December 3, 2025 • 39 mins
In this episode we answer emails from Patrick, Kyle, and Dave. We discuss the advantages of using risk parity style portfolios for higher withdrawal rates, how to manage a sleeve of individual REITs, the joys of giving in its various forms, a risk parity style portfolio in a Donor Advised Fund, and reverse glide paths. We share how planned generosity, donor-advised funds, and employer matches can make retirement more meaningful.
Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
Kitces & Carl podcast about "Frugal Bob": Helping Retired Clients To Actually Start Spending And Enjoying Their Money - Kitces & Carl Ep 178
Bigger Pockets Money Test Risk Parity Style Portfolio: We Built a 5% SWR Retirement Portfolio Using Fidelity in 48 Minutes (Golden Ratio Portfolio)
Choose FI Podcast #574: Top Five Regrets of the Dying (Book Club with Frank Vasquez and Ginger) | Ep 574
Kitces Reverse Glidepath Article: The Benefits Of A Rising Equity Glidepath In Retirement
Breathless AI-Bot Summary:
Most retirees don’t fail because they spend too much; they struggle because their portfolios weren’t built for withdrawals. We unpack how risk parity, smarter rebalancing, and a reverse glide path can protect early-retirement years while keeping growth on the table. Along the way, we share listener stories that show what happens when a 100% stock believer embraces diversification and discovers the joy of giving—through donor-advised funds, employer matches, and a simple plan to distribute one percent or more each year.
We start with a real allocation shift: blending large growth, small value, long Treasuries, gold, managed futures, and a small sleeve of REITs to reduce sequence risk. Then we get tactical. For individual REIT holdings, we treat the sleeve as one allocation and only rebalance when the sleeve moves versus the rest of the portfolio. Inside the sleeve, focus on outliers—trim oversized winners, reassess laggards with deteriorating stories—and keep transactions light to minimize taxes and churn.
The heart of the episode explores how generosity reshapes retirement planning. Using a donor-advised fund to “stress test” withdrawals at high rates teaches mechanics and builds confidence, while employer matching turns donations into leveraged impact. We talk practical tools—automating gifts, donating appreciated shares, setting “use-by” dates on giving accounts—and nontraditional forms of giving that create work, support local businesses, and deepen relationships.
We close by breaking down the reverse glide path championed by Michael Kitces and echoed by Bill Bengen: start retirement with lower equity exposure and increase it over time. Our working template moves from the low 40% equity range toward 60–70% as years pass—an evidence-informed band that historically supports higher safe withdrawal rates and tamps down sequence risk. Paired with risk parity diversification and a deliberate giving plan, it’s a path that funds a life you actually want to live.
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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 (00:36):
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):
Light in the French.
Mostly Uncle Frank (01:37):
But now onward, episode 469.
Voices (01:47):
Inconceivable!
Mostly Uncle Frank (01:49):
And so without further ado.
Voices (01:51):
Here I go once again with the email.
Mostly Uncle Frank (01:54):
And first off.
First off, we can email fromPatrick.
Patrick, just how dumb are you?
And Patrick writes.
Mostly Queen Mary (02:05):
Hi Frank.
I've been on the fire pathsince April 2016, and I'm about
75% of the way there at age 44.
Voices (02:14):
Yeah, baby, yeah!
Mostly Queen Mary (02:16):
I've been following standard Mr.
Money Mustache and JL Collins'advice to go 100% VTI VOO and
chill.
Following Big Earn's safewithdrawal rate series, I
assumed I was shooting for a3.25% withdrawal rate, with
early retirement not likelyuntil age 48 to 50.
Voices (02:35):
Forget about it.
Mostly Queen Mary (02:37):
I discovered your podcast in August, and it
has rocked my world in a majorway.
Voices (02:42):
No more flying, Solo.
Mostly Queen Mary (02:43):
After digesting hundreds of risk
parity radio episodes and doingsimulations with portfolio
charts, portfolio visualizer,and Big Earns Toolkit, I
realized that a transitiontowards a risk parity structure
would allow me to likely pullthe plug by the end of 2026 or
2027 at the latest.
Voices (03:02):
That's what I'm talking about.
Mostly Queen Mary (03:04):
I've shifted to a transitional allocation of
30% VUG VTI VOO, 30% VIOV, 16%VGLT, 10% GLDM, 5% DBMF, and 9%
split evenly among nineindividual REITs in diversified
(03:24):
industries.
Once my wife retires, we'llshift further to an allocation
of 25% VUG, 25% VIOV, 20% VGLT,15% GLDM, 10% DBMF, and 5%
REITs.
That lets me hit all of thesweet spots for macro allocation
and is a bit more aggressivethan the standard Golden Ratio
(03:47):
portfolio.
Voices (03:48):
A number so perfect.
Perfect.
We find it everywhere.
Everywhere.
Mostly Queen Mary (03:56):
My question is in regarding to rebalancing
the individual REITs.
Do you recommend rebalancingthe REITs individually so they
each maintain an even 1% of thetotal portfolio?
Or is there some other way ofrebalancing you would recommend?
The performance of thesecompanies has been all over the
map, with the best of themgaining 20% in a handful of
(04:16):
months, with the worst of themlooking at you, Iron Mountain,
losing 20% in that same timeframe.
The second and hopefully moreimportant impact from
discovering your show wasgetting me to think more about
charitable giving.
Voices (04:29):
Yes!
Mostly Queen Mary (04:30):
Your work with the Father McKenna Center
and Mary's work with Casainspired me to drop my default
hoarder setting and donate tolocal youth, arts, and athletic
groups, my local food pantry,and now, as you see, attached
the Father McKenna Center.
Voices (04:44):
Real wrath of God type stuff.
Mostly Queen Mary (04:46):
It also motivated me to look into my
company's match program, and loand behold, I discovered they
will match up to $15,000 ofannual donations to thousands of
charities.
Voices (04:56):
Excellent!
Mostly Queen Mary (04:58):
I feel like I have suddenly gained a
superpower in being able toexpend my employer's money on
behalf of such a good cause.
I'm now adding a big charitablegiving line in my
post-financial independencebudget to make use of that extra
1.75% of safe withdrawals.
Keep doing what you're doingand thank you so much for the
wonderful podcast, Patrick.
Voices (05:19):
Patrick, this trophy's for you!
Mostly Uncle Frank (05:27):
Well, first off, Patrick, thank you for
being a donor to the FatherMcKenna Center.
And mentioning charity, whichwe'll talk about.
We are recording this on GivingTuesday, although you don't
need to wait until the firstTuesday in December to uh
exercise your right to give tocharity.
Voices (05:45):
You gotta fight! Fight a right.
Mostly Uncle Frank (05:54):
Anyway, 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 in 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
the email line, as Patrick hasdone here, and also our second
(06:14):
emailer today.
Two ways to do that.
You can either do it directlyat the donation page of the
Father McKenna website, whichI'll link to again in the show
notes, or you can become apatron on Patreon, which you do
through the Risk Parity Radiowebsite.
Go to the support page andfollow the links there.
Either way, you get to go tothe front of the email line, but
(06:35):
make sure you mention it inyour email so I can duly move
you to the front of the line.
Voices (06:40):
You're in the wrong shape, buddy.
Come on.
Oh, I must be in the front.
Mostly Uncle Frank (06:44):
But now let's get to your email.
First, welcome to this program.
Since it sounds like you'vebeen around here just since
August.
Voices (06:57):
Welcome to the message.
Mostly Uncle Frank (06:59):
And hopefully what you've discovered
is that there are more andbetter ways to approach
decumulation than just notspending money.
Voices (07:06):
That's the fact jack! That's the fact jack!
Mostly Uncle Frank (07:10):
Because I think that actually is the
dominant strategy for most ofpopular personal finance, even
prior to Phi.
Well, especially prior to Phi,that is still the most dominant
strategy in personal financelater in life is don't spend
money and just keepaccumulating.
Voices (07:28):
Oh boy, I'm rich! I'm wealthy! I'm independent! I'm
socially secure! I'm rich! I'mrich! I'm rich.
Mostly Uncle Frank (07:37):
I was listening to some financial
advisors on another podcastrecently, and they were talking
about this (07:42):
that when you look at the decumulation strategies
of retirees, or most people areretirees, something like only
about 14% of decumulators arewilling to contemplate having
their stash of money go down inretirement, that most either
insist on maintaining at leastthat amount of money or
continuing to grow their moneyin retirement.
(08:04):
There was also a recent podcastby Michael Kitsis and Carl
Richards, the Kitsis and Carlshow, it's what they call that,
where they were talking a lotabout this too, that the main
problem there is what they callthe quote frugal Bob, unquote,
identity, which I think kind ofsums it up that frugal Bob's
been a saver all his life and solooks for ways to continue
(08:27):
pursuing that identity inretirement, even though it
doesn't make a whole lot ofsense.
And a lot of the advice you'veseen or you've been exposed to
is of that variety.
Voices (08:38):
Donate to the children's fund?
Why?
What have children ever donefor me?
Mostly Uncle Frank (08:44):
That lets solve our withdrawal rate
conundrum with just not spendingmoney.
Which always works, but it'snot really maximizing life.
It's maximizing money.
Voices (08:54):
I don't care about the children.
I just care about theirparents' money.
Mostly Uncle Frank (08:58):
That kits used in Carl podcast is actually
quite well worth listening to.
I'll link to it in the shownotes.
So getting to your questions,your question was on rebalancing
the individual REITs.
Now, I would treat all of yourREITs together as one allocation
and probably would not messwith it at all until you were
(09:18):
going to rebalance that wholeallocation against something
else in the portfolio and notworry about internal rebalancing
of that allocation,particularly because it's so
small.
I do the same thing with anallocation to property and
casualty insurance companiesbecause I use that as part of
our value tilt allocation andhold essentially the 10 largest
(09:41):
ones, but don't really look toreallocating amongst those
companies unless and or untilwe're going to either buy more
of that allocation or sell someof that allocation for
rebalancing purposes againstother allocations.
I think that makes thingssimpler and cleaner and also
reduces the number oftransactions for tax purposes.
(10:02):
Now, as for what to do aboutthe individual allocations to
REITs in this case, or propertyand casualty insurance companies
or whatever you're grouping asyour allocation, I don't know
what the best strategy for thatis, honestly.
There are two schools ofthought.
One would simply be to trim thewinners, which always makes
(10:22):
sense in a fund context, but ifyou are really thinking about
people that invest in individualcompanies, the usual advice is
to let your winners run, or atleast let them run for a very
long period of time untilthey're a very large proportion
of the portfolio.
And to trim the losers, becauseunlike funds, individual
(10:44):
companies don't necessarilyrevert to any known mean.
Some of them go out of businessand some of them multiply
greatly in value.
But I do find when I'm lookingat something like this, in terms
of rebalancing one of thesekind of allocations with a bunch
of stuff in it, that I amlooking at the ends of the
spectrum, either things thathave grown much larger than
(11:07):
everything else in that section,or things that have fallen off
or deteriorated and just aren'tvery good investments anymore.
If you were going to allocate awhole lot more to the sector,
you might also consider, shouldI be buying something new in
this sector?
Now, obviously, this doesn'tmake for a clean set of rules,
but on the other hand, if you'reonly looking at this question
(11:29):
when you're actually going torebalance this allocation, it
does reduce the number ofdecisions to be made.
You mentioned Iron Mountainspecifically.
That has been a really funnyreek to watch because it was a
really boring thing for a verylong time.
They specialized in, you know,storing actual paper in salt
mines and other places likethat, essentially.
(11:51):
But since the age of artificialintelligence and data centers
has become a thing, that stockhas become much more volatile,
first growing by leaps andbounds, and then more recently
having a downturn.
And it makes you wonder whatit's going to do next.
Voices (12:08):
We don't know.
What do we know?
You don't know, I don't know,nobody knows.
Mostly Uncle Frank (12:14):
So anyway, I would create a set of rules
that minimizes the number oftransactions that you actually
have to do with a sector that'scomposed of individual
components like that.
But no, I do not have a magicformula.
Maybe I will someday, but Icertainly don't today.
Look, it's MacGyver! Do youknow how to pick locks?
(12:35):
Just the observation thatindividual stocks are not like
funds.
They're two different animals,actually.
So buying a lot more ofsomething that is doing badly
often is not a really good idea.
So getting to the last part ofyour email, it sounds like this
is an example of you actuallychanging your identity from
(12:57):
somebody who defaulted towardshoarding money to somebody who's
now looking at what else canthey do with the money.
Voices (13:04):
No one can stop me.
Mostly Uncle Frank (13:07):
And I think that's the right approach, and I
think it's going to make you ahappier and more fulfilled
person overall as you goforward.
Voices (13:16):
Yes, Cat, now I should be ruler of the world.
Mostly Uncle Frank (13:22):
Because being a distributor of resources
is just much more fulfillingthan being a hoarder of
resources.
Voices (13:29):
That goes without saying.
Woof.
It's gonna be very popular.
Mostly Uncle Frank (13:36):
And I suppose if I had my brothers or
could be dictator for a day orwhatever, as far as a
recommendation for this isconcerned, I would think that,
you know, living off three orfour percent of your accumulated
assets and then having onepercent available to essentially
distribute, I think would makethe distributors better off, but
(13:57):
certainly would make the peoplearound them better off as well.
Surely you can't be serious.
Voices (14:03):
I am serious, and don't call me surely.
Mostly Uncle Frank (14:05):
And when I say distribute, that could be to
would-be heirs, it could be tocharities, it could be to other
projects.
I'm not limiting what thatactually means.
But when you think about it,there's no reason most people
can't actually do that becauseobviously that is a
discretionary expense, and so ifyou needed to cut it because
(14:27):
things weren't going well, youcertainly could.
Which builds in just a lot offlexibility in into any plan
that involves a planneddistribution, as you're talking
about here, and maybe gives anew definition to the concept of
being a one percenter.
I haven't taken leave of mysenses, Bob.
Voices (14:44):
I've come to them.
From now on, I want to try tohelp you to raise that family of
yours.
If you'll let me.
Well, we'll we'll talk it overlater, Bob, over a over a bowl
of hot punch.
Mostly Uncle Frank (15:03):
So I'm very glad that you're very motivated
and that you're finding joy inthis process in what you can
actually do with what you'veaccumulated.
Voices (15:12):
It's right, it's true.
It all happened to me.
I don't know what day of themonth it is.
I don't know how long I've beenamongst the spirits.
I don't know anything.
I never did know anything.
But now I know that I don'tknow anything.
I don't know anything.
I never did know anything, butnow I know that I don't know all
of the Christmas morning.
And I must stand them ahead.
(15:33):
I must stand them ahead.
Mostly Uncle Frank (15:40):
And so thank you for being a donor to the
Father McKenna Center.
Thank you for being a onepercenter in your own life, and
thank you for your email.
Voices (15:49):
Aren't you Patrick Starr?
Yep.
And this is your ID.
Yep.
I found this ID in this wallet,and if that's the case, this
must be your wallet.
That makes sense to me.
Then take it.
Mostly Uncle Frank (16:05):
It's not my wallet.
Voices (16:08):
Second off.
Mostly Uncle Frank (16:10):
Second off, we have an email from somebody
named Kyle.
Ky and Kyle writes.
Mostly Queen Mary (16:18):
Hi, Frank and Mary, Kyle here.
I have recently set up a donoradvised fund.
My wife and I are in our 30s,40s and have reached the Coast V
phase and on pace to hit ourfine number in the next five to
ten years.
But we do not foresee ourselvesstopping working.
So instead of being a greedyslob and just looking at all the
money, I can't help it.
Voices (16:38):
I'm a greedy slob.
Mostly Queen Mary (16:39):
I decided to open a donor advised fund.
As my first donation, I sent agift to the Father McKenna
Center in all in appreciation ofall the information you provide
for free through your work.
Voices (16:50):
You get a bunch of people around the world who are
doing highly skilled work, butthey're willing to do it for
free and volunteer their time,20, sometimes 30 hours a week.
And then what they create, theygive it away rather than sell
it.
It's going to be huge.
Mostly Queen Mary (17:08):
I set up my donor advice fund through DAFI
and created a golden ratioportfolio, but as the fund does
not have managed futures, I hadto use the original golden ratio
portfolio, modified a bit toinclude 14% of VIOV, USM V and
VUG, 25% VGLT, 15% of IAUM, 11%of REET, and 6% of SGOV.
Voices (17:34):
The Golden Ratio.
The Golden Ratio.
What's the answer what's theanswer?
Mostly Queen Mary (17:43):
I will be withdrawing at 8% per year to
stress test the portfolio.
And it's gone.
Poof.
I view this as a benefit to tryto understand how withdrawals
work in retirement and also topush myself to give a bit more.
I don't know what to do.
Voices (18:03):
I'm as light as a pillow.
I'm as happy as an angel.
I'm as happy as a schoolboy.
I'm as giddy.
I'm as giddy as a drunken man.
Mostly Queen Mary (18:14):
If and when the portfolio turns into a
pumpkin, I will end up addingmore to the fund.
Thanks for all you do, and feelfree to spread some South Park
(18:47):
references in.
Voices (18:49):
I want to hold you every morning and love you every
night, Al.
I promise you nothing but loveand happiness.
Mostly Uncle Frank (18:56):
Well, thank you also for being a donor to
the Father McKenna Center, Kyle.
I think it's funny andappropriate that there is a
donor-advised fund companycalled Daffy, given the Daffy
Duck reference that we use heresometimes.
Voices (19:12):
Help! Okay then.
What's with you anyway?
I can't help it.
I'm a greedy slob.
It's my hobby.
Save me! Hush!
Mostly Uncle Frank (19:26):
It sounds like you have a good plan here,
and this does also give you somevaluable experience in
experimenting with a drawdownportfolio, which, as I've come
to learn particularly this year,is something that a lot of
people find valuable since wehad that episode on bigger
pockets money with Mindy, wherewe set up a sample portfolio for
(19:48):
her to experiment with.
And since we live in this eraof fractional shares and no fee
trading, there's no reason thatanyone can't set up their own
experiment with a drawdownportfolio, either in a donor
advised fund or in some othercapacity.
Voices (20:05):
We can put that check in a money market mutual fund,
then we'll reinvest the earningsinto foreign currency accounts
with compounding interest, andit's gone.
Mostly Uncle Frank (20:14):
But your question was how do we think and
plan our charitable giving,which is also appropriate for
Giving Tuesday, I suppose, howserendipitous that is.
But honestly, I think this isvery personal.
I think it's something youought to kind of experiment
with, find out kind of whattrips your trigger and gives you
(20:37):
the most joy or feeling ofwell-being as to what kind of
giving or distribution you wantto participate in.
This kind of goes to somethingthat Richard Rohr wrote in the
book Falling Upward, which isabout kind of approaching
retirement or your second partof life, in which he says you
kind of need to go back to thestarting point because by the
(21:00):
time you had your career, youkind of know everything about
that career and can kind ofshortcut things and just not do
things that don't appear to beuseful.
But when you're going back tokind of figure out what am I
gonna do next and what am Igonna do next with respect to
charity and things, he says it'skind of like being a kid again
that you need to go out and trya few things and see which ones
(21:21):
you like and which ones youdon't, and sort of be willing to
fish or cut bait depending onwhich ones appeal most to you.
But the only way you're reallygonna figure that out is by
actually participating.
Voices (21:34):
You must unlearn what you have learned.
Alright, I'll give it a try.
No, try not.
Do or do not.
There is no try.
Mostly Uncle Frank (21:48):
For Mary and I, I think we both like being
able to actually participate inthe organization we're also
giving money to, or raisingmoney for, because it's also a
source of new relationships andcreativity and something besides
just writing a check.
There's also some amount ofmoney we'll just give to people
(22:08):
who ask, our friends and family.
Or for me, I like giving moneyaway to kids that come to the
door raising money for theirband or things like that, just
because I played in band as achild.
Voices (22:23):
Must create a desperate need in your town for a boy's
band.
Mostly Uncle Frank (22:27):
And I suppose equally important is to
figure out what you don't get asmuch joy out of giving to.
So, for example, for me inparticular, I don't really enjoy
giving money to educationalinstitutions, even though
they're always asking for money.
Not only the ones I went to,but all of the ones our kids
went to.
I'd rather give money tosomething that is likely to feel
(22:50):
more impact from what I can do,since I'm not going to be
buying any buildings and puttingmy name on them or anything
like that.
But I also think you shouldthink beyond traditional
charitable giving.
Because what some people liketo do is just hire people to do
work that maybe they could dothemselves, but that other
person really does need a job.
(23:11):
Or you might use some of it tosupport a local business.
Or if there is somebody in yourfamily or a community that is
starting a business and asks foran investment.
It may not be a good investmentfrom a purely business
perspective, but you may thinkof it as a form of gifting if
you think the person is sincereand their idea is reasonably
(23:33):
decent.
Voices (23:34):
I had an idea like that once, a long time ago.
Really?
What was it, Tom?
Well, all right.
It was a jump to conclusions,Matt.
You see, it would be this matthat you would put on the floor
and would have differentconclusions written on it that
(23:55):
you could jump to.
That is the worst idea I'veever heard in my life, Tom.
Yes.
Yes, it's horrible, this idea.
Mostly Uncle Frank (24:05):
It's not wrong to put up some money for
something like that, even thoughyou need to treat it as a
write-off, essentially.
At least so long as it's notperpetuating some kind of bad
behavior or avoidance behaviorin the person receiving the
money.
Voices (24:19):
You know, whenever I see an opportunity now, I charge it
like a bull.
Ned the bull, that's me now.
Mostly Uncle Frank (24:25):
So don't be afraid of being creative.
But on the other hand, don't beafraid of making mistakes.
That if you're going to givemoney away, sometimes you'll
give money away and decide laterthat probably wasn't a good
place to give the money or agood thing to do with the money.
And that's okay.
You don't want to get caught upin some kind of analysis
paralysis.
Voices (24:46):
You will have to be somebody.
You will have to be somebody.
You will have to be somebody.
Mostly Uncle Frank (24:54):
Which is actually a problem that a lot of
large charities or foundationshave in which they spend so much
time analyzing what they'reabout to do that they're really
wasting money and time by notjust getting on it and getting
going.
You don't want to turn into acontrol freak about this stuff
or act like you are buyingsomebody's performance because
(25:17):
that's likely to lead todissatisfaction, not more
satisfaction.
Now, mechanically, if you'renot accustomed to giving money
away regularly, what you need todo is make it part of a budget,
or even make a separate accountwhere you put the money.
And for traditional charities,that could be a donor-advised
(25:37):
fund.
But for something else, itcould be just some account, and
you tell yourself, I need togive this money away by this
date, and if I haven't done it,then it's going to go to a
default usage, if you will.
And then periodically youreassess where the money is
going.
In that light, don't forget theoption that many of us have,
(25:57):
which is to donate shares toavoid the capital gains on them.
Because they're verytax-efficient ways of giving
money, and that's one of them.
In the end, I think that to theextent you can make your giving
also a way of either formingnew relationships or deepening
old ones, or some kind ofself-expression or creativity,
(26:20):
particularly if you're workingon something where the object is
to build something or createsomething, those are going to be
essentially the best bang youcan get for your charitable
buck, if you will.
I know what you're thinking.
Did he fire six shots or onlyfive?
Because they will help youavoid some of the five regrets
(26:41):
of the dying.
And if you haven't listened tomy recent appearance on the
Choose FI podcast with Gingertalking about that, it's
probably something you want tocheck out as well.
And I'll link to that again inthe show notes.
I think what you are doing herewith your donor advice fund,
where you're also using it toexperiment with a portfolio as a
creative outlet, also is goingto give you more bang for your
(27:03):
buck than you otherwise wouldget simply by writing a check
somewhere.
So thank you for writing in andtelling us about it.
Thank you for being a donor tothe Father McKenna Center.
And thank you for your email.
Voices (27:18):
Oswalda stars in the sky.
I'll be there, Cam.
Oswe Like the shell that's bythe camp ready, Cambi Dave.
(27:38):
Last off last off?
Mostly Uncle Frank (27:41):
We have an email from Dave.
Voices (27:44):
Who is it?
It's it's Dave, man.
Will you open up?
I got the stuff with me.
Who?
Dave, man, open up.
Dave?
Yeah, Dave, come on, man, openup.
I think the cops are.
Dave's not here.
Mostly Uncle Frank (27:56):
And Dave Wright.
Mostly Queen Mary (27:58):
Hi, Frank.
I'm doing about 15 episodes aday to catch up.
Voices (28:02):
A very sick man.
Mostly Queen Mary (28:04):
I'm soon to retire, and I'm so glad I found
you.
You are an excellent teacher.
The debunking of BS rants aremy favorites.
I once heard Kitsis mentionthat he has been working on the
benefits of going 100% equities15 years into retirement.
I would love to hear yourthoughts.
Voices (28:24):
Hey, come on, man.
Who is it?
It's Dave, man.
Will you open up?
I got the stuff with me.
Dave, man, open up.
Dave! Yeah, Dave.
Dave's not here.
Mostly Uncle Frank (28:36):
Well, Dave, I'm glad you're enjoying the
show, including the rants.
Although I believe I've sloweddown a little bit in my old age
here.
But part of that is because Ihave a lot more emails to answer
than I used to.
And the rant was something thatI used to fill episode time in
the first six months to a yearof this podcast.
Voices (28:59):
I want you to be nice.
Until it's time to not be nice.
Well, uh, how are we supposed toknow when that is?
You won't.
I'll let you know.
Mostly Uncle Frank (29:13):
If you're a lawyer and particularly a
litigator, you do enjoy having agood rant now and again.
Voices (29:20):
I don't like your attitude.
What else is no?
I'm holding you in contempt ofcourt.
Where's that money, you sillystupid old fool?
Where's that money?
You realize what this means?
It means bankruptcy and scandaland prison.
That's what it means.
One of us is going to jail.
Well, it's not gonna be me.
Mostly Uncle Frank (29:42):
Now, getting to the substance of your email,
what you are talking about forMichael Kitsis is called a
reverse glide path.
And it was born out of someinteresting research that he
did.
I can't remember who he did itwith, whether it was Wade Phoe
or somebody else, but they werelooking at the Traditional
advice about using a glide pathfor a long period of time as
(30:06):
somebody ages and going fromessentially fewer bonds to more
bonds over some extended periodof time.
And they actually determinedthat that was a bad strategy and
was likely to becounterproductive, which is
something that a lot of personalfinance still does not get
because it completely turns onits head this old idea or wives'
(30:28):
tale that you should holdsomething like a hundred minus
your age in stocks and the restin bonds.
That's really stupid advicethat nobody should be following.
Voices (30:37):
Are you stupid or something?
Stupid is, stupid does, sir.
Mostly Uncle Frank (30:41):
But it's a good litmus test if you hear
somebody advising that or sayingthat people should do that
because that person does notknow what they're talking about.
Voices (30:49):
I award you no points, and may God have mercy on your
soul.
Mostly Uncle Frank (30:55):
So what they found was actually you were
probably going to be better offif you were using a glide path
to use the reverse glide path,in which case you would start
right before retirement or atretirement with a lower amount
of stocks and then increase theamount of stocks in your
portfolio over time.
And that seemed to play outwell.
(31:17):
Now, Bill Bangin has alsomentioned this in his most
recent book that came out lastsummer.
And so I think this is an areathat I'm certainly interested in
exploring, given where we arein retirement, basically five or
six years in.
And according to what BillBengen wrote, it does seem to
work with a variety ofportfolios, because the original
(31:40):
portfolio that Kitsus waslooking at was a simple like
60-40 was just, you know, onestock fund, one bond fund kind
of thing.
But essentially, this may beanother way of effectively
increasing a safe withdrawalrate over time, particularly if
it's coupled with the idea thatan average retiree is not going
to experience inflation at thesame rate as the general
(32:01):
population, and so can take moreportfolio risk, both for that
reason and because they'recloser to death, frankly.
Death stocks you at every turn.
What we really don't know aboutthis, however, is what would be
the optimal way of implementingsomething like this.
And over how many years shouldit be implemented?
(32:22):
I mean, should it beimplemented over 10 years?
Should it be implemented over30 years?
And should we be going to aportfolio that looks more like
an accumulation portfolio, ormaybe just to the upper limits
of good retirement portfoliosfor higher safe withdrawal
rates?
Voices (32:39):
And you've gone over something again and again and
again and again, like I have.
Certain questions get answered,others spring up.
The mind plays tricks on you,you play tricks back! It's like
you're unraveling a big cableknit sweater.
That someone keeps knitting andknitting and knitting and
(33:01):
knitting and knitting andknitting and knitting.
Mostly Uncle Frank (33:07):
My gut feeling or hypothesis is
something like this.
We know from Bill Bengin'sresearch that the portfolios
with the highest safe withdrawalrates seem to have somewhere
between 40-something percent instocks and 70 some percent in
stocks.
So, just from that information,it would seem that an ideal
(33:28):
glide path might look likesomething that starts with 40
some percent in stocks and thengradually increases it over some
period of time to get up tosomewhere in the 60s or maybe
70% in stocks, depending on howmany bonds you also had in the
portfolio and what else was inthere.
I don't have any proof thatthat's the best strategy, but to
(33:49):
me, it seems to tick all theboxes, if you will, because
you're taking more risk and arelikely to get higher returns
over time as you increase theamount of stocks in the
portfolio.
Yet if if you're staying withinthose kind of framework, you
know that your ultimate safewithdrawal rate is not going to
be dropping by significantamounts because you're having 80
(34:10):
or 90% of stocks in theportfolio or only 10% of stocks
in the portfolio.
I'm not sure increasing it to100% makes any sense unless you
are really just dropping yourexpense levels to rates below
3%, in which case you're justtalking about creating a an
accumulation portfolio.
At that point, I would thinkthe solution would be to spend
(34:32):
more money and not continue toincrease the percentage in
stocks.
At least that would be mypreference.
So I am thinking ofimplementing something like this
or a variation of this.
Given I'm 61 now, so I could doit between the ages of 61 and
70, and maybe we will take oneof the sample portfolios and
(34:54):
implement something like this.
I'm thinking if we took thesample golden ratio portfolio
and gradually increased it overten years from its forty-two
percent in stocks to somethinglike sixty-two percent in
stocks, in which case it couldstill be a golden ratio
portfolio.
Voices (35:10):
A number so perfect.
Mostly Uncle Frank (35:12):
Perfect.
You find it everywhere,everywhere.
That might be something that isinteresting and useful.
So I'm thinking of startingsomething like that at the next
rebalancing next July.
But I have not worked out allthe details.
I'm not a smart man.
Voices (35:34):
Uh what?
The money in your account.
It didn't do too well, it'sgone.
Mostly Uncle Frank (35:39):
Anyway, I'm glad you brought this up because
this is one of the sort ofunanswered questions in my mind.
Now that we know that a reverseglide path is probably a good
strategy, let's see if we couldflesh out some of the details of
what that should look like orbe like.
Because I don't think there's aclean answer to that question
right now.
And it's something that couldbe developed over the next ten
(36:00):
years.
Not that I'm likely to be doingthe research myself.
At least not in the details.
Voices (36:09):
I don't think I'd like another job.
Mostly Uncle Frank (36:12):
So, those are some of my thoughts.
Voices (36:14):
You are talking about the nonsensical ravings of a
lunatic mind.
Mostly Uncle Frank (36:20):
Glad you're enjoying the podcast.
And thank you for your email.
Voices (36:26):
Open up the door, it's Dave! Dave, D A V Dave! Yeah,
Dave! Dave! Right, man.
Dave, now will you open up thedoor?
Dave not here!
Mostly Uncle Frank (36:42):
But now I see our signal is beginning to
fade.
We are gonna try and get backon our regular two podcasts a
week schedule, at least for thenext month or so.
I'm sure you're all excitedabout that.
This is pretty much the worstvideo ever made.
And in the meantime, if youhave comments or questions for
me, please send them to Frank atRiskPardyRader.com.
(37:03):
That email is Frank atRiskParodyRader.com.
Or you can go to the websitewww.riskparty radio.com and fill
out that contact form, and I'llget your message 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, a review.
That would be great.
Okay.
(37:23):
Thank you once again for tuningin.
This is Frank Basquez with RiskParty Radio.
Signing off.
Voices (37:33):
Yeah, yeah.
Mostly Queen Mary (38:52):
Please consult with your own advisors
before taking any actions basedon any information you have
heard here, making sure to takeinto account your own personal
circumstances.
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 (00:36):
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):
Light in the French.
Mostly Uncle Frank (01:37):
But now onward, episode 469.
Voices (01:47):
Inconceivable!
Mostly Uncle Frank (01:49):
And so without further ado.
Voices (01:51):
Here I go once again with the email.
Mostly Uncle Frank (01:54):
And first off.
First off, we can email fromPatrick.
Patrick, just how dumb are you?
And Patrick writes.
Mostly Queen Mary (02:05):
Hi Frank.
I've been on the fire pathsince April 2016, and I'm about
75% of the way there at age 44.
Voices (02:14):
Yeah, baby, yeah!
Mostly Queen Mary (02:16):
I've been following standard Mr.
Money Mustache and JL Collins'advice to go 100% VTI VOO and
chill.
Following Big Earn's safewithdrawal rate series, I
assumed I was shooting for a3.25% withdrawal rate, with
early retirement not likelyuntil age 48 to 50.
Voices (02:35):
Forget about it.
Mostly Queen Mary (02:37):
I discovered your podcast in August, and it
has rocked my world in a majorway.
Voices (02:42):
No more flying, Solo.
Mostly Queen Mary (02:43):
After digesting hundreds of risk
parity radio episodes and doingsimulations with portfolio
charts, portfolio visualizer,and Big Earns Toolkit, I
realized that a transitiontowards a risk parity structure
would allow me to likely pullthe plug by the end of 2026 or
2027 at the latest.
Voices (03:02):
That's what I'm talking about.
Mostly Queen Mary (03:04):
I've shifted to a transitional allocation of
30% VUG VTI VOO, 30% VIOV, 16%VGLT, 10% GLDM, 5% DBMF, and 9%
split evenly among nineindividual REITs in diversified
(03:24):
industries.
Once my wife retires, we'llshift further to an allocation
of 25% VUG, 25% VIOV, 20% VGLT,15% GLDM, 10% DBMF, and 5%
REITs.
That lets me hit all of thesweet spots for macro allocation
and is a bit more aggressivethan the standard Golden Ratio
(03:47):
portfolio.
Voices (03:48):
A number so perfect.
Perfect.
We find it everywhere.
Everywhere.
Mostly Queen Mary (03:56):
My question is in regarding to rebalancing
the individual REITs.
Do you recommend rebalancingthe REITs individually so they
each maintain an even 1% of thetotal portfolio?
Or is there some other way ofrebalancing you would recommend?
The performance of thesecompanies has been all over the
map, with the best of themgaining 20% in a handful of
(04:16):
months, with the worst of themlooking at you, Iron Mountain,
losing 20% in that same timeframe.
The second and hopefully moreimportant impact from
discovering your show wasgetting me to think more about
charitable giving.
Voices (04:29):
Yes!
Mostly Queen Mary (04:30):
Your work with the Father McKenna Center
and Mary's work with Casainspired me to drop my default
hoarder setting and donate tolocal youth, arts, and athletic
groups, my local food pantry,and now, as you see, attached
the Father McKenna Center.
Voices (04:44):
Real wrath of God type stuff.
Mostly Queen Mary (04:46):
It also motivated me to look into my
company's match program, and loand behold, I discovered they
will match up to $15,000 ofannual donations to thousands of
charities.
Voices (04:56):
Excellent!
Mostly Queen Mary (04:58):
I feel like I have suddenly gained a
superpower in being able toexpend my employer's money on
behalf of such a good cause.
I'm now adding a big charitablegiving line in my
post-financial independencebudget to make use of that extra
1.75% of safe withdrawals.
Keep doing what you're doingand thank you so much for the
wonderful podcast, Patrick.
Voices (05:19):
Patrick, this trophy's for you!
Mostly Uncle Frank (05:27):
Well, first off, Patrick, thank you for
being a donor to the FatherMcKenna Center.
And mentioning charity, whichwe'll talk about.
We are recording this on GivingTuesday, although you don't
need to wait until the firstTuesday in December to uh
exercise your right to give tocharity.
Voices (05:45):
You gotta fight! Fight a right.
Mostly Uncle Frank (05:54):
Anyway, 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 in 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
the email line, as Patrick hasdone here, and also our second
(06:14):
emailer today.
Two ways to do that.
You can either do it directlyat the donation page of the
Father McKenna website, whichI'll link to again in the show
notes, or you can become apatron on Patreon, which you do
through the Risk Parity Radiowebsite.
Go to the support page andfollow the links there.
Either way, you get to go tothe front of the email line, but
(06:35):
make sure you mention it inyour email so I can duly move
you to the front of the line.
Voices (06:40):
You're in the wrong shape, buddy.
Come on.
Oh, I must be in the front.
Mostly Uncle Frank (06:44):
But now let's get to your email.
First, welcome to this program.
Since it sounds like you'vebeen around here just since
August.
Voices (06:57):
Welcome to the message.
Mostly Uncle Frank (06:59):
And hopefully what you've discovered
is that there are more andbetter ways to approach
decumulation than just notspending money.
Voices (07:06):
That's the fact jack! That's the fact jack!
Mostly Uncle Frank (07:10):
Because I think that actually is the
dominant strategy for most ofpopular personal finance, even
prior to Phi.
Well, especially prior to Phi,that is still the most dominant
strategy in personal financelater in life is don't spend
money and just keepaccumulating.
Voices (07:28):
Oh boy, I'm rich! I'm wealthy! I'm independent! I'm
socially secure! I'm rich! I'mrich! I'm rich.
Mostly Uncle Frank (07:37):
I was listening to some financial
advisors on another podcastrecently, and they were talking
about this (07:42):
that when you look at the decumulation strategies
of retirees, or most people areretirees, something like only
about 14% of decumulators arewilling to contemplate having
their stash of money go down inretirement, that most either
insist on maintaining at leastthat amount of money or
continuing to grow their moneyin retirement.
(08:04):
There was also a recent podcastby Michael Kitsis and Carl
Richards, the Kitsis and Carlshow, it's what they call that,
where they were talking a lotabout this too, that the main
problem there is what they callthe quote frugal Bob, unquote,
identity, which I think kind ofsums it up that frugal Bob's
been a saver all his life and solooks for ways to continue
(08:27):
pursuing that identity inretirement, even though it
doesn't make a whole lot ofsense.
And a lot of the advice you'veseen or you've been exposed to
is of that variety.
Voices (08:38):
Donate to the children's fund?
Why?
What have children ever donefor me?
Mostly Uncle Frank (08:44):
That lets solve our withdrawal rate
conundrum with just not spendingmoney.
Which always works, but it'snot really maximizing life.
It's maximizing money.
Voices (08:54):
I don't care about the children.
I just care about theirparents' money.
Mostly Uncle Frank (08:58):
That kits used in Carl podcast is actually
quite well worth listening to.
I'll link to it in the shownotes.
So getting to your questions,your question was on rebalancing
the individual REITs.
Now, I would treat all of yourREITs together as one allocation
and probably would not messwith it at all until you were
(09:18):
going to rebalance that wholeallocation against something
else in the portfolio and notworry about internal rebalancing
of that allocation,particularly because it's so
small.
I do the same thing with anallocation to property and
casualty insurance companiesbecause I use that as part of
our value tilt allocation andhold essentially the 10 largest
(09:41):
ones, but don't really look toreallocating amongst those
companies unless and or untilwe're going to either buy more
of that allocation or sell someof that allocation for
rebalancing purposes againstother allocations.
I think that makes thingssimpler and cleaner and also
reduces the number oftransactions for tax purposes.
(10:02):
Now, as for what to do aboutthe individual allocations to
REITs in this case, or propertyand casualty insurance companies
or whatever you're grouping asyour allocation, I don't know
what the best strategy for thatis, honestly.
There are two schools ofthought.
One would simply be to trim thewinners, which always makes
(10:22):
sense in a fund context, but ifyou are really thinking about
people that invest in individualcompanies, the usual advice is
to let your winners run, or atleast let them run for a very
long period of time untilthey're a very large proportion
of the portfolio.
And to trim the losers, becauseunlike funds, individual
(10:44):
companies don't necessarilyrevert to any known mean.
Some of them go out of businessand some of them multiply
greatly in value.
But I do find when I'm lookingat something like this, in terms
of rebalancing one of thesekind of allocations with a bunch
of stuff in it, that I amlooking at the ends of the
spectrum, either things thathave grown much larger than
(11:07):
everything else in that section,or things that have fallen off
or deteriorated and just aren'tvery good investments anymore.
If you were going to allocate awhole lot more to the sector,
you might also consider, shouldI be buying something new in
this sector?
Now, obviously, this doesn'tmake for a clean set of rules,
but on the other hand, if you'reonly looking at this question
(11:29):
when you're actually going torebalance this allocation, it
does reduce the number ofdecisions to be made.
You mentioned Iron Mountainspecifically.
That has been a really funnyreek to watch because it was a
really boring thing for a verylong time.
They specialized in, you know,storing actual paper in salt
mines and other places likethat, essentially.
(11:51):
But since the age of artificialintelligence and data centers
has become a thing, that stockhas become much more volatile,
first growing by leaps andbounds, and then more recently
having a downturn.
And it makes you wonder whatit's going to do next.
Voices (12:08):
We don't know.
What do we know?
You don't know, I don't know,nobody knows.
Mostly Uncle Frank (12:14):
So anyway, I would create a set of rules
that minimizes the number oftransactions that you actually
have to do with a sector that'scomposed of individual
components like that.
But no, I do not have a magicformula.
Maybe I will someday, but Icertainly don't today.
Look, it's MacGyver! Do youknow how to pick locks?
(12:35):
Just the observation thatindividual stocks are not like
funds.
They're two different animals,actually.
So buying a lot more ofsomething that is doing badly
often is not a really good idea.
So getting to the last part ofyour email, it sounds like this
is an example of you actuallychanging your identity from
(12:57):
somebody who defaulted towardshoarding money to somebody who's
now looking at what else canthey do with the money.
Voices (13:04):
No one can stop me.
Mostly Uncle Frank (13:07):
And I think that's the right approach, and I
think it's going to make you ahappier and more fulfilled
person overall as you goforward.
Voices (13:16):
Yes, Cat, now I should be ruler of the world.
Mostly Uncle Frank (13:22):
Because being a distributor of resources
is just much more fulfillingthan being a hoarder of
resources.
Voices (13:29):
That goes without saying.
Woof.
It's gonna be very popular.
Mostly Uncle Frank (13:36):
And I suppose if I had my brothers or
could be dictator for a day orwhatever, as far as a
recommendation for this isconcerned, I would think that,
you know, living off three orfour percent of your accumulated
assets and then having onepercent available to essentially
distribute, I think would makethe distributors better off, but
(13:57):
certainly would make the peoplearound them better off as well.
Surely you can't be serious.
Voices (14:03):
I am serious, and don't call me surely.
Mostly Uncle Frank (14:05):
And when I say distribute, that could be to
would-be heirs, it could be tocharities, it could be to other
projects.
I'm not limiting what thatactually means.
But when you think about it,there's no reason most people
can't actually do that becauseobviously that is a
discretionary expense, and so ifyou needed to cut it because
(14:27):
things weren't going well, youcertainly could.
Which builds in just a lot offlexibility in into any plan
that involves a planneddistribution, as you're talking
about here, and maybe gives anew definition to the concept of
being a one percenter.
I haven't taken leave of mysenses, Bob.
Voices (14:44):
I've come to them.
From now on, I want to try tohelp you to raise that family of
yours.
If you'll let me.
Well, we'll we'll talk it overlater, Bob, over a over a bowl
of hot punch.
Mostly Uncle Frank (15:03):
So I'm very glad that you're very motivated
and that you're finding joy inthis process in what you can
actually do with what you'veaccumulated.
Voices (15:12):
It's right, it's true.
It all happened to me.
I don't know what day of themonth it is.
I don't know how long I've beenamongst the spirits.
I don't know anything.
I never did know anything.
But now I know that I don'tknow anything.
I don't know anything.
I never did know anything, butnow I know that I don't know all
of the Christmas morning.
And I must stand them ahead.
(15:33):
I must stand them ahead.
Mostly Uncle Frank (15:40):
And so thank you for being a donor to the
Father McKenna Center.
Thank you for being a onepercenter in your own life, and
thank you for your email.
Voices (15:49):
Aren't you Patrick Starr?
Yep.
And this is your ID.
Yep.
I found this ID in this wallet,and if that's the case, this
must be your wallet.
That makes sense to me.
Then take it.
Mostly Uncle Frank (16:05):
It's not my wallet.
Voices (16:08):
Second off.
Mostly Uncle Frank (16:10):
Second off, we have an email from somebody
named Kyle.
Ky and Kyle writes.
Mostly Queen Mary (16:18):
Hi, Frank and Mary, Kyle here.
I have recently set up a donoradvised fund.
My wife and I are in our 30s,40s and have reached the Coast V
phase and on pace to hit ourfine number in the next five to
ten years.
But we do not foresee ourselvesstopping working.
So instead of being a greedyslob and just looking at all the
money, I can't help it.
Voices (16:38):
I'm a greedy slob.
Mostly Queen Mary (16:39):
I decided to open a donor advised fund.
As my first donation, I sent agift to the Father McKenna
Center in all in appreciation ofall the information you provide
for free through your work.
Voices (16:50):
You get a bunch of people around the world who are
doing highly skilled work, butthey're willing to do it for
free and volunteer their time,20, sometimes 30 hours a week.
And then what they create, theygive it away rather than sell
it.
It's going to be huge.
Mostly Queen Mary (17:08):
I set up my donor advice fund through DAFI
and created a golden ratioportfolio, but as the fund does
not have managed futures, I hadto use the original golden ratio
portfolio, modified a bit toinclude 14% of VIOV, USM V and
VUG, 25% VGLT, 15% of IAUM, 11%of REET, and 6% of SGOV.
Voices (17:34):
The Golden Ratio.
The Golden Ratio.
What's the answer what's theanswer?
Mostly Queen Mary (17:43):
I will be withdrawing at 8% per year to
stress test the portfolio.
And it's gone.
Poof.
I view this as a benefit to tryto understand how withdrawals
work in retirement and also topush myself to give a bit more.
I don't know what to do.
Voices (18:03):
I'm as light as a pillow.
I'm as happy as an angel.
I'm as happy as a schoolboy.
I'm as giddy.
I'm as giddy as a drunken man.
Mostly Queen Mary (18:14):
If and when the portfolio turns into a
pumpkin, I will end up addingmore to the fund.
Thanks for all you do, and feelfree to spread some South Park
(18:47):
references in.
Voices (18:49):
I want to hold you every morning and love you every
night, Al.
I promise you nothing but loveand happiness.
Mostly Uncle Frank (18:56):
Well, thank you also for being a donor to
the Father McKenna Center, Kyle.
I think it's funny andappropriate that there is a
donor-advised fund companycalled Daffy, given the Daffy
Duck reference that we use heresometimes.
Voices (19:12):
Help! Okay then.
What's with you anyway?
I can't help it.
I'm a greedy slob.
It's my hobby.
Save me! Hush!
Mostly Uncle Frank (19:26):
It sounds like you have a good plan here,
and this does also give you somevaluable experience in
experimenting with a drawdownportfolio, which, as I've come
to learn particularly this year,is something that a lot of
people find valuable since wehad that episode on bigger
pockets money with Mindy, wherewe set up a sample portfolio for
(19:48):
her to experiment with.
And since we live in this eraof fractional shares and no fee
trading, there's no reason thatanyone can't set up their own
experiment with a drawdownportfolio, either in a donor
advised fund or in some othercapacity.
Voices (20:05):
We can put that check in a money market mutual fund,
then we'll reinvest the earningsinto foreign currency accounts
with compounding interest, andit's gone.
Mostly Uncle Frank (20:14):
But your question was how do we think and
plan our charitable giving,which is also appropriate for
Giving Tuesday, I suppose, howserendipitous that is.
But honestly, I think this isvery personal.
I think it's something youought to kind of experiment
with, find out kind of whattrips your trigger and gives you
(20:37):
the most joy or feeling ofwell-being as to what kind of
giving or distribution you wantto participate in.
This kind of goes to somethingthat Richard Rohr wrote in the
book Falling Upward, which isabout kind of approaching
retirement or your second partof life, in which he says you
kind of need to go back to thestarting point because by the
(21:00):
time you had your career, youkind of know everything about
that career and can kind ofshortcut things and just not do
things that don't appear to beuseful.
But when you're going back tokind of figure out what am I
gonna do next and what am Igonna do next with respect to
charity and things, he says it'skind of like being a kid again
that you need to go out and trya few things and see which ones
(21:21):
you like and which ones youdon't, and sort of be willing to
fish or cut bait depending onwhich ones appeal most to you.
But the only way you're reallygonna figure that out is by
actually participating.
Voices (21:34):
You must unlearn what you have learned.
Alright, I'll give it a try.
No, try not.
Do or do not.
There is no try.
Mostly Uncle Frank (21:48):
For Mary and I, I think we both like being
able to actually participate inthe organization we're also
giving money to, or raisingmoney for, because it's also a
source of new relationships andcreativity and something besides
just writing a check.
There's also some amount ofmoney we'll just give to people
(22:08):
who ask, our friends and family.
Or for me, I like giving moneyaway to kids that come to the
door raising money for theirband or things like that, just
because I played in band as achild.
Voices (22:23):
Must create a desperate need in your town for a boy's
band.
Mostly Uncle Frank (22:27):
And I suppose equally important is to
figure out what you don't get asmuch joy out of giving to.
So, for example, for me inparticular, I don't really enjoy
giving money to educationalinstitutions, even though
they're always asking for money.
Not only the ones I went to,but all of the ones our kids
went to.
I'd rather give money tosomething that is likely to feel
(22:50):
more impact from what I can do,since I'm not going to be
buying any buildings and puttingmy name on them or anything
like that.
But I also think you shouldthink beyond traditional
charitable giving.
Because what some people liketo do is just hire people to do
work that maybe they could dothemselves, but that other
person really does need a job.
(23:11):
Or you might use some of it tosupport a local business.
Or if there is somebody in yourfamily or a community that is
starting a business and asks foran investment.
It may not be a good investmentfrom a purely business
perspective, but you may thinkof it as a form of gifting if
you think the person is sincereand their idea is reasonably
(23:33):
decent.
Voices (23:34):
I had an idea like that once, a long time ago.
Really?
What was it, Tom?
Well, all right.
It was a jump to conclusions,Matt.
You see, it would be this matthat you would put on the floor
and would have differentconclusions written on it that
(23:55):
you could jump to.
That is the worst idea I'veever heard in my life, Tom.
Yes.
Yes, it's horrible, this idea.
Mostly Uncle Frank (24:05):
It's not wrong to put up some money for
something like that, even thoughyou need to treat it as a
write-off, essentially.
At least so long as it's notperpetuating some kind of bad
behavior or avoidance behaviorin the person receiving the
money.
Voices (24:19):
You know, whenever I see an opportunity now, I charge it
like a bull.
Ned the bull, that's me now.
Mostly Uncle Frank (24:25):
So don't be afraid of being creative.
But on the other hand, don't beafraid of making mistakes.
That if you're going to givemoney away, sometimes you'll
give money away and decide laterthat probably wasn't a good
place to give the money or agood thing to do with the money.
And that's okay.
You don't want to get caught upin some kind of analysis
paralysis.
Voices (24:46):
You will have to be somebody.
You will have to be somebody.
You will have to be somebody.
Mostly Uncle Frank (24:54):
Which is actually a problem that a lot of
large charities or foundationshave in which they spend so much
time analyzing what they'reabout to do that they're really
wasting money and time by notjust getting on it and getting
going.
You don't want to turn into acontrol freak about this stuff
or act like you are buyingsomebody's performance because
(25:17):
that's likely to lead todissatisfaction, not more
satisfaction.
Now, mechanically, if you'renot accustomed to giving money
away regularly, what you need todo is make it part of a budget,
or even make a separate accountwhere you put the money.
And for traditional charities,that could be a donor-advised
(25:37):
fund.
But for something else, itcould be just some account, and
you tell yourself, I need togive this money away by this
date, and if I haven't done it,then it's going to go to a
default usage, if you will.
And then periodically youreassess where the money is
going.
In that light, don't forget theoption that many of us have,
(25:57):
which is to donate shares toavoid the capital gains on them.
Because they're verytax-efficient ways of giving
money, and that's one of them.
In the end, I think that to theextent you can make your giving
also a way of either formingnew relationships or deepening
old ones, or some kind ofself-expression or creativity,
(26:20):
particularly if you're workingon something where the object is
to build something or createsomething, those are going to be
essentially the best bang youcan get for your charitable
buck, if you will.
I know what you're thinking.
Did he fire six shots or onlyfive?
Because they will help youavoid some of the five regrets
(26:41):
of the dying.
And if you haven't listened tomy recent appearance on the
Choose FI podcast with Gingertalking about that, it's
probably something you want tocheck out as well.
And I'll link to that again inthe show notes.
I think what you are doing herewith your donor advice fund,
where you're also using it toexperiment with a portfolio as a
creative outlet, also is goingto give you more bang for your
(27:03):
buck than you otherwise wouldget simply by writing a check
somewhere.
So thank you for writing in andtelling us about it.
Thank you for being a donor tothe Father McKenna Center.
And thank you for your email.
Voices (27:18):
Oswalda stars in the sky.
I'll be there, Cam.
Oswe Like the shell that's bythe camp ready, Cambi Dave.
(27:38):
Last off last off?
Mostly Uncle Frank (27:41):
We have an email from Dave.
Voices (27:44):
Who is it?
It's it's Dave, man.
Will you open up?
I got the stuff with me.
Who?
Dave, man, open up.
Dave?
Yeah, Dave, come on, man, openup.
I think the cops are.
Dave's not here.
Mostly Uncle Frank (27:56):
And Dave Wright.
Mostly Queen Mary (27:58):
Hi, Frank.
I'm doing about 15 episodes aday to catch up.
Voices (28:02):
A very sick man.
Mostly Queen Mary (28:04):
I'm soon to retire, and I'm so glad I found
you.
You are an excellent teacher.
The debunking of BS rants aremy favorites.
I once heard Kitsis mentionthat he has been working on the
benefits of going 100% equities15 years into retirement.
I would love to hear yourthoughts.
Voices (28:24):
Hey, come on, man.
Who is it?
It's Dave, man.
Will you open up?
I got the stuff with me.
Dave, man, open up.
Dave! Yeah, Dave.
Dave's not here.
Mostly Uncle Frank (28:36):
Well, Dave, I'm glad you're enjoying the
show, including the rants.
Although I believe I've sloweddown a little bit in my old age
here.
But part of that is because Ihave a lot more emails to answer
than I used to.
And the rant was something thatI used to fill episode time in
the first six months to a yearof this podcast.
Voices (28:59):
I want you to be nice.
Until it's time to not be nice.
Well, uh, how are we supposed toknow when that is?
You won't.
I'll let you know.
Mostly Uncle Frank (29:13):
If you're a lawyer and particularly a
litigator, you do enjoy having agood rant now and again.
Voices (29:20):
I don't like your attitude.
What else is no?
I'm holding you in contempt ofcourt.
Where's that money, you sillystupid old fool?
Where's that money?
You realize what this means?
It means bankruptcy and scandaland prison.
That's what it means.
One of us is going to jail.
Well, it's not gonna be me.
Mostly Uncle Frank (29:42):
Now, getting to the substance of your email,
what you are talking about forMichael Kitsis is called a
reverse glide path.
And it was born out of someinteresting research that he
did.
I can't remember who he did itwith, whether it was Wade Phoe
or somebody else, but they werelooking at the Traditional
advice about using a glide pathfor a long period of time as
(30:06):
somebody ages and going fromessentially fewer bonds to more
bonds over some extended periodof time.
And they actually determinedthat that was a bad strategy and
was likely to becounterproductive, which is
something that a lot of personalfinance still does not get
because it completely turns onits head this old idea or wives'
(30:28):
tale that you should holdsomething like a hundred minus
your age in stocks and the restin bonds.
That's really stupid advicethat nobody should be following.
Voices (30:37):
Are you stupid or something?
Stupid is, stupid does, sir.
Mostly Uncle Frank (30:41):
But it's a good litmus test if you hear
somebody advising that or sayingthat people should do that
because that person does notknow what they're talking about.
Voices (30:49):
I award you no points, and may God have mercy on your
soul.
Mostly Uncle Frank (30:55):
So what they found was actually you were
probably going to be better offif you were using a glide path
to use the reverse glide path,in which case you would start
right before retirement or atretirement with a lower amount
of stocks and then increase theamount of stocks in your
portfolio over time.
And that seemed to play outwell.
(31:17):
Now, Bill Bangin has alsomentioned this in his most
recent book that came out lastsummer.
And so I think this is an areathat I'm certainly interested in
exploring, given where we arein retirement, basically five or
six years in.
And according to what BillBengen wrote, it does seem to
work with a variety ofportfolios, because the original
(31:40):
portfolio that Kitsus waslooking at was a simple like
60-40 was just, you know, onestock fund, one bond fund kind
of thing.
But essentially, this may beanother way of effectively
increasing a safe withdrawalrate over time, particularly if
it's coupled with the idea thatan average retiree is not going
to experience inflation at thesame rate as the general
(32:01):
population, and so can take moreportfolio risk, both for that
reason and because they'recloser to death, frankly.
Death stocks you at every turn.
What we really don't know aboutthis, however, is what would be
the optimal way of implementingsomething like this.
And over how many years shouldit be implemented?
(32:22):
I mean, should it beimplemented over 10 years?
Should it be implemented over30 years?
And should we be going to aportfolio that looks more like
an accumulation portfolio, ormaybe just to the upper limits
of good retirement portfoliosfor higher safe withdrawal
rates?
Voices (32:39):
And you've gone over something again and again and
again and again, like I have.
Certain questions get answered,others spring up.
The mind plays tricks on you,you play tricks back! It's like
you're unraveling a big cableknit sweater.
That someone keeps knitting andknitting and knitting and
(33:01):
knitting and knitting andknitting and knitting.
Mostly Uncle Frank (33:07):
My gut feeling or hypothesis is
something like this.
We know from Bill Bengin'sresearch that the portfolios
with the highest safe withdrawalrates seem to have somewhere
between 40-something percent instocks and 70 some percent in
stocks.
So, just from that information,it would seem that an ideal
(33:28):
glide path might look likesomething that starts with 40
some percent in stocks and thengradually increases it over some
period of time to get up tosomewhere in the 60s or maybe
70% in stocks, depending on howmany bonds you also had in the
portfolio and what else was inthere.
I don't have any proof thatthat's the best strategy, but to
(33:49):
me, it seems to tick all theboxes, if you will, because
you're taking more risk and arelikely to get higher returns
over time as you increase theamount of stocks in the
portfolio.
Yet if if you're staying withinthose kind of framework, you
know that your ultimate safewithdrawal rate is not going to
be dropping by significantamounts because you're having 80
(34:10):
or 90% of stocks in theportfolio or only 10% of stocks
in the portfolio.
I'm not sure increasing it to100% makes any sense unless you
are really just dropping yourexpense levels to rates below
3%, in which case you're justtalking about creating a an
accumulation portfolio.
At that point, I would thinkthe solution would be to spend
(34:32):
more money and not continue toincrease the percentage in
stocks.
At least that would be mypreference.
So I am thinking ofimplementing something like this
or a variation of this.
Given I'm 61 now, so I could doit between the ages of 61 and
70, and maybe we will take oneof the sample portfolios and
(34:54):
implement something like this.
I'm thinking if we took thesample golden ratio portfolio
and gradually increased it overten years from its forty-two
percent in stocks to somethinglike sixty-two percent in
stocks, in which case it couldstill be a golden ratio
portfolio.
Voices (35:10):
A number so perfect.
Mostly Uncle Frank (35:12):
Perfect.
You find it everywhere,everywhere.
That might be something that isinteresting and useful.
So I'm thinking of startingsomething like that at the next
rebalancing next July.
But I have not worked out allthe details.
I'm not a smart man.
Voices (35:34):
Uh what?
The money in your account.
It didn't do too well, it'sgone.
Mostly Uncle Frank (35:39):
Anyway, I'm glad you brought this up because
this is one of the sort ofunanswered questions in my mind.
Now that we know that a reverseglide path is probably a good
strategy, let's see if we couldflesh out some of the details of
what that should look like orbe like.
Because I don't think there's aclean answer to that question
right now.
And it's something that couldbe developed over the next ten
(36:00):
years.
Not that I'm likely to be doingthe research myself.
At least not in the details.
Voices (36:09):
I don't think I'd like another job.
Mostly Uncle Frank (36:12):
So, those are some of my thoughts.
Voices (36:14):
You are talking about the nonsensical ravings of a
lunatic mind.
Mostly Uncle Frank (36:20):
Glad you're enjoying the podcast.
And thank you for your email.
Voices (36:26):
Open up the door, it's Dave! Dave, D A V Dave! Yeah,
Dave! Dave! Right, man.
Dave, now will you open up thedoor?
Dave not here!
Mostly Uncle Frank (36:42):
But now I see our signal is beginning to
fade.
We are gonna try and get backon our regular two podcasts a
week schedule, at least for thenext month or so.
I'm sure you're all excitedabout that.
This is pretty much the worstvideo ever made.
And in the meantime, if youhave comments or questions for
me, please send them to Frank atRiskPardyRader.com.
(37:03):
That email is Frank atRiskParodyRader.com.
Or you can go to the websitewww.riskparty radio.com and fill
out that contact form, and I'llget your message 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, a review.
That would be great.
Okay.
(37:23):
Thank you once again for tuningin.
This is Frank Basquez with RiskParty Radio.
Signing off.
Voices (37:33):
Yeah, yeah.
Mostly Queen Mary (38:52):
Please consult with your own advisors
before taking any actions basedon any information you have
heard here, making sure to takeinto account your own personal
circumstances.
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