In this episode we answer emails from Jess, Phil and Scott. We discuss an experience of setting up a sample RPR portfolio for one's self, using asset swaps to manage cash, and fun with the low bar standards and other inadequacies of many financial advisors.
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.
Additional Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
How To Do An Asset Swap Video from Risk Parity Chronicles: How to Do an Asset Swap
Bigger Pockets Money Test Risk Parity Style Portfolio: We Built a 5% SWR Retirement Portfolio Using Fidelity in 48 Minutes (Golden Ratio Portfolio)
Excess Returns Podcast With Rick Ferri (forward to minute 49): Most Never Escape Stage 3 | Rick Ferri on How You Can Beat the Complexity Trap
Breathless Unedited AI-Bot Summary:
Tired of being told that everything beyond a three-fund portfolio is “too hard”? We pull back the curtain on practical tools that make DIY investing simpler in practice, not smaller in ambition. Starting with a listener’s test portfolios, we show how hands-on experience beats theory, why diversification means loving today’s winners and tomorrow’s comebacks, and how to turn rebalancing into reliable cash flow.
We go deep on asset location and the overlooked power of asset swaps. By “selling here, buying there,” you can keep your overall mix unchanged while moving ordinary income into tax-deferred accounts and positioning equities in taxable for qualified dividends and capital gains. If you’ve been parking big cash balances in a HYSA and wondering why your tax bill keeps creeping up, this segment is your blueprint for tax efficiency without extra risk.
Then we tackle withdrawal rates with clear eyes. Many advisors still anchor to 3 percent for retirees in their 60s. We explain why diversified, risk parity style allocations can responsibly target closer to 5 percent over long horizons, especially when you harvest from strength. Case in point: trimming gold after a powerful run to fund November distributions across our sample portfolios. We share market snapshots, what’s leading and lagging, and how a rules-based process keeps emotion out of the driver’s seat.
If you want an investing plan that funds a life—relationships, experiences, generosity—rather than an accounting hobby, this conversation is your on-ramp. Subscribe, share with a friend who needs a nudge to start that test portfolio, and leave a review telling us your target withdrawal rate and why.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Voices (00:00):
A foolish consistency is the hobgoblin of little mind,
adored by little statesmen andphilosophers and divines.
If a man does not keep pacewith his companions, perhaps it
is because he hears a differentdrummer.
A different drummer.
Mostly Queen Mary (00:18):
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 fromthe 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 (00:49):
Yeah, baby, yeah.
Mostly Uncle Frank (00:51):
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 are episodes 12, 14,16, 19, 21, 56, 82, and 184.
(01:16):
And you probably should checkthose out too, because we have
the finest podcast audienceavailable.
Voices (01:26):
Top drawer.
Really top drawer.
Mostly Uncle Frank (01:30):
Along with a host named after a hot dog.
Voices (01:34):
Lighten up Francis.
Mostly Uncle Frank (01:37):
But now onward, episode 462.
Today in Risk Party Radio, it'stime for our weekly portfolio
reviews of the eight sampleportfolios you can find at
www.riskparty radio.com on theportfolios page.
And yes, we also have to talkabout monthly distributions for
(01:58):
November.
Voices (01:59):
Show me the money! Jerry, you better yell! Show me
the money!
Mostly Uncle Frank (02:04):
Which is going to involve selling a lot
of gold.
That's what happens whensomething goes up a lot.
Voices (02:11):
I love gold.
Mostly Uncle Frank (02:15):
But before we get to that.
Voices (02:18):
I'm intrigued, my dear.
How are you saying?
Email.
Mostly Uncle Frank (02:23):
And first off.
First off, we have an emailfrom Jess.
Jess from Alaska again.
Voices (02:32):
Sweet mother of Abraham Lincoln, the prospector! You
wanna meet you!
Mostly Uncle Frank (02:37):
And Jess writes.
Mostly Queen Mary (02:39):
Hey Frank.
I was listening to your latestpodcast and was shocked and
thrilled to hear you answer myquestion from way back.
Voices (02:46):
You are talking about the nonsensical ravings of a
lunatic mind.
Mostly Queen Mary (02:52):
I decided I didn't have to choose among
Vanguard, Schwab, and Fidelity.
I could set up small testportfolios on all three
platforms and check out the UIsand limitations myself.
Voices (03:03):
Yeah, baby, yeah!
Mostly Queen Mary (03:05):
So I went back and listened to the two
bigger pockets money podcastsyou were on in July.
They were even better thesecond time.
Voices (03:12):
The best, Jerry.
The best.
Mostly Queen Mary (03:14):
I do love your perspective on investing
and spending on things that aremeaningful and avoiding hoarding
since I have a strong intentionto spend down and give away my
nest egg and die with as littleas I can manage.
Voices (03:44):
Yes!
Mostly Queen Mary (03:45):
So, I did use Fidelity in the Golden Ratio
portfolio you suggested.
Mostly Uncle Frank (03:51):
The Golden Ratio.
Mostly Queen Mary (03:54):
It was a rush since I have literally never
set up an asset allocationbefore.
I am really appreciative of thesupport.
Really excellent learningexperience made much easier by
you and Mindy.
Nanu! Nanu! It would haveprobably not happened at all
without you.
Voices (04:12):
I don't know how much value I have in this universe,
but I do know that it made a fewpeople happier than they would
have been without me.
And as long as I know that, I'mas rich as I ever need to be.
Mostly Queen Mary (04:21):
Now, I wish I had done it earlier since VUG
is already up $50 per sharesince July.
All my best, Jess from Alaska.
Mostly Uncle Frank (04:31):
Well, we just heard from Jess in episode
460 a couple episodes ago.
And thank you for writing inagain, and thank you for being a
donor to the Father McKennaCenter.
Voices (04:42):
Yay! Oh Bullseye! We're part of a family again!
Mostly Uncle Frank (04:48):
Beginning to see how this works, I do get to
all the emails eventually,because thankfully this podcast
is still small enough that I cananswer all the emails, at least
the ones that aren't junkemails, trying to become a guest
on a podcast that doesn't haveany guests.
I get a lot of those too.
Voices (05:07):
Always be closing.
Always be closing.
Mostly Uncle Frank (05:13):
But more importantly, you've learned that
you can go to the front of theemail line by donating to the
Father McKenna Center, as youhave done here.
Voices (05:21):
You can do it!
Mostly Uncle Frank (05:23):
As most of you know, we do not have any
sponsors on this podcast.
We do have a charity wesupport.
It's called the Father McKennaCenter and it supports hungry
and homeless people inWashington, D.C.
Full disclosure, I'm the boardof the charity and I'm the
current treasurer.
But if you give to the charityas Jess has done here, you get
to go to the front of the emailline.
There are two ways to do that.
(05:44):
Actually, Jess seems to havefound a third way, but uh the
main ways to do that are you cango to the donation page, the
Father McKenna website, whichI'll link to the show notes, or
you can become one of ourpatrons on Patreon if you go to
the support page atwww.riskperiator.com.
You can sign up for that there.
Either way, you get to go tothe front of the email line, but
(06:06):
just make sure you mention itin your email so I can duly move
you to the front of the line.
Did you see the memo aboutthis?
But now let's get to youremail.
I'm really glad you were ableto act on what you saw in that
Bigger Pockets Money podcast andcreate your own test run of a
risk parity style portfolio.
I hope you're also takingwithdrawals out of it because
(06:28):
that's part of the fun and partof the learning process.
There is this kind of myth outthere that having a brokerage
(06:51):
account is advanced or hard, orhaving more than a simple
one-to-three fund portfolio istoo hard for most people.
In fact, it's just not toohard.
It's unfamiliar.
But you can familiarizeyourself with it with a
relatively small amount ofmoney.
And there's no reason anybodywho is at least mildly curious
(07:11):
about do-it-yourself investingshould not be having a brokerage
account and doing experimentswith small amounts of money.
That's how you learn.
Voices (07:21):
Now, kids, in my next part of my talk, I'm gonna be
laying some heavy concepts onyou.
Mostly Uncle Frank (07:28):
As I've railed on many times before,
this idea that we need toworship some god of simplicity
out there because we're toostupid to manage our own assets
without going psycho orsomething like that.
The name's Francis Sawyer.
Any of you guys call meFrancis, and I'll kill you.
(07:52):
It's just wrong, and itcultivates a form of learned
helplessness.
Where you start believing thateverything is too difficult, so
you don't even try.
That's no way to live a life,either in your investing life or
(08:13):
another life.
Fat, drunk, and stupid is noway to go through life, sir.
It may be a place to startsomething, but it's certainly
not a place to end something.
Voices (08:24):
I must complete my bust.
Two novels, finish myblueprints, begin my beginning.
Hey, GIMA, most of you alwaystalk in rhyme.
If I spoke prose, you'd all findout.
I don't know what I talk about.
Mostly Uncle Frank (08:35):
And I'm glad you're also appreciating that
just saving and investing moneyis not much of a purpose unto
itself, as Morgan Housell saysin his recent book, The Art of
Spending Money.
If you think that's yourpurpose, then basically all you
have is an accounting hobby thatyou really need to focus these
activities of saving, investing,and spending money to some
(08:59):
higher purpose that does notjust involve accumulating more
and more money until you'redead.
And I talked a couple episodesago about the identity chapter
(09:30):
in that book, which I think isthe most important chapter in
that book, and that you need tobe careful about choosing your
identity because it may affectyour ultimate happiness and
satisfaction with life.
And the examples of a badidentity to pick in his mind
were things like I am a saver,but they could also be
identities that are specific toa particular career or a
(09:55):
particular kind of job oractivity or something like that.
You may have those identitiesand you probably should have
multiple identities, but in mymind, the best kinds of
identities to pick eventuallyand overall are the identities
that are related torelationships.
Because we do know from thefive regrets of the dying and
(10:17):
all kinds of literature thatultimately having good
relationships is one of the keysto living a fulfilled life.
And so if you want to have goodrelationships, you may consider
choosing identities that arerelated to being a good friend,
a good parent, a good spouse, agood community member in
(10:39):
whatever community that youbelong to.
Because those kinds ofidentities are likely to lead
you to more satisfaction in lifethan things like I am a saver
or I am a lawyer or somethinglike that.
Because if you haverelationship-based identities,
then you can use your financesto enhance those sorts of
(10:59):
things, and the finances do notbecome the identity or the
purpose as unto themselves.
Getting back to your portfolio,yeah, I suppose it would have
(11:35):
been nice to have bought VUG orgold earlier this year.
But that's the way things go.
There's always going to besomething going up and something
going down in this kind ofportfolio, at least almost all
of the time.
The last few months haveactually been kind of unusual,
particularly September, wherejust about everything was going
up.
That does happen sometimes withone of these portfolios, but
(11:58):
it's not normal.
Usually over the course of ayear or a few years, you will
have assets in these portfoliosthat look fabulous and some of
them look terrible.
And that is how you know you'rewell diversified.
Because that's whatdiversification means, that
different things are performingwell or poorly at different
times, and that you really wantto have a multi-year or
(12:21):
decade-long perspective on allof this.
It's interesting if you look atsomething like the Golden Ratio
portfolio going back 30-someyears, and you can do this
analysis on testfolio, you cansee the history of all of the
assets for the past 30-someyears.
And I think there's only oneyear where nothing was up in the
(12:42):
portfolio.
I think that year was 2018,which everything was pretty much
flat.
What you learn from that isthat by having a
well-diversified portfolio,you're going to have something
that is going up even in theworst years, and you can take
from that while the other assetsrecover.
And in some years like this,just about everything is going
(13:02):
up.
Both of those situations areunusual.
They're on the ends of theprobability spectrum, but it
does happen, particularly whenyou have a weak dollar like
we've had this year.
That tends to make everythingpriced in dollars look a little
better than it otherwise would.
Anyway, having a little testportfolio does allow you to see
that in sort of in real time,these assets going up and down
(13:26):
and performing differently atdifferent times.
But that is how we learn.
So congratulations again fortaking action on this, and I
hope to hear more from you inthe future.
I'm glad you're enjoying thepodcast.
I'm glad you become a donor.
And thank you for your email.
Second off, we have an emailfrom Phil.
Voices (14:16):
Phil?
Hey, Phil?
Phil?
Phil Connors?
Phil Connors, I thought thatwas you.
Mostly Uncle Frank (14:24):
And Phil Wright's.
Mostly Queen Mary (14:26):
Thanks for the podcast.
The question I have is aboutasset swapping cash for tax
efficiency.
And am I missing something?
To be clear, for example, youdon't need an extra $5,000 in
the checking account earning0.02% interest.
Voices (14:42):
Always money in a banana stand.
Mostly Queen Mary (14:43):
My solution has been move $5,000 to taxable
brokerage and buy X.
Sell X equivalent in IRA andcash goes to money market or
whatever.
Reverse as needed respectingTLH.
It seems really obvious to swaparound cash with taxable/slash
deferred accounts other thancash that has to be immediately
available, bail, pizza guy,prescriptions, etc.
Voices (15:06):
All of our precious bodily fluids.
Mostly Queen Mary (15:09):
My process has been keep a reasonable
balance in your checkingaccount, for example, Fidelity
CMA, and have something aroundas needed.
Keep the bulk of your cash,emergency is way overplayed, in
a tax-deferred account.
It's so easy and fast to movefunds around, I don't understand
why most of the advice I hearis keep cash in a HYSA or CD or
(15:30):
some other taxable vehicle.
Voices (15:32):
Stupid as stupid does, sir.
Mostly Queen Mary (15:34):
Is it a least common denominator situation?
Ease of explanation?
Time for the idea to sink in?
I don't know.
The explanation in previouspodcasts and RPC video about
asset swapping was good.
The only downside I can imagineis if capital gains are
significant, it may feel betterto not be taxed on a much higher
(15:54):
gain.
Setting up and monitoring myown sample portfolios has been
fantastic.
I started investing out ofcollege and work plans in the
mid-90s.
The first defining moment in myinvestment understanding was
reading Bernstein's IntelligentAsset Allocator in 2010-ish.
The second was discovering yourpodcast.
Thanks.
I know you don't want a secondjob.
(16:15):
Please keep it up, Phil.
You don't want any jobs.
Mostly Uncle Frank (16:21):
It's not that I'm lazy.
Voices (16:23):
It's that I just don't care.
Mostly Uncle Frank (16:25):
Well, thank you for writing in again, Phil.
And thank you for being a donorto the Father McKenna Center,
which is why your email has alsogone to the front of the line,
along with Jess this time.
So let's talk about assetswaps.
(16:46):
I know you understand what theyare, but this seems to be a
very underused tool in personalfinance.
Voices (16:53):
And we have the tools, we have the talent.
Mostly Uncle Frank (16:57):
And what it really is, is a way for you to
move assets in and out ofretirement accounts and taxable
accounts without actually movingany money in or out of the
account.
And the way that it works isyou are essentially selling,
say, assets in one account andthen buying them in the other
(17:18):
account to equalize out youroverall portfolio, but
effectively moving it from oneaccount to another.
Now I realize that explanationsounded confusing because this
is not that conducive toexplaining orally or on a
podcast.
It's easier if you do go lookat that video that Justin of
Risk Parity Chronicles preparedfor us, and I will link to it
(17:39):
again in the show notes, but itshows you exactly how to do an
asset swap between two accounts.
Didn't you get that memo?
And I think what you're doingmakes a whole lot of sense,
particularly if you have a lotof money in a taxable account
that is paying a lot of ordinaryincome.
I ran into this with anotherlistener who had sold a
(18:00):
property, and so they ended upwith several hundred thousand
dollars in cash that they hadjust put into money markets or
some kind of savings becausethey were still figuring out
what to do with it in the nextyear.
But what they realized after ayear is that had thrown off a
whole lot of ordinary taxableincome and was extremely tax
(18:20):
inefficient to be having thatsort of asset in the taxable
side of their investments.
And so I pointed out that youcould avoid all those taxes if
you essentially did an assetswap.
Instead of holding all thiscash in your taxable side of
your account, why don't you buystocks or something that only
(18:42):
throws off very limited incomethat is qualified income and
maintains capital gains?
And then what you do is you goover to your retirement account,
you sell some of the stocksthat are in there, and you buy
all of this cash.
You put it in short-term bondsor something similar in the
retirement account.
That way you still have thesame asset mix, but all of that
(19:06):
income, instead of appearing inyour taxable account and being
taxable that year, goes intoyour retirement account, which
can be reinvested, but you'renot paying taxes on it while
it's sitting in there.
You only pay taxes on it whenit comes out.
And that makes a whole lot moresense than paying these tax
bills in your taxable brokerageaccount, because it also plays
(19:28):
into timing that ultimately youwant to be taking money out of
those retirement accounts whenthe rest of your income is low.
And the rest of your income isnot going to be low if you have
piles of things generatingordinary income in a taxable
account.
Now, I'm not sure the juice isworth the squeeze if you're only
talking about $5,000 thatyou're asset swapping, but it's
(19:48):
not wrong to do that if itdoesn't take much effort.
The way you squeeze my lamina,I'm gonna fall out of It is
sufficient to say that thehigher your marginal ordinary
income tax rate is, the morevaluable the asset swapping
(20:10):
technique is going to be for youin your everyday lives, in
addition to being a way to taxoptimize your retirement
portfolios.
So I think your process forcash management is quite a good
one.
And thank you for sharing itwith us.
Voices (20:32):
It cuts whack.
Mostly Uncle Frank (20:45):
And Mindy Jensen has done by setting up a
sample portfolio so you canlearn how to manage it and just
see how it works.
I honestly didn't think thatwould be that great of a
learning tool.
It would be more of a pain formost people, but I've learned
that it actually is quite a goodlearning tool and that many
people benefit from it, and it'seasier to get a feel for how
(21:08):
this works by simply doing it asopposed to just reading or
hearing about it.
Let's do it.
I probably should have knownthat because that is what Mary
and I tell our trial practicestudents in our law school
(21:31):
class.
That is, you're going toremember and appreciate
something by doing it, gettingup and doing it, as opposed to
just reading about it or hearingabout it.
Voices (21:41):
I do it.
I love to do it.
I just did it and I'm ready todo it again.
Don't tell me you don't do it.
Mostly Uncle Frank (21:50):
But I'm glad you and Jess have told me about
that so that I can incorporateit into future recommendations
as to how to get into this.
I'm glad you're enjoying thepodcast.
Thank you for your suggestionson cash management.
Thank you for your donations,and thank you for your email.
(22:11):
And Scott Wrights.
Mostly Queen Mary (22:52):
Howdy, longtime listener, haven't
donated yet.
Yet.
Check out the July twentyninth, your money your wealth
podcast with Beth and Rip.
It's the first one and it won'ttake you long to confirm your
latest rant.
It could be the worst one yetregarding hoarding and
overaccumulation.
Have a great day.
Voices (23:46):
Have you ever heard of Plato, Aristotle, Socrates?
Yes, morons.
Really?
Mostly Uncle Frank (23:53):
And I use as an example of that the show
Your Money, Your Wealth, whichis run by a couple of AUM
financial advisor types.
Voices (24:04):
I drink your milkshake.
I drink it up!
Mostly Uncle Frank (24:12):
And so Scott is also referring to their
episode that came out on July29th with another example of
these types of callers.
And I won't belabor it, but itis pretty ridiculous when people
call into these shows and theysay they basically have eight or
ten million dollars orsomething like that, and they
(24:32):
wonder if they can spend$100,000 in retirement.
Shirley, you can't be serious.
I am serious, and don't call meShirley.
Because they clearly know theanswer to that question.
And I do keep wondering,though, whether the advisors on
that show select these people,or that it's just a happenstance
that almost all the people thatwrite into that show are
(24:54):
grossly oversaved.
Voices (24:56):
What's with you anyway?
I can't help it.
I'm a greedy slob.
It's my hobby.
Save me.
Mostly Uncle Frank (25:03):
What I have observed though is that a lot of
these advisors who have shows,especially the ones that are
paid through AUM, that's assetsunder management that take a
percentage of your money everyyear.
It's usually around 1%.
So if you have a $5 millionportfolio, you're paying these
people $50,000 a year toallegedly do something for you.
(25:24):
But what I've observed, theyset really low performance bars
for themselves, and are oftensaying things like people in
their 60s should only be takingout 3% of their invested assets,
and that's the kind of plansthey put people in.
I have to tell you, if you'reone of those people, that's
(25:44):
really not good enough for the2020s, and the world is going to
catch up with this gouging,frankly.
It's gouging and chargingpeople lots of money for a
mediocre plan becausepsychological hand holding is
only worth so much.
Voices (26:00):
Aw, you're such a good boy.
Yeah, you're so good.
Mostly Uncle Frank (26:07):
Even the financial advisor community at
large, if you go to someplacelike ThinkAdvisor, you'll see
people like David Blanchett,who's famous in the field and
has written a lot about theretirement spending smile and
many other things.
He's been saying for at least afew years now that the target
for your basic retirementportfolio ought to be spending
5%, that that really ought to bethe target.
(26:29):
So if your plan only allowsyour client to be spending 3% in
retirement, I'm talking aboutjust somebody in their 60s like
I am now, you're really just notdoing a good enough job to be
paid that amount of money.
Voices (26:44):
You had only one job.
Mostly Uncle Frank (26:46):
And I can tell you, as a consumer of this
stuff that gets marketed to allthe time, that's just not good
enough.
Voices (26:54):
That and a nickel get your hot cup, a jack squat.
Mostly Uncle Frank (26:59):
I mean, I can do this myself and take five
percent.
If I was gonna pay somebody onepercent or something like that,
at least I would think I'd beable to be taking four percent
out, but three percent?
Come on.
Voices (27:11):
Do you think anybody wants a roundhouse kicked to the
face while I'm wearing thesebad boys?
Forget about it.
Mostly Uncle Frank (27:18):
Then I see people who charge by the hour
saying the same thing.
And I was just listening toRick Ferry on the Excess Returns
podcast a week or two ago.
And they asked him point blank,I mean, what do you tell your
clients, an average client, howmuch money they can take out of
their portfolio?
And he hemmed and hawed aroundit and really didn't want to
answer the question.
But eventually they pinned himdown and he said 3%.
(27:40):
And he was talking aboutleaving the same amount of money
you started with to your heirs.
So that shines it up a littlebit.
But I can tell you the kinds ofportfolios we're using start
with a 6% safe withdrawal rateon a 30-year basis and on a
forever basis are at 5%.
(28:00):
So if you're saying that peoplecan only take out 60% of what
we can do ourselves, that's notgood enough either.
Voices (28:10):
Forget about it.
Mostly Uncle Frank (28:12):
I'll link to that in the show notes, it's at
the end of that podcast.
But I feel like, yeah, maybethat was good enough ten,
fifteen years ago when financialadvisors first started using
lots of index fund-basedportfolios.
But that's just not cutting ittoday.
So if that's what you have tooffer, you either need to charge
a whole lot less, or why don'tyou just up your game as far as
(28:36):
what you're recommending.
Of course, you may have to stopworshiping a god of simplicity
out of one side of your mouthand talking about tips ladders
out of the other side of yourmouth.
Because yeah, that kind ofthinking does lead you to these
kind of 3% safe control rates.
Anyway, I don't feel too muchlike ranting today.
That's enough of a rant onthis.
You can go back to listen toepisode 441 if you want to get
(28:59):
the uh full meal deal on that.
That's what I'm talking about.
But I'm glad I'm not the onlyone that listens to these things
with these grossly oversavedpeople and wonders why they were
writing it at all.
But as Morgan Housel says,their identity is to have an
accounting hobby.
Voices (29:17):
Ha ha ha!
Mostly Uncle Frank (29:19):
And maybe we should try to do better than
that with what life we haveremaining.
Voices (29:25):
Death stalks you at every turn! Grandpa?
Well, it does! There it is!
Mostly Uncle Frank (29:33):
Death So thank you for bringing that to
our attention, and thank you foryour email.
Now we are going to dosomething extremely fun.
And the extremely fun thing weget to do now is our weekly
portfolio reviews of the eightsample portfolios you can find
at www.riskperior.com on theportfolios page.
(29:56):
We're also going to talk aboutour monthly distributions for
November.
But just looking at how thesemarkets have performed this year
so far, starting with the SP500 represented by the fund VOO,
that's up 17.47% for the yearso far.
The Nasdaq 100, represented byQQQ, is up 23.51% for the year
(30:18):
so far.
Small cap value represented bythe fund VIOV continues to lag.
It is only up 3.04% for theyear so far.
And gold continues to be thebig winner, even though it is
off of its ridiculous highs.
Well, it's still at ridiculoushighs.
I love gold.32% for the year sofar.
(30:45):
Which means we've been sellingit and continue to sell it.
I think the last time we boughtgold in most of these
portfolios was in 2021.
When I looked back and lookedat the Golden Ratio portfolio,
we started with $1,600 worth ofgold in that portfolio.
(31:07):
We've sold $1,000 worth of goldin that portfolio, and there's
still over $2,000 worth of goldin it right now.
Voices (31:17):
And that's the way uh uh I like it, Casey and the
Shunshine Bund.
Mostly Uncle Frank (31:23):
Now, does that mean you should run out and
chase gold because it's goneup?
Voices (31:27):
No, Mr.
Bund, I expect you to die.
Mostly Uncle Frank (31:31):
Because what's funny about these
portfolios and about assets ingeneral is the time you actually
want to be buying them is wheneverybody hates them and nobody
cares.
Voices (31:43):
That is the straight stuff, oh funk master.
Mostly Uncle Frank (31:46):
And we saw this with respect to gold.
We had a listener three yearsago saying, Why are you doing
that?
Isn't that a foolishconsistency?
This thing's never gonnaperform again.
And that is just ranksilliness.
Voices (31:59):
That's not how it works.
That's not how any of thisworks.
Mostly Uncle Frank (32:04):
One thing you should learn from listening
to other amateur investors isthat they are terrible at
predicting the future and theyfixate on what has happened in
the last three to ten years andtry to predict from that.
Voices (32:20):
My name's Sonia.
I'm going to be showing you umthe crystal ball and how to use
it or how I use it.
Mostly Uncle Frank (32:27):
And they are usually wrong.
Voices (32:31):
Wrong!
Mostly Uncle Frank (32:32):
Until three years ago, it was gold as a
terrible asset.
Today its bonds are a terribleasset, and small cap value is a
terrible asset.
Voices (32:41):
You can actually feel the energy from your ball by
just putting your hands in andout.
Mostly Uncle Frank (32:46):
Well, if you look at the history of this,
the first year of theseportfolios, small cap value is
actually the best performer outof all of the assets.
And you don't know what isgoing to be next.
But that's the point of holdinga whole bunch of diversified
assets that you don't know.
Voices (33:04):
We don't know.
What do we know?
You don't know, I don't know,nobody knows.
Mostly Uncle Frank (33:10):
So stop trying to predict things and
just hold a variety of assets,even the ones that have been
performing badly for the pastfive years or three to ten years
or whatever metric you'reusing.
Learn something from GeorgeCostanza when what you do seems
(33:32):
to result in bad results, andthe typical behavior of amateur
investors is to chase thingsthat have done well in the past
one to ten years.
That is the typical behavior.
If you do the opposite, you mayhave good results because
events that haven't happened in40 or 50 years might just happen
(33:53):
next year.
That's the way this works.
Voices (33:56):
Yeah, I should do the opposite.
If every instinct you have iswrong, then the opposite would
have to be right.
Yes.
I will do the opposite.
I used to sit here and donothing and regret it for the
rest of the day.
So now I will do the oppositeand I will do something.
(34:17):
Excuse me, uh, I couldn't helpbut notice that you were looking
in my direction.
Oh, yes, I was.
You just ordered the same exactlunch as me.
My name is George.
I'm unemployed and I live withmy parents.
(34:42):
I'm Victoria.
Hi.
Mostly Uncle Frank (34:45):
So all those retail financial advisors who
have been telling you, well,gold hasn't performed well since
1980, so you shouldn't own it,and it did really badly in the
1990s, so you shouldn't own it,and the 1970s are never gonna
happen again.
Uh guess what?
They were wrong.
Wrong! And they're still wrongtoday.
(35:05):
Wrong?
Wrong! They've just got egg intheir face now.
Right?
Wrong! Moving on.
Long-term treasury bondsrepresented by the fund VGLT are
up seven point one five percentfor the year so far.
Yeah, those are now the leastpopular asset of these.
But just wait till the nextrecession.
Rates represented by the fundRET are up seven point four six
(35:29):
percent for the year so far.
Commodities represented by thefund PDBC are up four point five
four percent for the year sofar.
Preferred shares represented byPFFV are up 2.68 for the year
so far, and managed futures aremanaging to be up.
Representative fund DBMF is up10.51% for the year so far.
(35:49):
Which has gone from one of theworst performers this year to
one of the best performers thisyear in the last six months.
Nobody predicted that either.
Voices (35:58):
Don't be saucy with me, Bernays.
Mostly Uncle Frank (36:02):
Now moving to these portfolios.
First one's the all seasons.
This is a reference portfolio.
It's only 30% in stocks and atotal stock market fund, 55% in
intermediate and long-termtreasury bonds, and the
remaining 15% in goldencommodities.
It was up 1.64% for the monthof October.
It's up 13.28% year to date,and up 22.98% since inception in
(36:26):
July 2020.
For the month of November,we're taking $34 out of it.
It will come out of accumulatedcash.
It's at a 4% annualized rate,and it'll be $350 year to date,
and $2,040 since inception inJuly 2020.
Moving to these bread andbutter kind of portfolios, first
(36:46):
one's gold and butterfly.
This one is 40% in stocksdivided into a total stock
market fund and a small capvalue fund, 40% in bonds divided
into long and short treasurybonds, and the remaining 20% in
gold, GLDM.
It was up 1.49% for October.
It's up 16.51% year to date andup 56.04% since inception in
(37:11):
July 2020.
For the month of November,we'll be withdrawing $50 that is
going to come out of the goldallocation in GLDM.
This is at a 5% annualizedrate.
That'll be $511 year to dateand $2,812 since inception in
July 2020.
Next one's the golden ratio.
Voices (37:32):
A number so perfect.
Mostly Uncle Frank (37:34):
Perfect.
We find it everywhere.
Everywhere.
Sacred geometry.
This one is 42% in stocks,divided it into a large cap
growth fund and a small capvalue fund, 26% in long-term
treasury bonds, 16% in gold, 10%in managed futures, and the
(37:56):
remaining 6% in cash and a moneymarket fund.
It's up 2.15% for the month ofOctober.
It's up 16.97% year to date,and up 52.01% since inception in
July 2020.
For the month of November,we'll be withdrawing $49.
We always withdraw out of thecash money market fund for this
(38:17):
portfolio.
At a 5% annualized rate,that'll be $492 year-to-date and
$2,754 since inception in July2020.
Next one's the Risk ParityUltimate, our kitchen sink.
We won't be going through all12 of these funds, but it's up
1.62% for the month of October.
It's up 16.39% year to date andup 38.9% since inception in
(38:42):
July 2020.
We'll be withdrawing $53 out ofit from gold for the month of
November.
This is now at a 6% annualizedrate, so that'll be $464 year to
date and $2,914 since inceptionin July 2020.
Now moving to theseexperimental portfolios that all
involve leverage funds.
Voices (39:04):
Tony Stark was able to build this in a cave with a
bunch of scraps.
Mostly Uncle Frank (39:12):
Don't try this at home.
Voices (39:14):
You have a gambling problem.
Mostly Uncle Frank (39:16):
First one's the accelerated permanent
portfolio.
This one is 27.5% in a leveredbond fund TMF.
25% in UPRO, a levered S P 500fund, 25% in PFFV, a preferred
shares fund, and 22.5% in goldin GLDM.
It was up 3.23% for the monthof October.
(39:36):
It's up 22.96% year to date andup 24.23% since inception in
July 2020.
For the month of November,we're withdrawing $44, also
coming out of gold.
It's at a 6% annualized rate.
That'll be $433 year to dateand $3,063 since inception in
July 2020.
(39:58):
Next one's the aggressive50-50.
This is the least diversifiedand most levered of these
portfolios.
Voices (40:05):
Look away.
Mostly Uncle Frank (40:06):
I'm it is 33% in UPRO, a levered stock
fund, 33% in TMF, a levered bondfund, and the remaining 34%
divided into a preferred sharesfund and intermediate treasury
bonds as ballast.
It's up 3.23% for the month ofOctober.
It's up 15.47% year to date andup 1.7% since inception in July
(40:30):
2020.
For November, we'll be taking$36 out of it, out of the UPRO,
the Levered Stock Fund.
It's at a 6% annualized rate.
It'll be $360 year to date and$3,028 since inception in July
2020.
Moving to the next one, this isthe levered golden ratio.
(40:51):
It has 35% in a composite fundcalled NTSX, that is the SP 500
and Treasury bonds levered up1.5 to 1, 15% in AVDV, which is
an international small cap valuefund.
20% in gold, GLDM, 10% in amanaged futures fund, KMLM, 10%
(41:12):
in TMF, which is a levered bondfund, and the remaining 10%
divided into two levered fundsthat follow the Dow and a
Utilities Index.
It's up 2.45% month to date.
It's up 23.57% year to date,and up 18.11% since inception in
July 2021.
(41:33):
For the month of October, weare withdrawing $39 out of it
from gold, GLDM.
It's at a 5% annualized rateright now.
That'll be $373 year-to-dateand $1,940 since inception in
July 2021.
And moving to our last one, theOPTRA portfolio.
(41:54):
One portfolio to rule them all.
This is a return-stacked kindof portfolio.
It is 16% in UPRO, which is aLevered SP 500 fund, 24% in
AVGV, which is a worldwide valuetilted fund, 24% in GOVZ, which
is a Treasury Strips fund, andthe remaining 36% divided into
(42:14):
gold and managed futures.
It's up 2.92% for the month ofOctober.
It's up 22.71% year-to-date andup 26.28% since inception in
July 2024.
It's relatively new.
For the month of November,we're taking out $59 out of
UPRO, which is a 6% annualizedrate.
(42:34):
It'll be $576 year-to-date and$836 since inception in July
2024.
And that concludes our weeklyportfolio reviews and our
monthly distributions.
I am sure you found thatscintillating.
As always.
Voices (42:53):
This is pretty much the worst video ever made.
Mostly Uncle Frank (42:56):
But now I see our signal is beginning to
fade.
If you have comments orquestions for me, please send
them to Frank atRiskPartyRader.com.com.
Or you can go to the websitewww.riskparty.com.
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
(43:17):
favorite podcast provider andlike, subscribe, and be some
stars follow a review.
That would be great.
Okay.
Thank you once again for tuningin.
This is Frank Vasquez with RiskParty Radio.
Signing off.
A foolish consistency is the hobgoblin of little mind,
adored by little statesmen andphilosophers and divines.
If a man does not keep pacewith his companions, perhaps it
is because he hears a differentdrummer.
A different drummer.
Mostly Queen Mary (00:18):
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 fromthe 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 (00:49):
Yeah, baby, yeah.
Mostly Uncle Frank (00:51):
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 are episodes 12, 14,16, 19, 21, 56, 82, and 184.
(01:16):
And you probably should checkthose out too, because we have
the finest podcast audienceavailable.
Voices (01:26):
Top drawer.
Really top drawer.
Mostly Uncle Frank (01:30):
Along with a host named after a hot dog.
Voices (01:34):
Lighten up Francis.
Mostly Uncle Frank (01:37):
But now onward, episode 462.
Today in Risk Party Radio, it'stime for our weekly portfolio
reviews of the eight sampleportfolios you can find at
www.riskparty radio.com on theportfolios page.
And yes, we also have to talkabout monthly distributions for
(01:58):
November.
Voices (01:59):
Show me the money! Jerry, you better yell! Show me
the money!
Mostly Uncle Frank (02:04):
Which is going to involve selling a lot
of gold.
That's what happens whensomething goes up a lot.
Voices (02:11):
I love gold.
Mostly Uncle Frank (02:15):
But before we get to that.
Voices (02:18):
I'm intrigued, my dear.
How are you saying?
Email.
Mostly Uncle Frank (02:23):
And first off.
First off, we have an emailfrom Jess.
Jess from Alaska again.
Voices (02:32):
Sweet mother of Abraham Lincoln, the prospector! You
wanna meet you!
Mostly Uncle Frank (02:37):
And Jess writes.
Mostly Queen Mary (02:39):
Hey Frank.
I was listening to your latestpodcast and was shocked and
thrilled to hear you answer myquestion from way back.
Voices (02:46):
You are talking about the nonsensical ravings of a
lunatic mind.
Mostly Queen Mary (02:52):
I decided I didn't have to choose among
Vanguard, Schwab, and Fidelity.
I could set up small testportfolios on all three
platforms and check out the UIsand limitations myself.
Voices (03:03):
Yeah, baby, yeah!
Mostly Queen Mary (03:05):
So I went back and listened to the two
bigger pockets money podcastsyou were on in July.
They were even better thesecond time.
Voices (03:12):
The best, Jerry.
The best.
Mostly Queen Mary (03:14):
I do love your perspective on investing
and spending on things that aremeaningful and avoiding hoarding
since I have a strong intentionto spend down and give away my
nest egg and die with as littleas I can manage.
Voices (03:44):
Yes!
Mostly Queen Mary (03:45):
So, I did use Fidelity in the Golden Ratio
portfolio you suggested.
Mostly Uncle Frank (03:51):
The Golden Ratio.
Mostly Queen Mary (03:54):
It was a rush since I have literally never
set up an asset allocationbefore.
I am really appreciative of thesupport.
Really excellent learningexperience made much easier by
you and Mindy.
Nanu! Nanu! It would haveprobably not happened at all
without you.
Voices (04:12):
I don't know how much value I have in this universe,
but I do know that it made a fewpeople happier than they would
have been without me.
And as long as I know that, I'mas rich as I ever need to be.
Mostly Queen Mary (04:21):
Now, I wish I had done it earlier since VUG
is already up $50 per sharesince July.
All my best, Jess from Alaska.
Mostly Uncle Frank (04:31):
Well, we just heard from Jess in episode
460 a couple episodes ago.
And thank you for writing inagain, and thank you for being a
donor to the Father McKennaCenter.
Voices (04:42):
Yay! Oh Bullseye! We're part of a family again!
Mostly Uncle Frank (04:48):
Beginning to see how this works, I do get to
all the emails eventually,because thankfully this podcast
is still small enough that I cananswer all the emails, at least
the ones that aren't junkemails, trying to become a guest
on a podcast that doesn't haveany guests.
I get a lot of those too.
Voices (05:07):
Always be closing.
Always be closing.
Mostly Uncle Frank (05:13):
But more importantly, you've learned that
you can go to the front of theemail line by donating to the
Father McKenna Center, as youhave done here.
Voices (05:21):
You can do it!
Mostly Uncle Frank (05:23):
As most of you know, we do not have any
sponsors on this podcast.
We do have a charity wesupport.
It's called the Father McKennaCenter and it supports hungry
and homeless people inWashington, D.C.
Full disclosure, I'm the boardof the charity and I'm the
current treasurer.
But if you give to the charityas Jess has done here, you get
to go to the front of the emailline.
There are two ways to do that.
(05:44):
Actually, Jess seems to havefound a third way, but uh the
main ways to do that are you cango to the donation page, the
Father McKenna website, whichI'll link to the show notes, or
you can become one of ourpatrons on Patreon if you go to
the support page atwww.riskperiator.com.
You can sign up for that there.
Either way, you get to go tothe front of the email line, but
(06:06):
just make sure you mention itin your email so I can duly move
you to the front of the line.
Did you see the memo aboutthis?
But now let's get to youremail.
I'm really glad you were ableto act on what you saw in that
Bigger Pockets Money podcast andcreate your own test run of a
risk parity style portfolio.
I hope you're also takingwithdrawals out of it because
(06:28):
that's part of the fun and partof the learning process.
There is this kind of myth outthere that having a brokerage
(06:51):
account is advanced or hard, orhaving more than a simple
one-to-three fund portfolio istoo hard for most people.
In fact, it's just not toohard.
It's unfamiliar.
But you can familiarizeyourself with it with a
relatively small amount ofmoney.
And there's no reason anybodywho is at least mildly curious
(07:11):
about do-it-yourself investingshould not be having a brokerage
account and doing experimentswith small amounts of money.
That's how you learn.
Voices (07:21):
Now, kids, in my next part of my talk, I'm gonna be
laying some heavy concepts onyou.
Mostly Uncle Frank (07:28):
As I've railed on many times before,
this idea that we need toworship some god of simplicity
out there because we're toostupid to manage our own assets
without going psycho orsomething like that.
The name's Francis Sawyer.
Any of you guys call meFrancis, and I'll kill you.
(07:52):
It's just wrong, and itcultivates a form of learned
helplessness.
Where you start believing thateverything is too difficult, so
you don't even try.
That's no way to live a life,either in your investing life or
(08:13):
another life.
Fat, drunk, and stupid is noway to go through life, sir.
It may be a place to startsomething, but it's certainly
not a place to end something.
Voices (08:24):
I must complete my bust.
Two novels, finish myblueprints, begin my beginning.
Hey, GIMA, most of you alwaystalk in rhyme.
If I spoke prose, you'd all findout.
I don't know what I talk about.
Mostly Uncle Frank (08:35):
And I'm glad you're also appreciating that
just saving and investing moneyis not much of a purpose unto
itself, as Morgan Housell saysin his recent book, The Art of
Spending Money.
If you think that's yourpurpose, then basically all you
have is an accounting hobby thatyou really need to focus these
activities of saving, investing,and spending money to some
(08:59):
higher purpose that does notjust involve accumulating more
and more money until you'redead.
And I talked a couple episodesago about the identity chapter
(09:30):
in that book, which I think isthe most important chapter in
that book, and that you need tobe careful about choosing your
identity because it may affectyour ultimate happiness and
satisfaction with life.
And the examples of a badidentity to pick in his mind
were things like I am a saver,but they could also be
identities that are specific toa particular career or a
(09:55):
particular kind of job oractivity or something like that.
You may have those identitiesand you probably should have
multiple identities, but in mymind, the best kinds of
identities to pick eventuallyand overall are the identities
that are related torelationships.
Because we do know from thefive regrets of the dying and
(10:17):
all kinds of literature thatultimately having good
relationships is one of the keysto living a fulfilled life.
And so if you want to have goodrelationships, you may consider
choosing identities that arerelated to being a good friend,
a good parent, a good spouse, agood community member in
(10:39):
whatever community that youbelong to.
Because those kinds ofidentities are likely to lead
you to more satisfaction in lifethan things like I am a saver
or I am a lawyer or somethinglike that.
Because if you haverelationship-based identities,
then you can use your financesto enhance those sorts of
(10:59):
things, and the finances do notbecome the identity or the
purpose as unto themselves.
Getting back to your portfolio,yeah, I suppose it would have
(11:35):
been nice to have bought VUG orgold earlier this year.
But that's the way things go.
There's always going to besomething going up and something
going down in this kind ofportfolio, at least almost all
of the time.
The last few months haveactually been kind of unusual,
particularly September, wherejust about everything was going
up.
That does happen sometimes withone of these portfolios, but
(11:58):
it's not normal.
Usually over the course of ayear or a few years, you will
have assets in these portfoliosthat look fabulous and some of
them look terrible.
And that is how you know you'rewell diversified.
Because that's whatdiversification means, that
different things are performingwell or poorly at different
times, and that you really wantto have a multi-year or
(12:21):
decade-long perspective on allof this.
It's interesting if you look atsomething like the Golden Ratio
portfolio going back 30-someyears, and you can do this
analysis on testfolio, you cansee the history of all of the
assets for the past 30-someyears.
And I think there's only oneyear where nothing was up in the
(12:42):
portfolio.
I think that year was 2018,which everything was pretty much
flat.
What you learn from that isthat by having a
well-diversified portfolio,you're going to have something
that is going up even in theworst years, and you can take
from that while the other assetsrecover.
And in some years like this,just about everything is going
(13:02):
up.
Both of those situations areunusual.
They're on the ends of theprobability spectrum, but it
does happen, particularly whenyou have a weak dollar like
we've had this year.
That tends to make everythingpriced in dollars look a little
better than it otherwise would.
Anyway, having a little testportfolio does allow you to see
that in sort of in real time,these assets going up and down
(13:26):
and performing differently atdifferent times.
But that is how we learn.
So congratulations again fortaking action on this, and I
hope to hear more from you inthe future.
I'm glad you're enjoying thepodcast.
I'm glad you become a donor.
And thank you for your email.
Second off, we have an emailfrom Phil.
Voices (14:16):
Phil?
Hey, Phil?
Phil?
Phil Connors?
Phil Connors, I thought thatwas you.
Mostly Uncle Frank (14:24):
And Phil Wright's.
Mostly Queen Mary (14:26):
Thanks for the podcast.
The question I have is aboutasset swapping cash for tax
efficiency.
And am I missing something?
To be clear, for example, youdon't need an extra $5,000 in
the checking account earning0.02% interest.
Voices (14:42):
Always money in a banana stand.
Mostly Queen Mary (14:43):
My solution has been move $5,000 to taxable
brokerage and buy X.
Sell X equivalent in IRA andcash goes to money market or
whatever.
Reverse as needed respectingTLH.
It seems really obvious to swaparound cash with taxable/slash
deferred accounts other thancash that has to be immediately
available, bail, pizza guy,prescriptions, etc.
Voices (15:06):
All of our precious bodily fluids.
Mostly Queen Mary (15:09):
My process has been keep a reasonable
balance in your checkingaccount, for example, Fidelity
CMA, and have something aroundas needed.
Keep the bulk of your cash,emergency is way overplayed, in
a tax-deferred account.
It's so easy and fast to movefunds around, I don't understand
why most of the advice I hearis keep cash in a HYSA or CD or
(15:30):
some other taxable vehicle.
Voices (15:32):
Stupid as stupid does, sir.
Mostly Queen Mary (15:34):
Is it a least common denominator situation?
Ease of explanation?
Time for the idea to sink in?
I don't know.
The explanation in previouspodcasts and RPC video about
asset swapping was good.
The only downside I can imagineis if capital gains are
significant, it may feel betterto not be taxed on a much higher
(15:54):
gain.
Setting up and monitoring myown sample portfolios has been
fantastic.
I started investing out ofcollege and work plans in the
mid-90s.
The first defining moment in myinvestment understanding was
reading Bernstein's IntelligentAsset Allocator in 2010-ish.
The second was discovering yourpodcast.
Thanks.
I know you don't want a secondjob.
(16:15):
Please keep it up, Phil.
You don't want any jobs.
Mostly Uncle Frank (16:21):
It's not that I'm lazy.
Voices (16:23):
It's that I just don't care.
Mostly Uncle Frank (16:25):
Well, thank you for writing in again, Phil.
And thank you for being a donorto the Father McKenna Center,
which is why your email has alsogone to the front of the line,
along with Jess this time.
So let's talk about assetswaps.
(16:46):
I know you understand what theyare, but this seems to be a
very underused tool in personalfinance.
Voices (16:53):
And we have the tools, we have the talent.
Mostly Uncle Frank (16:57):
And what it really is, is a way for you to
move assets in and out ofretirement accounts and taxable
accounts without actually movingany money in or out of the
account.
And the way that it works isyou are essentially selling,
say, assets in one account andthen buying them in the other
(17:18):
account to equalize out youroverall portfolio, but
effectively moving it from oneaccount to another.
Now I realize that explanationsounded confusing because this
is not that conducive toexplaining orally or on a
podcast.
It's easier if you do go lookat that video that Justin of
Risk Parity Chronicles preparedfor us, and I will link to it
(17:39):
again in the show notes, but itshows you exactly how to do an
asset swap between two accounts.
Didn't you get that memo?
And I think what you're doingmakes a whole lot of sense,
particularly if you have a lotof money in a taxable account
that is paying a lot of ordinaryincome.
I ran into this with anotherlistener who had sold a
(18:00):
property, and so they ended upwith several hundred thousand
dollars in cash that they hadjust put into money markets or
some kind of savings becausethey were still figuring out
what to do with it in the nextyear.
But what they realized after ayear is that had thrown off a
whole lot of ordinary taxableincome and was extremely tax
(18:20):
inefficient to be having thatsort of asset in the taxable
side of their investments.
And so I pointed out that youcould avoid all those taxes if
you essentially did an assetswap.
Instead of holding all thiscash in your taxable side of
your account, why don't you buystocks or something that only
(18:42):
throws off very limited incomethat is qualified income and
maintains capital gains?
And then what you do is you goover to your retirement account,
you sell some of the stocksthat are in there, and you buy
all of this cash.
You put it in short-term bondsor something similar in the
retirement account.
That way you still have thesame asset mix, but all of that
(19:06):
income, instead of appearing inyour taxable account and being
taxable that year, goes intoyour retirement account, which
can be reinvested, but you'renot paying taxes on it while
it's sitting in there.
You only pay taxes on it whenit comes out.
And that makes a whole lot moresense than paying these tax
bills in your taxable brokerageaccount, because it also plays
(19:28):
into timing that ultimately youwant to be taking money out of
those retirement accounts whenthe rest of your income is low.
And the rest of your income isnot going to be low if you have
piles of things generatingordinary income in a taxable
account.
Now, I'm not sure the juice isworth the squeeze if you're only
talking about $5,000 thatyou're asset swapping, but it's
(19:48):
not wrong to do that if itdoesn't take much effort.
The way you squeeze my lamina,I'm gonna fall out of It is
sufficient to say that thehigher your marginal ordinary
income tax rate is, the morevaluable the asset swapping
(20:10):
technique is going to be for youin your everyday lives, in
addition to being a way to taxoptimize your retirement
portfolios.
So I think your process forcash management is quite a good
one.
And thank you for sharing itwith us.
Voices (20:32):
It cuts whack.
Mostly Uncle Frank (20:45):
And Mindy Jensen has done by setting up a
sample portfolio so you canlearn how to manage it and just
see how it works.
I honestly didn't think thatwould be that great of a
learning tool.
It would be more of a pain formost people, but I've learned
that it actually is quite a goodlearning tool and that many
people benefit from it, and it'seasier to get a feel for how
(21:08):
this works by simply doing it asopposed to just reading or
hearing about it.
Let's do it.
I probably should have knownthat because that is what Mary
and I tell our trial practicestudents in our law school
(21:31):
class.
That is, you're going toremember and appreciate
something by doing it, gettingup and doing it, as opposed to
just reading about it or hearingabout it.
Voices (21:41):
I do it.
I love to do it.
I just did it and I'm ready todo it again.
Don't tell me you don't do it.
Mostly Uncle Frank (21:50):
But I'm glad you and Jess have told me about
that so that I can incorporateit into future recommendations
as to how to get into this.
I'm glad you're enjoying thepodcast.
Thank you for your suggestionson cash management.
Thank you for your donations,and thank you for your email.
(22:11):
And Scott Wrights.
Mostly Queen Mary (22:52):
Howdy, longtime listener, haven't
donated yet.
Yet.
Check out the July twentyninth, your money your wealth
podcast with Beth and Rip.
It's the first one and it won'ttake you long to confirm your
latest rant.
It could be the worst one yetregarding hoarding and
overaccumulation.
Have a great day.
Voices (23:46):
Have you ever heard of Plato, Aristotle, Socrates?
Yes, morons.
Really?
Mostly Uncle Frank (23:53):
And I use as an example of that the show
Your Money, Your Wealth, whichis run by a couple of AUM
financial advisor types.
Voices (24:04):
I drink your milkshake.
I drink it up!
Mostly Uncle Frank (24:12):
And so Scott is also referring to their
episode that came out on July29th with another example of
these types of callers.
And I won't belabor it, but itis pretty ridiculous when people
call into these shows and theysay they basically have eight or
ten million dollars orsomething like that, and they
(24:32):
wonder if they can spend$100,000 in retirement.
Shirley, you can't be serious.
I am serious, and don't call meShirley.
Because they clearly know theanswer to that question.
And I do keep wondering,though, whether the advisors on
that show select these people,or that it's just a happenstance
that almost all the people thatwrite into that show are
(24:54):
grossly oversaved.
Voices (24:56):
What's with you anyway?
I can't help it.
I'm a greedy slob.
It's my hobby.
Save me.
Mostly Uncle Frank (25:03):
What I have observed though is that a lot of
these advisors who have shows,especially the ones that are
paid through AUM, that's assetsunder management that take a
percentage of your money everyyear.
It's usually around 1%.
So if you have a $5 millionportfolio, you're paying these
people $50,000 a year toallegedly do something for you.
(25:24):
But what I've observed, theyset really low performance bars
for themselves, and are oftensaying things like people in
their 60s should only be takingout 3% of their invested assets,
and that's the kind of plansthey put people in.
I have to tell you, if you'reone of those people, that's
(25:44):
really not good enough for the2020s, and the world is going to
catch up with this gouging,frankly.
It's gouging and chargingpeople lots of money for a
mediocre plan becausepsychological hand holding is
only worth so much.
Voices (26:00):
Aw, you're such a good boy.
Yeah, you're so good.
Mostly Uncle Frank (26:07):
Even the financial advisor community at
large, if you go to someplacelike ThinkAdvisor, you'll see
people like David Blanchett,who's famous in the field and
has written a lot about theretirement spending smile and
many other things.
He's been saying for at least afew years now that the target
for your basic retirementportfolio ought to be spending
5%, that that really ought to bethe target.
(26:29):
So if your plan only allowsyour client to be spending 3% in
retirement, I'm talking aboutjust somebody in their 60s like
I am now, you're really just notdoing a good enough job to be
paid that amount of money.
Voices (26:44):
You had only one job.
Mostly Uncle Frank (26:46):
And I can tell you, as a consumer of this
stuff that gets marketed to allthe time, that's just not good
enough.
Voices (26:54):
That and a nickel get your hot cup, a jack squat.
Mostly Uncle Frank (26:59):
I mean, I can do this myself and take five
percent.
If I was gonna pay somebody onepercent or something like that,
at least I would think I'd beable to be taking four percent
out, but three percent?
Come on.
Voices (27:11):
Do you think anybody wants a roundhouse kicked to the
face while I'm wearing thesebad boys?
Forget about it.
Mostly Uncle Frank (27:18):
Then I see people who charge by the hour
saying the same thing.
And I was just listening toRick Ferry on the Excess Returns
podcast a week or two ago.
And they asked him point blank,I mean, what do you tell your
clients, an average client, howmuch money they can take out of
their portfolio?
And he hemmed and hawed aroundit and really didn't want to
answer the question.
But eventually they pinned himdown and he said 3%.
(27:40):
And he was talking aboutleaving the same amount of money
you started with to your heirs.
So that shines it up a littlebit.
But I can tell you the kinds ofportfolios we're using start
with a 6% safe withdrawal rateon a 30-year basis and on a
forever basis are at 5%.
(28:00):
So if you're saying that peoplecan only take out 60% of what
we can do ourselves, that's notgood enough either.
Voices (28:10):
Forget about it.
Mostly Uncle Frank (28:12):
I'll link to that in the show notes, it's at
the end of that podcast.
But I feel like, yeah, maybethat was good enough ten,
fifteen years ago when financialadvisors first started using
lots of index fund-basedportfolios.
But that's just not cutting ittoday.
So if that's what you have tooffer, you either need to charge
a whole lot less, or why don'tyou just up your game as far as
(28:36):
what you're recommending.
Of course, you may have to stopworshiping a god of simplicity
out of one side of your mouthand talking about tips ladders
out of the other side of yourmouth.
Because yeah, that kind ofthinking does lead you to these
kind of 3% safe control rates.
Anyway, I don't feel too muchlike ranting today.
That's enough of a rant onthis.
You can go back to listen toepisode 441 if you want to get
(28:59):
the uh full meal deal on that.
That's what I'm talking about.
But I'm glad I'm not the onlyone that listens to these things
with these grossly oversavedpeople and wonders why they were
writing it at all.
But as Morgan Housel says,their identity is to have an
accounting hobby.
Voices (29:17):
Ha ha ha!
Mostly Uncle Frank (29:19):
And maybe we should try to do better than
that with what life we haveremaining.
Voices (29:25):
Death stalks you at every turn! Grandpa?
Well, it does! There it is!
Mostly Uncle Frank (29:33):
Death So thank you for bringing that to
our attention, and thank you foryour email.
Now we are going to dosomething extremely fun.
And the extremely fun thing weget to do now is our weekly
portfolio reviews of the eightsample portfolios you can find
at www.riskperior.com on theportfolios page.
(29:56):
We're also going to talk aboutour monthly distributions for
November.
But just looking at how thesemarkets have performed this year
so far, starting with the SP500 represented by the fund VOO,
that's up 17.47% for the yearso far.
The Nasdaq 100, represented byQQQ, is up 23.51% for the year
(30:18):
so far.
Small cap value represented bythe fund VIOV continues to lag.
It is only up 3.04% for theyear so far.
And gold continues to be thebig winner, even though it is
off of its ridiculous highs.
Well, it's still at ridiculoushighs.
I love gold.32% for the year sofar.
(30:45):
Which means we've been sellingit and continue to sell it.
I think the last time we boughtgold in most of these
portfolios was in 2021.
When I looked back and lookedat the Golden Ratio portfolio,
we started with $1,600 worth ofgold in that portfolio.
(31:07):
We've sold $1,000 worth of goldin that portfolio, and there's
still over $2,000 worth of goldin it right now.
Voices (31:17):
And that's the way uh uh I like it, Casey and the
Shunshine Bund.
Mostly Uncle Frank (31:23):
Now, does that mean you should run out and
chase gold because it's goneup?
Voices (31:27):
No, Mr.
Bund, I expect you to die.
Mostly Uncle Frank (31:31):
Because what's funny about these
portfolios and about assets ingeneral is the time you actually
want to be buying them is wheneverybody hates them and nobody
cares.
Voices (31:43):
That is the straight stuff, oh funk master.
Mostly Uncle Frank (31:46):
And we saw this with respect to gold.
We had a listener three yearsago saying, Why are you doing
that?
Isn't that a foolishconsistency?
This thing's never gonnaperform again.
And that is just ranksilliness.
Voices (31:59):
That's not how it works.
That's not how any of thisworks.
Mostly Uncle Frank (32:04):
One thing you should learn from listening
to other amateur investors isthat they are terrible at
predicting the future and theyfixate on what has happened in
the last three to ten years andtry to predict from that.
Voices (32:20):
My name's Sonia.
I'm going to be showing you umthe crystal ball and how to use
it or how I use it.
Mostly Uncle Frank (32:27):
And they are usually wrong.
Voices (32:31):
Wrong!
Mostly Uncle Frank (32:32):
Until three years ago, it was gold as a
terrible asset.
Today its bonds are a terribleasset, and small cap value is a
terrible asset.
Voices (32:41):
You can actually feel the energy from your ball by
just putting your hands in andout.
Mostly Uncle Frank (32:46):
Well, if you look at the history of this,
the first year of theseportfolios, small cap value is
actually the best performer outof all of the assets.
And you don't know what isgoing to be next.
But that's the point of holdinga whole bunch of diversified
assets that you don't know.
Voices (33:04):
We don't know.
What do we know?
You don't know, I don't know,nobody knows.
Mostly Uncle Frank (33:10):
So stop trying to predict things and
just hold a variety of assets,even the ones that have been
performing badly for the pastfive years or three to ten years
or whatever metric you'reusing.
Learn something from GeorgeCostanza when what you do seems
(33:32):
to result in bad results, andthe typical behavior of amateur
investors is to chase thingsthat have done well in the past
one to ten years.
That is the typical behavior.
If you do the opposite, you mayhave good results because
events that haven't happened in40 or 50 years might just happen
(33:53):
next year.
That's the way this works.
Voices (33:56):
Yeah, I should do the opposite.
If every instinct you have iswrong, then the opposite would
have to be right.
Yes.
I will do the opposite.
I used to sit here and donothing and regret it for the
rest of the day.
So now I will do the oppositeand I will do something.
(34:17):
Excuse me, uh, I couldn't helpbut notice that you were looking
in my direction.
Oh, yes, I was.
You just ordered the same exactlunch as me.
My name is George.
I'm unemployed and I live withmy parents.
(34:42):
I'm Victoria.
Hi.
Mostly Uncle Frank (34:45):
So all those retail financial advisors who
have been telling you, well,gold hasn't performed well since
1980, so you shouldn't own it,and it did really badly in the
1990s, so you shouldn't own it,and the 1970s are never gonna
happen again.
Uh guess what?
They were wrong.
Wrong! And they're still wrongtoday.
(35:05):
Wrong?
Wrong! They've just got egg intheir face now.
Right?
Wrong! Moving on.
Long-term treasury bondsrepresented by the fund VGLT are
up seven point one five percentfor the year so far.
Yeah, those are now the leastpopular asset of these.
But just wait till the nextrecession.
Rates represented by the fundRET are up seven point four six
(35:29):
percent for the year so far.
Commodities represented by thefund PDBC are up four point five
four percent for the year sofar.
Preferred shares represented byPFFV are up 2.68 for the year
so far, and managed futures aremanaging to be up.
Representative fund DBMF is up10.51% for the year so far.
(35:49):
Which has gone from one of theworst performers this year to
one of the best performers thisyear in the last six months.
Nobody predicted that either.
Voices (35:58):
Don't be saucy with me, Bernays.
Mostly Uncle Frank (36:02):
Now moving to these portfolios.
First one's the all seasons.
This is a reference portfolio.
It's only 30% in stocks and atotal stock market fund, 55% in
intermediate and long-termtreasury bonds, and the
remaining 15% in goldencommodities.
It was up 1.64% for the monthof October.
It's up 13.28% year to date,and up 22.98% since inception in
(36:26):
July 2020.
For the month of November,we're taking $34 out of it.
It will come out of accumulatedcash.
It's at a 4% annualized rate,and it'll be $350 year to date,
and $2,040 since inception inJuly 2020.
Moving to these bread andbutter kind of portfolios, first
(36:46):
one's gold and butterfly.
This one is 40% in stocksdivided into a total stock
market fund and a small capvalue fund, 40% in bonds divided
into long and short treasurybonds, and the remaining 20% in
gold, GLDM.
It was up 1.49% for October.
It's up 16.51% year to date andup 56.04% since inception in
(37:11):
July 2020.
For the month of November,we'll be withdrawing $50 that is
going to come out of the goldallocation in GLDM.
This is at a 5% annualizedrate.
That'll be $511 year to dateand $2,812 since inception in
July 2020.
Next one's the golden ratio.
Voices (37:32):
A number so perfect.
Mostly Uncle Frank (37:34):
Perfect.
We find it everywhere.
Everywhere.
Sacred geometry.
This one is 42% in stocks,divided it into a large cap
growth fund and a small capvalue fund, 26% in long-term
treasury bonds, 16% in gold, 10%in managed futures, and the
(37:56):
remaining 6% in cash and a moneymarket fund.
It's up 2.15% for the month ofOctober.
It's up 16.97% year to date,and up 52.01% since inception in
July 2020.
For the month of November,we'll be withdrawing $49.
We always withdraw out of thecash money market fund for this
(38:17):
portfolio.
At a 5% annualized rate,that'll be $492 year-to-date and
$2,754 since inception in July2020.
Next one's the Risk ParityUltimate, our kitchen sink.
We won't be going through all12 of these funds, but it's up
1.62% for the month of October.
It's up 16.39% year to date andup 38.9% since inception in
(38:42):
July 2020.
We'll be withdrawing $53 out ofit from gold for the month of
November.
This is now at a 6% annualizedrate, so that'll be $464 year to
date and $2,914 since inceptionin July 2020.
Now moving to theseexperimental portfolios that all
involve leverage funds.
Voices (39:04):
Tony Stark was able to build this in a cave with a
bunch of scraps.
Mostly Uncle Frank (39:12):
Don't try this at home.
Voices (39:14):
You have a gambling problem.
Mostly Uncle Frank (39:16):
First one's the accelerated permanent
portfolio.
This one is 27.5% in a leveredbond fund TMF.
25% in UPRO, a levered S P 500fund, 25% in PFFV, a preferred
shares fund, and 22.5% in goldin GLDM.
It was up 3.23% for the monthof October.
(39:36):
It's up 22.96% year to date andup 24.23% since inception in
July 2020.
For the month of November,we're withdrawing $44, also
coming out of gold.
It's at a 6% annualized rate.
That'll be $433 year to dateand $3,063 since inception in
July 2020.
(39:58):
Next one's the aggressive50-50.
This is the least diversifiedand most levered of these
portfolios.
Voices (40:05):
Look away.
Mostly Uncle Frank (40:06):
I'm it is 33% in UPRO, a levered stock
fund, 33% in TMF, a levered bondfund, and the remaining 34%
divided into a preferred sharesfund and intermediate treasury
bonds as ballast.
It's up 3.23% for the month ofOctober.
It's up 15.47% year to date andup 1.7% since inception in July
(40:30):
2020.
For November, we'll be taking$36 out of it, out of the UPRO,
the Levered Stock Fund.
It's at a 6% annualized rate.
It'll be $360 year to date and$3,028 since inception in July
2020.
Moving to the next one, this isthe levered golden ratio.
(40:51):
It has 35% in a composite fundcalled NTSX, that is the SP 500
and Treasury bonds levered up1.5 to 1, 15% in AVDV, which is
an international small cap valuefund.
20% in gold, GLDM, 10% in amanaged futures fund, KMLM, 10%
(41:12):
in TMF, which is a levered bondfund, and the remaining 10%
divided into two levered fundsthat follow the Dow and a
Utilities Index.
It's up 2.45% month to date.
It's up 23.57% year to date,and up 18.11% since inception in
July 2021.
(41:33):
For the month of October, weare withdrawing $39 out of it
from gold, GLDM.
It's at a 5% annualized rateright now.
That'll be $373 year-to-dateand $1,940 since inception in
July 2021.
And moving to our last one, theOPTRA portfolio.
(41:54):
One portfolio to rule them all.
This is a return-stacked kindof portfolio.
It is 16% in UPRO, which is aLevered SP 500 fund, 24% in
AVGV, which is a worldwide valuetilted fund, 24% in GOVZ, which
is a Treasury Strips fund, andthe remaining 36% divided into
(42:14):
gold and managed futures.
It's up 2.92% for the month ofOctober.
It's up 22.71% year-to-date andup 26.28% since inception in
July 2024.
It's relatively new.
For the month of November,we're taking out $59 out of
UPRO, which is a 6% annualizedrate.
(42:34):
It'll be $576 year-to-date and$836 since inception in July
2024.
And that concludes our weeklyportfolio reviews and our
monthly distributions.
I am sure you found thatscintillating.
As always.
Voices (42:53):
This is pretty much the worst video ever made.
Mostly Uncle Frank (42:56):
But now I see our signal is beginning to
fade.
If you have comments orquestions for me, please send
them to Frank atRiskPartyRader.com.com.
Or you can go to the websitewww.riskparty.com.
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
(43:17):
favorite podcast provider andlike, subscribe, and be some
stars follow a review.
That would be great.
Okay.
Thank you once again for tuningin.
This is Frank Vasquez with RiskParty Radio.
Signing off.
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