Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Harry Browne’s Rules of Financial Safety (1999)

thetaoofwealth.wordpress.com

Post reply on HN
Print view View original

181–190 of 245 posts

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

#181

Post by ghaff »

dehrmann wrote: post #125
dalyons wrote: post #77

Earlier quoted context omitted.

Not missing. “ The cash portion should be kept in a money market fund investing only in short-term U.S. Treasury securities, so that you don’t have to evaluate credit risk. These securities are safer than bank accounts”

The funny lesson I got from SVB was why bother putting cash in a bank when they're just going to put it in treasuries, MBSes, etc. It's not exactly insured, but a short-term government money market fund seems safer, or a state muni fund if you're worried about the federal government defaulting.

>why bother putting cash in a bank

In general, banks are set up to deliver consumer services that brokerages are not. However, in these days where treasury funds have ~5% interest rates, it makes sense to keep checking account balances at a level that they have a comfortable buffer for your preferences but no higher.

I see my brokerage makes the case for maybe not needing a separate bank. Which may be true at this point. On the other hand having one doesn't really cost me much and would probably be a bit of a pain to change.

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

#182

Post by jamesaurichs »

roenxi wrote: post #39
ghaff wrote: post #27

Earlier quoted context omitted.

>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. That depends on lots of things including how old you are and the current economic situation. For someone on the older side, getting a very low risk 5% on a chunk of their money doesn't seem like a half-bad strategy at the moment espe…

They could hold gold. Similar risk profile, much more likely to hold value long term and be better to hand on to the kids if there is some left over. I'm not saying cash is so terrible that a nervous, confused and delicate grandma can't just eat the losses for security. I mean, sure. If you think you're probably going to lose money anyway then 10%! But a 25% allocation by default is just giving money to wealthy men w…

Note that this OP probably has some agenda against dollar, being that in another comment before https://news.ycombinator.com/item?id=37046128#37047171 they said

"Yeah, for example China's position of overwhelming strength vs. weak little USoA meant that China's wages have risen by an order of magnitude and their technology catapulted into the present century, building them in to the world's largest economy."

Just a subtle subterfuge against dollar if I had to guess

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

#183

Post by Tempest1981 »

thenerdhead wrote: post #120
soared wrote: post #33

Earlier quoted context omitted.

This is true historically where you needed to pick an individual advisor who managed your portfolio based on their experience/etc. That’s not really how the major companies like fidelity run it anymore - an advisor gets their certification and then fully plays by the playbook and isn’t allowed to even have their own track record. So you’re not getting some guys advise, you’re getting a company’s extremely researched…

The point of much of Harry Browne’s work is to be self-reliant and not trust the government nor big companies with your life decisions such as investments. Stop fooling yourself that these big companies are looking into your best interests. They aren’t. They are looking for ways to make activity on your investments and collect fees.

Ok, but I know people who invest poorly and never rebalance. It's not a priority for them. Professional help would be a win-win for both, even after fees.

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

#184

Post by splintercell »

theshrike79 wrote: post #173
nottorp wrote: post #118

Earlier quoted context omitted.

"In November 2021, N26 announced that it would be pulling out of the United States in January 2022, leading to the closure of approximately 500,000 accounts. American customers were no longer be able to use its app after January 11, 2022." This is the bank you linked to?

I'm also not American, like most of the world =)

Yeah so the Obamacare regulations took care of the American financial isolation.

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

#185

Post by alluro2 »

nemo wrote: post #94
darkclouds wrote: post #38

Earlier quoted context omitted.

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…

>just look at the sanctions done to Russians when the West decides to stoke a war! Worth noting that the sanctions on Russia were due to Russia invasions of neighbors like Ukraine (and Georgia), not "the West" deciding to stoke a war. "The West" was using sanctions to _avoid_ stoking a war in responding to Russia's various military offensives against neighbors.

If you're actually interested in having an informed opinion on the matter, it might be useful finding out more about history of NATO vs USSR, expansion of NATO and dynamic of relationship between NATO and Russia, and EU and Russia in the last ~20 years. Not defending anyone, nor do I have any horse in the game, but as usual, reality is not black and white, and there's a broader history of moves and counter-moves that lead to this point. So "the West stoke a war" is not simply and obviously false (neither it is one-dimensionally true).

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

#186

Post by glitchc »

nly wrote: post #161
hammock wrote: post #158

Earlier quoted context omitted.

Why get hung up on the percentages? Isn’t that bike shedding? The principle is what matters. Take the wealth you can’t afford to lose, and put it in a balanced portfolio that seeks to match the performance of the market so that you don’t fall behind your peers. So look at your peers (your socioeconomic class) and match the average portfolio. For a tech wagie, a 60/40 for the older folks or 80/20 for the younger folks…

Most UHNWIs have the majority of their liquid wealth in public stocks, real estate and bonds. It's a bit of a myth that they have exotic investment tastes (once you eliminate equity in their own businesses)

Modern UHNWI individuals in the tech markets are almost entirely stock in their own company(ies). It's paper money against which they borrow to fund their lifestyle. They do sell this stock from time to time, but mainly to pay off debt. If they sold everything all at once, the stock would tank, taking their wealth along with it.

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

#187

Post by prepend »

sacado2 wrote: post #175
oezi wrote: post #20

The asset split of 25% each of gold, stocks, bonds and cash would have fared relatively bad over the years since 2007-09.

6% or so per year, in fact. Not so bad.

Worse than a more typical 80% stock/15% bonds/5% cash.

Having half your assets in cash and gold is very not smart.

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

#188

Post by nemo »

alluro2 wrote: post #185
nemo wrote: post #94

Earlier quoted context omitted.

>just look at the sanctions done to Russians when the West decides to stoke a war! Worth noting that the sanctions on Russia were due to Russia invasions of neighbors like Ukraine (and Georgia), not "the West" deciding to stoke a war. "The West" was using sanctions to _avoid_ stoking a war in responding to Russia's various military offensives against neighbors.

If you're actually interested in having an informed opinion on the matter, it might be useful finding out more about history of NATO vs USSR, expansion of NATO and dynamic of relationship between NATO and Russia, and EU and Russia in the last ~20 years. Not defending anyone, nor do I have any horse in the game, but as usual, reality is not black and white, and there's a broader history of moves and counter-moves that…

In fact I'm actually very familiar with that history already. Russia has justified their military invasions and occupations of neighbors by claiming that their actions were a result of NATO's actions, but this is in my opinion after having considered the evidence to be a ridiculous pretext. At no point did NATO actually force Russia to roll their military forces across the borders of their neighbors despite Russia's obviously false claims to that effect.

This is a case where pro-Russian propagandists have made a lot of headway in both-sides-ing an issue which was unilateral. Repeating that propaganda isn't a nuanced or informed take, it's rationalizing and justifying war crimes.

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

#189

Post by jordanpg »

soared wrote: post #33
thenerdhead wrote: post #11

Earlier quoted context omitted.

Rule #1 literally talks about why you don't. > Can you make big profits by relying on an expert who does have the proper qualifications? How do you find a true expert? That task is no easier than picking the right investments. If you don’t understand investing as well as the pros, you won’t know how to check those who seek to advise you. And you can’t rely on an advisor’s track record, even when it’s presented honest…

This is true historically where you needed to pick an individual advisor who managed your portfolio based on their experience/etc. That’s not really how the major companies like fidelity run it anymore - an advisor gets their certification and then fully plays by the playbook and isn’t allowed to even have their own track record. So you’re not getting some guys advise, you’re getting a company’s extremely researched…

The issue is that these "advisors" have to get paid. And if you are paying for mass-produced advice, the margins are guaranteed to be small. This is the kind of advice that you can easily get if you research it, but might still be work intensive or error-prone to implement. The happy medium is robo-advisors, that get paid slightly less and implement the strategies for you.

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

#190

Post by kqr »

javanissen wrote: post #88
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…

I don’t follow the Harry Browne portfolio advice, but I have read Craig Rowland’s very good book about it [0], and I disagree. The Permanent Portfolio has had pretty good overall returns extremely consistently despite its low (25%) stock allocation because it holds four assets with poor correlation and rebalances between them, and because one of them is cash. These assets each do well under different economic conditi…

> Ultimately I think your objection to the portfolio is because you think it’s advantageous to take on more risk. For a young investor with high risk tolerance I agree with you,

I agree with everything you write except this bit deserves an expansion.

There is a growth-optimal balance between assets and it depends only on the joint probabilities of future returns, which means it's unknowable -- but it also means it depends not at all on the age of the investor. (Which makes sense, if you think about it -- why would the optimal growth rate depend on the age of the person owning the money?)

However, the optimal growth rate is only guaranteed asymptotically, and aiming for it could result in some wild swings up and down before getting there, so for people without infinite time on their hands it makes sense to keep a higher proportion of wealth in low-risk assets.

Post reply on HN