Lyt til Risk Parity Radio

In this episode we answer emails from Jeff, Jenzo and Sam.  We discuss spending money on relationships, a 72(t) situation, what to do with an unused Coverdell, GDE (again), a nice risk parity write-up and some random musings about the history of free speech and communications technologies. And THEN we our go through our weekly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio [https://www.riskparityradio.com/portfolios]. Additional links: Jenzo's GDE Backtest:  testfol.io/?s=0SLNjC7As4b [https://testfol.io/?s=0SLNjC7As4b] Sam's Most Excellent Risk Parity Explication Blog Post:  15 Uncorrelated Assets | SSiS [https://www.societalsatireinshorts.com/m3/15-uncorrelated-assets] Sam's Most Excellent Bill Of Rights Blog Post:  Boxed In | SSiS [https://www.societalsatireinshorts.com/m3/boxed-in] Breathless Unedited AI-Bot Summary: When markets tumble and headlines scream doom, properly diversified portfolios reveal their quiet strength. This episode showcases exactly that phenomenon - while small cap value has plummeted 15.58% and the S&P 500 has shed 5.74% year-to-date, gold has soared a remarkable 25.87%, creating a balancing effect that keeps risk parity portfolios remarkably stable. We dive into listener Jeff's retirement strategy, examining his use of 72T distributions and exploring whether his recent RV purchase makes financial sense. The answer turns out to be more about relationships than raw numbers. Research shows expenditures that facilitate meaningful connections tend to yield the greatest happiness returns - a powerful framework for evaluating major purchases in retirement. The emerging world of composite leveraged ETFs takes center stage as we examine GDE, which combines S&P 500 exposure with gold allocation at 1.8x leverage. While innovative funds like these package risk parity principles into convenient solutions, they represent a tradeoff between simplicity and control. We explore whether these instruments belong in a sophisticated asset allocation strategy or if traditional single-asset funds still offer superior flexibility. For investors fascinated by portfolio design theory, we tackle the question of just how many truly uncorrelated assets one needs. While hedge funds and endowments might pursue 15+ distinct asset classes, diminishing returns suggest a more practical approach for individual investors. The mathematical reality shows the incremental benefit of adding that 11th or 12th asset pales in comparison to the impact of moving from one or two assets to five diverse investments. Our weekly portfolio review reveals the practical power of these principles. Despite market turmoil, most of our sample portfolios remain nearly flat or slightly positive for the year - precisely the stability risk parity promises. Whether you're just beginning your investment journey or fine-tuning an established strategy, this episode offers both theoretical frameworks and practical evidence for building resilient portfolios in uncertain times. Ready to hear more? Subscribe, leave a review, and send your questions to frank@riskparityradio.com. Support the show [https://www.riskparityradio.com/support]

In this episode we answer emails from Marco Esquandolas and Multi-Family Investor.  We discuss a long-term diversified Roth portfolio for a 13-year old, modelling Delaware Statutory Trusts in a portfolio, transitioning out of an all S&P 500 allocation in a taxable account, PFIX, Sabine Royalty Trust and individual stocks in retirement portfolios, and M1 Finance. Note/Correction:  Sabine is actually NOT structured like an MLP but as a true trust and therefore issues 1099s, not K-1s like most companies in the oil & gas royalty space. Links: Shannon's Demon Article:  Unexpected Returns: Shannon's Demon & the Rebalancing Bonus – Portfolio Charts [https://portfoliocharts.com/2022/04/12/unexpected-returns-shannons-demon-the-rebalancing-bonus/] IDMO vs EFG (and other international growth funds) Analysis:  testfol.io/analysis?s=4PEQ1YvTbAM [https://testfol.io/analysis?s=4PEQ1YvTbAM] Breathless Unedited AI-Bot Summary: Dive into the world of strategic portfolio building with this illuminating episode where Frank tackles questions from two distinct investors at opposite ends of the age spectrum. A father shares his 13-year-old son's Shannon's Demon-inspired portfolio that's being built for an ultra-long 50+ year time horizon, featuring a balanced approach to growth and value across both domestic and international markets. Frank offers targeted advice on fund selection while celebrating this young investor's precocious financial journey. The conversation shifts dramatically when an engineer earning $250,000-300,000 annually shares his detailed retirement strategy with hopes of financial independence before 50. With $3.4 million spread across multiple investment vehicles including real estate, this listener puzzles over how to transition to a risk parity portfolio without triggering a substantial tax bill. Frank methodically dissects several aspects of this complex situation, questioning the wisdom of backdoor Roth conversions during peak earning years and clarifying misconceptions about Delaware Statutory Trusts as bond substitutes. What makes this episode particularly valuable is Frank's blend of technical advice and practical wisdom. He cuts through complex tax and investment strategies to offer straightforward solutions - identifying tax-loss harvesting opportunities, rethinking account structures, and focusing on expenses rather than arbitrary portfolio targets. The discussion extends to specialized investments like royalty trusts and interest rate hedges, providing listeners with a masterclass in portfolio construction that balances theoretical ideals with real-world constraints. Whether you're managing investments for the next generation or planning your own early retirement, this episode delivers actionable insights on building resilient, tax-efficient portfolios tailored to your unique circumstances. The principles shared apply across market conditions and investment goals, making this essential listening for any DIY investor seeking to optimize their financial future. Support the show [https://www.riskparityradio.com/support]

In this episode we answer emails from El Yama, Graham, and James.  We discuss using risk parity-style portfolios for intermediate term needs, the short-term bond allocation in the Golden Butterfly, accounting for child credit, rising equity glidepaths, the fundamental differences between 100% stock portfolios and diversified portfolios and why you want the latter for retirement unless your goal is to die with the most money, and a CAPE ratio critique from Meb Faber's podcast. And THEN we our go through our weekly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio [https://www.riskparityradio.com/portfolios]. Additional links: Kitces Article re Rising Glidepaths:  The Benefits Of A Rising Equity Glidepath In Retirement [https://www.kitces.com/blog/should-equity-exposure-decrease-in-retirement-or-is-a-rising-equity-glidepath-actually-better/] Kitces/Pfau Paper re Rising Glidepaths:  Reducing Retirement Risk with a Rising Equity Glide-Path by Wade D. Pfau, Michael Kitces :: SSRN [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2324930] Meb Faber Podcast with Brian Jacobs discussing problems with CAPE ratio predictions:  A Century of No Return! The Truth About The Beloved Bonds (Brian Jacobs of Aptus Reveals) [https://www.youtube.com/watch?v=7XK5_8zAriM&t=2819s] Breathless Unedited AI-Bot Summary: "A foolish consistency is the hobgoblin of little minds," begins this thought-provoking exploration of why most investors are trapped in accumulation-phase thinking even as they approach or enter retirement.  The question at the heart of this episode strikes at a surprising disconnect in personal finance: Why do so many investors intellectually understand they're investing to enjoy retirement, yet construct portfolios clearly designed to maximize wealth at death?  Through a series of illuminating listener emails, Frank unpacks how portfolios optimized for accumulation often fail spectacularly during the decumulation phase. One listener confesses he "always wondered why anyone would buy bonds when clearly stocks give a far greater return," before discovering through portfolio testing that a 100% equity portfolio would have "failed catastrophically" for someone retiring around 2000-2003. This recognition—that diversification isn't about maximizing returns but enabling sustainable withdrawals—represents the fundamental insight many investors miss until too late. As Frank colorfully puts it, if your goal is to "die with the most money possible" in your "golden coffin," then by all means stick with 90-100% equities. But if you actually intend to enjoy your retirement by spending more than 3% of your portfolio annually, a properly diversified approach becomes essential. The episode also addresses why attempts to use valuation metrics like CAPE ratios to predict market movements have largely failed, and why separating your portfolio into growth and value components offers a more reliable approach to capturing rebalancing bonuses without attempting market timing. Make sure your investment behavior actually matches your stated goals. If you're planning to spend in retirement, construct a portfolio that optimizes for sustainable withdrawals, not maximum theoretical returns. Support the show [https://www.riskparityradio.com/support]

In this episode we answer emails from Corn Pop, Dustin and Jim.  We discuss annuities for elderly parents, TIPS ladders in retirement, REITs in small cap value funds, currency speculation, the GDE fund (again) and an aggressive portfolio construction. Link: Interview of Michael Kitces Re Problems With TIPS Ladders:  Michael Kitces: How Higher Yields Affect Asset Allocation and Retirement Planning | Morningstar [https://www.morningstar.com/financial-advisors/michael-kitces-how-higher-yields-affect-asset-allocation-retirement-planning] Breathless and Promotional AI-Bot Summary: Dive into the mailbag as Frank tackles complex investment questions with his signature blend of expertise and pop culture references. This episode unpacks several critical financial planning dilemmas that challenge conventional wisdom. First, Frank examines when annuities make sense for elderly parents, explaining how health prospects and longevity expectations should guide this decision. For those likely to outlive actuarial tables, annuities can provide financial value and simplify management—but they're far from universally beneficial. Frank introduces Qualified Longevity Annuity Contracts (QLACs) as a strategic option for those concerned about funding long-term care in their later years. The conversation shifts to a provocative take on TIPS ladders, with Frank describing long-term ladders as "a flex for hoarders" rather than necessary financial tools. He argues these complicated structures work best for defined periods with specific purposes—like bridging to Social Security—not as decades-long income vehicles that will inevitably be either too long or too short for your actual lifespan. Currency speculation, Bitcoin, and aggressive portfolio construction round out the episode's explorations. Frank explains how currency exposure already exists implicitly in international stocks and gold without dedicated speculation, evaluates an aggressive portfolio with substantial Bitcoin allocation, and questions whether dividend stocks belong in accumulation strategies. Throughout, Frank balances technical analysis with practical wisdom, reminding listeners that personalized investment approaches must account for individual circumstances rather than following generic advice. Whether you're managing a retirement portfolio or building wealth, you'll gain valuable perspective on how the finest investment strategies align with your actual needs rather than theoretical ideals. Want your questions answered on a future episode? Email frank@riskparityradar.com and don't forget to subscribe and leave a review! Support the show [https://www.riskparityradio.com/support]

In this episode we answer emails from Jeremy, Brad, and James.  We discuss a more aggressive risk-parity portfolio similar to the Weird Portfolio, the problems with data analysis and recency bias and considerations in accounting for Social Security or pensions in retirement portfolio planning. And THEN we our go through our weekly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio [https://www.riskparityradio.com/portfolios]. Additional links: Jeremy's Portfolio on Portfolio Visualizer:  https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=LDhLHuhVF5zOKfTZckLT7 Weird Portfolio:  Weird Portfolio – Portfolio Charts [https://portfoliocharts.com/portfolios/weird-portfolio/] Testfolio Portfolio Comparison (90/10 vs. 50/50):  https://testfol.io/?s=2TDnqWEw5FE Bogle Interview (re Social Security):  Jack Bogle on Index Funds, Vanguard, and Investing Advice [https://www.youtube.com/watch?v=MLgn_kVKjCE&t=605s] Kitces Interview (re Social Security):  Social Security: Part of Your Asset Allocation? [https://www.youtube.com/watch?v=uN2xhIPYMm4] Breathless AI-Bot Summary:   "A foolish consistency is the hobgoblin of little minds," begins this episode, capturing the essence of breaking away from conventional investment thinking. Stepping into Frank's metaphorical "dive bar of personal finance," listeners are treated to an exploration of portfolio diversification during turbulent market conditions. Frank tackles three thought-provoking listener questions that challenge common investing assumptions. First, he analyzes a balanced portfolio proposal with equal allocations to large-cap growth, small-cap value, REITs, long-term treasuries, and gold, explaining why this more aggressive risk parity approach shows promising safe withdrawal rates. The conversation shifts to the dangers of recency bias when a listener questions the underperformance of a 50-50 small-cap value/large-cap growth portfolio over just five years. Frank emphasizes that even a decade of data can be "just noise" when evaluating investment strategies, reminding us to focus on performance during challenging market periods rather than recent returns. Perhaps most compelling is Frank's fresh perspective on integrating Social Security into financial planning. Challenging the notion that Social Security should be viewed as fixed-income allocation, he suggests treating it more like an annuity that reduces expenses rather than an asset within your portfolio. This shifts the conversation from wealth preservation to life maximization, encouraging retirees to consider increasing discretionary spending rather than hoarding assets. The weekly portfolio review reveals a fascinating market story: while the S&P 500 has fallen 8.64% year-to-date and small-cap value has plummeted 19.69%, gold has surged 23.12%. This perfect illustration of risk parity principles shows how properly diversified portfolios maintain remarkable stability despite individual asset volatility. The unlevered sample portfolios remain down less than 1% year-to-date, demonstrating the power of hearing that "different drummer" when constructing your investment approach. Have questions about building your own diversified portfolio? Email frank@riskparityradio.com or visit the website to connect directly. Don't forget to subscribe and leave a review wherever you listen to podcasts! Support the show [https://www.riskparityradio.com/support]