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"Safe stuff"
Rating: 1.63 (16 votes)
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Long term investments need to be anchored in stability as well as sufficiently exposed to growth. I consider "safe stuff" to be CDs, money market funds, treasuries, short term, and intermediate term high quality corporate bonds, Ginnie Mae funds, foreign currency funds, commodities funds, high yield bond funds and foreign bond funds, in safest to least safe order. (I don't get involved in individual bonds.) Do you rate the "safety range" in the same way or include other investment categories? Please post your comments. In the family trust I'm responsible for, 46% of assets are in "safe stuff" at the moment. There is never less than 40% because that represents the current risk tolerance level of the family as a whole. My own personal long term investments are 20% in "safe stuff", currently almost entirely in CDs and money market funds paying over 5%, the safest of the safe with a respectable return during turbulent times. For the hypothetical Bicycle Trust that is my Strategy Lab portfolio, I'm assuming a more risk-tolerant family group and chosen a 28% allocation to "safe stuff". Because the Strategy Lab "pays" only 1% cash interest, I've been looking for alternatives for my 28%. I'm very leery of bonds since Pimco's Bill Gross said in late spring that he feels we're entering a long term bear market in bonds. Since I'm not using bonds in real life, I don't want to use them in this portfolio either. The main alternative I've chosen, DBV previous post, has been doing quite well (up 2.57% in 7 days). I recently bought a small amount of UDN, an exchange-traded fund that tracks the price and yield performance of the Deutsche Bank Short US Dollar Futures Index. The index is comprised solely of short futures contracts designed to replicate the performance of being long the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc. It's also up slightly (0.19% in 3 days). I'd be very interested in any thoughts you have on other possibilities. | ||
