Business Owners: Why Permanent Portfolio?

In following up with our recent piece on the 5 Reasons Why You Need to Pay Attention to Permanent Portfolio we thought we would get a little more specific and identify why this portfolio fits the needs of a business owner.  Again, in no particular order...

Simplicity

I think we could all use a little more of this in our lives, but this is especially true for the hectic day-to-day life that a business owner endures.  Permanent Portfolio holds 25% positions in stocks, bonds, gold, and cash.  Once a year we rebalance the portfolio back to these 25% pieces after the market moves these percentages around throughout the year.  THAT'S IT!  This is not a portfolio that requires your attention, your worry, or your time.  There is no forecasting, guessing, or speculating.  It is simple, and it works.

Tax Efficiency

Low turnover = tax efficiency due to the fact that Permanent Portfolio requires buying and selling just once a year.  This makes this portfolio much more tax efficient than the typical bond/stock portfolio or a mutual fund where buying and selling is frequent.  Every year we are skimming our profits and rebalancing back to 25% pieces triggering small capital gains, rather than blowing out an entire asset class which could trigger large capital gains and thus more tax to be paid.  While not a point that first comes to mind when looking at Permanent Portfolio, is sure is an important one to tax-conscious business owners.

Downside Protection/Low Volatility

Business owners are always at risk.  Why not a portfolio that can significantly lower risk?  While Permanent Portfolio grabs its share of gains when times are good, is the downside protection during the tough times where Permanent Portfolio earns it's keep.  Look no further than the two days that followed the Brexit vote.  Permanent Portfolio (thanks to gold and bonds) shot up when the average investor was losing and eventually fleeing.  This is a portfolio that has a long history of downside protection while growing wealth safely.  After all.. What the wealthy really want.. is to remain wealthy.  Take a look at the image below comparing Permanent Portfolio to traditional bond/stock portfolios during periods of difficult and volatile equity markets.  The protection and outperformance is clear and fits with most business owner's needs.

CAGR = Compound Annual Growth Rate.  Figures courtesy of portfoliovisualizer.com

If you would like to learn more about Permanent Portfolio or if you have any questions please do not hesitate to contact me at brenton.kemp [at] nbc.ca

or 519-646-5713.  You can also follow us on Twitter for regular Permanent Portfolio updates @KempFamWealthMG or sign up for our Permanent Portfolio newsletter here.  Let the Kemp Family Wealth Management Group manage your risk.

*The securities or sectors mentioned herein are not suitable for all types of investors. Please consult your investment advisor to verify whether the securities or sectors suit your investor’s profile as well as to obtain complete information, including the main risk factors, regarding those securities or sectors.

 

 

 

 

To learn more, call us at 877-446-5711 or brenton.kemp [at] nbc.ca (email)