Index
A
Acceptable real rate of return, 51
Assets
definition, 2
increase in, 5
Australian dollar, 53, 54, 110
capital allocation, 55
currency holdings after purchase, 56
FX account
after rebalancing, 61
ideal and actual allocations, 60
inflation rate, 53
interest rate, 53
positive real interest rate environment, 54
real rate of return, 53
B
Balance sheet
definition, 2
Miss Borderline, 3
Mr. and Mrs. Fit, 4
Mr. and Mrs. Unfit, 2
Bank, definition of, 48
Basket of commodities, 19
Benchmark rate, 54
capital allocation, 55
currency holdings after purchase, 56
FX account
after rebalancing, 61
ideal and actual allocations of, 60
inflation rate, 53
interest rate, 53
positive real interest rate environment, 54
real rate of return, 53
Brokerage account, 45
Bullion Vault Company, 44
Buy-and-hold strategy, 110–112
C
CAGR. See Compound annual growth rate
capital allocation, 55
currency holdings after purchase, 56
FX account
after rebalancing, 61
ideal and actual allocations of, 60
inflation rate, 53
interest rate, 53
positive real interest rate environment, 54
real rate of return, 53
Capital
allocation, for currencies, 55
gains, 46
gains tax, 45
implementation of, 14
objectives and types, 14
Cash flow statement, 6
expenses, reduction of, 9
income, increase in, 8
Miss Borderline, 7
Mr. and Mrs. Fit, 7
Mr. and Mrs. Unfit, 6
Cash rebalancing method, 57
Certificate of deposit (CD), 52
Compound annual growth rate (CAGR), 16, 17, 71–73
Consumer Price Index (CPI), 24
Consumer Price Index for All Urban Consumers (CPI-U), 15, 16
Counterfeiting, 22
CPI-U. See Consumer Price Index for All Urban Consumers
Currency
allocation of 100,000 US dollars, 56
real rate of return on, 53
rebalancing, 67
trading, peculiarities of, 58
types of, 53
units, supply of, 22
weighting, 55
D
DD. See Drawdown
Defunct currency, 113
Devaluation of currency. See Currency, devaluation
Discretionary expenses, 9
Dollar cost averaging, 32, 111
Drawdown (DD), 30
Dreyfus (WisdomTree), 59
E
EFA
annual rebalancing of, 34
ETF allocation, 33
creation, 108
establishment, Mr. & Mrs. Fit, 46
objective, 109
purchasing power protection, 39
alternative solution, 47
increasing emergency fund, 40
precious metals, investment on, 41
ETFs. See Exchange-traded funds
capital allocation, 55
currency holdings after purchase, 56
FX account
after rebalancing, 61
ideal and actual allocations of, 60
inflation rate, 53
interest rate, 53
positive real interest rate environment, 54
real rate of return, 53
Everbank, 57
Exchange-traded funds (ETFs), 15, 30, 59
allocation, 33
noncorrelated, 90
rebalancing, 67
ultra-short fund, 92
Expenses
discretionary, 9
mandatory, 9
F
Fiat (by decree)
counter-feiting, 22
currency, 22
achievement, 107
balance sheet, 2
cash flow statement, 6
meaning of, 1
Financial meltdown, 114
Financial nightmare, 10
Foreign currency, 52
Foreign exchange (FX) trade, 57–59
after rebalancing, 61
ideal and actual allocations, 60
G
Global Gold Company, 44
Gold (GLD)
Australian dollars, price in, 43
control, 110
ETF recommendation, 62
investment on, 41
and oil ratio, 37
prices in dollars, 36
savings account funding, 109
standard, 22
vs. US dollar, 47
GoldMoney holdings, 45
H
"Hedonic quality adjustment", 25
HELOC. See Home equity line of credit
Holding. See GoldMoney holdings
Home equity line of credit (HELOC), 48, 108
capital allocation, 55
currency holdings after purchase, 57
FX account
after rebalancing, 61
ideal and actual allocations, 60
inflation rate, 53
interest rate, 53
positive real interest rate environment, 54
real rate of return, 53
I
IB. See Interactive brokers
Income
characteristics, 8
Individual retirement account (IRA), 69
Inertia, 81
Inflation
Consumer Price Index, 24
definition, 15
financial fitness, 13
inevitability of, 22
MAR ratio, 35
negative real interest rates, 15
purchasing power, 15
rates, on currencies, 53
responsibility, 28
market performance, 30
Mr. and Mrs. Fit, seeking financial advice, 29
single-currency problem, 26
Inflation-proof emergency fund, 42
Interactive brokers (IB), 57
Interest rates, on currencies, 53
International currency, 109
Inverse Treasury Bonds (TBT), 62, 64, 110
Investment account, 14
Investment account management, 69, 111
construction of investment, 70
FARCE avoidance, 77
IRA, 69
Mr. and Mrs. Fit
portfolio managers. See Portfolio management
risk adjustment, 70
risk and return measurement, 70
drawdown (DD) percentage, 73
MAR ratio, 73
performance achievement, 74
periodic value, 73
return value, 71
uncontrolled risk, 74
risk minimization, 75
ROI, 75
trading vs. investment, 78
buy and hold investor, 79
instrument filter, 80
market selection, 79
position-sizing method, 82
rebalancing portfolio, 78
setup conditions, 81
six components, 78
trend capturing
average true range (ATR), 94, 96, 97
capital efficiency, 99
financial spending, 86
instrument filter (see Exchange-traded funds)
market selection, 88
risk per share calculation, 98
setup condition, 93
true range, 94
volatility, 98
XLQ, 97
Investment portfolio ETFs, 113
iShares Trust Barclays 20+ Year Treasury Bond Fund, 62
J
capital allocation, 55
currency holdings after purchase, 57
FX account
after rebalancing, 61
ideal and actual allocations, 60
inflation rate, 53
interest rate, 53
positive real interest rate environment, 54
real rate of return, 53
L
Liabilities
decrease in, 5
definition, 2
Liquidity, migration of, 113
Low/negative real interest rate environment, 61
M
Managed Account Reports (MARs) ratio, 31, 35
Mandatory expenses, 9
Market performance, 30
Momentum, 81
Monetary policy, 21
Money supply, factors affecting, 22
N
Negative net worth, 2
Negative real interest rate
reduction in, 15
Negative real rate of return, 26
Net capital gain, 45
Net cash flow calculation, 6
Net liquidation value (NLV), 97, 98
Net worth, 2
capital allocation, 55
currency holdings after purchase, 57
FX account
after rebalancing, 61
ideal and actual allocations, 60
inflation rate, 53
interest rate, 53
positive real interest rate environment, 55
real rate of return, 53
P
Palladium (PALL)
control, 110
ETF recommendation, 62
investment on, 41
savings account funding, 109
Passive income, 8
Periodic rebalancing, 35
Perth Mint, 44
Platinum (PPLT)
control, 110
dollar allocation, 64
ETF recommendation, 62
investment on, 41
savings account funding, 109
Portfolio management
ETF and poor performance, 104
skills acquisition, 104
statistics, 105
Positive net worth, 2
Positive real interest rate environment, 52, 54
Precious metal(s)
ETFs, 109
holdings of, 45
investment companies, 44
investment on, 41
emergency fund establishment, of Mr. & Mrs. Fit, 46
Gold vs. US dollar, 47
GoldMoney, working of, 45
inflation-proof emergency fund, 42
practical problems, 43
owing, 112
Procrastination, 107
brokers going out of business, 114
defunct currency, 113
emergency fund creation, 108
financial fitness achievement, 107
financial meltdown, 114
GoldMoney, 113
investment account management, 111
investment portfolio ETFs, existence of, 113
owing precious metals, 112
precious metals ETFs, existence of, 113
savings account, funding of, 109
Purchasing power
emergency fund
maintenance, 40
protection, 39
reduction in, 15
Q
Quote currency, 58
R
Rake, 75
Random walk strategy, 117
Real rate of return
on currencies, 53
definition, 52
Rebalancing model curriencies vs. ETFs, 67
money and investment, 120
probability, 120
Recurring income, 9
Repeatable income, 9
Return on investment (ROI), 75
in TIP, 17
in TLT, 18
Risk-adjusted return, 66
Rydex (CurrencyShares), 59
S
S&P 500
index, 112
Savings account
funding of, 109
objective, 14
Savings and working capital, 51
acceptable real rate of return, 51
historical results, 65
low/negative real interest rate environment, 61
positive real interest rate environment, 54
currency trading, peculiarities of, 58
Scalable income, 8
Silver (SLV)
control, 110
ETF recommendation, 62
investment on, 41
savings account funding, 109
Single-currency problem, 26
Single-currency risk, 26
Smart money, 42
Sound investment, 31
SPY, 33
annual rebalancing of, 34
S&P 500 dollar cost averaging, 32
S&P 500 investment return, 31
capital allocation, 55
currency holdings after purchase, 57
FX account
after rebalancing, 61
ideal and actual allocations, 60
inflation rate, 53
interest rate, 53
positive real interest rate environment, 55
real rate of return, 53
capital allocation, 55
currency holdings after purchase, 57
FX account
after rebalancing, 61
ideal and actual allocations, 60
inflation rate, 53
interest rate, 53
positive real interest rate environment, 55
real rate of return, 53
T
Time-for-money income, 8
TIP security. See Treasury Inflation Protected (TIP) security
annual rebalancing of, 34
return on investment in, 18
Trading Blox, 66
Treasury Inflation Protected (TIP) security
return on investment in, 17
savings and working capital, 62
US dollar allocation, 64
U
United States (US) dollar, 53, 64, 110
capital allocation, 55
currency holdings after purchase, 57
FX account
after rebalancing, 61
ideal and actual allocations, 60
vs. Gold, 47
Index, 27
inflation rate, 53
interest rate, 53
positive real interest rate environment, 55
real rate of return, 53
Useful online resources
consumer price index, 122
economics and statistics, 122
interactive brokers, 122
interest rate, currency, 122
precious metals, 121
products, 122
trading and investment, 121
Z
Zero percent tax bracket, 17