I am opening an account with Permanent funds for a mutual fund called Permanent Portfolio (PRPFX).

The fund owns gold, silver, US bonds, swiss francs, and US growth stocks.

The purpose of this fund is to pay down our mortgage. Each year we hope to put in $1000-$3000 in this fund, then somewhere around year 20 of our mortgage, we should be able to cash in the fund and pay off the mortgage.

The fund was chosen because it diversifies what we have now (we do not own 3 of the asset classes the fund holds), it should also have low taxable distribitions (gold and silver do not pay dividends and account for close to 50% of holdings). The fund needs to beat the 5.75% rate on our first mortgage and 7.25% rate we have on our second mortgage. I am anticipating a return of close to 8% per year from this fund.

2007 tax year summary:

Married filing jointly

Gross Income 103k
Adjusted Gross Income 65k
effective tax rate 8%

That was my lowest effective tax rate since working full time. I am curious what others effective tax rate is?

I have decided to use the self directed brokerage option in my 401k. It costs $20/quarter to maintain, plus transaction costs.

My plan is to put 10k into the self directed brokerage 2X each year. In the 6 months between the brokerage deposits, the money will be invested in my companies normal 401k offerings.

I will track my IRR of both and make sure my choices beat my companies choices.

Company's choices are nameless funds.
43% to domestic large caps
25% to domestic small caps
5% to company stock
15% to foreign developed markets
10% to foreign emerging markets
1% to high yield bond fund
1% to core bond fund

(no mid cap offering)

Brokerage choices will let me do 1/3 aggressive and 2/3 diversified positions.

14% PRPFX (growth)
7% ULPIX (aggressive growth-2X S&P 500)
14% PRFDX (large value diversified)
7% ADVDX (large value dividend accelerator)
10% PRDMX (diversified mid cap)
5% CGMFX (aggressive growth)
10% PRDSX (diversified small cap)
5% xxxxX (aggressive small cap- looking for this now)
20% PSLIX (diversified international)
5% xxxxX (aggressive foreign or global)
3% RPSIX (diversified bond fund)

The bond position will grow 1% from sales of all holdings every 6 months.
I will rebalance 2X per year. In June I will make sure 2/3-1/3 allocation is true. In December I will balance the whole portfolio.

Wife asked earlier in the month about making an extra mortgage payment each year, to pay it off sooner.

I suggested we take the money and invest it as a compromise. In a taxable account which could be used to pay down mortgage if one of us lost a job, or used to payoff mortgage if the money was invested properly.

She agreed to let me invest the $500-$2000 we would pay extra each year. Because the mortgage rate is 5.75%, I think I can pick just about any mutual fund and beat that. My choice is PRPFX- holds some gold, some silver, some bonds, some swiss francs and some stocks. Expecting 7-10% annual returns from Permanent Portfolio.