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on Jan 31, 2012 11:19 PM by Chrysalis
Permanent Portfolio Funds
on Jan 31, 2012 11:19 PM
I was on this forum this morning and read a post asking about permanent portfolio funds, speficiallly about PRPFX. Now I can't find that post again (it's tough to get old!) so I'll post here.
I was very intrigued by the concept of permanent portfolio funds (PPFs)-- the post this morning was the first I'd heard about them. So I looked up some info. If you're interested, check out the Wall Street Journal article at
When I left my university employer 15 years ago, I had $25,000 in my TIAA account. With no additional contributions, it's now worth $125,000. So I've done OK with managing my investments. However, my retirement is getting closer (about 5 years away) and I've decided to be more conservative with the money I'm going to need during the first 5 years of my retirement. The rest of it I will continue to play with and take some significant risks because I won't be needing it for at least another 10 years.
The problem is that traditional "conservative" investments like bonds provide almost no growth in a bull market, which frustrates me. But between the global economy and the wild swings of the stock market in recent years, equity funds are too risky for my "near term" money. What to do?
Permanent portfolio funds invest in a mathematically determined mix of stocks, bonds, gold, and T-bills. The idea is that when stocks are up bonds are down and visa versa, so they balance out. Gold will keep pace with inflation and T-bills will hold their value during depression, so you're covered either way. If the fund manager chooses the right investments and the right percentages, PPFs hold their value during bear markets but also have significant upside potential (like 8% or more) during bull markets. The funds deliberately make it very inconvenient to get your money out (few if any online services, everything notarized and sent by snail mail, etc) because they want you to invest your money and forget about it for years. You're not supposed to jump in and out the way I do with my usual mutual fund investments (a system that works for me).
If the stock market goes up and keeps going up, you will lose out on a lot of growth. But if Greece defaults, or Dubai sells short, or China calls their loans, or whatever global insanity sends the markets into a tailspin, I think I might be happy I invested in a PPF. Just wanted to share my thoughts with you.
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