How to Invest in Bonds for Deflation Protection

The four asset classes in a Permanent Portfolio include stocks, bonds, cash and gold. Each asset course hedges against one of the four economical conditions: inflation, deflation, prosperity and recession. We primarily spend 25% each into each asset class and then rebalance the whole stock portfolio when one of the asset classes reaches a 35% or 15% rebalancing trigger. Making use of the Permanent Portfolio Expenditure Strategy provides us with these benefits: more information

Great comes back: it gained over 8% per year over the last 40 years with low volatility.

Diversification: using multiple asset classes helps mitigate risk as we are generally not putting all of our eggs in a single basket. 

Economic condition allocation: each asset category behaves differently depending on what is going on in our economy. Stocks and options are for prosperity, a genuine are for deflation, silver is made for inflation and cash is made for recession.

Low cost: we can implement the Permanent Portfolio with an gross annual expense of only 0. 15% or the industry average of just one. 03%. This places additional money in your bank and less in their own.

Reduces investing fear and greed: because we are by using a systematic approach to investing, we could taking thoughts out of the picture. Emotions are your biggest barrier to investing success.

No market timing or guessing which asset course will outperform. It does not get any easier than this.

Easy to deal with: the Permanent Portfolio is a low maintenance strategy; it will take you only a couple of minutes each season to self-manage your opportunities.
We only buy long lasting nominal treasury bonds with maturities of 25 or more years for the Permanent Portfolio. No GUIDELINES, corporate, municipal or international bonds. We use treasuries for safety reasons and so they help mitigate the pursuing risks:

No default risk. Governments can print more money to pay their obligations.

No call risk. These bonds are not callable like some business or municipal bonds can be.

No currency risk as these bonds are denominated in your local currency.

No outside politics risk.
We hold these treasury bonds until they reach 20 years remaining to maturity. We then sell them and then buy new long-term binds. While we hold the bonds they are paying us interest income. All of us allocate this earned interest income to our Dollars asset class. There is an inverse relationship between bond prices and interest rates. When interest levels go up, bond prices decrease. And vice versa. We all hold bonds for decrease protection. Interest rates land during a deflation which cause bond prices to increase. If this attachment investing seems too complicated for you, explore using the iShares TLT which is a low-cost long term treasury bond exchange bought and sold fund (ETF). In case you live outside the USA, you have to be able to find an equivalent for your country. I hold the a genuine directly and don’t use a fund.