In this episode we explore one big long answer to an email from Bob about why people refuse to spend money in retirement despite having more than adequate resources. We touch on the math and psychology of the Possibility Effect and how to use Base Rates to overcome that, what the numbers say you really should be afraid of, how to break down expenses to alleviate fears and the real underlying problem in many cases, which is not fear, but personal identity rooted in "Frugality Inertia."
And THEN we our go through our weekly and monthly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.
Books Referenced:
"The Top Five Regrets of the Dying" by Bronnie Ware
"Falling Upward" by Richard Rohr
"Strength to Strength" and "Build The Life You Want" by Arthur Brooks
"The Second Mountain" by David Brooks
"The Soul of Wealth" by Daniel Crosby
"The Art of Spending Money" by Morgan Housel
"Die With Zero" by Bill Perkins
Additional Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
Morgan Housel Podcast: The Morgan Housel Podcast, Episode 1: The Art of Spending Money
Narrative Psychology: How to tell stories that give you meaning | Jane Goodall, Terry Crews & Dan McAdams
ChooseFI Pod #508: 508 | 5% SWR, Revealed Preferences, and the 3 Stories | Frank Vasquez
Four Idols Video: https://tinyurl.com/4vua3eb2
Satisficing: Satisficing - Wikipedia
Breathless AI-Bot Summary:
This episode tackles the psychology behind the "golden coffin" phenomenon – wealthy retirees who maintain sub 3% withdrawal rates, essentially ensuring they'll die with maximum assets. While justified as prudent planning, the real barriers to enjoying retirement wealth are more complex and fascinating.
We dive into cognitive science, exploring how the "possibility effect" (identified by Kahneman and Tversky) distorts our risk perception. Your brain amplifies the tiny probability of running out of money while downplaying the vastly higher probability of running out of time. A 55-year-old man has an 11.3% chance of dying within 10 years – yet many obsess over financial scenarios with less than 1% probability of occurring.
Beyond cognitive biases lies an identity crisis. Many successful investors have spent decades defining themselves through wealth accumulation. This "frugality inertia" becomes so embedded in self-image that spending feels wrong, even when mathematically sound. The financial services industry exploits these fears, selling products that promise impossible certainties while encouraging hoarding behaviors.
The solution? Reframing retirement spending around four evidence-based wellbeing categories: relationships, experiences, work avoidance (paying for freedom from tedious tasks), and giving. These categories reliably generate happiness returns far superior to watching account balances grow. For those struggling to make this psychological transition, books like "Falling Upward" (Rohr), "Strength to Strength" (Brooks), and "The Soul of Wealth" (Crosby) provide frameworks for evolving beyond accumulation as life purpose.
What retirement story are you living? The miser who dies rich but unfulfilled, or the transformed Scrooge who discovers generosity's joy? The choice defines not just your retirement, but your legacy.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Voices (00:01):
A foolish consistency is the hobgoblin of little minds,
adored by little statesmen andphilosophers and divines.
If a man does not keep pace withhis companions, perhaps it is
because he hears a differentdrummer, a different drummer.
Mostly Mary (00:19):
And now, coming to you from dead center on your
dial, welcome to Risk ParityRadio, where we explore
alternatives and assetallocations for the
do-it-yourself investorBroadcasting to you now from the
comfort of his easy chair.
Here is your host, frankVasquez.
Mostly Uncle Frank (00:37):
Thank you, Mary, and welcome to Risk Parity
Radio.
If you have just stumbled inhere, you will find that this
podcast is kind of like a divebar of personal finance and
do-it-yourself investing.
Voices (00:52):
Expect the unexpected.
Mostly Uncle Frank (00:55):
It's a relatively small place.
It's just me and Mary in hereand we only have a few
mismatched bar stools and someeasy chairs.
Voices (01:09):
We have no sponsors, we have no guests and we have no
expansion plans.
I don't think I'd like anotherjob.
Mostly Uncle Frank (01:14):
There are basically two kinds of people
that like to hang out in thislittle dive bar.
You see, in this world there'stwo kinds of people my friend,
the smaller group are those whoactually think the host is funny
, regardless of the content ofthe podcast.
Voices (01:31):
Funny how, how am I?
Mostly Uncle Frank (01:32):
funny.
These include friends andfamily and a number of people
named Abby.
Voices (01:39):
Abby, someone Abby who.
Abby normal, abby normal Abbeynormal.
Mostly Uncle Frank (01:48):
The larger group includes a number of
highly successful do-it-yourselfinvestors, many of whom have
accumulated multi-million dollarportfolios over a period of
years.
Voices (02:02):
The best, jerry the best .
Mostly Uncle Frank (02:04):
And they are here to share information and
to gather information to helpthem continue managing their
portfolios as they go forward,particularly as they get to
their distribution ordecumulation phases of their
financial life.
Voices (02:23):
What we do is, if we need that extra push over the
cliff, you know what we do Putit up to 11.
11, exactly.
Mostly Uncle Frank (02:30):
But whomever you are, you are welcome here.
I have a feeling we're not inKansas anymore.
But now onward, episode 436.
Today on Risk Party Radio.
Mostly Mary (02:46):
It's time for the grand unveiling of money Onward
episode 436.
Voices (02:48):
Today on Risk Parity Radio.
Mostly Uncle Frank (02:51):
It's time for the grand unveiling of money
, which means we'll be doing ourweekly portfolio reviews of the
eight sample portfolios thatyou can find at
wwwriskparityradiocom on theportfolios page, and we'll also
be talking about our monthlydistributions Boring, but before
we get to that, first I'd liketo remind you that we are
(03:11):
working on improving the websitewith our volunteer, luke from
Quebec.
Voices (03:17):
We have top men working on it right now.
Who Top?
Mostly Uncle Frank (03:26):
men and we are collecting comments on the
alternative, which you can findat wwwriskparityradiocom and go
to the top and click on the altsite button and you can check
that out in demo form.
We're collecting comments onthat.
We've got a bunch of goodcomments so far.
(03:47):
If you'd like to comment on itsappearance, don't worry about
its functionality right now.
Please send me an email tofrankatriskparityradiocom and we
will collect your comment inthe comment pile for that and
we'll get around to actuallyimplementing that in August or
September.
Mostly Mary (04:06):
I think I've improved on your methods a bit
too, and we'll get around toactually implementing that in
August or September.
I think I've improved on yourmethods a bit too.
I employed some.
Mostly Uncle Frank (04:12):
Chiara Scuro shading.
And the other thing we havegoing on right now is our Top of
the T-Shirt matching campaignfor the Father McKenna Center.
If you want to hear all aboutthat, go back to episode 426,
but I'll just mention it brieflythat we do not have any
sponsors on this program.
We do have a charity we support.
It's called the Father McKennaCenter and it supports hungry
and homeless people inWashington DC.
(04:33):
The best way to give to themfor this campaign is to go
directly to their website, whichI will link to in the show
notes, and donate on theirdonation page.
Do mention Risk Parity Radio inthe comment section there, or
you can become a patron onPatreon by going to the support
page at wwwriskparityradiocomand give that way.
(04:55):
Either way, we will greatlyappreciate your donation and
move you to the front of theemail line when you have an
email.
Voices (05:04):
Yes.
Mostly Uncle Frank (05:06):
And, speaking of emails, we do have
one that we're going to respondto today that I've been holding
back because it's a longresponse, and so without further
ado, I'm intrigued by this howyou say emails First off, second
off, first off, second off,last off, first, second and last
(05:30):
off.
We have an email from Bob.
Mostly Mary (05:33):
You're never home.
You talk to your trucks morethan you do me.
You never even touch me anymore.
Bob, I just can't do this.
And Bob writes Hi Frank,long-time listener here, I often
hear you talk about how manyretirees unconsciously aim for
the golden coffin, dying withthe most money possible by using
a 3% or even lower safewithdrawal rate and barely
(05:56):
spending anything.
Voices (05:59):
It's such a terrible thing for a man to struggle with
something better than he is.
Mostly Mary (06:03):
Another idol has replaced me in your heart.
To me, that behavior is drivenby one thing fear, the plain,
simple fear of running out ofmoney before running out of life
.
I struggle with that too.
(06:31):
I want to use a four to fivepercent withdrawal rate, but I
just can't pull the triggerbecause of this deep-seated fear
.
Markets are unpredictable andvolatile and even though stats
say the four percent rule is 96percent safe, the fear doesn't
care about math.
Voices (06:44):
Dogs and cats living together mass hysteria.
Mostly Mary (06:48):
You, on the other hand, seem comfortable aiming
for a 5% safe withdrawal rate inyour own retirement and I don't
get the impression you rely onside income from the blog or
podcast.
How do you manage that fear?
How do you build the confidenceto actually enjoy your money
instead of hoarding it?
Just in case I'm 55 and sittingaround 20 times my annual
(07:10):
expenses now and using one ofyour portfolios with a 5% safe
withdrawal target, I'd like tocall it quits, but I really
appreciate any advice you cangive on mentally overcoming this
fear and trusting the plan.
Thanks, Bob.
Voices (07:23):
Looks like a tricky job, Bob, Not when you have a good
team.
Mr Bentley, Okay, team let'sget to work.
Mostly Mary (07:30):
Can we fix it?
Yes, we can.
Mostly Uncle Frank (07:35):
Well, this one's gonna take some explaining
because it's going intopsychology and philosophy
regarding spending money.
Voices (07:44):
Always with you.
What cannot be done?
Hear you nothing that I say.
You must unlearn what you havelearned.
All right, I'll give it a try.
No try, not Do or do not.
There is no try.
Mostly Uncle Frank (08:03):
My experience is that, yes, people
have fears about running out ofmoney, but there's also a deeper
issue involved here that has todo with identity.
That we're going to talk about.
But first let's talk about thefear component itself.
Voices (08:19):
We got a scary 140 this week.
Mostly Uncle Frank (08:23):
So if you have accumulated enough to
retire on 25 times expenses is ageneral guideline.
If you have that much, yes, youcan work it out, and you
probably need less than that.
And so the way the math worksis that you have almost no
chance of running out of money.
And the reason you have almostno chance of running out of
money because if you get on aplan that has a small chance of
(08:46):
running out of money and youhappen to start running out of
money, you can just change yourplan.
So you have no chance ofrunning out of money.
You have a small chance ofhaving to change your plan, and
by small I mean something on theorder of less than 5%.
If you are using a good planwith a good portfolio.
(09:07):
Okay, just recognizing that,you can see that a fear of
running out of money here isreally a phobia.
That's what it is a phobia, andit's no different than being
afraid of spiders or sharks orenclosed spaces or any other
phobia that you can think of.
Voices (09:25):
You are talking about the nonsensical ravings of a
lunatic mind.
Mostly Uncle Frank (09:31):
This is not different, and a phobia of
running out of money does notmake you special and does not
require special treatment.
That is different from allother phobias.
If it is severe, yes, youshould get counseling, go to a
therapist, because there may beand are likely to be scripts in
your past life whether growingup in scarcity or other things
(09:52):
that cause you to be the way youare, and so you may need a
therapist to help you changethat, and you should be willing
to spend money on that.
But since I can't do that here,let's talk about something more
practical.
But since I can't do that here,let's talk about something more
practical which is just thenumbers and the overall
psychology of this and kind ofwhere it comes from.
And the best source for thisbroad understanding is Kahneman
(10:19):
and Tversky and DanielKahneman's book Thinking Fast
and Slow, where he talks abouthuman beings.
You can essentially dividethinking processes into two
groups, what he calls system oneand system two.
System one is your reactivesystem that makes decisions very
quickly based on rules of thumbor fears in many cases.
(10:40):
System two is the rationalthinker part of your brain that
actually tries to reason throughthings and make the best
decision based on the evidencethat you have.
And what he identifies inThinking Fast and Slow is a
whole list of cognitive biases,system one patterns, if you will
(11:01):
, that many human beings adoptand that seem to be part of our
general programming as humanbeings.
The other way this has beendescribed that I really like is
Predictably Irrational, which isthe title of a book by Dan
Ariely.
Just the idea that, yeah, wehave these kind of cognitive
biases built in because itprobably serves some important
(11:23):
function in keeping us safe frompredators or being able to
accumulate enough food.
It's in some hunter-gathererkind of society we lived in
thousands of years ago.
But a lot of them are not thatuseful now and are often
counterproductive, since we haveto plan for many, many years in
advance and not just what'sgoing on in the next five
minutes or tomorrow.
(11:45):
So one of the cognitive biasesthat Kahneman and Tversky had
identified is called thepossibility effect.
And what is the possibilityeffect?
The possibility effect is thetendency of human beings to
misassign probabilities based onmere possibilities, either in
some circumstancesover-weighting the possibility
(12:07):
of some kind of occurrence andin some cases under-weighting
the possibility of some kind ofoccurrence.
And usually, if it's in ourpersonal control, we think it's
more likely.
So one of the classic examplesis you ask somebody if you
opened a restaurant what's theprobability you would succeed at
it, and suppose this person isa good cook and they had worked
in restaurants before or theyhave some kind of skill.
(12:29):
Many people of that ilk wouldsay something on the range of oh
yeah, I would have like a 60 or70% probability of success.
That's completely wrong.
Actually, their probability ofsuccess is probably less than
30%, and the reason that is isbecause the base rate
probability of anybodysucceeding is like 20% or less.
(12:49):
So even if you're skilled, youonly go up the scale a little
bit.
You don't go all the way up tohigh likelihoods.
The way this works in thecontext we're talking about is
you are erroneously assigning ahigh probability of failure,
when the probability of failurein running out of money or
having a financial problem ifyou're adequately saved in the
(13:12):
first place is ridiculously low.
But if you are not spendingmoney and have a fear of this,
what you are actually doing isassigning a much higher
probability to this event.
In the worst cases, you turninto Dustin Hoffman's character
(13:34):
in Rain man.
Where he wouldn't fly in anyairlines except for Qantas,
because he knew that everyairline had had at least one
crash.
Voices (13:44):
There's an American plane.
American flight 625 crashedApril 27, 1976.
We don't have to take American.
There's a lot of flights.
Yeah, there's another airlineContinental.
Continental crashed November 15,1987.
Flight 1713, 28 casualties.
Now there's a Delta.
(14:05):
Yeah, I mean it leaves amidnight ray, you know.
But Delta, how's Delta?
Delta crashed August 2nd 1985,lockheel 1011, dallas 4.
All right, all right.
Terrible winds.
All airlines 135.
All airlines have crashed atone time or another.
That doesn't mean that they arenot safe Qantas, qantas.
Qantas never crashed that theyare not safe, qantas, qantas.
Mostly Uncle Frank (14:26):
Qantas never crashed, but instead of
assigning a trivial percentagepossibility to having a crash on
an airline, he took that as anyone crash that an airline might
have, gave it a highprobability that their next
flight would crash.
Voices (14:39):
Ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah Ah
we're not going to take theplane.
He's okay, he's okay, he's okay.
We're not going to take theplane, just just relax.
He was, he was upset, we weregoing to take the plane.
We're not going to take theplane now.
(14:59):
We're not going to take theplane.
We're not going to fly.
Okay, no flying.
Mostly Uncle Frank (15:09):
That's a cartoonish example, but that is
exactly what you are doing whenyou're saying I'm afraid to
spend money when I've got a planthat has a very low probability
of failure.
Because the truth is, the kindof failure you're talking about
would probably be events thatare affecting society overall,
like nuclear wars or somethingof that ilk that no amount of
financial planning is going tosolve anyway.
(15:30):
So what is the cure or thesystem to answer to this?
It's to always use base rateswhenever you're calculating
anything or thinking about whatis the real probability.
What kind of fear should Ireally assign to this?
Based on real probabilities andI've talked about this many
times before that this issomething that CFPs do not do
(15:53):
well.
They haven't been trained in it.
They have not been trained inproper forecasting techniques,
and a lot of people misuseretirement calculators because
they have not been trained inusing forecasting techniques.
Using base rates means youactually use the best rate you
think is the right one.
In my case, I would uselong-term historical data to
(16:17):
assess returns or likelyoutcomes, and you would not
change that by making it moreaggressive or more conservative
and then ramming it into acalculator.
If you really want to learnthat you look not only at
Kahneman and Tversky, but peoplethat study forecasting, like
Annie Duke, who wrote Thinkingand Bets, or Phil Tetlock, who
wrote the book Superforecasters.
But that is the mathematicalcure for this recognizing that
(16:40):
the fear is coming from thispossibility effect.
That is a cognitive bias thatwe all have.
But the cure for that is to usebase rates when you are
forecasting.
And if you're running a MonteCarlo simulation, like you've
done already, and using actualdata or something akin to it,
(17:01):
you'll get base rate forecastwith those low probabilities.
Now how else would you use baserates in this context?
One of the things people gethyper fearful about is needing
long-term care.
And then I ask them well, haveyou calculated the possibility
of that happening and what arethe probabilities, the real
probabilities?
Most people haven't done that.
(17:22):
They don't know, they haven'tdone the research.
Instead, they sit andfearmonger about it.
Voices (17:28):
You can't handle the dogs and cats living together.
Mostly Uncle Frank (17:31):
And say well , it's a possibility, therefore
I need to plan for it as if it'sa high probability.
Let me give you some just basicstatistics on that.
The possibility of a man in theUnited States needing long-term
care any long-term care is onlya 50% probability.
Half the time you'll need zerolong-term care.
All right of the people that doneed long-term care, the mean
(17:55):
for a man is needing it for oneto two years, of which only the
second year or the years afteryear one actually require a
significant monetary outlay.
So only half the men need it.
And if you do need it, youprobably only need to pay for
about a year's worth of it.
So the probability of needingit for a longer time is
(18:15):
somewhere down around 10%, atleast for a man.
But that's not the problem.
If you think this is a problem,the problem is not that you
might need it or there might bea 10% chance you need it.
You have to also understand theproblem is you think you might
not be able to pay for it.
So what is the probability thatyou wouldn't be able to pay for
(18:36):
it after living a long time?
Well, if you need it early on,that probability is kind of zero
, because if you've saved enoughmoney to live for 30 years or
some number like that, and youonly happen to live 15 more
years and then go into long-termcare for a few, you had an
extra 15-20 years of money topay for it.
So that scenario is not aproblem.
(18:57):
The scenario that's the problemis you actually live the 30
years, then you need long-termcare and you don't have enough
money at that point to be ableto afford it.
Now the chances are, if you'respending four or five percent
and have a good plan, you aregoing to have more money than
you started with.
So the probability of living areally long time, needing a lot
(19:19):
of long-term care and not havingenough money to pay for it you
have to multiply all thoseprobabilities together and if
you multiply even 10% times 10%,without even factoring the
other one, you're down at 1% allof a sudden.
So that is your base rateprobability of both needing
long-term care, having lived along time, and not being able to
(19:40):
afford it.
Now how would you modify that?
You would modify that bypersonal data Do you have a
history in your family ofdementia or something else like
that?
And also you would do some kindof assessment of your personal
health, but that's an examplewhere people use the possibility
effect instead of using baserates to calculate what their
actual probability is of bothneeding it and not being able to
(20:03):
afford it, which is vanishinglysmall if you were prepared for
a long retirement anyway.
Now you need to recognize thatthe financial services industry
does not calculate base ratesand does not want to calculate
base rates.
Forget about it.
They love the possibilityeffect.
That is called marketing.
Voices (20:22):
A.
B C A, always B B C.
Closing, always be closing,always be closing.
Mostly Uncle Frank (20:33):
You can sell things.
If you can convince somebody,they have a high probability of
having this problem, even ifthey don't.
Voices (20:42):
Because only one thing counts in this life Get them to
sign on the line which is dotted.
Mostly Uncle Frank (20:48):
And if you are consuming a lot of financial
industry content, chances arethey are giving you possibility
effect-based reasoning and notbase rate-based reasoning.
Voices (20:58):
Am I right or am I right , or am I right, right, right,
right.
Mostly Uncle Frank (21:02):
But what's the other base rate that you're
not thinking about?
That you should be thinkingabout it's this Go look up the
chances of you, as a 55-year-oldman, dying in the next 10 years
.
What is the chance of you dyingin the next 10 years?
If you look at actuarial tables, you have an 11.3% chance of
(21:23):
dying in the next 10 years.
So why aren't you worried aboutthat?
Why are you worried aboutvanishingly small probability of
running out of money in 30years when your chances of dying
are 11.3% in the next 10 years?
That's what you should beworried about.
That's what you should beafraid of is not running out of
(21:45):
money, it's running out of life.
And once you're past 50, yourchances of running out of life
start going up a lot.
Voices (21:54):
No more flying solo.
You need somebody watching yourback at all times.
Mostly Uncle Frank (22:00):
In other words, people who are afraid of
running out of money.
You're probably afraid of thewrong thing and you also need to
think about this.
If you have a spouse, what isthe probability of, say, two
50-year-olds, a man and a woman?
The probability of the womandying in the next 10 years is
something like 4.9%.
The probability of the mandying in the next 10 years is
(22:21):
something like 7%.
The probability of one of themdying is more like 12% when you
do the calculation.
So that's the probability thatyou're going to be living
without a spouse or that one ofyou is.
No, I haven't subtracted thepossibility of you both dying at
the same period, but it's closeenough for this purpose.
(22:42):
The point of all of this is isto say you have other things.
You should be afraid of more, alot more than running out of
money you will find that it isyou who are mistaken about a
great many things.
(23:10):
Thankfully, you can reduce thoseprobabilities by spending some
money on your health, both yourmental health and physical
health, but we'll get to that ina little bit, all right.
So that's the math of it andthat's convincing to some people
.
It's not convincing to otherpeople.
Stupid is what stupid does, sir.
What else can you do to getover the fears?
You can break down your expenses.
(23:30):
For one thing, recognize thatif you're doing something like
we're doing, where our base ormandatory expenses are about 60%
of our expenses, which is 3% ofour investable assets, and so
we have 2% that is discretionary, which I would divide into
comfort expenses andextravagances, and so, knowing
(23:52):
that if there's a problem, wecould simply dial that back, we
could sell our big house andmove into something smaller.
There's a whole lot of thingsthat we could do to ameliorate
any significant loss in ourassets, if you will.
And so if you haven't done thatexercise, I really would sit
down and say well, what is mybase life actually cost, how
(24:13):
much of that is covered?
And if it's 3% or less, that'sanother indication you don't
have any problem.
Another question is whetheryou've accounted for other
incomes you're likely to have,including Social Security, and
assigning that some number andif you're over 50, you probably
should be doing that too orrecognizing that it's yet
another buffer you have.
(24:33):
The next thing you might try toovercome your fear is actually
test running a little portfolio.
Create a separate account, putsome money in there maybe
$10,000 or something Structurethat like you think your
portfolio is going to bestructured, and then start
taking money out of it everymonth just as a test run, and
(24:54):
maybe, if you're five years awayfrom retirement, you can do
that for five years just seeinghow it all works, like we're
doing with these sampleportfolios.
Voices (25:03):
And that's the way.
Uh-huh, uh-huh, I like it.
Casey and the Sunshine.
Band.
Mostly Uncle Frank (25:08):
It's the same principle as learning how
to ride a bicycle or cook asouffle or something.
You're not going to learn thatmuch about it by reading about
it.
At some point you have toactually start doing it, and
there's no reason you can'tactually practice on that before
you start retirement.
All right, let's stop talkingabout the fear itself.
Voices (25:28):
Let me assert my firm belief that the only thing we
have to fear is fear itself.
Mostly Uncle Frank (25:37):
And start talking about what I think is
the real issue.
For most people, it's notreally fear.
It's easier to say fear becauseit sounds like something that
is going to elicit sympathy.
The truth is that for mostpeople who have trouble spending
money, it's not really aboutfear.
It's about identity,self-identity, self-worth,
(25:58):
attached to having more money orseeing that number go up as
long as you live.
And people don't like to thinkabout themselves that way
because we attach pejorativeterms to that, like hoarder or
miser or something of thatnature.
Voices (26:15):
What's with you?
Mostly Mary (26:16):
anyway, I can't help it.
I'm a greedy slob, it's myhobby.
Mostly Uncle Frank (26:21):
save me and so you'd rather just be saying,
oh, I'm just afraid, not thatI'm a hoarder, I'm a miser.
I really value watching thenumber go up.
It's part of my identity, it'spart of what I do and it's part
of what makes me great.
Voices (26:37):
It's mine understand mine, mine, all mine, go, go, go
, mine.
Do you hear me?
Oh, oh, oh, mine, mine, mine,oh, brotherimb, climb, climb, oh
, brother, climb up for me.
Oh, sesame, I'm rich, I'm ahappy miser.
Mostly Uncle Frank (26:48):
And some people like having that identity
and they really don't want tochange.
I think that's what we'rereally dealing with a lot of
times, when people say that theyare afraid of something.
And no, I'm not saying you'rethis person or not this person,
but my experience isparticularly in the personal
finance area.
(27:08):
When you listen to theinterviews of guru types about
what they personally do.
They think this is a greatthing to be, somebody that is
accumulating money until deathand they're proud of it.
Voices (27:17):
Oh boy, I'm rich.
Mostly Mary (27:19):
I'm wealthy, I'm independent, I'm socially secure
.
I'm rich, I'm rich, I'm rich.
Mostly Uncle Frank (27:27):
Because a lot of ego gets wrapped up in
that as part of the identity.
I'm a great investor.
I know how to do this.
A good sign that somebody fallsinto this category is if you
ask them who their retirementrole model is and they say
Warren Buffett retirement rolemodel is, and they say Warren
Buffett, that is undoubtedly ahoarder person or a person that
(27:48):
attaches a lot of their ego toinvesting.
What they don't realize is thatthat is probably a bad role
model for most people, becauseWarren Buffett's success is not
based so much on personal habitsor disciplines or anything else
.
It's based on talent, talentthat you or I don't have and
we're not going to acquire byadopting the habits of Warren
(28:08):
Buffett.
And if you read the bookSnowball, you'll realize there's
a lot of parts of his life thatwere not desirable and we do
not wish to emulate,particularly in interpersonal
relationships.
But if that is your role model,you may have this identity
problem and you probably need toget some better or different
role models.
If you want to level up, go towho Warren Buffett says is his
(28:32):
hero, which is a guy named ChuckFeeney who spent the second
half of his life giving awaybillions of dollars, and his
example is what actually led tothis billionaire's pledge that a
lot of very wealthy people haveadopted in giving their money
away or planning to give theirmoney away, Because you don't
need any special talents to beable to do that.
(28:53):
That's something you can learnhow to do.
That's what makes a good rolemodel for retirement Not people
with special talents, but peoplethat do things that you can
also learn how to do and emulate.
Morgan Housel calls thisidentity piece of this frugality
, inertia that you've spent somuch of your life building up
(29:14):
assets, saving, investing wellthat that has become so integral
to your personal identity thatyou can't let go of it.
Or you have a very difficulttime letting go of it, or you
really don't want to let go ofit in your hardest of hearts.
He's going to be talking aboutthat in his new book, the Art of
Spending.
I will link to something in theshow notes where he outlines
(29:36):
that and other things in a shortpodcast.
Another reference you shouldcheck out is Arthur Brooks,
who's written some excellentbooks.
He's like a professor ofhappiness at Harvard now, after
having two other careers, he'sgot a book out called Build the
Life you Want, and one of thethings he talks about in there
is the four idols, which aremoney, power, fame and pleasure,
(29:58):
and that everybody has one thatis kind of their bugaboo or
their problem that prevents themfrom perhaps living their best
life, and for many people,listening to this money is that
one, and particularly seeing thenumber go up.
I'll link to a funny thing.
It's a Jordan Petersoninterview of him about this and
him going through the exerciseto determine which idol is.
(30:21):
Your problem is your personalproblem and you'll see how they
go through it.
But you probably want to dothat exercise and I would think
that if you have a fear ofrunning out of money, that being
obsessed with the money idol isprobably your bugaboo in that
respect.
Anyway, if you can recognizethat perhaps this is part of
your identity and you want tochange that, you really want to
(30:44):
change that.
You have some learning to do.
You don't need to figure thisout.
A lot of other people havefigured this out.
You do need to learn somethings.
You do need to go and read somebooks about these kinds of
issues, which is kind of, how dowe maximize life towards the
end of life?
Fortunately, with AIs you canalso ask your favorite
(31:07):
artificial intelligence tosummarize these books for you,
and that may be a shortcut.
The first one I'd recommend isthe Five Regrets of the Dying by
Bronnie Ware.
This ties into if you only have10 years left, what are the
things you need to do before youdie?
Voices (31:22):
Dead is dead.
Mostly Uncle Frank (31:24):
Most of those are focused on
self-expression andrelationships.
In addition to that one, thereare three ones that I commonly
recommend.
One is called Falling Upward byRichard Rohr, which is
basically transitioning fromyour first life to your second
life or your retirement life.
Strength to Strength, also byArthur Brooks, is another one.
(31:45):
Like that how Do you ReinventYourself, which is essentially
what you are doing when you aredeciding?
I'm not going to be this personwho is frugality, inertia and
ties up their ego and theirself-worth and is wanting to
make a change.
Read the Second Mountain byJames Brooks and that book I
just mentioned.
(32:05):
Build the Life you Want, againby Arthur Brooks.
There are other ones, but Ihave to tell you I've
recommended these books to otherpeople before, and then I
talked to them later and I askedthem whether they read them or
not, and of course they hadn't,and so it really makes me wonder
.
Well, maybe you really don'twant to change?
Do you just want to say, oh,I'm afraid, or I can't do it, or
(32:28):
it's too hard, or whatever theexcuse is?
Voices (32:32):
You will be visited by three spirits.
What Was that?
The chance of hope that youmentioned, jiggy?
It was In that case, never mind, I think I'd rather not.
Mostly Uncle Frank (32:50):
But if you really do want to change this,
you do have to take some action.
You do have to learn some newtricks.
You do have to learn what theresearch says and how to go
about this.
It's not going to happen bylistening to me telling you how
to overcome your fears oranything like that.
Voices (33:08):
But what's easy to do is what easy not to do?
Guess when I went and got thislittle book.
Guess when I went and got it.
The same day I heard about it.
I went and got it.
Somebody says well, mr roan,does that make you different
than most everybody else?
The answers yes.
Somebody says well, why is that?
(33:29):
We don't know.
What do we know?
Mostly Uncle Frank (33:32):
you don't know, I don't know, nobody knows
because the truth is somepeople want to change and they
read the books and do the thingsto make themselves change and
other people don't, and theydon't all we know is some, some
get the spark and say I'm goingto change my life.
Voices (33:46):
I'm going to change my health, I'm going to change my
relationship with my family.
I'm going to change everything.
And if it starts with an apple,if it starts with a walk around
the block, if it starts with abook, if it starts with a
journal, whatever it starts with, I'm a candidate.
I'm ready to you to change.
Mostly Uncle Frank (34:10):
And you'd rather be one of these people
who goes to the end of lifeaccumulating as much money as
possible, because that is yourself-identity or your ego.
Three other books you can readabout spending money in
particular, or using money.
One is the Soul of Wealth byDaniel Crosby.
It came out last year.
One is the Soul of Wealth byDaniel Crosby came out last year
.
I'll actually be doing that onewith our ChooseFI DC group that
meets in Lorton in August.
(34:31):
I think we'll be talking aboutthat one and I will lead that
discussion.
Mostly Mary (34:36):
It's all the same to you.
Mostly Uncle Frank (34:40):
I'll drive that tanker.
The Art of Spending Money byMorgan Housel is going to come
out in October, but I've alreadyseen the sort of preview of
that that I'm linking to in theshow notes.
Die With Zero is another onethat some people like and some
people don't.
I don't think it's that greatof a book compared to the other
ones.
It's not written by somebodywho's either studied this
(35:01):
intensely or is a psychologistor both.
I would say it's more of aexample of somebody's
implementation of these sorts ofideas, but unfortunately he's
so ridiculously wealthy that alot of the stuff he's talking
about is not applicable to mostpeople, but some people find
that convincing.
Another thing you probably wantto study is narrative
(35:22):
psychology, and the idea ofnarrative psychology is that
people live their best liveswhen they know what kind of
their story is.
I'll link to a nice video inthe show notes about narrative
psychology applied to JaneGoodall and Terry Crews.
I also talked about this inepisode 508 of the Choose Fi
podcast, which I will link toagain in the show notes.
(35:45):
But you may need to change thestory of your life or your next
life from what it was, becauseif your story was, I work hard
and accumulate lots of money onthis kind of hero's journey in
your career.
You need a different story, andI think the trap people fall
into is they create a differenthero's journey.
(36:06):
They have a different careerand maybe that works out well
for some.
But if you're really talkingabout enjoying life beyond that,
where you're the hero, maybeyou don't want to be the hero
anymore.
You want to be somebody elsewho is helping some other people
on their hero's journeys, andso mine are the Mexican
fisherman, the starfish throwerand the curious child.
(36:29):
But you'll have to go listen toChoose FI, episode 508 to get
more on that.
All right, we already talkedbriefly about the four idols.
The answer to those four idolsis what is enough?
If you haven't defined what'senough money, what's enough
power, what's enough fame orwhat's enough pleasure seeking,
(36:50):
then you end up substitutingthose for some kind of real
purpose.
But then that leads to thequestion well, what should you
be spending your money on topromote and expand your
well-being in your second halfof life or retirement?
And again, this is notsomething you need to go figure
out on your own or make up orinvent.
(37:10):
It's something you need tolearn, and you're probably only
going to learn it if you startreading some of these books that
I keep recommending.
Learn it, know it, live it.
So this comes from Daniel Crosby, and what he's identified is
basically four things you canspend money on that are likely
(37:31):
to improve your well-being andthat you should be trying out.
The first one, and the biggestone, is relationships, and that
means strengthening your oldties and creating new ones, and
that is the best way to decidewhether you're going to go on a
trip or buy something or dosomething.
Is this activity or thisexpense going to help improve
(37:55):
relationships?
And the answer can be differentfor the same object for
different people relationshipsand the answer can be different
for the same object fordifferent people.
So, for example, if you'vealways wanted to drive around in
an RV, that might be good foryou, but if your spouse doesn't
want to do that, buying thatthing is creating a problem in
(38:16):
that relationship, whereas ifyou both agree and you both want
to do that, then buying the RVimproves your relationship there
.
But I think that should be aprimary, or one of the primary
thoughts you have in spendingmoney on anything in retirement
beyond the necessities is how isthis going to affect
relationships, either improvethem in some way, or would it
(38:39):
detract if I did that?
Next week, I'll be taking a tripto New York to get together
with some old friends from theMidwest, one of them who is a
big Cubs fan and he likes toplan these trips where we go to
a different city and watch theCubs play whomever is there.
In this case, we're going towatch the Cubs play the Yankees
next weekend.
Now do I really have aninterest in going to New York or
(39:03):
going to see baseball games inYankee Stadium?
No, I really don't, but that'snot the point.
The point of doing this andspending the money on it is it
is sustaining and improving anold relationship or old
relationships with this group ofguys.
So if this was an invitationfrom somebody I barely knew, it
(39:24):
would not be a good way to spendmy time or my money.
But the point of this trip isto spend it on the relationship,
not on the particular activity.
All right.
The second thing you can spendmoney on to improve your
well-being is experiences, andthose basically fall into two
categories.
One is just stuff you reallylike.
Doing that would likely get youinto some flow state, whether
(39:47):
that's riding a bicycle orwriting or cooking or gardening,
could be all kinds of differentthings, and this is one place
you should probably experimentin retirement, thinking you know
, I'd always like to go skiing alot.
And maybe you go and youdiscover, yeah, that's your bag
and you want to spend a lot moremoney on it.
Or maybe you go and discover,yeah, I really don't get that
(40:10):
much out of it.
Personally, I don't feel a flowstate coming on when I think
about it.
So that's one kind of thing youcan spend money on that is
worthwhile, particularly if yougrow or create out of it.
But the other kinds ofexperiences you want to have are
the ones where you are going toform new relationships, where
you are joining with groups ofpeople doing some kind of
(40:31):
activity or something, and maybethat requires you to travel to
a certain place or spend somemoney on some equipment so you
can participate in whatever theactivity is.
But that is, in fact, where youare going to discover new
friendships, because that's notgoing to happen if you're just
sitting around reading financialnews and doing things by
yourself.
(40:52):
You do have to get out there andmake a lot of acquaintances and
then, if you do enough of that,you will acquire new
friendships over time, butfriendships are generally not
acquired in a linear manner.
Usually what happens is you havean acquaintance, then something
bad happens to one of the otherpeople and the other one steps
(41:15):
up and does something nice forthat person or helps them with
something, and that's wherefriendships are really formed.
Not all acquaintances are goingto turn into friendships.
You can't count it that way,but if you're not making more
acquaintances, you're not goingto have new friends, and maybe
you don't need any new friendswhen you get to, say, age 80,
but you probably want to get outthere at age 55 and experience
(41:39):
a few new people so that youhave those friends when you get
to be 80.
So one of the ways I've beenable to make new friends is by
interacting with people infinancial independence
communities, and so we had agood example of that this week.
I had met Bill Yount and hiswife in 2019 at the FinCon event
that happened to be in DC, andsince then we've become very
(41:59):
good friends and they were overfor the past week.
We had a great time the best,jerry the best eating, drinking,
pontificating and wanderingaround various historical sites
and parks in the dc area whatare all these people doing here?
Voices (42:16):
drinking and having a good time, oh that.
That's why we're here.
You're too stupid to have agood time.
Mostly Uncle Frank (42:28):
But stuff like that doesn't happen unless
you get out there and startinteracting with other people.
Voices (42:34):
Au contraire, don't be saucy with me Bernays.
Mostly Uncle Frank (42:39):
It was extremely fun, and we even went
to a medical museum, sincethey're both doctors.
Voices (42:45):
It might be a tumor.
It's not a tumor.
It's not a tumor at all.
Mostly Uncle Frank (42:51):
Third thing you can spend money on to make
your life better is workavoidance, and that means paying
other people to do things thatyou don't like doing and don't
like spending time on and aretaking up a lot of your time.
Voices (43:04):
Looks like you've been missing a lot of work lately.
Mostly Uncle Frank (43:06):
I wouldn't say I've been missing it, bob,
and whether that's doing yourtaxes or mowing your lawn or
whatever it is, it's differentfor each person.
Getting somebody to clean yourhouse is probably a good use of
your money is probably a gooduse of your money.
What you're doing there isyou're buying your time back so
that you can spend your timehaving experiences with other
people, making new acquaintancesor doing other things that are
(43:27):
likely to be more interestingand more fulfilling.
If you still find yourselftrading time for money, that is
not a good use of your timeanymore.
So if you're going to multiplestores to save a few dollars or
changing your own oil in yourcar when you don't have to
anymore, or any other number oftasks that you might have
(43:49):
sensibly done when you were ayounger person and didn't have
much money, you want to reversethat and start spending the
money to get the time back andnot be spending a lot of your
days doing menial tasks.
A concept you should becomeacquainted with is called
satisficing, where, instead oftrying to optimize for saving
(44:10):
money, you just take the firstthing that seems reasonable or
that meets a minimum requirement.
I'll link to an article aboutthat in the show notes.
But it's the opposite of tryingto optimize everything, because
trying to optimize everythingwastes a lot of time.
All right, the fourth thing youcan spend more money on that
makes your well-being improve iswhat I like to call red hot
(44:33):
chili pepper pie, and that'sgiving money away.
And there are basically threeways you can give money away, or
categories.
One is charities regularcharities.
You'll find that you get morewell-being out of a charity if
(44:55):
you're actually participating init in some way, as opposed to
just writing checks, and I wouldencourage you to think about
that, which is what I do withthe Father McKenna Center.
You'll also find that if you'reengaged with an organization
like that, that is also a placeto make new acquaintances and
then make new friends.
And the nice thing aboutcharitable organizations is that
(45:19):
people there typically are notfixated on having the most money
, so they make better rolemodels and better people to hang
around.
Since you become the average ofthe five people you spend the
most time with, you need to makesure you're spending some time
with some people who are notobsessed with investing and
having more money.
Voices (45:40):
Let me tell you about the power of association.
You are the average of the fivepeople you spend the most time
with, want to know your future.
Look at your friends, want tochange your future.
Change your friends.
I'm not saying abandon your oldfriends.
(46:01):
I'm saying expand your circle.
Include people who inspire you,challenge you, push you to grow
.
Because here's what I found youcan't soar with the eagles if
you're hanging around with theturkeys.
Mostly Uncle Frank (46:18):
Okay.
Besides that, you can give toyour heirs.
If you have children or otherpeople who are going to get
money when you die, it isprobably a better procedure for
you to give them some of thatmoney while you are alive,
pretty much starting right now.
What we do for our kids is givethem their advance in the form
(46:43):
of funding their Roth IRAs, andthat's kind of an easy one.
There might be other thingsthat you can help with paying
for, whether it's child care ora down payment on a house or
some kind of family celebrationlike a wedding or something like
that.
You don't want them to becomedependent on.
You.
Do not buy them clubmemberships or very expensive
(47:06):
cars that cost a lot to maintainor insure, or houses they can't
afford.
But giving while you are aliveto people who are younger, who
can really use it at that time,is way more efficient and way
more life-affirming than waitinguntil you are dead and they're
probably 60 years old and don'tneed the money anyway.
(47:26):
The average person who inheritsmoney significant money in the
US these days is nearly 60 yearsold, which tells you a lot
about how bad people are atplanning, particularly people
who have a tendency to hoard alot of money, because, no, you
do not get to be known as agenerous person if you are not
(47:46):
generous while you are alive.
If you want people to thinkyou're a generous person, don't
make them wait until you're deadfor you to prove that.
Prove that up while you'realive, and that is also a way to
teach adult children how toinvest or handle money or do
other things.
So it's also going to improverelationships if you give money
(48:08):
strategically and appropriatelyto your would-be heirs and then,
finally, you can just givemoney to support family members
or friends.
We own the house that myparents live in, and being able
to do that gives me a great dealof personal satisfaction.
Now, some people do spend toomuch money on other people, but
generally those are not thepeople listening to this podcast
(48:30):
or having accumulated enough toretire with, but that can be a
great source of personalsatisfaction and better
relationships.
Whether that's a family memberyou're not required to support,
or some friend or some smallorganization.
That is not a traditionalcharity.
Voices (48:51):
I haven't taken leave of my senses, Bob.
I've come to them.
From now on, I want to try tohelp you to raise that family of
yours, if you'll let me.
Well, we'll talk it over later,Bob, over a bowl of hot punch.
Mostly Uncle Frank (49:11):
It could also be just hiring somebody to
do a job that you wouldn'tnecessarily need them to do, but
maybe they need a job.
There are kind of infinitelymany ways you can approach this.
Anyway, hopefully this helpssome.
This getting over feargenerally means replacing that
fear either with a differentfear that you really should be
(49:33):
worried about running out oftime and not running out of
money, or just a desire to be abetter person in some way.
That fears or phobias aresomething to be overcome.
It's no different than notknowing how to be a public
speaker and wanting to be apublic speaker and then
overcoming that fear by takingaction to do that.
And that question comes up areyour desires to be a better
(49:57):
person or have a better lifemore important to you than
either your fears or youridentity as a saver?
Because I think it's unlikelyyou're going to overcome this
fear if you don't have a betteror higher purpose that you are
seeking to achieve.
That is more important to youthan the fear or the identity,
(50:18):
and hopefully those books andreferences will help you
discover that.
Voices (50:22):
That and a nickel.
Get your hot cup a jack squat.
Mostly Uncle Frank (50:28):
So you can rewrite the story of your
retirement as not one that I wasafraid to spend money.
Therefore I didn't, and I hadthe most money at death.
And that was all To somethingthat resembles more the reformed
Ebenezer Scrooge at the end ofthe Christmas Carol, who used
his money to form all kinds ofbetter relationships all around
(50:50):
with all kinds of people.
Voices (50:53):
I don't deserve to be so happy.
I can't help it.
I just can't help it.
I just can't help it.
Scrooge was better than hisword.
He became as good a friend, asgood a master and as good a man
as the good old city ever knew,or any other good old city, town
(51:15):
or borough in the good oldworld.
And to tiny Tim, who lived andgot well again, he became a
second father, and that's news.
Mostly Uncle Frank (51:26):
Hopefully that helps and thank you for
your email.
Now we're going to do somethingextremely fun, and the extremely
fun thing we get to do now isour weekly portfolio reviews.
Of the eight sample portfoliosyou can find at
wwwriskparityreviewcom on theportfolios page, we also have
distributions for July to talkabout.
(51:48):
Just looking at the marketsthis year, so far, it's looking
like a pretty good year.
Right now, the S&P 500,represented by VOO, is up 7.46%
for the year so far.
The NASDAQ 100, represented byQQQ, is up 9.08% for the year so
far.
Small cap value, represented bythe fund VIOV, is still a loser
(52:11):
, but not a big loser.
It's down 3.49% for the year sofar.
Gold continues to be the bigwinner this year.
Representative fund GLDM is up27.02% for the year so far.
Mostly Mary (52:23):
I love gold.
Mostly Uncle Frank (52:27):
Long-term treasury bonds, represented by
the fund VGLT, are up 2.2% forthe year so far.
Reits, represented by the fundREET, are up 5.42% for the year
so far.
Commodities, represented by thefund PDBC are up 2.54% year to
date.
Preferred shares, representedby the fund PFFV are up 0.90%
(52:48):
year to date and managed futuresare managing to be almost flat.
Now, representative fund DBMFis down 0.14% for the year so
far.
So a bad year is turning intoan easy year, although it's been
pretty easy for us this yearoverall.
Looking at these portfolios,the first one's a reference
(53:08):
portfolio called the All Seasons.
It's only 30% in stocks in atotal stock market fund, 55% in
intermediate and long-termtreasury bonds and 15% in gold
and commodities long-termtreasury bonds and 15% in gold
and commodities.
It is up 0.2% for the month ofJuly.
It's up 6.1% year-to-date andup 15.18% since inception in
(53:29):
July 2020.
For the month of July, we aredistributing, or have
distributed, $32 from the cashthat is built up.
It's at a 4% annualized rateand that's $219 year-to-date and
$1,909 since inception, july2020.
All these portfolios startedwith about $10,000.
(53:50):
Moving to the bread-and-butterkind of portfolios, first one's
Golden Butterfly, this one's 40%in stocks divided into a total
stock market fund and a smallcap value fund.
This one's 40% in stocksdivided into a total stock
market fund and a small capvalue fund, 40% in treasury
bonds divided into long andshort and 20% in gold GLDM.
It's up 1.06% for the month ofJuly.
It's up 7.31% year to date andup 43.71% since inception in
(54:16):
July 2020.
We are distributing $46 out ofit.
It'll come out of the goldportion of it GLDM for July.
That's at a 5% annualized rate.
That'll be $318 year-to-dateand $2,619 since inception in
July 2020.
We will also be rebalancingthese later this month, at least
(54:38):
the first four of them.
We'll be selling a lot of goldat that point in time.
Moving to the next one, thegolden ratio, this one is 42
percent in stocks divided into alarge cap growth fund and a
small cap value fund, 26 inlong-term treasury bonds, 16 in
gold, 10 in a managed futuresfund and 6% in cash in a money
(55:00):
market.
It's up 1.01% month to date.
It's up 6.4% year to date andup 38.27% since inception in
July 2020.
We are taking $45 from the cashportion for July.
That's at a 5% annualized rate.
We always take out of the cashportion for this portfolio, the
way it is managed, in the mostsimplified form that you can
(55:24):
manage, a portfolio, which we'llbe talking about more at
rebalancing time and that's $304distributed for the year so far
and $2,566 since inception ofJuly 2020.
Next one's the risk parityultimate.
Not going to go through all 14of these funds, but it's up
0.96% for the month of July.
(55:45):
It's up 6.01% year-to-date andup 26.51% since inception of
July 2020.
For the month of July, we aredistributing $40 out of it in
accumulated cash.
It's at a 5% annualized rate.
That'll be $276 year to dateand $2,726 since inception in
(56:06):
July 2020.
Now moving to theseexperimental portfolios
involving leveraged funds.
Voices (56:12):
You have a gambling problem.
Mostly Uncle Frank (56:14):
We do hideous experiments here, so you
don't have to Look away, I'mhideous.
First one's the acceleratedpermanent portfolio.
This one is 27.5%, so you don'thave to.
(56:36):
It's up 0.49% month-to-date forJuly.
It's up 7.49% year-to-date andup 8.59% since inception in July
2020.
It'll be distributing $39 outof it from gold for July.
It's at a 6% annualized rate.
That'll be $269 year-to-date indistributions and $2,899 since
(57:01):
inception in July 2020.
Next one's the aggressive 50-50.
This one is the most leveredand least diversified of these
portfolios and the worstperformer too.
It's one-third in a leveredstock fund UPRO one-third in a
levered bond fund TMF and theremaining third divided into a
preferred shares fund and anintermediate treasury bond fund
(57:22):
as ballast.
It's up 0.34% month to date.
It's up 2.37% year to date, butdown 9.84% since inception in
July 2020.
We'll be distributing $32 outof it out of accumulated cash
for July.
Accumulated cash for Julythat's $224 year-to-date and
$2,892 since inception in July2020.
(57:45):
Next one's the levered goldenratio, which is a year younger
than the first six.
This one is 35% in a compositefund called NTSX that is, the
S&P 500 and treasury bonds.
20% in gold GLDM treasury bonds.
20% in gold GLDM.
15% in an international smallcap value fund, avdv, 10% in
(58:13):
KMLM, a managed futures fund,10% in TMF, a levered bond fund,
and the remaining 10% in twolevered funds, one that follows
the Dow and one that follows theUtilities Index.
It is up 0.47% for the month ofJuly.
It's up 9.8% year-to-date andup 4.94% since inception, july
2021.
We'll be distributing $35 out ofaccumulated cash for July or
(58:33):
have distributed.
I should say it's at a 5%annualized rate.
It'll be $236 year-to-date and$1,792 since inception, july
2021.
And the last one is our newestone, the Optra portfolio, which
just became a year old.
This one is a return stackportfolio.
(58:55):
It is 16 percent in a leveragedstock fund, upro, 24% in AVGV,
which is a worldwide value fund,24% in GOVZ, that's a treasury
strips fund, and the remaining36% in gold and managed futures.
It's up 1.02% month-to-date.
(59:16):
It's up 8.49% year-to-date andup 11.65% since inception in
July 2024.
We're distributing $52 out ofit out of accumulated cash for
July.
It's at a 6% annualized rate.
That'll be $354 year-to-dateand $614 since inception in July
(59:37):
2024.
And that concludes our weeklyand monthly portfolio reviews.
Voices (59:44):
I'm putting you to sleep .
Mostly Uncle Frank (59:45):
Which is enough for now, because this has
been a long podcast.
We do that sometimes.
This is pretty much the worstvideo ever made, but now I see
our signal is beginning to fade.
If you have comments orquestions for me, please send
them to frank atriskparityradiocom.
That email is frank atriskparityradiocom.
Or you can go to the website,wwwriskparityradiocom.
(01:00:07):
Put your message into thecontact form and I'll get it
that way.
If you haven't had a chance todo it, please go to your
favorite podcast provider andlike subscribe.
Give me some stars, a follow, areview.
That would be great.
Okay, thank you, stars.
A follow a review?
That would be great.
Okay, thank you once again fortuning in.
This is Frank Vasquez with RiskParity Radio signing off.
Voices (01:00:30):
Some people never will have much.
They're too cautious.
Now, you can also be tooreckless, but you can also be
too cautious.
This is called the timidapproach to life, and my caution
was always the risk.
Risk used to drive me right upthe wall.
I used to say what if thishappens?
(01:00:52):
What if this happens?
And on top of that, if this wasto happen, look at the fix.
I'd be in.
Better not try.
I could always ace myself out.
Then I'll tell you what changedmy whole life when I finally
discovered it's all risky.
The minute you were born it gotrisky.
If you think trying is risky,wait till they hand you the bill
(01:01:14):
for not trying.
If you think investing is risky, wait till you get the tab for
not investing.
See, it's all risky.
Getting married is risky.
Having children is risky.
Going into business is risky.
Wait till you get the tab fornot investing.
See, it's all risky.
Getting married is risky.
Having children is risky.
Going into business is risky.
Investing your money is risky.
It's all risky.
I'll tell you how risky life is.
You're not going to get outalive.
That's risky.
(01:01:36):
The Englishman says well, ifthat's the way it's going to
work out, let's give it a goRight, that's what it's for.
Give it a go.
Somebody says, yeah, but I'mlooking for safety and security.
Fine, then huddle in a corner,we'll cover you with a sheet,
bring you three meals a day andwe'll protect you, feed you,
look after you, care for you.
We won't let anything happen toyou and you'll probably live to
(01:01:59):
be 100.
The guy said well, yeah, I'dlive to be 100.
But what a way to live, right,what a way to live safe and
secure.
Don't ask for security, ask foradventure.
Better to live 30 years full ofadventure than 100 years safe
in the corner.
(01:02:20):
And see, it's not important howlong you live.
What's important is how youlive.
Mostly Mary (01:02:28):
The Risk Parody Radio Show is hosted by Frank
Vasquez.
The content provided is forentertainment and informational
purposes only and does notconstitute financial, investment
tax or legal advice.
Please consult with your ownadvisors before taking any
actions based on any informationyou have heard here, making
sure to take into account yourown personal circumstances.
A foolish consistency is the hobgoblin of little minds,
adored by little statesmen andphilosophers and divines.
If a man does not keep pace withhis companions, perhaps it is
because he hears a differentdrummer, a different drummer.
Mostly Mary (00:19):
And now, coming to you from dead center on your
dial, welcome to Risk ParityRadio, where we explore
alternatives and assetallocations for the
do-it-yourself investorBroadcasting to you now from the
comfort of his easy chair.
Here is your host, frankVasquez.
Mostly Uncle Frank (00:37):
Thank you, Mary, and welcome to Risk Parity
Radio.
If you have just stumbled inhere, you will find that this
podcast is kind of like a divebar of personal finance and
do-it-yourself investing.
Voices (00:52):
Expect the unexpected.
Mostly Uncle Frank (00:55):
It's a relatively small place.
It's just me and Mary in hereand we only have a few
mismatched bar stools and someeasy chairs.
Voices (01:09):
We have no sponsors, we have no guests and we have no
expansion plans.
I don't think I'd like anotherjob.
Mostly Uncle Frank (01:14):
There are basically two kinds of people
that like to hang out in thislittle dive bar.
You see, in this world there'stwo kinds of people my friend,
the smaller group are those whoactually think the host is funny
, regardless of the content ofthe podcast.
Voices (01:31):
Funny how, how am I?
Mostly Uncle Frank (01:32):
funny.
These include friends andfamily and a number of people
named Abby.
Voices (01:39):
Abby, someone Abby who.
Abby normal, abby normal Abbeynormal.
Mostly Uncle Frank (01:48):
The larger group includes a number of
highly successful do-it-yourselfinvestors, many of whom have
accumulated multi-million dollarportfolios over a period of
years.
Voices (02:02):
The best, jerry the best .
Mostly Uncle Frank (02:04):
And they are here to share information and
to gather information to helpthem continue managing their
portfolios as they go forward,particularly as they get to
their distribution ordecumulation phases of their
financial life.
Voices (02:23):
What we do is, if we need that extra push over the
cliff, you know what we do Putit up to 11.
11, exactly.
Mostly Uncle Frank (02:30):
But whomever you are, you are welcome here.
I have a feeling we're not inKansas anymore.
But now onward, episode 436.
Today on Risk Party Radio.
Mostly Mary (02:46):
It's time for the grand unveiling of money Onward
episode 436.
Voices (02:48):
Today on Risk Parity Radio.
Mostly Uncle Frank (02:51):
It's time for the grand unveiling of money
, which means we'll be doing ourweekly portfolio reviews of the
eight sample portfolios thatyou can find at
wwwriskparityradiocom on theportfolios page, and we'll also
be talking about our monthlydistributions Boring, but before
we get to that, first I'd liketo remind you that we are
(03:11):
working on improving the websitewith our volunteer, luke from
Quebec.
Voices (03:17):
We have top men working on it right now.
Who Top?
Mostly Uncle Frank (03:26):
men and we are collecting comments on the
alternative, which you can findat wwwriskparityradiocom and go
to the top and click on the altsite button and you can check
that out in demo form.
We're collecting comments onthat.
We've got a bunch of goodcomments so far.
(03:47):
If you'd like to comment on itsappearance, don't worry about
its functionality right now.
Please send me an email tofrankatriskparityradiocom and we
will collect your comment inthe comment pile for that and
we'll get around to actuallyimplementing that in August or
September.
Mostly Mary (04:06):
I think I've improved on your methods a bit
too, and we'll get around toactually implementing that in
August or September.
I think I've improved on yourmethods a bit too.
I employed some.
Mostly Uncle Frank (04:12):
Chiara Scuro shading.
And the other thing we havegoing on right now is our Top of
the T-Shirt matching campaignfor the Father McKenna Center.
If you want to hear all aboutthat, go back to episode 426,
but I'll just mention it brieflythat we do not have any
sponsors on this program.
We do have a charity we support.
It's called the Father McKennaCenter and it supports hungry
and homeless people inWashington DC.
(04:33):
The best way to give to themfor this campaign is to go
directly to their website, whichI will link to in the show
notes, and donate on theirdonation page.
Do mention Risk Parity Radio inthe comment section there, or
you can become a patron onPatreon by going to the support
page at wwwriskparityradiocomand give that way.
(04:55):
Either way, we will greatlyappreciate your donation and
move you to the front of theemail line when you have an
email.
Voices (05:04):
Yes.
Mostly Uncle Frank (05:06):
And, speaking of emails, we do have
one that we're going to respondto today that I've been holding
back because it's a longresponse, and so without further
ado, I'm intrigued by this howyou say emails First off, second
off, first off, second off,last off, first, second and last
(05:30):
off.
We have an email from Bob.
Mostly Mary (05:33):
You're never home.
You talk to your trucks morethan you do me.
You never even touch me anymore.
Bob, I just can't do this.
And Bob writes Hi Frank,long-time listener here, I often
hear you talk about how manyretirees unconsciously aim for
the golden coffin, dying withthe most money possible by using
a 3% or even lower safewithdrawal rate and barely
(05:56):
spending anything.
Voices (05:59):
It's such a terrible thing for a man to struggle with
something better than he is.
Mostly Mary (06:03):
Another idol has replaced me in your heart.
To me, that behavior is drivenby one thing fear, the plain,
simple fear of running out ofmoney before running out of life
.
I struggle with that too.
(06:31):
I want to use a four to fivepercent withdrawal rate, but I
just can't pull the triggerbecause of this deep-seated fear
.
Markets are unpredictable andvolatile and even though stats
say the four percent rule is 96percent safe, the fear doesn't
care about math.
Voices (06:44):
Dogs and cats living together mass hysteria.
Mostly Mary (06:48):
You, on the other hand, seem comfortable aiming
for a 5% safe withdrawal rate inyour own retirement and I don't
get the impression you rely onside income from the blog or
podcast.
How do you manage that fear?
How do you build the confidenceto actually enjoy your money
instead of hoarding it?
Just in case I'm 55 and sittingaround 20 times my annual
(07:10):
expenses now and using one ofyour portfolios with a 5% safe
withdrawal target, I'd like tocall it quits, but I really
appreciate any advice you cangive on mentally overcoming this
fear and trusting the plan.
Thanks, Bob.
Voices (07:23):
Looks like a tricky job, Bob, Not when you have a good
team.
Mr Bentley, Okay, team let'sget to work.
Mostly Mary (07:30):
Can we fix it?
Yes, we can.
Mostly Uncle Frank (07:35):
Well, this one's gonna take some explaining
because it's going intopsychology and philosophy
regarding spending money.
Voices (07:44):
Always with you.
What cannot be done?
Hear you nothing that I say.
You must unlearn what you havelearned.
All right, I'll give it a try.
No try, not Do or do not.
There is no try.
Mostly Uncle Frank (08:03):
My experience is that, yes, people
have fears about running out ofmoney, but there's also a deeper
issue involved here that has todo with identity.
That we're going to talk about.
But first let's talk about thefear component itself.
Voices (08:19):
We got a scary 140 this week.
Mostly Uncle Frank (08:23):
So if you have accumulated enough to
retire on 25 times expenses is ageneral guideline.
If you have that much, yes, youcan work it out, and you
probably need less than that.
And so the way the math worksis that you have almost no
chance of running out of money.
And the reason you have almostno chance of running out of
money because if you get on aplan that has a small chance of
(08:46):
running out of money and youhappen to start running out of
money, you can just change yourplan.
So you have no chance ofrunning out of money.
You have a small chance ofhaving to change your plan, and
by small I mean something on theorder of less than 5%.
If you are using a good planwith a good portfolio.
(09:07):
Okay, just recognizing that,you can see that a fear of
running out of money here isreally a phobia.
That's what it is a phobia, andit's no different than being
afraid of spiders or sharks orenclosed spaces or any other
phobia that you can think of.
Voices (09:25):
You are talking about the nonsensical ravings of a
lunatic mind.
Mostly Uncle Frank (09:31):
This is not different, and a phobia of
running out of money does notmake you special and does not
require special treatment.
That is different from allother phobias.
If it is severe, yes, youshould get counseling, go to a
therapist, because there may beand are likely to be scripts in
your past life whether growingup in scarcity or other things
(09:52):
that cause you to be the way youare, and so you may need a
therapist to help you changethat, and you should be willing
to spend money on that.
But since I can't do that here,let's talk about something more
practical.
But since I can't do that here,let's talk about something more
practical which is just thenumbers and the overall
psychology of this and kind ofwhere it comes from.
And the best source for thisbroad understanding is Kahneman
(10:19):
and Tversky and DanielKahneman's book Thinking Fast
and Slow, where he talks abouthuman beings.
You can essentially dividethinking processes into two
groups, what he calls system oneand system two.
System one is your reactivesystem that makes decisions very
quickly based on rules of thumbor fears in many cases.
(10:40):
System two is the rationalthinker part of your brain that
actually tries to reason throughthings and make the best
decision based on the evidencethat you have.
And what he identifies inThinking Fast and Slow is a
whole list of cognitive biases,system one patterns, if you will
(11:01):
, that many human beings adoptand that seem to be part of our
general programming as humanbeings.
The other way this has beendescribed that I really like is
Predictably Irrational, which isthe title of a book by Dan
Ariely.
Just the idea that, yeah, wehave these kind of cognitive
biases built in because itprobably serves some important
(11:23):
function in keeping us safe frompredators or being able to
accumulate enough food.
It's in some hunter-gathererkind of society we lived in
thousands of years ago.
But a lot of them are not thatuseful now and are often
counterproductive, since we haveto plan for many, many years in
advance and not just what'sgoing on in the next five
minutes or tomorrow.
(11:45):
So one of the cognitive biasesthat Kahneman and Tversky had
identified is called thepossibility effect.
And what is the possibilityeffect?
The possibility effect is thetendency of human beings to
misassign probabilities based onmere possibilities, either in
some circumstancesover-weighting the possibility
(12:07):
of some kind of occurrence andin some cases under-weighting
the possibility of some kind ofoccurrence.
And usually, if it's in ourpersonal control, we think it's
more likely.
So one of the classic examplesis you ask somebody if you
opened a restaurant what's theprobability you would succeed at
it, and suppose this person isa good cook and they had worked
in restaurants before or theyhave some kind of skill.
(12:29):
Many people of that ilk wouldsay something on the range of oh
yeah, I would have like a 60 or70% probability of success.
That's completely wrong.
Actually, their probability ofsuccess is probably less than
30%, and the reason that is isbecause the base rate
probability of anybodysucceeding is like 20% or less.
(12:49):
So even if you're skilled, youonly go up the scale a little
bit.
You don't go all the way up tohigh likelihoods.
The way this works in thecontext we're talking about is
you are erroneously assigning ahigh probability of failure,
when the probability of failurein running out of money or
having a financial problem ifyou're adequately saved in the
(13:12):
first place is ridiculously low.
But if you are not spendingmoney and have a fear of this,
what you are actually doing isassigning a much higher
probability to this event.
In the worst cases, you turninto Dustin Hoffman's character
(13:34):
in Rain man.
Where he wouldn't fly in anyairlines except for Qantas,
because he knew that everyairline had had at least one
crash.
Voices (13:44):
There's an American plane.
American flight 625 crashedApril 27, 1976.
We don't have to take American.
There's a lot of flights.
Yeah, there's another airlineContinental.
Continental crashed November 15,1987.
Flight 1713, 28 casualties.
Now there's a Delta.
(14:05):
Yeah, I mean it leaves amidnight ray, you know.
But Delta, how's Delta?
Delta crashed August 2nd 1985,lockheel 1011, dallas 4.
All right, all right.
Terrible winds.
All airlines 135.
All airlines have crashed atone time or another.
That doesn't mean that they arenot safe Qantas, qantas.
Qantas never crashed that theyare not safe, qantas, qantas.
Mostly Uncle Frank (14:26):
Qantas never crashed, but instead of
assigning a trivial percentagepossibility to having a crash on
an airline, he took that as anyone crash that an airline might
have, gave it a highprobability that their next
flight would crash.
Voices (14:39):
Ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah Ah
we're not going to take theplane.
He's okay, he's okay, he's okay.
We're not going to take theplane, just just relax.
He was, he was upset, we weregoing to take the plane.
We're not going to take theplane now.
(14:59):
We're not going to take theplane.
We're not going to fly.
Okay, no flying.
Mostly Uncle Frank (15:09):
That's a cartoonish example, but that is
exactly what you are doing whenyou're saying I'm afraid to
spend money when I've got a planthat has a very low probability
of failure.
Because the truth is, the kindof failure you're talking about
would probably be events thatare affecting society overall,
like nuclear wars or somethingof that ilk that no amount of
financial planning is going tosolve anyway.
(15:30):
So what is the cure or thesystem to answer to this?
It's to always use base rateswhenever you're calculating
anything or thinking about whatis the real probability.
What kind of fear should Ireally assign to this?
Based on real probabilities andI've talked about this many
times before that this issomething that CFPs do not do
(15:53):
well.
They haven't been trained in it.
They have not been trained inproper forecasting techniques,
and a lot of people misuseretirement calculators because
they have not been trained inusing forecasting techniques.
Using base rates means youactually use the best rate you
think is the right one.
In my case, I would uselong-term historical data to
(16:17):
assess returns or likelyoutcomes, and you would not
change that by making it moreaggressive or more conservative
and then ramming it into acalculator.
If you really want to learnthat you look not only at
Kahneman and Tversky, but peoplethat study forecasting, like
Annie Duke, who wrote Thinkingand Bets, or Phil Tetlock, who
wrote the book Superforecasters.
But that is the mathematicalcure for this recognizing that
(16:40):
the fear is coming from thispossibility effect.
That is a cognitive bias thatwe all have.
But the cure for that is to usebase rates when you are
forecasting.
And if you're running a MonteCarlo simulation, like you've
done already, and using actualdata or something akin to it,
(17:01):
you'll get base rate forecastwith those low probabilities.
Now how else would you use baserates in this context?
One of the things people gethyper fearful about is needing
long-term care.
And then I ask them well, haveyou calculated the possibility
of that happening and what arethe probabilities, the real
probabilities?
Most people haven't done that.
(17:22):
They don't know, they haven'tdone the research.
Instead, they sit andfearmonger about it.
Voices (17:28):
You can't handle the dogs and cats living together.
Mostly Uncle Frank (17:31):
And say well , it's a possibility, therefore
I need to plan for it as if it'sa high probability.
Let me give you some just basicstatistics on that.
The possibility of a man in theUnited States needing long-term
care any long-term care is onlya 50% probability.
Half the time you'll need zerolong-term care.
All right of the people that doneed long-term care, the mean
(17:55):
for a man is needing it for oneto two years, of which only the
second year or the years afteryear one actually require a
significant monetary outlay.
So only half the men need it.
And if you do need it, youprobably only need to pay for
about a year's worth of it.
So the probability of needingit for a longer time is
(18:15):
somewhere down around 10%, atleast for a man.
But that's not the problem.
If you think this is a problem,the problem is not that you
might need it or there might bea 10% chance you need it.
You have to also understand theproblem is you think you might
not be able to pay for it.
So what is the probability thatyou wouldn't be able to pay for
(18:36):
it after living a long time?
Well, if you need it early on,that probability is kind of zero
, because if you've saved enoughmoney to live for 30 years or
some number like that, and youonly happen to live 15 more
years and then go into long-termcare for a few, you had an
extra 15-20 years of money topay for it.
So that scenario is not aproblem.
(18:57):
The scenario that's the problemis you actually live the 30
years, then you need long-termcare and you don't have enough
money at that point to be ableto afford it.
Now the chances are, if you'respending four or five percent
and have a good plan, you aregoing to have more money than
you started with.
So the probability of living areally long time, needing a lot
(19:19):
of long-term care and not havingenough money to pay for it you
have to multiply all thoseprobabilities together and if
you multiply even 10% times 10%,without even factoring the
other one, you're down at 1% allof a sudden.
So that is your base rateprobability of both needing
long-term care, having lived along time, and not being able to
(19:40):
afford it.
Now how would you modify that?
You would modify that bypersonal data Do you have a
history in your family ofdementia or something else like
that?
And also you would do some kindof assessment of your personal
health, but that's an examplewhere people use the possibility
effect instead of using baserates to calculate what their
actual probability is of bothneeding it and not being able to
(20:03):
afford it, which is vanishinglysmall if you were prepared for
a long retirement anyway.
Now you need to recognize thatthe financial services industry
does not calculate base ratesand does not want to calculate
base rates.
Forget about it.
They love the possibilityeffect.
That is called marketing.
Voices (20:22):
A.
B C A, always B B C.
Closing, always be closing,always be closing.
Mostly Uncle Frank (20:33):
You can sell things.
If you can convince somebody,they have a high probability of
having this problem, even ifthey don't.
Voices (20:42):
Because only one thing counts in this life Get them to
sign on the line which is dotted.
Mostly Uncle Frank (20:48):
And if you are consuming a lot of financial
industry content, chances arethey are giving you possibility
effect-based reasoning and notbase rate-based reasoning.
Voices (20:58):
Am I right or am I right , or am I right, right, right,
right.
Mostly Uncle Frank (21:02):
But what's the other base rate that you're
not thinking about?
That you should be thinkingabout it's this Go look up the
chances of you, as a 55-year-oldman, dying in the next 10 years
.
What is the chance of you dyingin the next 10 years?
If you look at actuarial tables, you have an 11.3% chance of
(21:23):
dying in the next 10 years.
So why aren't you worried aboutthat?
Why are you worried aboutvanishingly small probability of
running out of money in 30years when your chances of dying
are 11.3% in the next 10 years?
That's what you should beworried about.
That's what you should beafraid of is not running out of
(21:45):
money, it's running out of life.
And once you're past 50, yourchances of running out of life
start going up a lot.
Voices (21:54):
No more flying solo.
You need somebody watching yourback at all times.
Mostly Uncle Frank (22:00):
In other words, people who are afraid of
running out of money.
You're probably afraid of thewrong thing and you also need to
think about this.
If you have a spouse, what isthe probability of, say, two
50-year-olds, a man and a woman?
The probability of the womandying in the next 10 years is
something like 4.9%.
The probability of the mandying in the next 10 years is
(22:21):
something like 7%.
The probability of one of themdying is more like 12% when you
do the calculation.
So that's the probability thatyou're going to be living
without a spouse or that one ofyou is.
No, I haven't subtracted thepossibility of you both dying at
the same period, but it's closeenough for this purpose.
(22:42):
The point of all of this is isto say you have other things.
You should be afraid of more, alot more than running out of
money you will find that it isyou who are mistaken about a
great many things.
(23:10):
Thankfully, you can reduce thoseprobabilities by spending some
money on your health, both yourmental health and physical
health, but we'll get to that ina little bit, all right.
So that's the math of it andthat's convincing to some people
.
It's not convincing to otherpeople.
Stupid is what stupid does, sir.
What else can you do to getover the fears?
You can break down your expenses.
(23:30):
For one thing, recognize thatif you're doing something like
we're doing, where our base ormandatory expenses are about 60%
of our expenses, which is 3% ofour investable assets, and so
we have 2% that is discretionary, which I would divide into
comfort expenses andextravagances, and so, knowing
(23:52):
that if there's a problem, wecould simply dial that back, we
could sell our big house andmove into something smaller.
There's a whole lot of thingsthat we could do to ameliorate
any significant loss in ourassets, if you will.
And so if you haven't done thatexercise, I really would sit
down and say well, what is mybase life actually cost, how
(24:13):
much of that is covered?
And if it's 3% or less, that'sanother indication you don't
have any problem.
Another question is whetheryou've accounted for other
incomes you're likely to have,including Social Security, and
assigning that some number andif you're over 50, you probably
should be doing that too orrecognizing that it's yet
another buffer you have.
(24:33):
The next thing you might try toovercome your fear is actually
test running a little portfolio.
Create a separate account, putsome money in there maybe
$10,000 or something Structurethat like you think your
portfolio is going to bestructured, and then start
taking money out of it everymonth just as a test run, and
(24:54):
maybe, if you're five years awayfrom retirement, you can do
that for five years just seeinghow it all works, like we're
doing with these sampleportfolios.
Voices (25:03):
And that's the way.
Uh-huh, uh-huh, I like it.
Casey and the Sunshine.
Band.
Mostly Uncle Frank (25:08):
It's the same principle as learning how
to ride a bicycle or cook asouffle or something.
You're not going to learn thatmuch about it by reading about
it.
At some point you have toactually start doing it, and
there's no reason you can'tactually practice on that before
you start retirement.
All right, let's stop talkingabout the fear itself.
Voices (25:28):
Let me assert my firm belief that the only thing we
have to fear is fear itself.
Mostly Uncle Frank (25:37):
And start talking about what I think is
the real issue.
For most people, it's notreally fear.
It's easier to say fear becauseit sounds like something that
is going to elicit sympathy.
The truth is that for mostpeople who have trouble spending
money, it's not really aboutfear.
It's about identity,self-identity, self-worth,
(25:58):
attached to having more money orseeing that number go up as
long as you live.
And people don't like to thinkabout themselves that way
because we attach pejorativeterms to that, like hoarder or
miser or something of thatnature.
Voices (26:15):
What's with you?
Mostly Mary (26:16):
anyway, I can't help it.
I'm a greedy slob, it's myhobby.
Mostly Uncle Frank (26:21):
save me and so you'd rather just be saying,
oh, I'm just afraid, not thatI'm a hoarder, I'm a miser.
I really value watching thenumber go up.
It's part of my identity, it'spart of what I do and it's part
of what makes me great.
Voices (26:37):
It's mine understand mine, mine, all mine, go, go, go
, mine.
Do you hear me?
Oh, oh, oh, mine, mine, mine,oh, brotherimb, climb, climb, oh
, brother, climb up for me.
Oh, sesame, I'm rich, I'm ahappy miser.
Mostly Uncle Frank (26:48):
And some people like having that identity
and they really don't want tochange.
I think that's what we'rereally dealing with a lot of
times, when people say that theyare afraid of something.
And no, I'm not saying you'rethis person or not this person,
but my experience isparticularly in the personal
finance area.
(27:08):
When you listen to theinterviews of guru types about
what they personally do.
They think this is a greatthing to be, somebody that is
accumulating money until deathand they're proud of it.
Voices (27:17):
Oh boy, I'm rich.
Mostly Mary (27:19):
I'm wealthy, I'm independent, I'm socially secure
.
I'm rich, I'm rich, I'm rich.
Mostly Uncle Frank (27:27):
Because a lot of ego gets wrapped up in
that as part of the identity.
I'm a great investor.
I know how to do this.
A good sign that somebody fallsinto this category is if you
ask them who their retirementrole model is and they say
Warren Buffett retirement rolemodel is, and they say Warren
Buffett, that is undoubtedly ahoarder person or a person that
(27:48):
attaches a lot of their ego toinvesting.
What they don't realize is thatthat is probably a bad role
model for most people, becauseWarren Buffett's success is not
based so much on personal habitsor disciplines or anything else
.
It's based on talent, talentthat you or I don't have and
we're not going to acquire byadopting the habits of Warren
(28:08):
Buffett.
And if you read the bookSnowball, you'll realize there's
a lot of parts of his life thatwere not desirable and we do
not wish to emulate,particularly in interpersonal
relationships.
But if that is your role model,you may have this identity
problem and you probably need toget some better or different
role models.
If you want to level up, go towho Warren Buffett says is his
(28:32):
hero, which is a guy named ChuckFeeney who spent the second
half of his life giving awaybillions of dollars, and his
example is what actually led tothis billionaire's pledge that a
lot of very wealthy people haveadopted in giving their money
away or planning to give theirmoney away, Because you don't
need any special talents to beable to do that.
(28:53):
That's something you can learnhow to do.
That's what makes a good rolemodel for retirement Not people
with special talents, but peoplethat do things that you can
also learn how to do and emulate.
Morgan Housel calls thisidentity piece of this frugality
, inertia that you've spent somuch of your life building up
(29:14):
assets, saving, investing wellthat that has become so integral
to your personal identity thatyou can't let go of it.
Or you have a very difficulttime letting go of it, or you
really don't want to let go ofit in your hardest of hearts.
He's going to be talking aboutthat in his new book, the Art of
Spending.
I will link to something in theshow notes where he outlines
(29:36):
that and other things in a shortpodcast.
Another reference you shouldcheck out is Arthur Brooks,
who's written some excellentbooks.
He's like a professor ofhappiness at Harvard now, after
having two other careers, he'sgot a book out called Build the
Life you Want, and one of thethings he talks about in there
is the four idols, which aremoney, power, fame and pleasure,
(29:58):
and that everybody has one thatis kind of their bugaboo or
their problem that prevents themfrom perhaps living their best
life, and for many people,listening to this money is that
one, and particularly seeing thenumber go up.
I'll link to a funny thing.
It's a Jordan Petersoninterview of him about this and
him going through the exerciseto determine which idol is.
(30:21):
Your problem is your personalproblem and you'll see how they
go through it.
But you probably want to dothat exercise and I would think
that if you have a fear ofrunning out of money, that being
obsessed with the money idol isprobably your bugaboo in that
respect.
Anyway, if you can recognizethat perhaps this is part of
your identity and you want tochange that, you really want to
(30:44):
change that.
You have some learning to do.
You don't need to figure thisout.
A lot of other people havefigured this out.
You do need to learn somethings.
You do need to go and read somebooks about these kinds of
issues, which is kind of, how dowe maximize life towards the
end of life?
Fortunately, with AIs you canalso ask your favorite
(31:07):
artificial intelligence tosummarize these books for you,
and that may be a shortcut.
The first one I'd recommend isthe Five Regrets of the Dying by
Bronnie Ware.
This ties into if you only have10 years left, what are the
things you need to do before youdie?
Voices (31:22):
Dead is dead.
Mostly Uncle Frank (31:24):
Most of those are focused on
self-expression andrelationships.
In addition to that one, thereare three ones that I commonly
recommend.
One is called Falling Upward byRichard Rohr, which is
basically transitioning fromyour first life to your second
life or your retirement life.
Strength to Strength, also byArthur Brooks, is another one.
(31:45):
Like that how Do you ReinventYourself, which is essentially
what you are doing when you aredeciding?
I'm not going to be this personwho is frugality, inertia and
ties up their ego and theirself-worth and is wanting to
make a change.
Read the Second Mountain byJames Brooks and that book I
just mentioned.
(32:05):
Build the Life you Want, againby Arthur Brooks.
There are other ones, but Ihave to tell you I've
recommended these books to otherpeople before, and then I
talked to them later and I askedthem whether they read them or
not, and of course they hadn't,and so it really makes me wonder
.
Well, maybe you really don'twant to change?
Do you just want to say, oh,I'm afraid, or I can't do it, or
(32:28):
it's too hard, or whatever theexcuse is?
Voices (32:32):
You will be visited by three spirits.
What Was that?
The chance of hope that youmentioned, jiggy?
It was In that case, never mind, I think I'd rather not.
Mostly Uncle Frank (32:50):
But if you really do want to change this,
you do have to take some action.
You do have to learn some newtricks.
You do have to learn what theresearch says and how to go
about this.
It's not going to happen bylistening to me telling you how
to overcome your fears oranything like that.
Voices (33:08):
But what's easy to do is what easy not to do?
Guess when I went and got thislittle book.
Guess when I went and got it.
The same day I heard about it.
I went and got it.
Somebody says well, mr roan,does that make you different
than most everybody else?
The answers yes.
Somebody says well, why is that?
(33:29):
We don't know.
What do we know?
Mostly Uncle Frank (33:32):
you don't know, I don't know, nobody knows
because the truth is somepeople want to change and they
read the books and do the thingsto make themselves change and
other people don't, and theydon't all we know is some, some
get the spark and say I'm goingto change my life.
Voices (33:46):
I'm going to change my health, I'm going to change my
relationship with my family.
I'm going to change everything.
And if it starts with an apple,if it starts with a walk around
the block, if it starts with abook, if it starts with a
journal, whatever it starts with, I'm a candidate.
I'm ready to you to change.
Mostly Uncle Frank (34:10):
And you'd rather be one of these people
who goes to the end of lifeaccumulating as much money as
possible, because that is yourself-identity or your ego.
Three other books you can readabout spending money in
particular, or using money.
One is the Soul of Wealth byDaniel Crosby.
It came out last year.
One is the Soul of Wealth byDaniel Crosby came out last year
.
I'll actually be doing that onewith our ChooseFI DC group that
meets in Lorton in August.
(34:31):
I think we'll be talking aboutthat one and I will lead that
discussion.
Mostly Mary (34:36):
It's all the same to you.
Mostly Uncle Frank (34:40):
I'll drive that tanker.
The Art of Spending Money byMorgan Housel is going to come
out in October, but I've alreadyseen the sort of preview of
that that I'm linking to in theshow notes.
Die With Zero is another onethat some people like and some
people don't.
I don't think it's that greatof a book compared to the other
ones.
It's not written by somebodywho's either studied this
(35:01):
intensely or is a psychologistor both.
I would say it's more of aexample of somebody's
implementation of these sorts ofideas, but unfortunately he's
so ridiculously wealthy that alot of the stuff he's talking
about is not applicable to mostpeople, but some people find
that convincing.
Another thing you probably wantto study is narrative
(35:22):
psychology, and the idea ofnarrative psychology is that
people live their best liveswhen they know what kind of
their story is.
I'll link to a nice video inthe show notes about narrative
psychology applied to JaneGoodall and Terry Crews.
I also talked about this inepisode 508 of the Choose Fi
podcast, which I will link toagain in the show notes.
(35:45):
But you may need to change thestory of your life or your next
life from what it was, becauseif your story was, I work hard
and accumulate lots of money onthis kind of hero's journey in
your career.
You need a different story, andI think the trap people fall
into is they create a differenthero's journey.
(36:06):
They have a different careerand maybe that works out well
for some.
But if you're really talkingabout enjoying life beyond that,
where you're the hero, maybeyou don't want to be the hero
anymore.
You want to be somebody elsewho is helping some other people
on their hero's journeys, andso mine are the Mexican
fisherman, the starfish throwerand the curious child.
(36:29):
But you'll have to go listen toChoose FI, episode 508 to get
more on that.
All right, we already talkedbriefly about the four idols.
The answer to those four idolsis what is enough?
If you haven't defined what'senough money, what's enough
power, what's enough fame orwhat's enough pleasure seeking,
(36:50):
then you end up substitutingthose for some kind of real
purpose.
But then that leads to thequestion well, what should you
be spending your money on topromote and expand your
well-being in your second halfof life or retirement?
And again, this is notsomething you need to go figure
out on your own or make up orinvent.
(37:10):
It's something you need tolearn, and you're probably only
going to learn it if you startreading some of these books that
I keep recommending.
Learn it, know it, live it.
So this comes from Daniel Crosby, and what he's identified is
basically four things you canspend money on that are likely
(37:31):
to improve your well-being andthat you should be trying out.
The first one, and the biggestone, is relationships, and that
means strengthening your oldties and creating new ones, and
that is the best way to decidewhether you're going to go on a
trip or buy something or dosomething.
Is this activity or thisexpense going to help improve
(37:55):
relationships?
And the answer can be differentfor the same object for
different people relationshipsand the answer can be different
for the same object fordifferent people.
So, for example, if you'vealways wanted to drive around in
an RV, that might be good foryou, but if your spouse doesn't
want to do that, buying thatthing is creating a problem in
(38:16):
that relationship, whereas ifyou both agree and you both want
to do that, then buying the RVimproves your relationship there
.
But I think that should be aprimary, or one of the primary
thoughts you have in spendingmoney on anything in retirement
beyond the necessities is how isthis going to affect
relationships, either improvethem in some way, or would it
(38:39):
detract if I did that?
Next week, I'll be taking a tripto New York to get together
with some old friends from theMidwest, one of them who is a
big Cubs fan and he likes toplan these trips where we go to
a different city and watch theCubs play whomever is there.
In this case, we're going towatch the Cubs play the Yankees
next weekend.
Now do I really have aninterest in going to New York or
(39:03):
going to see baseball games inYankee Stadium?
No, I really don't, but that'snot the point.
The point of doing this andspending the money on it is it
is sustaining and improving anold relationship or old
relationships with this group ofguys.
So if this was an invitationfrom somebody I barely knew, it
(39:24):
would not be a good way to spendmy time or my money.
But the point of this trip isto spend it on the relationship,
not on the particular activity.
All right.
The second thing you can spendmoney on to improve your
well-being is experiences, andthose basically fall into two
categories.
One is just stuff you reallylike.
Doing that would likely get youinto some flow state, whether
(39:47):
that's riding a bicycle orwriting or cooking or gardening,
could be all kinds of differentthings, and this is one place
you should probably experimentin retirement, thinking you know
, I'd always like to go skiing alot.
And maybe you go and youdiscover, yeah, that's your bag
and you want to spend a lot moremoney on it.
Or maybe you go and discover,yeah, I really don't get that
(40:10):
much out of it.
Personally, I don't feel a flowstate coming on when I think
about it.
So that's one kind of thing youcan spend money on that is
worthwhile, particularly if yougrow or create out of it.
But the other kinds ofexperiences you want to have are
the ones where you are going toform new relationships, where
you are joining with groups ofpeople doing some kind of
(40:31):
activity or something, and maybethat requires you to travel to
a certain place or spend somemoney on some equipment so you
can participate in whatever theactivity is.
But that is, in fact, where youare going to discover new
friendships, because that's notgoing to happen if you're just
sitting around reading financialnews and doing things by
yourself.
(40:52):
You do have to get out there andmake a lot of acquaintances and
then, if you do enough of that,you will acquire new
friendships over time, butfriendships are generally not
acquired in a linear manner.
Usually what happens is you havean acquaintance, then something
bad happens to one of the otherpeople and the other one steps
(41:15):
up and does something nice forthat person or helps them with
something, and that's wherefriendships are really formed.
Not all acquaintances are goingto turn into friendships.
You can't count it that way,but if you're not making more
acquaintances, you're not goingto have new friends, and maybe
you don't need any new friendswhen you get to, say, age 80,
but you probably want to get outthere at age 55 and experience
(41:39):
a few new people so that youhave those friends when you get
to be 80.
So one of the ways I've beenable to make new friends is by
interacting with people infinancial independence
communities, and so we had agood example of that this week.
I had met Bill Yount and hiswife in 2019 at the FinCon event
that happened to be in DC, andsince then we've become very
(41:59):
good friends and they were overfor the past week.
We had a great time the best,jerry the best eating, drinking,
pontificating and wanderingaround various historical sites
and parks in the dc area whatare all these people doing here?
Voices (42:16):
drinking and having a good time, oh that.
That's why we're here.
You're too stupid to have agood time.
Mostly Uncle Frank (42:28):
But stuff like that doesn't happen unless
you get out there and startinteracting with other people.
Voices (42:34):
Au contraire, don't be saucy with me Bernays.
Mostly Uncle Frank (42:39):
It was extremely fun, and we even went
to a medical museum, sincethey're both doctors.
Voices (42:45):
It might be a tumor.
It's not a tumor.
It's not a tumor at all.
Mostly Uncle Frank (42:51):
Third thing you can spend money on to make
your life better is workavoidance, and that means paying
other people to do things thatyou don't like doing and don't
like spending time on and aretaking up a lot of your time.
Voices (43:04):
Looks like you've been missing a lot of work lately.
Mostly Uncle Frank (43:06):
I wouldn't say I've been missing it, bob,
and whether that's doing yourtaxes or mowing your lawn or
whatever it is, it's differentfor each person.
Getting somebody to clean yourhouse is probably a good use of
your money is probably a gooduse of your money.
What you're doing there isyou're buying your time back so
that you can spend your timehaving experiences with other
people, making new acquaintancesor doing other things that are
(43:27):
likely to be more interestingand more fulfilling.
If you still find yourselftrading time for money, that is
not a good use of your timeanymore.
So if you're going to multiplestores to save a few dollars or
changing your own oil in yourcar when you don't have to
anymore, or any other number oftasks that you might have
(43:49):
sensibly done when you were ayounger person and didn't have
much money, you want to reversethat and start spending the
money to get the time back andnot be spending a lot of your
days doing menial tasks.
A concept you should becomeacquainted with is called
satisficing, where, instead oftrying to optimize for saving
(44:10):
money, you just take the firstthing that seems reasonable or
that meets a minimum requirement.
I'll link to an article aboutthat in the show notes.
But it's the opposite of tryingto optimize everything, because
trying to optimize everythingwastes a lot of time.
All right, the fourth thing youcan spend more money on that
makes your well-being improve iswhat I like to call red hot
(44:33):
chili pepper pie, and that'sgiving money away.
And there are basically threeways you can give money away, or
categories.
One is charities regularcharities.
You'll find that you get morewell-being out of a charity if
(44:55):
you're actually participating init in some way, as opposed to
just writing checks, and I wouldencourage you to think about
that, which is what I do withthe Father McKenna Center.
You'll also find that if you'reengaged with an organization
like that, that is also a placeto make new acquaintances and
then make new friends.
And the nice thing aboutcharitable organizations is that
(45:19):
people there typically are notfixated on having the most money
, so they make better rolemodels and better people to hang
around.
Since you become the average ofthe five people you spend the
most time with, you need to makesure you're spending some time
with some people who are notobsessed with investing and
having more money.
Voices (45:40):
Let me tell you about the power of association.
You are the average of the fivepeople you spend the most time
with, want to know your future.
Look at your friends, want tochange your future.
Change your friends.
I'm not saying abandon your oldfriends.
(46:01):
I'm saying expand your circle.
Include people who inspire you,challenge you, push you to grow
.
Because here's what I found youcan't soar with the eagles if
you're hanging around with theturkeys.
Mostly Uncle Frank (46:18):
Okay.
Besides that, you can give toyour heirs.
If you have children or otherpeople who are going to get
money when you die, it isprobably a better procedure for
you to give them some of thatmoney while you are alive,
pretty much starting right now.
What we do for our kids is givethem their advance in the form
(46:43):
of funding their Roth IRAs, andthat's kind of an easy one.
There might be other thingsthat you can help with paying
for, whether it's child care ora down payment on a house or
some kind of family celebrationlike a wedding or something like
that.
You don't want them to becomedependent on.
You.
Do not buy them clubmemberships or very expensive
(47:06):
cars that cost a lot to maintainor insure, or houses they can't
afford.
But giving while you are aliveto people who are younger, who
can really use it at that time,is way more efficient and way
more life-affirming than waitinguntil you are dead and they're
probably 60 years old and don'tneed the money anyway.
(47:26):
The average person who inheritsmoney significant money in the
US these days is nearly 60 yearsold, which tells you a lot
about how bad people are atplanning, particularly people
who have a tendency to hoard alot of money, because, no, you
do not get to be known as agenerous person if you are not
(47:46):
generous while you are alive.
If you want people to thinkyou're a generous person, don't
make them wait until you're deadfor you to prove that.
Prove that up while you'realive, and that is also a way to
teach adult children how toinvest or handle money or do
other things.
So it's also going to improverelationships if you give money
(48:08):
strategically and appropriatelyto your would-be heirs and then,
finally, you can just givemoney to support family members
or friends.
We own the house that myparents live in, and being able
to do that gives me a great dealof personal satisfaction.
Now, some people do spend toomuch money on other people, but
generally those are not thepeople listening to this podcast
(48:30):
or having accumulated enough toretire with, but that can be a
great source of personalsatisfaction and better
relationships.
Whether that's a family memberyou're not required to support,
or some friend or some smallorganization.
That is not a traditionalcharity.
Voices (48:51):
I haven't taken leave of my senses, Bob.
I've come to them.
From now on, I want to try tohelp you to raise that family of
yours, if you'll let me.
Well, we'll talk it over later,Bob, over a bowl of hot punch.
Mostly Uncle Frank (49:11):
It could also be just hiring somebody to
do a job that you wouldn'tnecessarily need them to do, but
maybe they need a job.
There are kind of infinitelymany ways you can approach this.
Anyway, hopefully this helpssome.
This getting over feargenerally means replacing that
fear either with a differentfear that you really should be
(49:33):
worried about running out oftime and not running out of
money, or just a desire to be abetter person in some way.
That fears or phobias aresomething to be overcome.
It's no different than notknowing how to be a public
speaker and wanting to be apublic speaker and then
overcoming that fear by takingaction to do that.
And that question comes up areyour desires to be a better
(49:57):
person or have a better lifemore important to you than
either your fears or youridentity as a saver?
Because I think it's unlikelyyou're going to overcome this
fear if you don't have a betteror higher purpose that you are
seeking to achieve.
That is more important to youthan the fear or the identity,
(50:18):
and hopefully those books andreferences will help you
discover that.
Voices (50:22):
That and a nickel.
Get your hot cup a jack squat.
Mostly Uncle Frank (50:28):
So you can rewrite the story of your
retirement as not one that I wasafraid to spend money.
Therefore I didn't, and I hadthe most money at death.
And that was all To somethingthat resembles more the reformed
Ebenezer Scrooge at the end ofthe Christmas Carol, who used
his money to form all kinds ofbetter relationships all around
(50:50):
with all kinds of people.
Voices (50:53):
I don't deserve to be so happy.
I can't help it.
I just can't help it.
I just can't help it.
Scrooge was better than hisword.
He became as good a friend, asgood a master and as good a man
as the good old city ever knew,or any other good old city, town
(51:15):
or borough in the good oldworld.
And to tiny Tim, who lived andgot well again, he became a
second father, and that's news.
Mostly Uncle Frank (51:26):
Hopefully that helps and thank you for
your email.
Now we're going to do somethingextremely fun, and the extremely
fun thing we get to do now isour weekly portfolio reviews.
Of the eight sample portfoliosyou can find at
wwwriskparityreviewcom on theportfolios page, we also have
distributions for July to talkabout.
(51:48):
Just looking at the marketsthis year, so far, it's looking
like a pretty good year.
Right now, the S&P 500,represented by VOO, is up 7.46%
for the year so far.
The NASDAQ 100, represented byQQQ, is up 9.08% for the year so
far.
Small cap value, represented bythe fund VIOV, is still a loser
(52:11):
, but not a big loser.
It's down 3.49% for the year sofar.
Gold continues to be the bigwinner this year.
Representative fund GLDM is up27.02% for the year so far.
Mostly Mary (52:23):
I love gold.
Mostly Uncle Frank (52:27):
Long-term treasury bonds, represented by
the fund VGLT, are up 2.2% forthe year so far.
Reits, represented by the fundREET, are up 5.42% for the year
so far.
Commodities, represented by thefund PDBC are up 2.54% year to
date.
Preferred shares, representedby the fund PFFV are up 0.90%
(52:48):
year to date and managed futuresare managing to be almost flat.
Now, representative fund DBMFis down 0.14% for the year so
far.
So a bad year is turning intoan easy year, although it's been
pretty easy for us this yearoverall.
Looking at these portfolios,the first one's a reference
(53:08):
portfolio called the All Seasons.
It's only 30% in stocks in atotal stock market fund, 55% in
intermediate and long-termtreasury bonds and 15% in gold
and commodities long-termtreasury bonds and 15% in gold
and commodities.
It is up 0.2% for the month ofJuly.
It's up 6.1% year-to-date andup 15.18% since inception in
(53:29):
July 2020.
For the month of July, we aredistributing, or have
distributed, $32 from the cashthat is built up.
It's at a 4% annualized rateand that's $219 year-to-date and
$1,909 since inception, july2020.
All these portfolios startedwith about $10,000.
(53:50):
Moving to the bread-and-butterkind of portfolios, first one's
Golden Butterfly, this one's 40%in stocks divided into a total
stock market fund and a smallcap value fund.
This one's 40% in stocksdivided into a total stock
market fund and a small capvalue fund, 40% in treasury
bonds divided into long andshort and 20% in gold GLDM.
It's up 1.06% for the month ofJuly.
It's up 7.31% year to date andup 43.71% since inception in
(54:16):
July 2020.
We are distributing $46 out ofit.
It'll come out of the goldportion of it GLDM for July.
That's at a 5% annualized rate.
That'll be $318 year-to-dateand $2,619 since inception in
July 2020.
We will also be rebalancingthese later this month, at least
(54:38):
the first four of them.
We'll be selling a lot of goldat that point in time.
Moving to the next one, thegolden ratio, this one is 42
percent in stocks divided into alarge cap growth fund and a
small cap value fund, 26 inlong-term treasury bonds, 16 in
gold, 10 in a managed futuresfund and 6% in cash in a money
(55:00):
market.
It's up 1.01% month to date.
It's up 6.4% year to date andup 38.27% since inception in
July 2020.
We are taking $45 from the cashportion for July.
That's at a 5% annualized rate.
We always take out of the cashportion for this portfolio, the
way it is managed, in the mostsimplified form that you can
(55:24):
manage, a portfolio, which we'llbe talking about more at
rebalancing time and that's $304distributed for the year so far
and $2,566 since inception ofJuly 2020.
Next one's the risk parityultimate.
Not going to go through all 14of these funds, but it's up
0.96% for the month of July.
(55:45):
It's up 6.01% year-to-date andup 26.51% since inception of
July 2020.
For the month of July, we aredistributing $40 out of it in
accumulated cash.
It's at a 5% annualized rate.
That'll be $276 year to dateand $2,726 since inception in
(56:06):
July 2020.
Now moving to theseexperimental portfolios
involving leveraged funds.
Voices (56:12):
You have a gambling problem.
Mostly Uncle Frank (56:14):
We do hideous experiments here, so you
don't have to Look away, I'mhideous.
First one's the acceleratedpermanent portfolio.
This one is 27.5%, so you don'thave to.
(56:36):
It's up 0.49% month-to-date forJuly.
It's up 7.49% year-to-date andup 8.59% since inception in July
2020.
It'll be distributing $39 outof it from gold for July.
It's at a 6% annualized rate.
That'll be $269 year-to-date indistributions and $2,899 since
(57:01):
inception in July 2020.
Next one's the aggressive 50-50.
This one is the most leveredand least diversified of these
portfolios and the worstperformer too.
It's one-third in a leveredstock fund UPRO one-third in a
levered bond fund TMF and theremaining third divided into a
preferred shares fund and anintermediate treasury bond fund
(57:22):
as ballast.
It's up 0.34% month to date.
It's up 2.37% year to date, butdown 9.84% since inception in
July 2020.
We'll be distributing $32 outof it out of accumulated cash
for July.
Accumulated cash for Julythat's $224 year-to-date and
$2,892 since inception in July2020.
(57:45):
Next one's the levered goldenratio, which is a year younger
than the first six.
This one is 35% in a compositefund called NTSX that is, the
S&P 500 and treasury bonds.
20% in gold GLDM treasury bonds.
20% in gold GLDM.
15% in an international smallcap value fund, avdv, 10% in
(58:13):
KMLM, a managed futures fund,10% in TMF, a levered bond fund,
and the remaining 10% in twolevered funds, one that follows
the Dow and one that follows theUtilities Index.
It is up 0.47% for the month ofJuly.
It's up 9.8% year-to-date andup 4.94% since inception, july
2021.
We'll be distributing $35 out ofaccumulated cash for July or
(58:33):
have distributed.
I should say it's at a 5%annualized rate.
It'll be $236 year-to-date and$1,792 since inception, july
2021.
And the last one is our newestone, the Optra portfolio, which
just became a year old.
This one is a return stackportfolio.
(58:55):
It is 16 percent in a leveragedstock fund, upro, 24% in AVGV,
which is a worldwide value fund,24% in GOVZ, that's a treasury
strips fund, and the remaining36% in gold and managed futures.
It's up 1.02% month-to-date.
(59:16):
It's up 8.49% year-to-date andup 11.65% since inception in
July 2024.
We're distributing $52 out ofit out of accumulated cash for
July.
It's at a 6% annualized rate.
That'll be $354 year-to-dateand $614 since inception in July
(59:37):
2024.
And that concludes our weeklyand monthly portfolio reviews.
Voices (59:44):
I'm putting you to sleep .
Mostly Uncle Frank (59:45):
Which is enough for now, because this has
been a long podcast.
We do that sometimes.
This is pretty much the worstvideo ever made, but now I see
our signal is beginning to fade.
If you have comments orquestions for me, please send
them to frank atriskparityradiocom.
That email is frank atriskparityradiocom.
Or you can go to the website,wwwriskparityradiocom.
(01:00:07):
Put your message into thecontact form and I'll get it
that way.
If you haven't had a chance todo it, please go to your
favorite podcast provider andlike subscribe.
Give me some stars, a follow, areview.
That would be great.
Okay, thank you, stars.
A follow a review?
That would be great.
Okay, thank you once again fortuning in.
This is Frank Vasquez with RiskParity Radio signing off.
Voices (01:00:30):
Some people never will have much.
They're too cautious.
Now, you can also be tooreckless, but you can also be
too cautious.
This is called the timidapproach to life, and my caution
was always the risk.
Risk used to drive me right upthe wall.
I used to say what if thishappens?
(01:00:52):
What if this happens?
And on top of that, if this wasto happen, look at the fix.
I'd be in.
Better not try.
I could always ace myself out.
Then I'll tell you what changedmy whole life when I finally
discovered it's all risky.
The minute you were born it gotrisky.
If you think trying is risky,wait till they hand you the bill
(01:01:14):
for not trying.
If you think investing is risky, wait till you get the tab for
not investing.
See, it's all risky.
Getting married is risky.
Having children is risky.
Going into business is risky.
Wait till you get the tab fornot investing.
See, it's all risky.
Getting married is risky.
Having children is risky.
Going into business is risky.
Investing your money is risky.
It's all risky.
I'll tell you how risky life is.
You're not going to get outalive.
That's risky.
(01:01:36):
The Englishman says well, ifthat's the way it's going to
work out, let's give it a goRight, that's what it's for.
Give it a go.
Somebody says, yeah, but I'mlooking for safety and security.
Fine, then huddle in a corner,we'll cover you with a sheet,
bring you three meals a day andwe'll protect you, feed you,
look after you, care for you.
We won't let anything happen toyou and you'll probably live to
(01:01:59):
be 100.
The guy said well, yeah, I'dlive to be 100.
But what a way to live, right,what a way to live safe and
secure.
Don't ask for security, ask foradventure.
Better to live 30 years full ofadventure than 100 years safe
in the corner.
(01:02:20):
And see, it's not important howlong you live.
What's important is how youlive.
Mostly Mary (01:02:28):
The Risk Parody Radio Show is hosted by Frank
Vasquez.
The content provided is forentertainment and informational
purposes only and does notconstitute financial, investment
tax or legal advice.
Please consult with your ownadvisors before taking any
actions based on any informationyou have heard here, making
sure to take into account yourown personal circumstances.
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