July 16, 2025 • 34 mins
In this episode we answer emails from Brian, Gary and Rob. We discuss the foibles of follies of attempting to market-time gold, the fundamental problems of trying to use TIPS as inflation "hedges" in a diversified portfolio and the limited circumstances in which they make sense, introducing children to financial topics, and tax considerations in making portfolio transitions.
Please remember to check out our alternative website design by clicking "Alt Site" at the top right of riskparityradio.com and send your feedback to frank@riskparityradio.com.
Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
Bill Bernstein TIPS Ladder Article ("A bond fund manager recently related to me his difficulty in figuring out the role of TIPS in his portfolios. After fumbling for a reply, I realized that he was right: like Social Security, they don’t occupy a formal slot in most folks’ asset allocation."): Riskless at Age 104 - Articles - Advisor Perspectives
Once Upon A FI Book: Once Upon a FI by Paul Mollenkopf | Discover Financial Wisdom Today
Analysis of LTPZ (-31.68% in 2022 -- "that's not an improvement!"): LTPZ – PIMCO 15+ Year US TIPS ETF – ETF Stock Quote | Morningstar
Breathless AI-Bot Summary:
Ever found yourself frozen by investment indecision? In this illuminating mailbag episode, we tackle three pressing questions from listeners who've generously supported the Father McKenna Center.
First, we address the common dilemma of gold market timing. When prices seem high, should you wait for a pullback or stick to your long-term plan? The answer lies not in crystal ball predictions but in understanding the purpose gold serves in your portfolio across decades, not months. Rather than trying to outsmart the market, consider transitioning gradually into your desired allocation—whether that means buying now or implementing a systematic approach over time.
The conversation then pivots to one of investing's most misunderstood instruments: Treasury Inflation-Protected Securities (TIPS). Despite their reputation as inflation hedges, the data tells a different story. We examine why TIPS have consistently disappointed during both inflationary and deflationary environments, dragging portfolios down precisely when protection was most needed. For investors seeking genuine inflation buffers, we explore alternatives that have historically outperformed during inflationary periods, including managed futures, commodities, and certain equity sectors.
Perhaps most valuable is our discussion about raising financially literate children. Rather than forcing concepts on uninterested young minds (a strategy that often backfires), we suggest meeting children where they are developmentally. From opening teen brokerage accounts to creating opportunities for learning about buyer's remorse with small amounts of money, these practical approaches help children develop healthy relationships with finances without overwhelming them.
We conclude with tax-efficient portfolio rebalancing strategies, demonstrating how to reduce overconcentrated positions without triggering massive tax bills. By identifying specific tax lots, directing new investments strategically, and managing dividend reinvestments, investors can gradually transform their allocations while minimizing the tax impact.
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.
Mostly Mary (00:10):
If a man does not keep pace with his companions,
perhaps it is because he hears adifferent drummer.
A different drummer and now,coming to you from dead center
on your dial, welcome to RiskParity Radio, where we explore
alternatives and assetallocations for the
do-it-yourself investor,Broadcasting to you now from the
(00:31):
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 are new here and wonderwhat we are talking about, you
may wish to go back and listento some of the foundational
episodes for this program.
Voices (00:50):
Yeah, baby, yeah.
Mostly Uncle Frank (00:52):
And the basic foundational episodes are
episodes 1, 3, 5, 7, and 9.
Some of our listeners,including Karen and Chris, have
identified additional episodesthat you may consider
foundational, and those areepisodes 12, 14, 16, 19, 21, 56,
(01:13):
82, and 184.
Whoa, and you probably shouldcheck those out too, because we
have the finest podcast audienceavailable.
Voices (01:26):
Top drawer, really top drawer.
Mostly Uncle Frank (01:31):
Along with a host named after a hot dog.
Voices (01:34):
Lighten up Francis.
Mostly Uncle Frank (01:37):
But now onward to episode 438.
Today, on Risk Parity Radio,we're just going to do what we
do best here, which is attend toyour emails.
Voices (01:47):
I could have told you that.
Mostly Uncle Frank (01:49):
But before we get to that, I wanted to
remind you we are in the processof collecting comments to
revamp our website.
Just come up With our goodfriend Luke from Quebec, who is
working on it.
Voices (02:03):
We have top men working on it right now?
Who?
Mostly Uncle Frank (02:10):
Top men and we have posted an alternative
website.
So if you go towwwriskparityradarcom and go up
to the top right and click onAlt Site, you'll go to the
alternative website, which is indemo mode, and if you would
take a look at that and if youhave comments on that, we'd
(02:33):
appreciate receiving them.
Please send the comments to theemail frankatriskparityradiocom
.
That'sfrankatriskparityradiocom.
We're currently collecting allthe comments and we'll go
through them in August and thenrevamp the website, okay team,
let's get to work.
Mostly Mary (02:51):
Can we fix it?
Yes, we can.
Mostly Uncle Frank (02:55):
But now without further ado.
Voices (02:57):
Here I go once again with the email.
Mostly Uncle Frank (03:01):
And First off.
First off, we have an emailfrom Brian.
Voices (03:06):
Hey, brian, care to place a wager?
Mostly Uncle Frank (03:09):
And Brian writes.
Mostly Mary (03:10):
Hi Mary.
I sent the below through theweb contact portal, then
realized an email would be moreappropriate.
Thanks for all you do.
Voices (03:18):
Mary, mary.
Mostly Uncle Frank (03:19):
I need your huggin'.
Mostly Mary (03:22):
Hello, Uncle Frank.
I just made my donation to theFather McKenna Center and a
match to a similar organizationin my hometown.
Voices (03:29):
Yes.
Mostly Mary (03:30):
I recently discovered you on the Afford
Anything podcast.
Thanks for your diligence ineducating us all on the
importance of risk parity anddecumulation portfolios.
My wife and I are 60-ish.
She just retired and I will beworking another two years until
our son finishes college and wecan downsize from our
California-sized mortgage.
We started decumulation thisyear at a conservative 3.8%.
(03:54):
We would like to transitionASAP to a golden ratio style
portfolio.
Our current assets areprimarily in pre-tax tax
accounts using several differentMerriman portfolios, a US
for-fund and worldwide all-valuewith a 70-30 allocation.
We have plenty of cowbell butno gold or alternative
investments.
(04:14):
We need to rebalance to moreLCG, gold and alternatives.
I can manage most of this andhave started rebalancing to some
managed futures most of thisand have started rebalancing to
some managed futures DBMF, lcgfrom LCV, reits and utilities.
We have enough cash in theseaccounts to cover the next one
(04:36):
and a half to two years.
The issue I have is gold.
I love gold.
Since gold is a store of valuerather than an appreciating
asset and with its current highsI hesitate jumping into it for
fear of getting OG over gold.
Consider queuing OG over goldfrom the movie I'm Gonna Get you
(04:58):
Sucker.
While I understand markettiming can be futile, are there
other assets or funds we couldconsider transitioning into
until gold is stable andhopefully, at a more reasonable
price?
Thanks, OG Brian.
Voices (05:14):
Cause of death.
Looks like OG Over gold.
Yeah, Any signs of foul play,Randy?
No sir.
Mostly Mary (05:23):
Looks like a case of just too many gold chains.
Mostly Uncle Frank (05:26):
Well, first off, let me thank you for your
donation to the Father McKennaCenter.
As most of you know, we do nothave any sponsors on this
program.
We do have a charity we support.
It's called the Father McKennaCenter and it serves hungry and
homeless people in Washington DC.
Full disclosure I am on theboard of the charity and I'm the
current treasurer.
But if you give to the charity,you get to go to the front of
(05:50):
the email line and we arecurrently running a campaign
called the Top of the T-ShirtCampaign that goes along with
our Walk for McKenna that wedescribed in episode 426.
And it's a matching campaignbecause one of our listeners,
matthew 63, has put up $15,000in matching funds.
So there are two ways to give.
You can either go to thewebsite the Father McKenna
(06:12):
website I'll link to in the shownotes, go to their donation
page and donate online.
If you do that, put a littlenote in the comment box that it
is related to Risk Parity Radio.
Or you can go to the websitewwwriskparityradiocom, go to the
support page and you can becomea donor on Patreon, which is
(06:33):
our monthly donors.
Either way, I'll move you tothe front of the email line and
all of the emailers today aredonors, and so they're all at
the front of the email line.
Voices (06:44):
Top drawer, really top drawer.
Mostly Uncle Frank (06:47):
And just so you're aware, if you're not at
the front of the line, the lineis about two months long right
now.
Voices (06:52):
It's like you're unraveling a big cable knit
sweater that someone keepsknitting, knitting, knitting,
knitting, knitting, knitting,knitting, knitting, knitting,
knitting, knitting, knitting,knitting.
Mostly Uncle Frank (07:07):
I do plan to answer all of the emails of
substance, but we'll get to themin due course.
Voices (07:15):
I have officially amounted to Jack you squat.
Mostly Uncle Frank (07:21):
Now, moving to your question.
You're wondering about markettiming gold.
Yeah well, I probably wouldn'ttry to your question.
You're wondering about markettime in gold?
Yeah well, I probably wouldn'ttry to do that.
Mostly Mary (07:30):
A crystal ball can help you, it can guide you.
Mostly Uncle Frank (07:35):
Because the way I look at portfolios and
what we're doing here is, Ithink of it in terms of not
months or years, but in terms ofdecades, and so to me it really
doesn't matter whether you getinto gold now or get into it
within the next two years orsomething.
If that's easier for you tostomach, then I would go ahead
and put it on some schedule andbuild it out to what you want it
(07:58):
to be.
Or perhaps you could buy halfof it now and then build out the
rest as you go.
The truth is that we don't knowwhat gold is going to do in the
next few years.
Forget about it.
Some decades it has gonenowhere, and other decades it
has gone up fivefold.
Voices (08:14):
That's the fact, Jack.
That's the fact, Jack.
Mostly Uncle Frank (08:18):
Particularly the earliest decade of this
century.
At the moment it seems to benegatively correlated with both
stocks and bonds, which seem toreact negatively whenever
there's talks of tariffs,whereas gold acts positively.
But that's just the currentenvironment.
Overall it tends to go up andto the right, but not in any
(08:38):
linear manner.
Voices (08:40):
You're insane gold member.
And that's the way.
Uh-huh, uh-huh, I like it.
Mostly Uncle Frank (08:47):
So there is really no predicting it.
It is about as stable as it'sbeen in the past few months, in
that it's in this kind oftrading range between $3,000 and
$3,500.
And it's possible it couldbreak either way and I suppose
we could ask our crystal ballwhat it thinks gold will do next
.
Mostly Mary (09:06):
Now the crystal ball has been used since ancient
times.
It's used for scrying, healingand meditation.
Mostly Uncle Frank (09:15):
But you know what our crystal ball always
says.
Voices (09:18):
We don't know.
What do we know?
You don't know, I don't know,nobody knows.
Mostly Uncle Frank (09:24):
So my suggestion is that you move into
it in an orderly fashion and,whether that's right away or
over a relatively short periodof time, like one to two years,
it's going to be a coin flip asto whether that was the best
choice or not.
Voices (09:38):
You can't handle the gambling problem.
Mostly Uncle Frank (09:41):
I do expect it will be higher than it is
right now in ten years, though,if only because the dollar is a
depreciating asset.
So hopefully that helps.
Thank you for your donation andthank you for your email.
Voices (09:56):
So, brian, we're even now right Ready to start a new
life in England.
I've got my money.
Your wounds have healed upnicely.
What do you say?
We let bygones be bygones.
Hmm, you shot me in both myknees, then lit me on fire,
second off.
Mostly Uncle Frank (10:11):
Second off, we have an email from Gary Gary,
please come back to me and Garywrites Hi Mary and Frank.
Mostly Mary (10:22):
I want to express my sincere gratitude for
continuing this incredible andinformative Risk Parody Radio
project.
Voices (10:28):
You are talking about the nonsensical ravings of a
lunatic mind.
Mostly Mary (10:34):
As an early listener, I'm still captivated
and eagerly anticipating thevaluable insights and clips you
share.
Voices (10:40):
That is the straight stuff.
Oh funk, master.
Mostly Mary (10:42):
That is the straight stuff, oh funk master
In a gesture of appreciation andsupport for the Father McKenna
Center.
Voices (10:51):
I recently contributed to the Top of the.
Mostly Mary (10:53):
T-Shirt campaign Groovy baby.
For a long time I've embraced ahighly diversified portfolio
construction that closelyresembles many of the Risk
Parity Radio principles.
I'm comfortable with the decentreturns and relatively low beta
associated with this approach.
I have two questions for you.
First, I'd like to delve deeperinto your apparent aversion to
tips.
(11:13):
Have you ever been?
Voices (11:15):
in a Turkish prison.
Mostly Mary (11:17):
For an investor who seeks risk-averse bonds.
Wouldn't tips provide aninvestor the principal's
purchasing power againstinflation?
Wouldn't tips provide aninvestor the principal's
purchasing power againstinflation, especially when
utilized in a bullet ETFladdered format, be beneficial?
Second, and most importantly,I'd be honored if you could
(11:38):
share your strategies and adviceon raising a financial-savvy
child into adulthood.
Voices (11:40):
Why?
What have children ever donefor me?
Mostly Mary (11:43):
I have a wonderful 10-year-old daughter named Zoe,
and I can't wait for her todiscover the surprise sound clip
for her.
Voices (11:50):
Zoe Zoe, zoe, zoe, zoe.
Mostly Mary (11:56):
Uh, what's your last name?
Again, I'm eager to gather thebest resources and take the
necessary steps now and in thecoming years to foster her
financial comfort and acumen.
Thank you once again for yourtime and consideration.
Best regards, gary.
Voices (12:12):
Gary, oh Gary.
So did you hear any of that, ordo I have to repeat myself?
Mostly Uncle Frank (12:22):
Well, thank you also for being a donor to
the Father McKenna Center andour Top of the T-Shirt campaign.
I'm glad you're an earlylistener and are still enjoying
the podcast.
Voices (12:34):
Oh, barry, you are gonna finish your dessert and you are
gonna like it.
Mostly Uncle Frank (12:41):
Now going to your questions.
First you asked about tips.
We haven't talked about thesemuch in a long time.
Voices (12:50):
I want you to be nice until it's time to not be nice.
Mostly Uncle Frank (12:57):
They were a popular topic in years past and
I will give you the list ofepisodes where we discuss them
it's 85, 94, 129, 141, 142, 151,164, 241, 244, 260, 288, 292,
(13:18):
297, and most recently inepisodes 415 and 421.
And I'll summarize this for youbriefly.
This also was alluded to in anarticle by William Bernstein
that tips really do not have agood place in a diversified
(13:39):
portfolio.
If you are talking aboutportfolio construction, forget
about it, because they don't doanything well.
Voices (13:47):
You had only one job.
Mostly Uncle Frank (13:50):
They really don't in terms of protecting a
portfolio from anything.
First of all, they're bonds.
Voices (13:55):
That's the fact.
Yeah, that's the fact, yeah.
Mostly Uncle Frank (13:59):
They're not going to be great inflation
fighters if their bonds they'rejust not, and they weren't in
2022.
Tips funds went into the toiletwith the rest of the bonds.
Voices (14:12):
And it's gone, poof.
Mostly Uncle Frank (14:16):
Go look up LPTZ, if you don't believe me,
or TIP, because the truth is,the only thing they're
preserving you from in terms ofinflation is if you are
comparing them to nominal bondsor to cash.
And, in fact, if you compare atip with a nominal bond, it is a
bet, because a nominal bond hasan estimate of future inflation
(14:40):
built into it.
That's the difference betweenthe stated rate of the tip and
the stated rate of the nominalbond.
So, if you take those twothings, if inflation is more
than the nominal bond wouldsuggest in the next period, the
term of the bond yes, ifinflation is more than that,
then the tip would be better off.
If inflation is actually lessthan what the nominal bond would
(15:00):
have predicted, then you areworse off.
Under no circumstances, though,does that protect any portfolio
, a large portfolio frominflation.
Voices (15:10):
That's not how it works.
That's not how any of thisworks.
Mostly Uncle Frank (15:14):
If you want to protect a portfolio from
inflation, get the assets thatactually do that job and stop
pretending that tips do a jobthat they do not do, they
haven't done, and I don't carehow many people say, oh well,
tips are going to help you withinflation.
No, they're not.
They haven't done that in thepast and they're not going to do
that in the future.
(15:34):
Forget about it in the future.
Forget about it.
If you want to protect aportfolio from inflation and
have something that outperformsoutperforms, doesn't just keep
up outperforms during inflationyou need something like managed
futures or commodities, orcertain kinds of value-tilted
stocks like energy stocks orstocks that invest in things
(15:58):
like property and casualtyinsurance companies that can
pass inflation to theircustomers.
And if you want to know howtips do it in deflationary
environments, they can be reallyterrible in that environment
too.
In 2008, the main tips fund TIPwent down 10%, whereas nominal
bonds were up 10% went down 10%,whereas nominal bonds were up
(16:19):
10%, so they completely blew itas far as being a good bond was
concerned.
Mostly Mary (16:24):
That's not an improvement.
Mostly Uncle Frank (16:26):
So I have to ask you, if you're putting this
in your portfolio, what do youthink they're doing?
Are you just lying to yourself?
Show me some data that showsthat they're actually going to
do what you say, or your friend,or whoever you're listening to,
says they're doing, because tome, that's a symptom that that
person really doesn't know whatthey're talking about.
With respect to portfolioconstruction, they're not
(16:48):
relying on data, they're relyingon some theory in their head.
As you can see, I really bigone here, which is huge.
So if you're talking aboutsimply tips protecting against
inflation compared with cash,and that's all you're talking
(17:08):
about, that is really all you'retalking about Okay, yeah, you
win, but you're not supposed tobe holding that much cash.
Voices (17:17):
Hello, hello, anybody home?
I think, mcfly, you win, butyou're not supposed to be
holding that much cash.
Hello, hello, anybody home?
I think, mcfly.
I think.
Mostly Uncle Frank (17:22):
If you're holding that much cash, you have
a different problem.
You have a cash drag.
Stop holding so much cash andbuy something else that actually
can protect a portfolio frominflation, and it isn't going to
be tips.
Now, what are they actuallygood for?
They are good for a specificrole.
If you are creating some kindof ladder of funds you expect to
(17:43):
spend in the future and you'reworried about inflation in that
period of time, and so you don'twant to hold cash, yes, you can
put them in a ladder and theywill fulfill that role against
cash or other bonds, not againstother assets.
So if you want to have a bulletETF laddered format or a
(18:05):
laddered format of tips, myquestion is what do you want
that for?
What do you really want thatfor?
Is it because you're otherwisebe holding a big pile of cash?
Okay, it's better than that.
It's not better than a realportfolio.
Voices (18:20):
Fat drunk and stupid is no way to go through life, son.
Mostly Uncle Frank (18:24):
So, unless you're holding it for a very
specific purpose and you arecomparing it to something like
other bonds or cash, it does nothave a good role in a portfolio
because it's not a very goodbond and it's not a very good
inflation fighter.
Voices (18:39):
You need somebody watching your back at all times.
Mostly Uncle Frank (18:43):
If you want something to do those jobs, you
need to pick something else thatactually does the job and
doesn't pretend to do the job orjust does the job in a
commercial on TV.
Voices (18:55):
Removes embarrassing stains from conduit sheets
(19:19):
that's right.
And it entertains visitingrelatives.
In a commercial on TV, wife, itwalks your dog and it doubles
on sacks.
It doubles on sacks.
You can jump back jacks.
See you later, alligator.
See you later, alligator.
And it steals your car, it getsrid of your gambling debts, it
quits smoking.
It's a friend, it's a companion.
It's the only product you willever need.
Mostly Uncle Frank (19:30):
All right, your second question Strategies
and advice for raising afinancially savvy child into
adulthood.
Voices (19:37):
Zoe Zoe, zoe, zoe.
Mostly Uncle Frank (19:42):
Well, my first advice is be careful,
because you have to approachdifferent children differently.
Some children are reallyinterested in things like money
and numbers and stuff like that.
Voices (19:53):
I'm out making some sweet moolah with Uncle Rico.
Mostly Uncle Frank (19:57):
And other ones just aren't.
Ugh, and they may becomeinterested in different things
at different ages.
When she's old enough, I wouldopen her up a teen account at
Fidelity I think is what theycall it now Because I think it's
just important for teenagers tobe able to have such an account
(20:17):
, to put money in it, to buy andsell things, regardless of what
they are.
Maybe she just wants to investin companies she's interested in
or buy something her friendheard about, or whatever it is.
The point of that.
Learning is just how to hold andoperate one of these accounts,
and then you can move on to morekinds of investing, in which
(20:37):
case you might say some birthdaymoney or some other money that
you're going to give her and say, ok, we're going to invest this
the way you probably shouldinvest it, which is in a simple
index fund and leave that alone,or a couple of index funds and
leave that alone, and then youcan have the rest of it and you
can buy whatever you want.
Just seeing the reaction tothem with that is interesting,
(21:00):
because some of them don't wantto touch it.
Other ones are interested inbuying and selling all kinds of
things and some of them justwant to get the money out and
buy something with it, but youdon't know what you have until
you try it out.
If you will, I would say 10 isa little young for most children
, but you never know.
Some are more precocious andinterested in these sorts of
(21:20):
things.
Voices (21:22):
Oh, I get it, let me try .
Mostly Uncle Frank (21:25):
I did make an episode, number 208, which is
for the beginning investor,although it's more directed at
somebody who is starting theirfirst job than a 10-year-old,
but you might want to listen tothat.
It's a Wizard of Oz-themedprogram.
Voices (21:42):
Very well, I'll bide my time.
And as for you, my fine lady,it's true I can't attend you
here and now as I'd like, butjust try to stay out of my way.
Just try, I'll get you mypretty and your little dog too.
Mostly Uncle Frank (22:03):
Ha, ha, ha, ha, ha, ha, ha, ha, ha ha, I'll
get you my pretty, and yourlittle dog too.
It will be important for her tolearn about earning money at
some point.
That is also very difficult fora 10-year-old, but to the
extent she can earn money moneythen you can open a Roth IRA for
her and every time she earns ahundred dollars a year, a
(22:23):
thousand dollars a year,whatever it is you can take a
thousand dollars of your ownmoney or whatever she made and
put it in this Roth IRA, whichalso encourages children to
start earning money all we needto do is get your confidence
back so you can make me moremoney.
Because basically you're gettinga hundred percent parent match
for it.
But if you talk to her a littlebit about it and she really
(22:46):
doesn't seem that interested,that's okay, just let it rest.
Come back to it next year shehas plenty of time.
It doesn't take that long tolearn this stuff.
You know, it's interesting ifyou listen to interviews of JL
Collins, who wrote the SimplePath to Wealth.
He said that he just pushed waytoo hard on this too early and
really turned his daughter offto it, which led him then to
(23:09):
write the Simple Path to Wealth.
Knowing well, if she's notgoing to listen to me now, maybe
when I'm gone she'll at leasthave this to read and then
she'll know what I had to sayabout it.
There is a relatively new bookout called Once Upon a Fi by
Paul and Amanda Malenkov.
I'll link to that in the shownotes.
It's little fairy talesoriented towards monetary things
(23:32):
.
Voices (23:33):
It's time for the grand unveiling of money.
Mostly Uncle Frank (23:37):
I have not read it.
It may be a little bit belowher grade level, but you never
know, you could see whether thatsparks an interest too.
The one thing she probably doesneed to learn around this time
is the concept of buyer'sremorse.
So make sure that she's got alittle money that she's allowed
to spend for herself and whenshe wants something she can buy
(23:57):
it and then maybe think later on, maybe it wasn't worth the
money.
Because you want children tolearn that lesson very early
with small amounts of money, sothat they're not learning it
when they're in their 20s andthey are being conned into
buying expensive items that theyreally don't want or don't need
.
But really the only way tolearn that is by actually having
(24:18):
spent the money and thenrealizing that you didn't want
that thing and now you don'thave the money for something
else.
So if she doesn't have anymoney of her own right now, make
sure you get some into herpockets.
Voices (24:32):
What has it got in its pockets?
Mostly Uncle Frank (24:38):
There are many other techniques for
raising financially savvychildren, some of which work
well for some children and don'twork well for others has been
my experience.
One of them is you can set upthe bank of mom and dad, where
they get some money and thenthey give it to you as a savings
bank and you give them someamount of interest.
Usually you set it relativelyhigh, like 10% or something like
(24:59):
that, so they can experience itgrowing.
And there are others, but I'mafraid I don't remember all of
them since I'm not very much ofan expert on this topic.
Voices (25:09):
Inconceivable.
Mostly Uncle Frank (25:11):
So those are some ideas in a random order.
Hopefully that helps at least alittle.
Thank you for your donation andthank you for your email.
Voices (25:22):
Gary, if only I could see you one more time so I could
tell you how much I love you.
If only I could hear you meowone last time, meow, yeah, like
that.
Last off.
Mostly Uncle Frank (25:38):
Last off of an email from Rob.
Last off, last off, we have anemail from Rob.
Voices (25:42):
No way.
Mostly Mary (25:44):
And Rob writes Thank you and Mary for hosting
the show.
I found your podcast just afterretiring last year at 58 and
have found it extremely helpful.
I just listened to episode 436and think this is one of the
best shows and should be addedto your required shows for new
listeners.
Voices (26:03):
You are correct, sir.
Mostly Mary (26:05):
Yes 85% of my portfolio is in tax deferred
accounts, invested in treasuriesand investment grade corporates
, with the rest of my portfolioin taxable accounts with
substantial unrealized capitalgains.
I have an issue I am stuck withtoo much equity exposure and
want to shift from my current70% equity to 60% and increase
(26:28):
my exposure in GLD and DBMF from5% to 15%.
But the tax pain.
I would sell mostly VGT as I amway over concentrated on large
cap tech.
However, vgt is upapproximately 150% and the tax
hit will be significant 15%federal rate plus Virginia at
(26:50):
5.75%.
I could sell some otherinvestments but they are up
approximately 100%.
The combination of the tax hitand GLD's recent run-up in Ox
has me frozen Any advice.
Also, I donated to the FatherMcKenna Center through Fidelity
just now.
Thanks, rob from Richmond.
Voices (27:09):
What guy in a suit.
No, it's a tax collector.
Hide us SpongeBob.
Mostly Uncle Frank (27:16):
Well, thank you for also being a donor to
the Father McKenna Center, rob.
As for your question, yes, I'mtaking it that you have all of
your taxable accounts investedin these equities and you don't
have any equities in thetax-deferred accounts, because
obviously, if you had equitiesin the tax-deferred accounts,
you could just sell those andbuy the gold and DBMF in there.
(27:38):
And with respect to DBMF itself, you probably do want to have
that in a retirement accountbecause it pays ordinary income,
because there are no taxconsequences for selling
equities in a retirement account.
But there are a couple thingsyou can do, even in a taxable
account.
But there are a couple thingsyou can do even in a taxable
account.
One would be to look at the taxlots, because you are not
(28:01):
required to sell the oldest lotfirst, even though that's what
it will do automatically.
You need to work with yourbrokerage, but they generally
have a way of identifying whichlots and when you purchase them,
and so the lots you are lookingfor are the ones that are at
least a year old to qualify forlong-term capital gains tax
(28:21):
treatment, but not much older,and those will not have gains of
100% or 150%.
They'll only have gains forwhat the past year was, and so
the tax hit on those is notgoing to be that great at all.
So if there are a series ofthose that you can sell now that
are, say, a year old to twoyears old or three years old,
(28:44):
that's how I would approach itin the first instance.
The other way of approaching itis also, if you have new money
going in, just use that topurchase the new assets and then
, if you are getting dividendson anything and you should be
getting some dividends and alsosome income in the retirement
accounts that can also be usedto purchase these other assets.
(29:06):
Just make sure you're nothaving it automatically
reinvested.
You want to get it out intocash and then buy the
alternative investment.
But one or more of thosemethods are going to be your
best bets for making thistransition.
I'm glad you liked episode 436,which was all about trying to
get over fears of spending moneyin retirement.
(29:29):
It seems to have been one ofthe favorites of our audience
here at least of the recentepisodes.
Voices (29:54):
But what's easy to do is what?
Easy not to do?
But walk away from the 90%.
Don't go where they go, don'tdo what they do, don't talk like
they talk.
Develop you a whole newlanguage, be part of the few.
Guess when I went and got thislittle book, guess, when I went
and got it the same day I heardabout it.
I went and got it.
(30:15):
Somebody says well, mr own,does that make you different
than most?
Everybody else?
The answers yes.
Somebody says well, why is that?
We don't know.
What do we know?
You don't know, I don't know,nobody knows.
All we know is some get thespark and say I'm gonna change
my life, I'm gonna change myhealth, I'm gonna change my
(30:36):
relationship with my family, I'mgonna 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 go and change mylife.
I invite you on that journey.
Once you look back on it, youwill never turn back.
You'll never go back to the oldways and the old language and
(30:56):
the old neglect, never.
Mostly Uncle Frank (31:00):
And hopefully that helps.
Thank you for your donationsand thank you for your email,
but now I see our signal isbeginning to fade.
Looks like this weekend we'llbe having a rebalancing episode,
which we do once a year.
We rebalance the first foursample portfolios.
Voices (31:20):
Boring.
Mostly Uncle Frank (31:22):
So we'll be going through that and I'm not
sure we'll have time for emails,but if we do, we will put in
some more donor emails, becausewe've got a few more lined up
here In the meantime.
If you have comments orquestions for me, please send
them to frankatriskpartyradiocom.
That email isfrankatriskpartyradiocom.
Or you can go to the website,wwwriskpartyradiocom.
Put your message into thecontact form and I'll get it
(31:46):
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.
Mostly Mary (31:56):
Okay.
Mostly Uncle Frank (31:58):
Thank you once again for tuning in.
Voices (31:59):
This is Frank Vasquez with Risk Party Radio signing
off.
How do we do it?
How do we do it?
How do we do it?
How do we do it?
We need your business.
We're going out of business.
(32:19):
We'll give you the business.
Get on the business and thegoing out of business sale.
Receive our free brochure.
Free brochure, batteries notincluded.
Send before midnight tomorrow.
(32:40):
Terms available Step right up,step right up, step right up.
You got it, buddy.
A large print give us and asmall print take us away.
Step right up.
You can step right up.
You can step right up.
Come on, step, stay proud of me, get away from me.
(33:02):
Kid, you're welcome.
Stay proud of me, stay proud ofme.
Stay proud of me.
Come on, come on, come on, comeon, come on, it's the bridal.
(33:26):
You can say bridal.
Come on, it's the bridal.
Mostly Mary (33:43):
Oh, it's the bridal .
The Risk Parody Radio Show ishosted 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
(34:04):
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.
Mostly Mary (00:10):
If a man does not keep pace with his companions,
perhaps it is because he hears adifferent drummer.
A different drummer and now,coming to you from dead center
on your dial, welcome to RiskParity Radio, where we explore
alternatives and assetallocations for the
do-it-yourself investor,Broadcasting to you now from the
(00:31):
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 are new here and wonderwhat we are talking about, you
may wish to go back and listento some of the foundational
episodes for this program.
Voices (00:50):
Yeah, baby, yeah.
Mostly Uncle Frank (00:52):
And the basic foundational episodes are
episodes 1, 3, 5, 7, and 9.
Some of our listeners,including Karen and Chris, have
identified additional episodesthat you may consider
foundational, and those areepisodes 12, 14, 16, 19, 21, 56,
(01:13):
82, and 184.
Whoa, and you probably shouldcheck those out too, because we
have the finest podcast audienceavailable.
Voices (01:26):
Top drawer, really top drawer.
Mostly Uncle Frank (01:31):
Along with a host named after a hot dog.
Voices (01:34):
Lighten up Francis.
Mostly Uncle Frank (01:37):
But now onward to episode 438.
Today, on Risk Parity Radio,we're just going to do what we
do best here, which is attend toyour emails.
Voices (01:47):
I could have told you that.
Mostly Uncle Frank (01:49):
But before we get to that, I wanted to
remind you we are in the processof collecting comments to
revamp our website.
Just come up With our goodfriend Luke from Quebec, who is
working on it.
Voices (02:03):
We have top men working on it right now?
Who?
Mostly Uncle Frank (02:10):
Top men and we have posted an alternative
website.
So if you go towwwriskparityradarcom and go up
to the top right and click onAlt Site, you'll go to the
alternative website, which is indemo mode, and if you would
take a look at that and if youhave comments on that, we'd
(02:33):
appreciate receiving them.
Please send the comments to theemail frankatriskparityradiocom
.
That'sfrankatriskparityradiocom.
We're currently collecting allthe comments and we'll go
through them in August and thenrevamp the website, okay team,
let's get to work.
Mostly Mary (02:51):
Can we fix it?
Yes, we can.
Mostly Uncle Frank (02:55):
But now without further ado.
Voices (02:57):
Here I go once again with the email.
Mostly Uncle Frank (03:01):
And First off.
First off, we have an emailfrom Brian.
Voices (03:06):
Hey, brian, care to place a wager?
Mostly Uncle Frank (03:09):
And Brian writes.
Mostly Mary (03:10):
Hi Mary.
I sent the below through theweb contact portal, then
realized an email would be moreappropriate.
Thanks for all you do.
Voices (03:18):
Mary, mary.
Mostly Uncle Frank (03:19):
I need your huggin'.
Mostly Mary (03:22):
Hello, Uncle Frank.
I just made my donation to theFather McKenna Center and a
match to a similar organizationin my hometown.
Voices (03:29):
Yes.
Mostly Mary (03:30):
I recently discovered you on the Afford
Anything podcast.
Thanks for your diligence ineducating us all on the
importance of risk parity anddecumulation portfolios.
My wife and I are 60-ish.
She just retired and I will beworking another two years until
our son finishes college and wecan downsize from our
California-sized mortgage.
We started decumulation thisyear at a conservative 3.8%.
(03:54):
We would like to transitionASAP to a golden ratio style
portfolio.
Our current assets areprimarily in pre-tax tax
accounts using several differentMerriman portfolios, a US
for-fund and worldwide all-valuewith a 70-30 allocation.
We have plenty of cowbell butno gold or alternative
investments.
(04:14):
We need to rebalance to moreLCG, gold and alternatives.
I can manage most of this andhave started rebalancing to some
managed futures most of thisand have started rebalancing to
some managed futures DBMF, lcgfrom LCV, reits and utilities.
We have enough cash in theseaccounts to cover the next one
(04:36):
and a half to two years.
The issue I have is gold.
I love gold.
Since gold is a store of valuerather than an appreciating
asset and with its current highsI hesitate jumping into it for
fear of getting OG over gold.
Consider queuing OG over goldfrom the movie I'm Gonna Get you
(04:58):
Sucker.
While I understand markettiming can be futile, are there
other assets or funds we couldconsider transitioning into
until gold is stable andhopefully, at a more reasonable
price?
Thanks, OG Brian.
Voices (05:14):
Cause of death.
Looks like OG Over gold.
Yeah, Any signs of foul play,Randy?
No sir.
Mostly Mary (05:23):
Looks like a case of just too many gold chains.
Mostly Uncle Frank (05:26):
Well, first off, let me thank you for your
donation to the Father McKennaCenter.
As most of you know, we do nothave any sponsors on this
program.
We do have a charity we support.
It's called the Father McKennaCenter and it serves hungry and
homeless people in Washington DC.
Full disclosure I am on theboard of the charity and I'm the
current treasurer.
But if you give to the charity,you get to go to the front of
(05:50):
the email line and we arecurrently running a campaign
called the Top of the T-ShirtCampaign that goes along with
our Walk for McKenna that wedescribed in episode 426.
And it's a matching campaignbecause one of our listeners,
matthew 63, has put up $15,000in matching funds.
So there are two ways to give.
You can either go to thewebsite the Father McKenna
(06:12):
website I'll link to in the shownotes, go to their donation
page and donate online.
If you do that, put a littlenote in the comment box that it
is related to Risk Parity Radio.
Or you can go to the websitewwwriskparityradiocom, go to the
support page and you can becomea donor on Patreon, which is
(06:33):
our monthly donors.
Either way, I'll move you tothe front of the email line and
all of the emailers today aredonors, and so they're all at
the front of the email line.
Voices (06:44):
Top drawer, really top drawer.
Mostly Uncle Frank (06:47):
And just so you're aware, if you're not at
the front of the line, the lineis about two months long right
now.
Voices (06:52):
It's like you're unraveling a big cable knit
sweater that someone keepsknitting, knitting, knitting,
knitting, knitting, knitting,knitting, knitting, knitting,
knitting, knitting, knitting,knitting.
Mostly Uncle Frank (07:07):
I do plan to answer all of the emails of
substance, but we'll get to themin due course.
Voices (07:15):
I have officially amounted to Jack you squat.
Mostly Uncle Frank (07:21):
Now, moving to your question.
You're wondering about markettiming gold.
Yeah well, I probably wouldn'ttry to your question.
You're wondering about markettime in gold?
Yeah well, I probably wouldn'ttry to do that.
Mostly Mary (07:30):
A crystal ball can help you, it can guide you.
Mostly Uncle Frank (07:35):
Because the way I look at portfolios and
what we're doing here is, Ithink of it in terms of not
months or years, but in terms ofdecades, and so to me it really
doesn't matter whether you getinto gold now or get into it
within the next two years orsomething.
If that's easier for you tostomach, then I would go ahead
and put it on some schedule andbuild it out to what you want it
(07:58):
to be.
Or perhaps you could buy halfof it now and then build out the
rest as you go.
The truth is that we don't knowwhat gold is going to do in the
next few years.
Forget about it.
Some decades it has gonenowhere, and other decades it
has gone up fivefold.
Voices (08:14):
That's the fact, Jack.
That's the fact, Jack.
Mostly Uncle Frank (08:18):
Particularly the earliest decade of this
century.
At the moment it seems to benegatively correlated with both
stocks and bonds, which seem toreact negatively whenever
there's talks of tariffs,whereas gold acts positively.
But that's just the currentenvironment.
Overall it tends to go up andto the right, but not in any
(08:38):
linear manner.
Voices (08:40):
You're insane gold member.
And that's the way.
Uh-huh, uh-huh, I like it.
Mostly Uncle Frank (08:47):
So there is really no predicting it.
It is about as stable as it'sbeen in the past few months, in
that it's in this kind oftrading range between $3,000 and
$3,500.
And it's possible it couldbreak either way and I suppose
we could ask our crystal ballwhat it thinks gold will do next
.
Mostly Mary (09:06):
Now the crystal ball has been used since ancient
times.
It's used for scrying, healingand meditation.
Mostly Uncle Frank (09:15):
But you know what our crystal ball always
says.
Voices (09:18):
We don't know.
What do we know?
You don't know, I don't know,nobody knows.
Mostly Uncle Frank (09:24):
So my suggestion is that you move into
it in an orderly fashion and,whether that's right away or
over a relatively short periodof time, like one to two years,
it's going to be a coin flip asto whether that was the best
choice or not.
Voices (09:38):
You can't handle the gambling problem.
Mostly Uncle Frank (09:41):
I do expect it will be higher than it is
right now in ten years, though,if only because the dollar is a
depreciating asset.
So hopefully that helps.
Thank you for your donation andthank you for your email.
Voices (09:56):
So, brian, we're even now right Ready to start a new
life in England.
I've got my money.
Your wounds have healed upnicely.
What do you say?
We let bygones be bygones.
Hmm, you shot me in both myknees, then lit me on fire,
second off.
Mostly Uncle Frank (10:11):
Second off, we have an email from Gary Gary,
please come back to me and Garywrites Hi Mary and Frank.
Mostly Mary (10:22):
I want to express my sincere gratitude for
continuing this incredible andinformative Risk Parody Radio
project.
Voices (10:28):
You are talking about the nonsensical ravings of a
lunatic mind.
Mostly Mary (10:34):
As an early listener, I'm still captivated
and eagerly anticipating thevaluable insights and clips you
share.
Voices (10:40):
That is the straight stuff.
Oh funk, master.
Mostly Mary (10:42):
That is the straight stuff, oh funk master
In a gesture of appreciation andsupport for the Father McKenna
Center.
Voices (10:51):
I recently contributed to the Top of the.
Mostly Mary (10:53):
T-Shirt campaign Groovy baby.
For a long time I've embraced ahighly diversified portfolio
construction that closelyresembles many of the Risk
Parity Radio principles.
I'm comfortable with the decentreturns and relatively low beta
associated with this approach.
I have two questions for you.
First, I'd like to delve deeperinto your apparent aversion to
tips.
(11:13):
Have you ever been?
Voices (11:15):
in a Turkish prison.
Mostly Mary (11:17):
For an investor who seeks risk-averse bonds.
Wouldn't tips provide aninvestor the principal's
purchasing power againstinflation?
Wouldn't tips provide aninvestor the principal's
purchasing power againstinflation, especially when
utilized in a bullet ETFladdered format, be beneficial?
Second, and most importantly,I'd be honored if you could
(11:38):
share your strategies and adviceon raising a financial-savvy
child into adulthood.
Voices (11:40):
Why?
What have children ever donefor me?
Mostly Mary (11:43):
I have a wonderful 10-year-old daughter named Zoe,
and I can't wait for her todiscover the surprise sound clip
for her.
Voices (11:50):
Zoe Zoe, zoe, zoe, zoe.
Mostly Mary (11:56):
Uh, what's your last name?
Again, I'm eager to gather thebest resources and take the
necessary steps now and in thecoming years to foster her
financial comfort and acumen.
Thank you once again for yourtime and consideration.
Best regards, gary.
Voices (12:12):
Gary, oh Gary.
So did you hear any of that, ordo I have to repeat myself?
Mostly Uncle Frank (12:22):
Well, thank you also for being a donor to
the Father McKenna Center andour Top of the T-Shirt campaign.
I'm glad you're an earlylistener and are still enjoying
the podcast.
Voices (12:34):
Oh, barry, you are gonna finish your dessert and you are
gonna like it.
Mostly Uncle Frank (12:41):
Now going to your questions.
First you asked about tips.
We haven't talked about thesemuch in a long time.
Voices (12:50):
I want you to be nice until it's time to not be nice.
Mostly Uncle Frank (12:57):
They were a popular topic in years past and
I will give you the list ofepisodes where we discuss them
it's 85, 94, 129, 141, 142, 151,164, 241, 244, 260, 288, 292,
(13:18):
297, and most recently inepisodes 415 and 421.
And I'll summarize this for youbriefly.
This also was alluded to in anarticle by William Bernstein
that tips really do not have agood place in a diversified
(13:39):
portfolio.
If you are talking aboutportfolio construction, forget
about it, because they don't doanything well.
Voices (13:47):
You had only one job.
Mostly Uncle Frank (13:50):
They really don't in terms of protecting a
portfolio from anything.
First of all, they're bonds.
Voices (13:55):
That's the fact.
Yeah, that's the fact, yeah.
Mostly Uncle Frank (13:59):
They're not going to be great inflation
fighters if their bonds they'rejust not, and they weren't in
2022.
Tips funds went into the toiletwith the rest of the bonds.
Voices (14:12):
And it's gone, poof.
Mostly Uncle Frank (14:16):
Go look up LPTZ, if you don't believe me,
or TIP, because the truth is,the only thing they're
preserving you from in terms ofinflation is if you are
comparing them to nominal bondsor to cash.
And, in fact, if you compare atip with a nominal bond, it is a
bet, because a nominal bond hasan estimate of future inflation
(14:40):
built into it.
That's the difference betweenthe stated rate of the tip and
the stated rate of the nominalbond.
So, if you take those twothings, if inflation is more
than the nominal bond wouldsuggest in the next period, the
term of the bond yes, ifinflation is more than that,
then the tip would be better off.
If inflation is actually lessthan what the nominal bond would
(15:00):
have predicted, then you areworse off.
Under no circumstances, though,does that protect any portfolio
, a large portfolio frominflation.
Voices (15:10):
That's not how it works.
That's not how any of thisworks.
Mostly Uncle Frank (15:14):
If you want to protect a portfolio from
inflation, get the assets thatactually do that job and stop
pretending that tips do a jobthat they do not do, they
haven't done, and I don't carehow many people say, oh well,
tips are going to help you withinflation.
No, they're not.
They haven't done that in thepast and they're not going to do
that in the future.
(15:34):
Forget about it in the future.
Forget about it.
If you want to protect aportfolio from inflation and
have something that outperformsoutperforms, doesn't just keep
up outperforms during inflationyou need something like managed
futures or commodities, orcertain kinds of value-tilted
stocks like energy stocks orstocks that invest in things
(15:58):
like property and casualtyinsurance companies that can
pass inflation to theircustomers.
And if you want to know howtips do it in deflationary
environments, they can be reallyterrible in that environment
too.
In 2008, the main tips fund TIPwent down 10%, whereas nominal
bonds were up 10% went down 10%,whereas nominal bonds were up
(16:19):
10%, so they completely blew itas far as being a good bond was
concerned.
Mostly Mary (16:24):
That's not an improvement.
Mostly Uncle Frank (16:26):
So I have to ask you, if you're putting this
in your portfolio, what do youthink they're doing?
Are you just lying to yourself?
Show me some data that showsthat they're actually going to
do what you say, or your friend,or whoever you're listening to,
says they're doing, because tome, that's a symptom that that
person really doesn't know whatthey're talking about.
With respect to portfolioconstruction, they're not
(16:48):
relying on data, they're relyingon some theory in their head.
As you can see, I really bigone here, which is huge.
So if you're talking aboutsimply tips protecting against
inflation compared with cash,and that's all you're talking
(17:08):
about, that is really all you'retalking about Okay, yeah, you
win, but you're not supposed tobe holding that much cash.
Voices (17:17):
Hello, hello, anybody home?
I think, mcfly, you win, butyou're not supposed to be
holding that much cash.
Hello, hello, anybody home?
I think, mcfly.
I think.
Mostly Uncle Frank (17:22):
If you're holding that much cash, you have
a different problem.
You have a cash drag.
Stop holding so much cash andbuy something else that actually
can protect a portfolio frominflation, and it isn't going to
be tips.
Now, what are they actuallygood for?
They are good for a specificrole.
If you are creating some kindof ladder of funds you expect to
(17:43):
spend in the future and you'reworried about inflation in that
period of time, and so you don'twant to hold cash, yes, you can
put them in a ladder and theywill fulfill that role against
cash or other bonds, not againstother assets.
So if you want to have a bulletETF laddered format or a
(18:05):
laddered format of tips, myquestion is what do you want
that for?
What do you really want thatfor?
Is it because you're otherwisebe holding a big pile of cash?
Okay, it's better than that.
It's not better than a realportfolio.
Voices (18:20):
Fat drunk and stupid is no way to go through life, son.
Mostly Uncle Frank (18:24):
So, unless you're holding it for a very
specific purpose and you arecomparing it to something like
other bonds or cash, it does nothave a good role in a portfolio
because it's not a very goodbond and it's not a very good
inflation fighter.
Voices (18:39):
You need somebody watching your back at all times.
Mostly Uncle Frank (18:43):
If you want something to do those jobs, you
need to pick something else thatactually does the job and
doesn't pretend to do the job orjust does the job in a
commercial on TV.
Voices (18:55):
Removes embarrassing stains from conduit sheets
(19:19):
that's right.
And it entertains visitingrelatives.
In a commercial on TV, wife, itwalks your dog and it doubles
on sacks.
It doubles on sacks.
You can jump back jacks.
See you later, alligator.
See you later, alligator.
And it steals your car, it getsrid of your gambling debts, it
quits smoking.
It's a friend, it's a companion.
It's the only product you willever need.
Mostly Uncle Frank (19:30):
All right, your second question Strategies
and advice for raising afinancially savvy child into
adulthood.
Voices (19:37):
Zoe Zoe, zoe, zoe.
Mostly Uncle Frank (19:42):
Well, my first advice is be careful,
because you have to approachdifferent children differently.
Some children are reallyinterested in things like money
and numbers and stuff like that.
Voices (19:53):
I'm out making some sweet moolah with Uncle Rico.
Mostly Uncle Frank (19:57):
And other ones just aren't.
Ugh, and they may becomeinterested in different things
at different ages.
When she's old enough, I wouldopen her up a teen account at
Fidelity I think is what theycall it now Because I think it's
just important for teenagers tobe able to have such an account
(20:17):
, to put money in it, to buy andsell things, regardless of what
they are.
Maybe she just wants to investin companies she's interested in
or buy something her friendheard about, or whatever it is.
The point of that.
Learning is just how to hold andoperate one of these accounts,
and then you can move on to morekinds of investing, in which
(20:37):
case you might say some birthdaymoney or some other money that
you're going to give her and say, ok, we're going to invest this
the way you probably shouldinvest it, which is in a simple
index fund and leave that alone,or a couple of index funds and
leave that alone, and then youcan have the rest of it and you
can buy whatever you want.
Just seeing the reaction tothem with that is interesting,
(21:00):
because some of them don't wantto touch it.
Other ones are interested inbuying and selling all kinds of
things and some of them justwant to get the money out and
buy something with it, but youdon't know what you have until
you try it out.
If you will, I would say 10 isa little young for most children
, but you never know.
Some are more precocious andinterested in these sorts of
(21:20):
things.
Voices (21:22):
Oh, I get it, let me try .
Mostly Uncle Frank (21:25):
I did make an episode, number 208, which is
for the beginning investor,although it's more directed at
somebody who is starting theirfirst job than a 10-year-old,
but you might want to listen tothat.
It's a Wizard of Oz-themedprogram.
Voices (21:42):
Very well, I'll bide my time.
And as for you, my fine lady,it's true I can't attend you
here and now as I'd like, butjust try to stay out of my way.
Just try, I'll get you mypretty and your little dog too.
Mostly Uncle Frank (22:03):
Ha, ha, ha, ha, ha, ha, ha, ha, ha ha, I'll
get you my pretty, and yourlittle dog too.
It will be important for her tolearn about earning money at
some point.
That is also very difficult fora 10-year-old, but to the
extent she can earn money moneythen you can open a Roth IRA for
her and every time she earns ahundred dollars a year, a
(22:23):
thousand dollars a year,whatever it is you can take a
thousand dollars of your ownmoney or whatever she made and
put it in this Roth IRA, whichalso encourages children to
start earning money all we needto do is get your confidence
back so you can make me moremoney.
Because basically you're gettinga hundred percent parent match
for it.
But if you talk to her a littlebit about it and she really
(22:46):
doesn't seem that interested,that's okay, just let it rest.
Come back to it next year shehas plenty of time.
It doesn't take that long tolearn this stuff.
You know, it's interesting ifyou listen to interviews of JL
Collins, who wrote the SimplePath to Wealth.
He said that he just pushed waytoo hard on this too early and
really turned his daughter offto it, which led him then to
(23:09):
write the Simple Path to Wealth.
Knowing well, if she's notgoing to listen to me now, maybe
when I'm gone she'll at leasthave this to read and then
she'll know what I had to sayabout it.
There is a relatively new bookout called Once Upon a Fi by
Paul and Amanda Malenkov.
I'll link to that in the shownotes.
It's little fairy talesoriented towards monetary things
(23:32):
.
Voices (23:33):
It's time for the grand unveiling of money.
Mostly Uncle Frank (23:37):
I have not read it.
It may be a little bit belowher grade level, but you never
know, you could see whether thatsparks an interest too.
The one thing she probably doesneed to learn around this time
is the concept of buyer'sremorse.
So make sure that she's got alittle money that she's allowed
to spend for herself and whenshe wants something she can buy
(23:57):
it and then maybe think later on, maybe it wasn't worth the
money.
Because you want children tolearn that lesson very early
with small amounts of money, sothat they're not learning it
when they're in their 20s andthey are being conned into
buying expensive items that theyreally don't want or don't need
.
But really the only way tolearn that is by actually having
(24:18):
spent the money and thenrealizing that you didn't want
that thing and now you don'thave the money for something
else.
So if she doesn't have anymoney of her own right now, make
sure you get some into herpockets.
Voices (24:32):
What has it got in its pockets?
Mostly Uncle Frank (24:38):
There are many other techniques for
raising financially savvychildren, some of which work
well for some children and don'twork well for others has been
my experience.
One of them is you can set upthe bank of mom and dad, where
they get some money and thenthey give it to you as a savings
bank and you give them someamount of interest.
Usually you set it relativelyhigh, like 10% or something like
(24:59):
that, so they can experience itgrowing.
And there are others, but I'mafraid I don't remember all of
them since I'm not very much ofan expert on this topic.
Voices (25:09):
Inconceivable.
Mostly Uncle Frank (25:11):
So those are some ideas in a random order.
Hopefully that helps at least alittle.
Thank you for your donation andthank you for your email.
Voices (25:22):
Gary, if only I could see you one more time so I could
tell you how much I love you.
If only I could hear you meowone last time, meow, yeah, like
that.
Last off.
Mostly Uncle Frank (25:38):
Last off of an email from Rob.
Last off, last off, we have anemail from Rob.
Voices (25:42):
No way.
Mostly Mary (25:44):
And Rob writes Thank you and Mary for hosting
the show.
I found your podcast just afterretiring last year at 58 and
have found it extremely helpful.
I just listened to episode 436and think this is one of the
best shows and should be addedto your required shows for new
listeners.
Voices (26:03):
You are correct, sir.
Mostly Mary (26:05):
Yes 85% of my portfolio is in tax deferred
accounts, invested in treasuriesand investment grade corporates
, with the rest of my portfolioin taxable accounts with
substantial unrealized capitalgains.
I have an issue I am stuck withtoo much equity exposure and
want to shift from my current70% equity to 60% and increase
(26:28):
my exposure in GLD and DBMF from5% to 15%.
But the tax pain.
I would sell mostly VGT as I amway over concentrated on large
cap tech.
However, vgt is upapproximately 150% and the tax
hit will be significant 15%federal rate plus Virginia at
(26:50):
5.75%.
I could sell some otherinvestments but they are up
approximately 100%.
The combination of the tax hitand GLD's recent run-up in Ox
has me frozen Any advice.
Also, I donated to the FatherMcKenna Center through Fidelity
just now.
Thanks, rob from Richmond.
Voices (27:09):
What guy in a suit.
No, it's a tax collector.
Hide us SpongeBob.
Mostly Uncle Frank (27:16):
Well, thank you for also being a donor to
the Father McKenna Center, rob.
As for your question, yes, I'mtaking it that you have all of
your taxable accounts investedin these equities and you don't
have any equities in thetax-deferred accounts, because
obviously, if you had equitiesin the tax-deferred accounts,
you could just sell those andbuy the gold and DBMF in there.
(27:38):
And with respect to DBMF itself, you probably do want to have
that in a retirement accountbecause it pays ordinary income,
because there are no taxconsequences for selling
equities in a retirement account.
But there are a couple thingsyou can do, even in a taxable
account.
But there are a couple thingsyou can do even in a taxable
account.
One would be to look at the taxlots, because you are not
(28:01):
required to sell the oldest lotfirst, even though that's what
it will do automatically.
You need to work with yourbrokerage, but they generally
have a way of identifying whichlots and when you purchase them,
and so the lots you are lookingfor are the ones that are at
least a year old to qualify forlong-term capital gains tax
(28:21):
treatment, but not much older,and those will not have gains of
100% or 150%.
They'll only have gains forwhat the past year was, and so
the tax hit on those is notgoing to be that great at all.
So if there are a series ofthose that you can sell now that
are, say, a year old to twoyears old or three years old,
(28:44):
that's how I would approach itin the first instance.
The other way of approaching itis also, if you have new money
going in, just use that topurchase the new assets and then
, if you are getting dividendson anything and you should be
getting some dividends and alsosome income in the retirement
accounts that can also be usedto purchase these other assets.
(29:06):
Just make sure you're nothaving it automatically
reinvested.
You want to get it out intocash and then buy the
alternative investment.
But one or more of thosemethods are going to be your
best bets for making thistransition.
I'm glad you liked episode 436,which was all about trying to
get over fears of spending moneyin retirement.
(29:29):
It seems to have been one ofthe favorites of our audience
here at least of the recentepisodes.
Voices (29:54):
But what's easy to do is what?
Easy not to do?
But walk away from the 90%.
Don't go where they go, don'tdo what they do, don't talk like
they talk.
Develop you a whole newlanguage, be part of the few.
Guess when I went and got thislittle book, guess, when I went
and got it the same day I heardabout it.
I went and got it.
(30:15):
Somebody says well, mr own,does that make you different
than most?
Everybody else?
The answers yes.
Somebody says well, why is that?
We don't know.
What do we know?
You don't know, I don't know,nobody knows.
All we know is some get thespark and say I'm gonna change
my life, I'm gonna change myhealth, I'm gonna change my
(30:36):
relationship with my family, I'mgonna 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 go and change mylife.
I invite you on that journey.
Once you look back on it, youwill never turn back.
You'll never go back to the oldways and the old language and
(30:56):
the old neglect, never.
Mostly Uncle Frank (31:00):
And hopefully that helps.
Thank you for your donationsand thank you for your email,
but now I see our signal isbeginning to fade.
Looks like this weekend we'llbe having a rebalancing episode,
which we do once a year.
We rebalance the first foursample portfolios.
Voices (31:20):
Boring.
Mostly Uncle Frank (31:22):
So we'll be going through that and I'm not
sure we'll have time for emails,but if we do, we will put in
some more donor emails, becausewe've got a few more lined up
here In the meantime.
If you have comments orquestions for me, please send
them to frankatriskpartyradiocom.
That email isfrankatriskpartyradiocom.
Or you can go to the website,wwwriskpartyradiocom.
Put your message into thecontact form and I'll get it
(31:46):
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.
Mostly Mary (31:56):
Okay.
Mostly Uncle Frank (31:58):
Thank you once again for tuning in.
Voices (31:59):
This is Frank Vasquez with Risk Party Radio signing
off.
How do we do it?
How do we do it?
How do we do it?
How do we do it?
We need your business.
We're going out of business.
(32:19):
We'll give you the business.
Get on the business and thegoing out of business sale.
Receive our free brochure.
Free brochure, batteries notincluded.
Send before midnight tomorrow.
(32:40):
Terms available Step right up,step right up, step right up.
You got it, buddy.
A large print give us and asmall print take us away.
Step right up.
You can step right up.
You can step right up.
Come on, step, stay proud of me, get away from me.
(33:02):
Kid, you're welcome.
Stay proud of me, stay proud ofme.
Stay proud of me.
Come on, come on, come on, comeon, come on, it's the bridal.
(33:26):
You can say bridal.
Come on, it's the bridal.
Mostly Mary (33:43):
Oh, it's the bridal .
The Risk Parody Radio Show ishosted 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
(34:04):
actions based on any informationyou have heard here, making
sure to take into account yourown personal circumstances.
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