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Harry Browne’s Rules of Financial Safety (1999)

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Re: Harry Browne’s Rules of Financial Safety (1999)

#141

Post by throw0101a »

andruby wrote: post #96
jonhohle wrote: post #59

Earlier quoted context omitted.

Many people believe the price of gold is being artificially suppressed or is artificially lagging since it is not behaving the way it typically does. If it can no longer be kept low, it will probably move quickly to a true market price. Is that true? JP Morgan and Deutche Bank have been caught manipulating the price, but it would probably need to be the Fed to keep it suppressed for as long as it has been. They certa…

Or: past performance is not a guarantee for future performance. Maybe gold and inflation are no longer as correlated as they used to be.

> Maybe gold and inflation are no longer as correlated as they used to be.

Or maybe they were never correlated and people just assumed they did and never bothered looking at the data:

* https://www.nber.org/papers/w18706

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789

Re: Harry Browne’s Rules of Financial Safety (1999)

#142

Post by zo1 »

andruby wrote: post #96
jonhohle wrote: post #59

Earlier quoted context omitted.

Many people believe the price of gold is being artificially suppressed or is artificially lagging since it is not behaving the way it typically does. If it can no longer be kept low, it will probably move quickly to a true market price. Is that true? JP Morgan and Deutche Bank have been caught manipulating the price, but it would probably need to be the Fed to keep it suppressed for as long as it has been. They certa…

Or: past performance is not a guarantee for future performance. Maybe gold and inflation are no longer as correlated as they used to be.

Or me with my tinfoil hat:Gold is correlated with real value and the inflation numbers don't reflect that because they're artificially suppressed.

I.e. if gold looks flat growth wise to the dollar, maybe it's cause it actually went up in value but the dollar went down due to inflation.

Re: Harry Browne’s Rules of Financial Safety (1999)

#143

Post by latchkey »

darkclouds wrote: post #38
roenxi wrote: post #14

Rule 11 deserves a rethink. There is an official policy that cash will lose some % of its value each year! Holding 25% of your wealth in cash is planning to throwing away years of life. For this sort of dead-basic investment advice, there is no point being ready for situations where a cash position is advantageous. People are much more likely to panic, do something stupid or get ground down by inflation. It is better…

You obviously havent had your bank account frozen for no reason. I have! Trying going without cash for 6 weeks, not knowing if transactions have gone through, direct debits have been paid etc etc. Going around in legal loopholes where the bank ombundsman wont talk to you until you have exhausted the banks complaints dept, but the banks complaints dept wont talk to you, so you get no where. Its fucking legal intimidat…

I had a bank account emptied by the US govt.

The California state board of equalization (SBOE) decided that since I hadn't filed and paid taxes in Cali for a few years, that they'd just empty one of my bank accounts to collect on me. Why didn't I pay taxes? Well, I moved to Vietnam and didn't know that I still had to file a $0.

Zero warning or notice. They just emptied it. Bank even charged me a couple hundred for this 'service' on top of it.

Even after I cleared up the issue with them via my EA, I've never gotten the money back. Luckily, they hit one of my bank accounts that had a small amount of money in it, enough to not get dinged fees by the bank for them holding my money. I was only using that account to transfer money back and forth to Vietnam.

So yea... I'm with you.

Re: Harry Browne’s Rules of Financial Safety (1999)

#144

Post by kaycebasques »

DennisP wrote: post #140
kaycebasques wrote: post #136

Earlier quoted context omitted.

> Trading systems and asset allocations are not the same thing. Asset allocation is just a trading system that changes much less frequently and has a different belief system underpinning it. They are both fundamentally decision frameworks about how to spend your money. The tragedy with this article is that a lot of the advice is sound. Once people get to Rule #11 they have a lot of reason to trust this author and ado…

Nothing is bulletproof, but you have to do something and Browne's portfolio has less risk than most. It sacrifices some returns to achieve that, but if you're retired or nearly so, it's a solid choice.

Yes, exactly! Nothing is bulletproof and you have to do something. There Ain't No Such Thing As A Free Lunch. You can't depend on anyone to figure out a low-risk plan for you, not even Browne!

Re: Harry Browne’s Rules of Financial Safety (1999)

#145

Post by [deleted] »

StopTheWorld wrote: post #55

> Rule 7: Don’t use leverage. > Using margin accounts or mortgages (for other than your home) puts you at risk to lose more than your original investment. As this says, margin accounts used in a certain way can put you at risk to lose more than your original investment. However, they are sometimes necessary to make investments with little to no additional risk. For example I may own $50,000 worth of XYZ Corp. and wan…

[deleted]

Re: Harry Browne’s Rules of Financial Safety (1999)

#146

Post by xvaier »

tejohnso wrote: post #135

> You’re violating Rule #1 if you think your investments can be the sole source of your retirement wealth What? That's exactly what I'm investing for. What the hell else should I expect to fund my retirement?

It should have been phrased, "your return on investments can be the sole source of your retirement wealth."

I think what they mean is that the bulk of your wealth will be the capital that you put into your investments with a reasonable amount of interest/capital gain.

Re: Harry Browne’s Rules of Financial Safety (1999)

#147

Post by ghaff »

AlbertCory wrote: post #115

I'll call out Rule 14: Beware of tax-avoidance schemes. I'm always meeting people who are obsessed with avoiding taxes. It's better to just pay the minimum you owe legally, and sleep at night. They think "Oh, it's deductible" means "Oh, it's free."

The one (very modest) trust I have some first-hand familiarity with, I'm pretty sure the effort and legal/accounting fees over the years long ago negated any tax savings associated with it.

Re: Harry Browne’s Rules of Financial Safety (1999)

#148

Post by stouset »

gnfargbl wrote: post #131

Rule 7 (don't use leverage) really needs some additional clarification. If you're borrowing money using a mortgage in order to invest in stocks, that's probably not particularly smart. If you're taking on debt financing to grow an already-profitable business into an even more profitable business, that might be a different kettle of fish.

> If you're borrowing money using a mortgage in order to invest in stocks, that's probably not particularly smart.

If you have both a mortgage and investments, that is almost literally exactly what you’re doing.

If your mortgage is below a 4% rate, this is almost certainly a great idea. If it’s above that, it may be a reasonable approach (up to a point).

I have a mortgage at 2.375% and I can assure you I intend to pay it off over the full 30 year duration. Every early payment is an enormous opportunity cost compared to leaving it in the markets over the remaining duration.

Re: Harry Browne’s Rules of Financial Safety (1999)

#149

Post by abwizz »

tejohnso wrote: post #135

> You’re violating Rule #1 if you think your investments can be the sole source of your retirement wealth What? That's exactly what I'm investing for. What the hell else should I expect to fund my retirement?

imo it means that you should also own a place to live in.

Re: Harry Browne’s Rules of Financial Safety (1999)

#150

Post by bwanab »

prepend wrote: post #76

What’s the minimum wealth level where these are applicable? > Rule 13: Keep some assets outside the country in which you live. This is very impractical unless you have even money where 5% of your wealth international makes up for the cost to maintain. It could easily cost$5-10k in travel expenses to travel somewhere and establish accounts, plus the costs to account for and audit and maintain.

It's not only impractical, but for U.S. citizens at least, practically impossible. I lived in Switzerland as an ex-pat worker for a few years, so I had a Swiss bank account. Nothing fancy, just a regular post office bank account like 75% of Swiss people have. When I moved back to the U.S. I kept it open with a modest balance since I had a debit card I could use when I was in Europe that kept me from incurring currency conversion costs. Over the years, the U.S. regulations made it very difficult to keep it open. The bank didn't want to deal with it, so they made it hard enough that I finally closed it.

I know why the U.S. does it, but that doesn't mean that I, as an honest taxpayer, have to like it.

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