    25% US TIPS
    25% Far East/Pacific equities
    25% stuff i.e. gold, silver and agricultural commodities.
    Free the dunston one next time too.
    • Flobberchops
    • By Flobberchops 5th Jan 18, 7:34 PM
    • 622 Posts
    • 447 Thanks
    Flobberchops
    A quarter of your worldly possessions held in the form of gold. Yikes.

    I heard on the grapevine that gold is hideously overpriced at the moment and the precious metal to be hoarding is silver, especially the CGT-free stuff. Is there any truth to that?

    "Lazy" portfolios appeal to me. I'm an inveterate tinkerer and kettle watcher, but I still believe (almost on virtue rather than evidence) that simplicity is effective and vice versa. I'd go for something like 25% FTSE 350, 25% world equities, 25% bonds including P2P, 25% real estate, land, precious metals, signed Elvis jumpsuits, etc.
    I work for a UK bank, but any comments made on this forum are solely my personal opinion. Caveat Emptor!
    • dunstonh
    • By dunstonh 5th Jan 18, 7:42 PM
    • 90,319 Posts
    • 57,101 Thanks
    dunstonh
    So what would a UK 'Lazy' portfolio look like if you were limited to 4 'things', each was 25% and you rebalanced every year??
    A lazy portfolio is using a multi-asset fund like VLS, L&GMI or HSBC or any number of alternative multi-asset funds.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • chrisgg
    • By chrisgg 5th Jan 18, 8:17 PM
    • 45 Posts
    • 30 Thanks
    chrisgg
    The permanent portfolio seems a sure fire way to underperform benchmarks over the long term.

    I'm unsure of the tactic of placing 50% of the portfolio in assets that will offer returns below that of inflation.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

5,007Posts Today

10,459Users online

Martin's Twitter