Numeraire Portfolio

This portfolio of intellectual capital, physical capital and financial capital is suggested for consideration by individuals who do not have the time, inclination, skills or focus to analyze individual stocks and other investment assets to buy and hold. Skills include intelligence and memory. As a point of reference, it is reported that stock-picker Warren Buffett has a five-sigma measured IQ, a photographic memory and a nearly monomaniacal interest in investing.

Education	Best and most, where justified
Emergency Cash Fund	Six to twelve months of living expenses
Term Life Insurance	Clean-up costs at death
Primary Residence Equity	Varies in amount
Marketable Securities: Stocks	Low-cost stock market index fund
Marketable Securities: Bonds	Low-cost sovereign 10-year bond fund

Resources for education, once expended, are a sunk cost, and they should always be treated as such to avoid becoming an obstacle to the advancement of learning. The proportion of marketable securities in defensive assets (near-cash and fixed-income) and the proportion in aggressive assets (real estate equity and stock equity) vary with life expectancy, goals, risk tolerance, and other factors. A moderate allocation of 60% aggressive and 40% defensive assets can serve as a starting point, with variation to fit individual circumstances and situations. In the USA, low-cost mutual funds run by not-for-profit companies are available. A S&P 500 Index stock fund will experience lower portfolio turnover and thus higher tax efficiency, and a U.S. Total Stock Market Index stock fund will experience higher portfolio turnover and thus lower tax efficiency. Exchange Traded Funds (ETF) will experience the highest tax efficiency regardless of portfolio turnover due to the in-kind mechanism of income-tax-free exchanges of securities to avoid realizing capital gains that are recognized. A broad market ETF can offer the benefits of greater tax efficiency, lower ownership costs, greater portfolio transparency and higher liquidity. Intermediate-term U.S. government bonds and investment-grade corporate bonds are available as mutual funds and index funds. The marketable securities available to residents of the USA may differ from those available to residents of other nations. Residents of nations with strong economies, deep capital markets and stable currencies may prefer their domestic stock and bond funds to avoid the risks of foreign currency exchange rates.