In this episode we answer emails from Anonymous from New Jersey, James, and Brad. We answer a donor’s six-part retirement plan, from mortgages and liquidity to 403(b) constraints, ETF trading, asset location, asset swaps, and tax‑savvy withdrawals. Then we discuss the risks of staying in an accumulation portfolio for too long and the options for obviating a crash before transitioning.
And THEN we our go through our weekly 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
Tax Planning Book: Amazon.com: Tax Planning To and Through Early Retirement: 9798999841599: Garrett, Cody, Mullaney, Sean: Books
Breathless AI-Bot Summary:
Ever wonder whether paying down a mortgage before retirement is actually the safest move? We make the counterintuitive case for liquidity first: keep cash flexible during the messy early retirement years, when housing changes, college timelines, and new expenses collide. With a real listener case study, we show how a mortgage can be a tool, not a trap—and why you can always accelerate later once the dust settles.
From there we dig into a pain point for many educators and nonprofit pros: weak 403(b) lineups. We break down why insurance-driven menus lag, how to advocate for better providers and funds, and when it makes sense to roll to an IRA for full control. You’ll also learn how to keep tracking simple, why monthly check‑ins beat daily dashboards, and how consolidating at a service‑oriented custodian streamlines everything. On execution, we explain why ETFs beat mutual funds for rebalancing speed and precision, plus how to convert Vanguard mutual funds to ETFs without tax surprises.
Taxes and withdrawals get the spotlight too. We clarify asset location—shelter ordinary income, let capital appreciation work in brokerage and Roth—and outline “asset swaps” that let you sell what’s up while managing tax impact. For those still accumulating, we talk strategy for a smoother glide into a risk parity portfolio to reduce sequence risk, and the trade-offs between earlier protection and maximum growth. We wrap with a market scoreboard across stocks, bonds, gold, REITs, commodities, preferreds, and managed futures, and report on sample portfolios including Golden Butterfly, Golden Ratio, Ultimate, and leveraged variants.
If you value actionable, no-nonsense guidance for DIY investors, you’ll find ideas you can use right away—whether you’re five years from retirement or still building your base. Subscribe, leave a review, and share this with a friend who’s wrestling with 403(b) choices or planning a tax-smart withdrawal strategy.
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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 hub goblin 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.
And the basic foundationalepisodes are episodes 1, 3, 5,
7, and 9.
Yes, it is still in my memorybanks.
(00:57):
We have also created anadditional resource, a
collection of additionalfoundational episodes and other
popular episodes.
Voices (01:07):
We have top men working on it right now.
Ooh.
Mostly Uncle Frank (01:14):
Top men.
And you can find those on theepisode guide page at
www.riskparty radio.com.
Inconceivable! All thanks toour friend Luke, our volunteer
in Quebec.
We'd be helpless without him.
Voices (01:36):
I have always depended on the kindness of strangers.
Mostly Uncle Frank (01:41):
Because other than him, it's just me and
Marion here.
I'll give you the moon,alright?
Voices (01:46):
I'll take it.
Mostly Uncle Frank (01:48):
We have no sponsors, we have no guests, and
we have no expansion plans.
Voices (01:53):
I don't think I'd like another job.
Mostly Uncle Frank (01:55):
Over the years, our podcast has become
very audienced focused, and Imust say we do have the finest
podcast audience available.
Voices (02:05):
Really top drawer.
Mostly Uncle Frank (02:07):
Along with a host named after a hot dog.
Voices (02:10):
Lighten up Francis.
Mostly Uncle Frank (02:14):
But now onward, episode 472.
Today in Risk Party Radio, it'stime for our weekly portfolio
reviews of the eight sampleportfolios you can find at
www.riskparty.com on theportfolios page.
Boring! Yeah, December isshaping up to be a boring month.
Which isn't so bad.
Voices (02:36):
As far back as he could remember, Rudolph wanted to be
one of Santa's made reindeer.
Like his friends, Jimmy theAntler and Frankie two times.
There was only one problem.
Hey Frankie, look! It's a raid!The cops are here! You'll never
be in Santa's gang.
(02:57):
Never be in Santa's gang.
Mostly Uncle Frank (03:04):
But before we get to that.
Voices (03:07):
I'm intrigued by this.
How you say email?
Mostly Uncle Frank (03:12):
And first off.
First off, I have an email fromAnonymous.
Anonymous from New Jersey.
Voices (03:21):
And I'll tell you everything.
Well, not everything.
Mostly Uncle Frank (03:26):
And Anonymous rights.
Mostly Queen Mary (03:29):
Hi, Frank and Mary.
Greetings from New Jersey.
Voices (03:32):
I'm Hermie the Drill.
Santa kicked me out because Iwouldn't give him his tribute.
Someday I'm gonna take overSanta's whole operation.
Mostly Queen Mary (03:40):
I've been listening to your show for a few
months now, and it has helpedme plan for the future
immeasurably.
I made a contribution to theFather McKenna Center in August
in anticipation of this note,and did so gladly while
ensconced in Fenway Parkwatching an inconsequential
game, all the while investing inmy relationships with old
friends.
Voices (04:00):
Hey, I'm with you, Pison, and I know just the guy
to call.
Mostly Queen Mary (04:06):
I have a couple of questions I was hoping
you could help me out with.
To set the stage, my wife and Ihave accounts at TIAA and
Vanguard.
The TIAA is with my presentemployer and has about $1.3
million in equities, mostly S P500 index in a 403B, 225,000 of
which is in Roth.
(04:26):
At Vanguard, my wife and I haveabout 245,000 in a brokerage
account, 220,000 VTSAX, and25,000 money market, 590,000 in
a traditional IRA, 470,000 GLDMand 120,000 DBMF, 2,060-ish K in
(04:47):
my Roth IRA, 220,000 VGLT andthe rest VUG, 200,000 in my
wife's Roth IRA, 92,000 VGLT andthe rest VIOV.
Our two kids, 16 and 13, bothhave 529s with about 40k in each
of them, as we have an HSA withabout 20,000.
(05:08):
Sorry for belaboring all thatdetail, but perhaps the
specifics will matter.
I am trying to steer our assetsinto a golden ratio portfolio.
Voices (05:20):
Define it everywhere, everywhere.
Mostly Queen Mary (05:22):
It's just taking a while to do so, with
the TIAA funds proving thebiggest obstacle since there are
so few choices there.
I'm planning on retiring infive years when my son graduates
from the high school I teachat.
I'm 59, and my wife plans onretiring between five and
fifteen years from now.
She's 50.
Question number one.
(05:42):
I work at a school whichprovides housing for my family
and me, so I'll have to buy ahouse or rent in five years when
I retire.
I think I should finance thehouse and accept the mortgage as
my lot.
I guess for the rest of mylife.
Any reason not to finance if webuy?
Question number two.
Should I complain if the 403Bofferings at my work are
(06:04):
lackluster?
I really can't find mutualfunds in areas of large cap
growth, small cap value, orlong-term treasuries within my
TIAA options.
Have you ever heard of aworkplace being amenable to
putting in more fund optionsthat are useful to the risk
parity crowd at the request ofan employee?
Question 3.
Is there a standard spreadsheetor other instrument that can be
(06:26):
used to track investments?
I'm split between TIAA andVanguard, and as you recall,
there are different accounts ineach, especially the Vanguard.
I am reluctant to give all theinformation to a third-party
app.
I've constructed my ownspreadsheet to track everything,
but it's complicated, seems toviolate the simplicity rule, and
I thought maybe there's aneasier way.
(06:47):
Question four, does it take youtwo days to do a trade, day one
to sell, then day two to buythe next asset?
That's what I've been doing.
Question five, is there anirony that index funds with
equities are best held inregular brokerage accounts for
being tax efficient, as well asin Roth since that's the best
place for something with capitalappreciation?
(07:08):
Question six, should I feel ascomfortable withdrawing from my
tax-sheltered accounts as frommy brokerage account?
Is there a school of thoughtthat says it's easier to take a
brokerage account through therequired minimum distribution
years, meaning that withdrawalsfrom my traditional IRA might be
the way to go at this time?
Or should I just withdraw fromwhatever asset is most inflated,
(07:28):
no matter the vehicle itresides in?
By the way, we don't withdrawmuch more than $20,000 a year to
make ends meet and have familyadventures together since we're
both still working.
We're also still contributingto retirement as much as we can,
but almost exclusively to theRoth accounts, and we make about
$140,000 a year combined.
I have more questions, butperhaps I should leave it at
(07:50):
that for now.
Please let us know if you getup to the Philly or New York
City area.
We'd love to treat you to abeer or libation of your choice.
Warm regards, Anonymous.
Voices (08:00):
I'm Yukon Cornelion, the greatest hitman of all, and
I've got a special present foryou.
Compliments of one disgruntledelf and red-nosed reindeer.
Were you talking to me?
You talking to me?
Mostly Uncle Frank (08:12):
Well, first off, thank you for being a donor
to the Father McKenna Center.
As most of you know, we don'thave any sponsors on this
program.
We do have a charity wesupport.
It's called the Father McKennaCenter.
It supports hungry and homelesspeople in Washington, D.C.
Full disclosure, I'm on theboard of the charity and I'm the
current treasurer.
But if you give to the charity,you get to go to the front of
the email line.
(08:32):
Two ways to do that.
I think you go directly to theFather McKenna donation page and
donate there.
I'll put that link in the shownotes.
Or you can go towww.riskpartywriter.com and go
to the support page and becomeone of our patrons on Patreon.
Either way, you get to go tothe front of the email line, but
just make sure you note it inyour email so I can duly move
(08:54):
you to the front of the line.
Voices (08:56):
Yes!
Mostly Uncle Frank (08:57):
Now getting to your email.
Looks like you're trying to getyour money's worth here.
You got six questions.
Alright, I'm game.
Voices (09:07):
Ho ho ho! Donner at Blitzen just hijacked a shipment
of pure snow.
We'll make two million easy.
Mostly Uncle Frank (09:14):
Your first question is about whether you
should finance the house andtake a mortgage or not.
And you said, I guess for therest of your life.
Well, first that is a falseassumption.
Voices (09:25):
That's not how it works.
That's not how any of thisworks.
Mostly Uncle Frank (09:29):
Just because you take on a mortgage today
does not mean you have to haveit for the rest of your life.
Because, as we know, we can payoff mortgages early.
Voices (09:37):
That's the fact, Jack! That's the fact, Jack!
Mostly Uncle Frank (09:41):
And that's important.
Because I think in yoursituation in particular, I would
take on the mortgage to beginwith, not so much for the
financial reasons, but forliquidity reasons.
And I think this is somethingthat amateur investors don't
appreciate very much, issometimes liquidity, having more
money around, is way moreimportant than paying down
(10:03):
mortgages or getting rid ofdebt.
And that I think is going to beyour circumstances.
When you are first retiring,you've got people in college or
high school, you got thingsmoving around.
So you are going to want tohave more money available, I
think, up front, because you canalways pay down that mortgage
(10:24):
early after a few years ofretirement when you've got
everything figured out as to howeverything is working.
But if you put that money intothe house in the equity, you
can't really get it out of therewithout going through some
rigmarole of trying to get aHELOC or other things like that.
So the better choice up frontis to take the mortgage.
(10:44):
I would put down the downpayment so you get the best
rates on it.
See how things go for a fewyears, and then if it makes
sense later on, you can pay offthe mortgage later on.
But you don't need to do itright away, and it probably
doesn't make sense to do itright away.
It is a false dilemma sinceit's not a binary choice.
Voices (11:02):
Choose.
What do you mean, choose?
We don't understand.
Mostly Uncle Frank (11:10):
Second question
about your 403B offerings ifthey're lackluster?
And well, there's no downsideto complaining about them.
I don't'm sure who you cancomplain to or who sets that up,
but yeah, if you could get thatchange, that would probably be
something better than TIAA,which is kind of the best of the
insurance companies who runthese things, but insurance
(11:32):
companies are just bad to beginwith.
The history of 403Bs is thatthey predate 401ks, and they
were traditionally run byinsurance companies more as
setting up annuity products orother things like that to mimic
traditional pensions.
And so it wasn't until after401ks came around that you
(11:55):
started having investmentchoices and things like that in
403Bs at all.
They have lagged behindgreatly.
There are a lot of really bad403Bs out there, particularly
for smaller education systemsand other systems that have to
use 403Bs due to theirclassification.
So this is a endemic andongoing problem.
(12:16):
403Bs with bad choices in them.
But no, they would not be justchanging this for one person or
adding things for one person orjust adding things in general
because the way these are setup, you have to have a sponsor,
a provider that is providing aset of funds.
What you'd really want them todo is shift to somebody like
Fidelity, which has a whole lotmore choices and does do 403Bs.
(12:40):
I doubt they're going to do it,but find out who is in charge
of that, whether there's acommittee or something like
that, and talk to them about itand see what you can do.
I wouldn't hold my breath.
Question three, is there astandard spreadsheet or other
instrument that can be used totrack investments?
And you're at T I A A andVanguard.
And the answer is no, notreally.
(13:03):
I mean, spreadsheets arespreadsheets, and that's what I
use.
What I need to.
Honestly, I do not keep trackof our individual investments on
a day-to-day basis.
You only really need to look atthese things once a month when
you are drawing down on, andeven less than that when you're
accumulating.
There are now a lot of placeslike Empower, I believe, or
(13:26):
other ones that will link upyour accounts and aggregate them
and put all your stuff in oneplace and so on and so forth.
And I know those are popularnow.
For me, it's sort of likethey're popular because we can
do this now with our technology.
That doesn't necessarily meanthey're that ultimately that
useful.
Gentlemen, we can rebuild him.
Voices (13:46):
We have the technology.
We have the capability to makethe world's first bionic man.
Mostly Uncle Frank (14:06):
So I just use spreadsheets when we need
to.
And we still have accounts atInteractive Brokers, Fidelity,
and Empower, believe it or not,along with a few other
straggling ones around.
Not that I'd recommend that.
Eventually, the easiest thingto do once you leave your
employer is to move that 403B.
You want to get it out of thereanyway.
You want to move it to an IRA.
(14:28):
And you can do that atVanguard.
I would probably do it atFidelity though, since Fidelity
has much better customer serviceon these sorts of things.
But then you'd want to moveyour Vanguard account over there
too.
But having everything in oneplace does make things easier to
monitor.
It should not actually be thatcomplicated to do this on a
spreadsheet unless you have anawful lot of different funds or
(14:49):
something going on in there.
But if you're only talkingabout a few funds in each place,
a spreadsheet is great forthat.
Just don't think you need toupdate it that often because you
really don't, unless you findthat entertaining.
Voices (15:02):
Better than he was before.
Better, stronger.
Mostly Uncle Frank (15:18):
Question four, does it take you two days
to do a trade, day one to sell,and then day two to buy the next
asset?
And the answer is no.
But the reason it doesn't takeme two days to do a trade is
because I'm using ETFs.
The reason you are probablyhaving to do it that way is
you're using mutual funds.
And if you use mutual funds,they only trade once a day.
(15:38):
So unless you can do anexchange, which you can do at a
place like Vanguard, or maybeyou can do it at TIA A2, if you
can do an exchange, they can dothe transaction all at once.
But if not, you will have tosell something one day and buy
it the next day.
I would just move everythingover to ETFs as much as possible
over time to make sure it's notgoing to cause you a tax
(16:01):
problem to do that.
I know if you have mutual fundsat Vanguard, a lot of them are
convertible to ETFs and it's nota taxable event.
So you may take advantage ofthat.
You're not going to be able todo anything about that in the
403B until you leave there, butonce you move it to an IRA, you
can just buy ETFs.
ETFs are more efficient, andthey are essentially iPhones to
(16:24):
the mutual fund BlackBerry.
And since we now have no feetrading and fractional shares,
there's no reason not to useETFs over mutual funds.
Welcome to the 2020s.
Capital appreciation,particularly long-term capital
(17:04):
appreciation, is a favored wayof getting returns.
That's why investing for incomeis usually a dumb idea.
You would rather get yourreturns in the form of capital
appreciation because then youcan time when you pay the taxes,
and you're probably going to bepaying less in taxes.
Always remember that the firstword after income is taxes.
Voices (17:26):
Yeah.
Didn't you get that memo?
Mostly Uncle Frank (17:29):
And so you need to work around anything
that pays income.
Anything that pays ordinaryincome, therefore, first wants
to go in a traditionalretirement account because it's
going to get shielded in thereand you're not going to pay that
tax on the ordinary incomeuntil you actually remove it
from the account.
So that is a feature of thesefunds and tax laws, not a bug.
(17:51):
Question six Should I feel ascomfortable with withdrawing
from my tax-sheltered accountsas from my brokerage account?
And the answer is yes, in termsof just comfort in withdrawing,
but when and how you do that isone of the major tax planning
issues with retirement accountsin general.
(18:12):
Sometimes you want to take outof one or the other, depending
on what your tax brackets are,and a whole host of other
variables, including how muchyou have in each one of the
things.
In your case, you're going tohave you retiring and your wife
is continuing to work,generating ordinary income
there.
What I would recommend is thatyou go and get the book by Sean
(18:36):
Mullaney and Cody Garrett thatjust came out in the past few
months.
It's called Tax Planning to andThrough Early Retirement, and
it defines early retirement asbefore age 65.
So it applies generally to lotsof people, including you.
But tax planning is one of themost time-consuming and
difficult issues to deal with inyour retirement scenarios,
(18:58):
because it also incorporatesthings like when do you take
Social Security, in addition toworking around your particular
tax brackets and your particularmix of accounts and your
particular goals in terms oflong-term planning.
There is no rule of thumb as towhich you should necessarily
withdraw from first or at aparticular time.
(19:18):
But I sense you're also askinga slightly different question
here about which assets to sell.
And this is a separate issuefrom which account should it
come out of.
Because you can do what'scalled an asset swap to
effectively move it from oneplace to another.
So I will link to a video inthe show notes to explain to you
(19:42):
how this works specificallywith a retirement account and a
taxable account.
But suppose you had these twoaccounts and you have an asset
this year, suppose it's gold,that's gone up a lot, and you
want to sell that asset for yourdistribution, but you don't
want Take money out of theretirement account.
Here's what you would do.
(20:03):
First, you would sell the goldin the retirement account.
Then you would take anotherasset outside the retirement
account.
Let's just say it's a stockindex fund for the purpose of
this example.
You would sell the amount ofthe distribution of that asset
in the taxable account that'soutside.
Then you would go back into theretirement account and buy that
(20:25):
much of that asset in theretirement account.
So what you have done is you'vesold gold in the retirement
account, you've bought the indexfund in the retirement account,
you've sold an equal amount ofthe index fund outside the
retirement account, andeffectively you are reducing the
amount of gold you are holding.
You are getting money out fromthe taxable account, but you are
(20:47):
not taking any money out of theretirement account.
So in this way, if you followthese kinds of asset swap rules,
it does not really matter wherethe asset is for the most part,
because you can always do anasset swap if you have a couple
of accounts like you have, andthat's how you're going to
manage this when it comes todistribution time.
Now that doesn't tell youanything about which account it
(21:08):
should come out of for taxpurposes, but that's how you do
the asset swap.
But check out the video becausethat will explain it in more
detail.
And that video comes from ourfriend Justin at Risk Parity
Chronicles.
It's one of his finestcreations.
Voices (21:23):
The best, Jerry.
The best.
Mostly Uncle Frank (21:25):
And if you're looking for a blog about
these topics, I would also checkthat out too.
Voices (21:30):
Excellent!
Mostly Uncle Frank (21:31):
So hopefully that answers your six
questions.
Voices (21:34):
That and a nickel, get your hot cup, a jack squat!
Mostly Uncle Frank (21:40):
I realize you may have more questions, but
this is a good time for you tosit down and start really
planning out a few of thesethings.
And not to etch them in stone,but just to see what your
options are.
Because the truth of the matteris because you have a 13 and a
14-year-old, and you're notgoing to be sure what they're
doing after high school for afew more years, and that will
have an impact on the rest ofyour plans, you really won't be
(22:03):
able to finalize anything untilthat happens.
At least that was ourexperience.
But it's good to know now whatthe options are and how these
things work.
So I definitely would go getthat tax and retirement book and
sit down and start studyingthese things.
And if you do get overwhelmedby that stuff, this is actually
a good thing to hire somebody toget help with, either who is
(22:25):
focused on tax planning itselfor is an hourly advisor that
deals with these issues.
Be advised that a lot ofadvisors will not touch tax
issues, particularly if theywork for one of the big
brokerages or something likethat.
But it's been my experiencethat that is actually one of the
most important things that youcan get professional advice
about.
(22:45):
And you need that a lot morethan you need professional
advice about what to invest in.
So hopefully that helps.
Thank you for being a donor tothe Father McKenna Center.
And thank you for your email.
Voices (22:58):
Does my nose amuse you?
Is it funny?
Like a clown?
Does it make you laugh?
No, no, no.
Great nose.
Okay, I'm the capo now.
Hermes my lieutenant, andabominable here's my enforcer.
Capish?
Now let's eat.
So remember, kids, the moral ofthis story is keep your mouth
shut.
Mostly Uncle Frank (23:18):
Second off.
Second off, we have an emailfrom James.
Voices (23:23):
Hey Jim Baby! I see you brought up reinforcements! Well,
I'm waiting for you, Jimmy Boy.
Mostly Uncle Frank (23:32):
And James writes.
Mostly Queen Mary (23:33):
Hi, Frank.
I noticed the back test linkfor the Opter Portfolio page is
withdrawing $50 yearly.
That's not an improvement.
I believe it should be monthlyin order to back test a 6%
withdrawal rate.
Voices (23:46):
You are correct, sir.
Yes!
Mostly Uncle Frank (23:49):
Well, thank you for alerting us to that,
James.
I'm not sure if it's my faultin the original, or it happened
when we transferred over all ofthe links and materials from the
old website to the new one.
Voices (24:01):
Chris Des Tabarnak Twimots, Chris.
In any event, we have top menworking on it right now.
Mostly Uncle Frank (24:12):
And we'll get it taken care of.
I do appreciate these kind ofcomments and corrections.
Because as you can imagine, wedo not have a big staff working
on any of this stuff.
And there are frequently typosand other little mistakes like
that in various places,particularly on the website.
Voices (24:31):
Gosh!
Mostly Uncle Frank (24:33):
So thank you very much for your corrective
email.
Voices (24:37):
And we have the tools! We had the talent! Last off.
Mostly Uncle Frank (24:43):
Last off of an email from Brad.
Voices (24:46):
You worked at All American Burger seven months
ago.
I did.
Mostly Uncle Frank (24:54):
And Brad writes.
Mostly Queen Mary (24:56):
Hi Frank and Mary.
I've been with you since nearlythe beginning.
I suggested some ArnoldSchwarzenegger sound bites.
I love the show and never missan episode.
Voices (25:06):
What's the matter?
I have a headache.
It might be a tumor.
It's not a tumor.
It's not a tumor at all.
Mostly Queen Mary (25:14):
I'm 41 and am still firmly in the
accumulation phase, but I'msoaking up as much knowledge as
I can in preparation for myhopeful retirement around age
50.
Voices (25:25):
I suck them down like Coca-Cola.
Mostly Queen Mary (25:28):
I know that you recommend transitioning to a
risk parity style portfolioabout five years out from
retirement.
I realize there's no accuratecrystal ball that predicts
market drops, but what if themarket drops right before the
transition to a risk paritystyle portfolio and stays down
for say 10 years, give or take?
And it's gone! I guess what I'mreally asking is there any
(25:51):
damage control techniques usingrisk parity methods to minimize
this potential timing issuewhile still in accumulation?
For example, could somethinglike 80% stocks be combined with
a mix of bonds and gold or anyof the other assets usually used
to provide slight protectionagainst the slim chance that the
market might be down startingprior to the transition phase?
(26:12):
I love the show and alwaysappreciate your comments on the
Choose a Fi group.
Thanks for all you do, Brad.
P.S.
How about some stallone soundbites?
Voices (26:24):
Yo, Adrian.
No, I don't hate that boy, but Ipity the fool, and I will
destroy any man who tries totake what I got.
What's your prediction for thefight then?
Prediction?
Yes, prediction.
Mostly Uncle Frank (26:42):
Well, first off, thank you for being a
longtime listener, Brad.
Voices (26:46):
Learn it.
Mostly Uncle Frank (26:48):
Know it.
Live it.
As time goes on and ouraudience expands, I really do
appreciate the people that havebeen around here the longest.
Voices (26:59):
We're mutants.
There's something wrong withus.
Something very, very wrong withus.
Something seriously wrong withus.
Mostly Uncle Frank (27:08):
Because we still do want to retain our dive
bar e quality to this program.
Voices (27:14):
Hey, what's happening, Norm?
It's a dog eat dog world'sammian and I'm wearing milk
phone underwear.
Mostly Uncle Frank (27:20):
And you can only do that if you have a few
regulars.
Voices (27:24):
You see, if you go back in history and uh take every
president, you'll find that thenumerical value of each letter
in the last name was equallydivisible into the uh year in
which they were elected.
By my calculations, uh, a nextpresident has to be named Yelnik
Mikwawa.
Mostly Uncle Frank (27:43):
Now, getting to your question, well, the
short answer is if you get a bigdrop right before you convert
the portfolio, you may just haveto work a little longer and
save a little more.
Voices (27:53):
Don't be saucy with me, Bernese.
Mostly Uncle Frank (27:56):
That's the reality of the situation.
But your solution or proposedsolution is the correct one.
If you are concerned aboutthis, the answer would be to
move more of it earlier on,either all the way to the risk
parity style portfolio orpartway to the risk parity style
portfolio, because the biggestrisk factor involved here is the
(28:20):
percentage you have invested instocks for the most part.
And if you reduce that risk,that will reduce most of the
risk that you're worried aboutwith respect to a big drawdown.
Now, the earlier you convertit, the less potential growth
you may have.
So it just may also take you alittle longer.
(28:40):
But the truth is a lot of thepeople that have these
portfolios treat them as theiraccumulation portfolio as well.
I know Tyler from PortfolioCharts has done that with his
golden butterfly portfolio.
I know the value stock geekdoes that with his weird
portfolio.
They essentially use that astheir accumulation portfolio,
(29:01):
which works fine.
It's just going to probablytake a little longer to get to
your FI number if you are usingthe more conservative portfolio
to accumulate in.
So that's the real trade-offthere.
Certainly, when you are decadesaway or haven't invested very
much at all, it does not makesense to go into a conservative
portfolio because, inparticular, if your future
(29:23):
contributions are going to be alarge part of your overall
portfolio, then you really wantto have what you have invested
in stocks because you'reessentially sitting on a pile of
future cash.
And so your portfolio isnaturally conservative in that
manner.
So if you were 25 years old andthen planning on investing from
(29:45):
then until you were 45, thosefirst few years are relatively
trivial amounts compared to the15 more years of future cash
that is going to be invested.
And therefore, you want thatall to be the end of the most
aggressive investments possible,and that's those index funds.
That calculus changes,obviously, the further along you
(30:08):
go, and the less money youintend to put in prospectively.
So you could do as you suggest.
These days, however, the biggerissue most people have is not
converting soon enough.
Because we've had such a goodrun for such a long time.
I think a lot of amateurinvestors in particular can't
(30:28):
comprehend the idea that nextyear could be starting like the
year 2000, and the next decadecould be horrible.
Voices (30:36):
You can't handle the truth.
Mostly Uncle Frank (30:39):
I think a lot of people just can't
comprehend that, and that's whythey maintain their all-stock
portfolio, or they've justcommitted to continuing to work
regardless.
Voices (30:49):
You can't handle the gambling problem.
Mostly Uncle Frank (30:52):
Or just not spending much money, which is
always a viable solution.
Voices (30:57):
I can't help it.
I'm a greedy slob.
It's my hobby.
Save me!
Mostly Uncle Frank (31:02):
So I think you are correct that it's better
to be safe than sorry,particularly if you have a very
kind of specific date that youreally want to say, I am
retired, and not have topotentially work longer due to
market conditions.
Voices (31:17):
You can't handle the crystal ball.
Mostly Uncle Frank (31:20):
So hopefully that helps.
I'm glad you're enjoying thepodcast, including the sound
clips.
Voices (31:27):
You can't handle the dogs and cats living together.
Mostly Uncle Frank (31:31):
And thank you for your email.
And the extremely fun thing weget to do now is our weekly
(32:05):
portfolio reviews of the eightsample portfolios you can find
at www.riskperry.com on theportfolios page.
And just looking at how themarkets are finishing out the
year.
The SP 500, represented by VOO,is up 17.44% for the year so
far.
The NASDAQ 100, represented byQQQ, is up 20.48% for the year.
(32:29):
Small cap value represented bythe fund VIOV is now up 9.25%
for the year.
It's gaining.
Voices (32:44):
I love gold.
Mostly Uncle Fra (32:47):
Representative fund GLDM is up 63.69% for the
year.
Voices (32:56):
And that's the way uh-huh uh-huh.
I like it.
Casey and the Shunshine Band.
Mostly Uncle Frank (33:02):
Long-term treasury bonds represented by
VGLT are up 4.87% for the year.
REITs represented by the fundREET are up 7.03%.
Commodities represented by thefund PDBC are up 4.93%.
And preferred sharesrepresented by PFFV are up 2.12%
for the year so far.
(33:23):
And finally, managed futuresrepresented by the fund DBMF are
managing to be up doubledigits.
They are up 12.85% for the yearso far.
Moving to these portfolios,these sample portfolios.
First one's a referenceportfolio.
It's called the All Seasons.
It is only 30% in stocks, ithas 55% in intermediate and
(33:45):
long-term treasury bonds, andthe remaining 15% in golden
commodities.
It is down 0.99% for the monthof December so far.
It's up 13.17% year to date andup 22.85% since inception in
July 2020.
Next one's a golden butterfly,the first of our bread and
butter kind of portfolios.
(34:06):
This one is 40% in stocksdivided into a total stock
market fund and a small capvalue fund.
40% in treasury bonds dividedinto long and short, and the
remaining 20% in gold, GLDM.
It's up 0.63% for the month ofDecember so far.
It's up 19.46 year to date andup 59.98% since inception in
(34:28):
July 2020.
Next one's a golden ratio.
What's the answer, Mr.
Voices (34:36):
Sacred Geometry, Sacred Geometry, Sacred Geometry?
The Golden Ratio.
The Golden Ratio.
Mostly Uncle Frank (34:47):
This one is 42% in stocks divided into a
large cap growth fund and asmall cap value fund.
26% in long-term treasurybonds, 16% in gold, 10% in
managed futures, and theremaining 6% in cash and a money
market fund.
It's up 0.25% for the month ofDecember.
It's up 18.95% year to date andup 54.58% since inception in
(35:13):
July 2020.
Next one's the Risk ParityUltimate.
It's kind of our kitchen sinkportfolio.
We're not going to go throughall 12 of these funds.
It is down to 0.35% for themonth of December.
It's up 17.11% year to date,and up 39.76% since inception in
July 2020.
Now moving to theseexperimental portfolios, these
(35:37):
all involve leveraged funds.
Voices (35:39):
You have a gambling problem.
Mostly Uncle Frank (35:42):
There's a lot of volatility here.
Voices (35:44):
Well, you have a gambling problem.
Mostly Uncle Frank (35:47):
First one's called the accelerated permanent
portfolio.
This one is 27.5% in a leveredbond fund, TMF, 25% in UPRO, a
levered stock fund, 25% in PFFV,a preferred shares fund, and
22.5% in gold, GLDM.
It's down 1.82% for the monthof December.
(36:08):
It's up 21.92% year to date andup 23.17% since inception in
July 2020.
Next one's the Aggressive 5050.
This is the most levered andleast diversified of these
portfolios, and by far the worstperformer.
It is one-third in a leveredstock fund UPRO, one-third and a
levered bond fund TMF, and theremaining third divided into a
(36:31):
preferred shares fund and anintermediate treasury bond fund.
It's down to 3.03% for themonth of December.
It's up 11.56% year to date anddown 1.75% since inception in
July 2020.
We may be doing a rebalancingon this.
We have to check how it playsout on Monday to see whether it
(36:52):
meets the criteria becauseMonday is the 15th.
Next one's a levered goldenratio.
This one is 35% in NTSX, whichis a composite levered fund that
invests in the S P 500 andTreasury bonds.
It's got 15% in AVDV, which isan international small cap value
fund, 20% in GLDM, that's gold,10% in KMLM, that's a managed
(37:18):
futures fund, 10% in TMF, that'sa levered bond fund.
The remaining 10% divided intoa levered Dow fund and a levered
utilities fund.
It is down 0.97% for the monthof December so far.
It's up 24.89% here to date,and up 19.37% since inception in
July 2021.
(37:39):
And the last one is our newestone, the Opter Portfolio.
One portfolio to rule them all.
And it is ruling this year,actually.
This place rolls.
It has 16% in UPRO, a leveredSP 500 fund, 24% in AVGV, which
is a worldwide value tiltedfund, 24% in GOVZ, which is a
(38:02):
Treasury Strips fund, and theremaining 36% divided into gold
and a managed futures fund.
It's down 0.01% for the monthof December.
It's up 25.04% year to date andup 28.69% since inception in
July 2024.
And that concludes our weeklyportfolio reviews as we slide
(38:26):
into the end of the year.
December is turning out to befairly uneventful here.
Voices (38:32):
Merry Christmas.
Ho, ho, ho.
Mostly Uncle Frank (38:37):
But now I see our signal is beginning to
fade.
If you have comments orquestions for me, please send
them to Frank atRiskPartyRadio.com.
That email is frank atriskparty.com.
Or you can go to the websitewww.riskparty.com.
Put your message into thecontact form and I'll get it all
that way.
If you haven't had a chance todo it, please go to your
favorite podcast provider andlike, subscribe, give me some
(39:00):
stars, a follow, a review.
That would be great.
Okay.
Thank you once again for tuningin.
This is Frank Vasquez with RiskParty Radio.
Signing off.
Voices (39:15):
You wanna go where people know people know how to
see.
You wanna go where everybodyknows your name.
Mostly Queen Mary (39:33):
The Risk Parody Radio Show is hosted by
Frank Vasquez.
The content provided is forentertainment and informational
purposes only and does notconstitute financial,
investment, tax, or legaladvice.
Please consult with your ownadvisors before taking any
actions based on any informationyou have heard here, making
sure to take into account yourown personal circumstances.
A foolish consistency is the hub goblin 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.
And the basic foundationalepisodes are episodes 1, 3, 5,
7, and 9.
Yes, it is still in my memorybanks.
(00:57):
We have also created anadditional resource, a
collection of additionalfoundational episodes and other
popular episodes.
Voices (01:07):
We have top men working on it right now.
Ooh.
Mostly Uncle Frank (01:14):
Top men.
And you can find those on theepisode guide page at
www.riskparty radio.com.
Inconceivable! All thanks toour friend Luke, our volunteer
in Quebec.
We'd be helpless without him.
Voices (01:36):
I have always depended on the kindness of strangers.
Mostly Uncle Frank (01:41):
Because other than him, it's just me and
Marion here.
I'll give you the moon,alright?
Voices (01:46):
I'll take it.
Mostly Uncle Frank (01:48):
We have no sponsors, we have no guests, and
we have no expansion plans.
Voices (01:53):
I don't think I'd like another job.
Mostly Uncle Frank (01:55):
Over the years, our podcast has become
very audienced focused, and Imust say we do have the finest
podcast audience available.
Voices (02:05):
Really top drawer.
Mostly Uncle Frank (02:07):
Along with a host named after a hot dog.
Voices (02:10):
Lighten up Francis.
Mostly Uncle Frank (02:14):
But now onward, episode 472.
Today in Risk Party Radio, it'stime for our weekly portfolio
reviews of the eight sampleportfolios you can find at
www.riskparty.com on theportfolios page.
Boring! Yeah, December isshaping up to be a boring month.
Which isn't so bad.
Voices (02:36):
As far back as he could remember, Rudolph wanted to be
one of Santa's made reindeer.
Like his friends, Jimmy theAntler and Frankie two times.
There was only one problem.
Hey Frankie, look! It's a raid!The cops are here! You'll never
be in Santa's gang.
(02:57):
Never be in Santa's gang.
Mostly Uncle Frank (03:04):
But before we get to that.
Voices (03:07):
I'm intrigued by this.
How you say email?
Mostly Uncle Frank (03:12):
And first off.
First off, I have an email fromAnonymous.
Anonymous from New Jersey.
Voices (03:21):
And I'll tell you everything.
Well, not everything.
Mostly Uncle Frank (03:26):
And Anonymous rights.
Mostly Queen Mary (03:29):
Hi, Frank and Mary.
Greetings from New Jersey.
Voices (03:32):
I'm Hermie the Drill.
Santa kicked me out because Iwouldn't give him his tribute.
Someday I'm gonna take overSanta's whole operation.
Mostly Queen Mary (03:40):
I've been listening to your show for a few
months now, and it has helpedme plan for the future
immeasurably.
I made a contribution to theFather McKenna Center in August
in anticipation of this note,and did so gladly while
ensconced in Fenway Parkwatching an inconsequential
game, all the while investing inmy relationships with old
friends.
Voices (04:00):
Hey, I'm with you, Pison, and I know just the guy
to call.
Mostly Queen Mary (04:06):
I have a couple of questions I was hoping
you could help me out with.
To set the stage, my wife and Ihave accounts at TIAA and
Vanguard.
The TIAA is with my presentemployer and has about $1.3
million in equities, mostly S P500 index in a 403B, 225,000 of
which is in Roth.
(04:26):
At Vanguard, my wife and I haveabout 245,000 in a brokerage
account, 220,000 VTSAX, and25,000 money market, 590,000 in
a traditional IRA, 470,000 GLDMand 120,000 DBMF, 2,060-ish K in
(04:47):
my Roth IRA, 220,000 VGLT andthe rest VUG, 200,000 in my
wife's Roth IRA, 92,000 VGLT andthe rest VIOV.
Our two kids, 16 and 13, bothhave 529s with about 40k in each
of them, as we have an HSA withabout 20,000.
(05:08):
Sorry for belaboring all thatdetail, but perhaps the
specifics will matter.
I am trying to steer our assetsinto a golden ratio portfolio.
Voices (05:20):
Define it everywhere, everywhere.
Mostly Queen Mary (05:22):
It's just taking a while to do so, with
the TIAA funds proving thebiggest obstacle since there are
so few choices there.
I'm planning on retiring infive years when my son graduates
from the high school I teachat.
I'm 59, and my wife plans onretiring between five and
fifteen years from now.
She's 50.
Question number one.
(05:42):
I work at a school whichprovides housing for my family
and me, so I'll have to buy ahouse or rent in five years when
I retire.
I think I should finance thehouse and accept the mortgage as
my lot.
I guess for the rest of mylife.
Any reason not to finance if webuy?
Question number two.
Should I complain if the 403Bofferings at my work are
(06:04):
lackluster?
I really can't find mutualfunds in areas of large cap
growth, small cap value, orlong-term treasuries within my
TIAA options.
Have you ever heard of aworkplace being amenable to
putting in more fund optionsthat are useful to the risk
parity crowd at the request ofan employee?
Question 3.
Is there a standard spreadsheetor other instrument that can be
(06:26):
used to track investments?
I'm split between TIAA andVanguard, and as you recall,
there are different accounts ineach, especially the Vanguard.
I am reluctant to give all theinformation to a third-party
app.
I've constructed my ownspreadsheet to track everything,
but it's complicated, seems toviolate the simplicity rule, and
I thought maybe there's aneasier way.
(06:47):
Question four, does it take youtwo days to do a trade, day one
to sell, then day two to buythe next asset?
That's what I've been doing.
Question five, is there anirony that index funds with
equities are best held inregular brokerage accounts for
being tax efficient, as well asin Roth since that's the best
place for something with capitalappreciation?
(07:08):
Question six, should I feel ascomfortable withdrawing from my
tax-sheltered accounts as frommy brokerage account?
Is there a school of thoughtthat says it's easier to take a
brokerage account through therequired minimum distribution
years, meaning that withdrawalsfrom my traditional IRA might be
the way to go at this time?
Or should I just withdraw fromwhatever asset is most inflated,
(07:28):
no matter the vehicle itresides in?
By the way, we don't withdrawmuch more than $20,000 a year to
make ends meet and have familyadventures together since we're
both still working.
We're also still contributingto retirement as much as we can,
but almost exclusively to theRoth accounts, and we make about
$140,000 a year combined.
I have more questions, butperhaps I should leave it at
(07:50):
that for now.
Please let us know if you getup to the Philly or New York
City area.
We'd love to treat you to abeer or libation of your choice.
Warm regards, Anonymous.
Voices (08:00):
I'm Yukon Cornelion, the greatest hitman of all, and
I've got a special present foryou.
Compliments of one disgruntledelf and red-nosed reindeer.
Were you talking to me?
You talking to me?
Mostly Uncle Frank (08:12):
Well, first off, thank you for being a donor
to the Father McKenna Center.
As most of you know, we don'thave any sponsors on this
program.
We do have a charity wesupport.
It's called the Father McKennaCenter.
It supports hungry and homelesspeople in Washington, D.C.
Full disclosure, I'm on theboard of the charity and I'm the
current treasurer.
But if you give to the charity,you get to go to the front of
the email line.
(08:32):
Two ways to do that.
I think you go directly to theFather McKenna donation page and
donate there.
I'll put that link in the shownotes.
Or you can go towww.riskpartywriter.com and go
to the support page and becomeone of our patrons on Patreon.
Either way, you get to go tothe front of the email line, but
just make sure you note it inyour email so I can duly move
(08:54):
you to the front of the line.
Voices (08:56):
Yes!
Mostly Uncle Frank (08:57):
Now getting to your email.
Looks like you're trying to getyour money's worth here.
You got six questions.
Alright, I'm game.
Voices (09:07):
Ho ho ho! Donner at Blitzen just hijacked a shipment
of pure snow.
We'll make two million easy.
Mostly Uncle Frank (09:14):
Your first question is about whether you
should finance the house andtake a mortgage or not.
And you said, I guess for therest of your life.
Well, first that is a falseassumption.
Voices (09:25):
That's not how it works.
That's not how any of thisworks.
Mostly Uncle Frank (09:29):
Just because you take on a mortgage today
does not mean you have to haveit for the rest of your life.
Because, as we know, we can payoff mortgages early.
Voices (09:37):
That's the fact, Jack! That's the fact, Jack!
Mostly Uncle Frank (09:41):
And that's important.
Because I think in yoursituation in particular, I would
take on the mortgage to beginwith, not so much for the
financial reasons, but forliquidity reasons.
And I think this is somethingthat amateur investors don't
appreciate very much, issometimes liquidity, having more
money around, is way moreimportant than paying down
(10:03):
mortgages or getting rid ofdebt.
And that I think is going to beyour circumstances.
When you are first retiring,you've got people in college or
high school, you got thingsmoving around.
So you are going to want tohave more money available, I
think, up front, because you canalways pay down that mortgage
(10:24):
early after a few years ofretirement when you've got
everything figured out as to howeverything is working.
But if you put that money intothe house in the equity, you
can't really get it out of therewithout going through some
rigmarole of trying to get aHELOC or other things like that.
So the better choice up frontis to take the mortgage.
(10:44):
I would put down the downpayment so you get the best
rates on it.
See how things go for a fewyears, and then if it makes
sense later on, you can pay offthe mortgage later on.
But you don't need to do itright away, and it probably
doesn't make sense to do itright away.
It is a false dilemma sinceit's not a binary choice.
Voices (11:02):
Choose.
What do you mean, choose?
We don't understand.
Mostly Uncle Frank (11:10):
Second question
about your 403B offerings ifthey're lackluster?
And well, there's no downsideto complaining about them.
I don't'm sure who you cancomplain to or who sets that up,
but yeah, if you could get thatchange, that would probably be
something better than TIAA,which is kind of the best of the
insurance companies who runthese things, but insurance
(11:32):
companies are just bad to beginwith.
The history of 403Bs is thatthey predate 401ks, and they
were traditionally run byinsurance companies more as
setting up annuity products orother things like that to mimic
traditional pensions.
And so it wasn't until after401ks came around that you
(11:55):
started having investmentchoices and things like that in
403Bs at all.
They have lagged behindgreatly.
There are a lot of really bad403Bs out there, particularly
for smaller education systemsand other systems that have to
use 403Bs due to theirclassification.
So this is a endemic andongoing problem.
(12:16):
403Bs with bad choices in them.
But no, they would not be justchanging this for one person or
adding things for one person orjust adding things in general
because the way these are setup, you have to have a sponsor,
a provider that is providing aset of funds.
What you'd really want them todo is shift to somebody like
Fidelity, which has a whole lotmore choices and does do 403Bs.
(12:40):
I doubt they're going to do it,but find out who is in charge
of that, whether there's acommittee or something like
that, and talk to them about itand see what you can do.
I wouldn't hold my breath.
Question three, is there astandard spreadsheet or other
instrument that can be used totrack investments?
And you're at T I A A andVanguard.
And the answer is no, notreally.
(13:03):
I mean, spreadsheets arespreadsheets, and that's what I
use.
What I need to.
Honestly, I do not keep trackof our individual investments on
a day-to-day basis.
You only really need to look atthese things once a month when
you are drawing down on, andeven less than that when you're
accumulating.
There are now a lot of placeslike Empower, I believe, or
(13:26):
other ones that will link upyour accounts and aggregate them
and put all your stuff in oneplace and so on and so forth.
And I know those are popularnow.
For me, it's sort of likethey're popular because we can
do this now with our technology.
That doesn't necessarily meanthey're that ultimately that
useful.
Gentlemen, we can rebuild him.
Voices (13:46):
We have the technology.
We have the capability to makethe world's first bionic man.
Mostly Uncle Frank (14:06):
So I just use spreadsheets when we need
to.
And we still have accounts atInteractive Brokers, Fidelity,
and Empower, believe it or not,along with a few other
straggling ones around.
Not that I'd recommend that.
Eventually, the easiest thingto do once you leave your
employer is to move that 403B.
You want to get it out of thereanyway.
You want to move it to an IRA.
(14:28):
And you can do that atVanguard.
I would probably do it atFidelity though, since Fidelity
has much better customer serviceon these sorts of things.
But then you'd want to moveyour Vanguard account over there
too.
But having everything in oneplace does make things easier to
monitor.
It should not actually be thatcomplicated to do this on a
spreadsheet unless you have anawful lot of different funds or
(14:49):
something going on in there.
But if you're only talkingabout a few funds in each place,
a spreadsheet is great forthat.
Just don't think you need toupdate it that often because you
really don't, unless you findthat entertaining.
Voices (15:02):
Better than he was before.
Better, stronger.
Mostly Uncle Frank (15:18):
Question four, does it take you two days
to do a trade, day one to sell,and then day two to buy the next
asset?
And the answer is no.
But the reason it doesn't takeme two days to do a trade is
because I'm using ETFs.
The reason you are probablyhaving to do it that way is
you're using mutual funds.
And if you use mutual funds,they only trade once a day.
(15:38):
So unless you can do anexchange, which you can do at a
place like Vanguard, or maybeyou can do it at TIA A2, if you
can do an exchange, they can dothe transaction all at once.
But if not, you will have tosell something one day and buy
it the next day.
I would just move everythingover to ETFs as much as possible
over time to make sure it's notgoing to cause you a tax
(16:01):
problem to do that.
I know if you have mutual fundsat Vanguard, a lot of them are
convertible to ETFs and it's nota taxable event.
So you may take advantage ofthat.
You're not going to be able todo anything about that in the
403B until you leave there, butonce you move it to an IRA, you
can just buy ETFs.
ETFs are more efficient, andthey are essentially iPhones to
(16:24):
the mutual fund BlackBerry.
And since we now have no feetrading and fractional shares,
there's no reason not to useETFs over mutual funds.
Welcome to the 2020s.
Capital appreciation,particularly long-term capital
(17:04):
appreciation, is a favored wayof getting returns.
That's why investing for incomeis usually a dumb idea.
You would rather get yourreturns in the form of capital
appreciation because then youcan time when you pay the taxes,
and you're probably going to bepaying less in taxes.
Always remember that the firstword after income is taxes.
Voices (17:26):
Yeah.
Didn't you get that memo?
Mostly Uncle Frank (17:29):
And so you need to work around anything
that pays income.
Anything that pays ordinaryincome, therefore, first wants
to go in a traditionalretirement account because it's
going to get shielded in thereand you're not going to pay that
tax on the ordinary incomeuntil you actually remove it
from the account.
So that is a feature of thesefunds and tax laws, not a bug.
(17:51):
Question six Should I feel ascomfortable with withdrawing
from my tax-sheltered accountsas from my brokerage account?
And the answer is yes, in termsof just comfort in withdrawing,
but when and how you do that isone of the major tax planning
issues with retirement accountsin general.
(18:12):
Sometimes you want to take outof one or the other, depending
on what your tax brackets are,and a whole host of other
variables, including how muchyou have in each one of the
things.
In your case, you're going tohave you retiring and your wife
is continuing to work,generating ordinary income
there.
What I would recommend is thatyou go and get the book by Sean
(18:36):
Mullaney and Cody Garrett thatjust came out in the past few
months.
It's called Tax Planning to andThrough Early Retirement, and
it defines early retirement asbefore age 65.
So it applies generally to lotsof people, including you.
But tax planning is one of themost time-consuming and
difficult issues to deal with inyour retirement scenarios,
(18:58):
because it also incorporatesthings like when do you take
Social Security, in addition toworking around your particular
tax brackets and your particularmix of accounts and your
particular goals in terms oflong-term planning.
There is no rule of thumb as towhich you should necessarily
withdraw from first or at aparticular time.
(19:18):
But I sense you're also askinga slightly different question
here about which assets to sell.
And this is a separate issuefrom which account should it
come out of.
Because you can do what'scalled an asset swap to
effectively move it from oneplace to another.
So I will link to a video inthe show notes to explain to you
(19:42):
how this works specificallywith a retirement account and a
taxable account.
But suppose you had these twoaccounts and you have an asset
this year, suppose it's gold,that's gone up a lot, and you
want to sell that asset for yourdistribution, but you don't
want Take money out of theretirement account.
Here's what you would do.
(20:03):
First, you would sell the goldin the retirement account.
Then you would take anotherasset outside the retirement
account.
Let's just say it's a stockindex fund for the purpose of
this example.
You would sell the amount ofthe distribution of that asset
in the taxable account that'soutside.
Then you would go back into theretirement account and buy that
(20:25):
much of that asset in theretirement account.
So what you have done is you'vesold gold in the retirement
account, you've bought the indexfund in the retirement account,
you've sold an equal amount ofthe index fund outside the
retirement account, andeffectively you are reducing the
amount of gold you are holding.
You are getting money out fromthe taxable account, but you are
(20:47):
not taking any money out of theretirement account.
So in this way, if you followthese kinds of asset swap rules,
it does not really matter wherethe asset is for the most part,
because you can always do anasset swap if you have a couple
of accounts like you have, andthat's how you're going to
manage this when it comes todistribution time.
Now that doesn't tell youanything about which account it
(21:08):
should come out of for taxpurposes, but that's how you do
the asset swap.
But check out the video becausethat will explain it in more
detail.
And that video comes from ourfriend Justin at Risk Parity
Chronicles.
It's one of his finestcreations.
Voices (21:23):
The best, Jerry.
The best.
Mostly Uncle Frank (21:25):
And if you're looking for a blog about
these topics, I would also checkthat out too.
Voices (21:30):
Excellent!
Mostly Uncle Frank (21:31):
So hopefully that answers your six
questions.
Voices (21:34):
That and a nickel, get your hot cup, a jack squat!
Mostly Uncle Frank (21:40):
I realize you may have more questions, but
this is a good time for you tosit down and start really
planning out a few of thesethings.
And not to etch them in stone,but just to see what your
options are.
Because the truth of the matteris because you have a 13 and a
14-year-old, and you're notgoing to be sure what they're
doing after high school for afew more years, and that will
have an impact on the rest ofyour plans, you really won't be
(22:03):
able to finalize anything untilthat happens.
At least that was ourexperience.
But it's good to know now whatthe options are and how these
things work.
So I definitely would go getthat tax and retirement book and
sit down and start studyingthese things.
And if you do get overwhelmedby that stuff, this is actually
a good thing to hire somebody toget help with, either who is
(22:25):
focused on tax planning itselfor is an hourly advisor that
deals with these issues.
Be advised that a lot ofadvisors will not touch tax
issues, particularly if theywork for one of the big
brokerages or something likethat.
But it's been my experiencethat that is actually one of the
most important things that youcan get professional advice
about.
(22:45):
And you need that a lot morethan you need professional
advice about what to invest in.
So hopefully that helps.
Thank you for being a donor tothe Father McKenna Center.
And thank you for your email.
Voices (22:58):
Does my nose amuse you?
Is it funny?
Like a clown?
Does it make you laugh?
No, no, no.
Great nose.
Okay, I'm the capo now.
Hermes my lieutenant, andabominable here's my enforcer.
Capish?
Now let's eat.
So remember, kids, the moral ofthis story is keep your mouth
shut.
Mostly Uncle Frank (23:18):
Second off.
Second off, we have an emailfrom James.
Voices (23:23):
Hey Jim Baby! I see you brought up reinforcements! Well,
I'm waiting for you, Jimmy Boy.
Mostly Uncle Frank (23:32):
And James writes.
Mostly Queen Mary (23:33):
Hi, Frank.
I noticed the back test linkfor the Opter Portfolio page is
withdrawing $50 yearly.
That's not an improvement.
I believe it should be monthlyin order to back test a 6%
withdrawal rate.
Voices (23:46):
You are correct, sir.
Yes!
Mostly Uncle Frank (23:49):
Well, thank you for alerting us to that,
James.
I'm not sure if it's my faultin the original, or it happened
when we transferred over all ofthe links and materials from the
old website to the new one.
Voices (24:01):
Chris Des Tabarnak Twimots, Chris.
In any event, we have top menworking on it right now.
Mostly Uncle Frank (24:12):
And we'll get it taken care of.
I do appreciate these kind ofcomments and corrections.
Because as you can imagine, wedo not have a big staff working
on any of this stuff.
And there are frequently typosand other little mistakes like
that in various places,particularly on the website.
Voices (24:31):
Gosh!
Mostly Uncle Frank (24:33):
So thank you very much for your corrective
email.
Voices (24:37):
And we have the tools! We had the talent! Last off.
Mostly Uncle Frank (24:43):
Last off of an email from Brad.
Voices (24:46):
You worked at All American Burger seven months
ago.
I did.
Mostly Uncle Frank (24:54):
And Brad writes.
Mostly Queen Mary (24:56):
Hi Frank and Mary.
I've been with you since nearlythe beginning.
I suggested some ArnoldSchwarzenegger sound bites.
I love the show and never missan episode.
Voices (25:06):
What's the matter?
I have a headache.
It might be a tumor.
It's not a tumor.
It's not a tumor at all.
Mostly Queen Mary (25:14):
I'm 41 and am still firmly in the
accumulation phase, but I'msoaking up as much knowledge as
I can in preparation for myhopeful retirement around age
50.
Voices (25:25):
I suck them down like Coca-Cola.
Mostly Queen Mary (25:28):
I know that you recommend transitioning to a
risk parity style portfolioabout five years out from
retirement.
I realize there's no accuratecrystal ball that predicts
market drops, but what if themarket drops right before the
transition to a risk paritystyle portfolio and stays down
for say 10 years, give or take?
And it's gone! I guess what I'mreally asking is there any
(25:51):
damage control techniques usingrisk parity methods to minimize
this potential timing issuewhile still in accumulation?
For example, could somethinglike 80% stocks be combined with
a mix of bonds and gold or anyof the other assets usually used
to provide slight protectionagainst the slim chance that the
market might be down startingprior to the transition phase?
(26:12):
I love the show and alwaysappreciate your comments on the
Choose a Fi group.
Thanks for all you do, Brad.
P.S.
How about some stallone soundbites?
Voices (26:24):
Yo, Adrian.
No, I don't hate that boy, but Ipity the fool, and I will
destroy any man who tries totake what I got.
What's your prediction for thefight then?
Prediction?
Yes, prediction.
Mostly Uncle Frank (26:42):
Well, first off, thank you for being a
longtime listener, Brad.
Voices (26:46):
Learn it.
Mostly Uncle Frank (26:48):
Know it.
Live it.
As time goes on and ouraudience expands, I really do
appreciate the people that havebeen around here the longest.
Voices (26:59):
We're mutants.
There's something wrong withus.
Something very, very wrong withus.
Something seriously wrong withus.
Mostly Uncle Frank (27:08):
Because we still do want to retain our dive
bar e quality to this program.
Voices (27:14):
Hey, what's happening, Norm?
It's a dog eat dog world'sammian and I'm wearing milk
phone underwear.
Mostly Uncle Frank (27:20):
And you can only do that if you have a few
regulars.
Voices (27:24):
You see, if you go back in history and uh take every
president, you'll find that thenumerical value of each letter
in the last name was equallydivisible into the uh year in
which they were elected.
By my calculations, uh, a nextpresident has to be named Yelnik
Mikwawa.
Mostly Uncle Frank (27:43):
Now, getting to your question, well, the
short answer is if you get a bigdrop right before you convert
the portfolio, you may just haveto work a little longer and
save a little more.
Voices (27:53):
Don't be saucy with me, Bernese.
Mostly Uncle Frank (27:56):
That's the reality of the situation.
But your solution or proposedsolution is the correct one.
If you are concerned aboutthis, the answer would be to
move more of it earlier on,either all the way to the risk
parity style portfolio orpartway to the risk parity style
portfolio, because the biggestrisk factor involved here is the
(28:20):
percentage you have invested instocks for the most part.
And if you reduce that risk,that will reduce most of the
risk that you're worried aboutwith respect to a big drawdown.
Now, the earlier you convertit, the less potential growth
you may have.
So it just may also take you alittle longer.
(28:40):
But the truth is a lot of thepeople that have these
portfolios treat them as theiraccumulation portfolio as well.
I know Tyler from PortfolioCharts has done that with his
golden butterfly portfolio.
I know the value stock geekdoes that with his weird
portfolio.
They essentially use that astheir accumulation portfolio,
(29:01):
which works fine.
It's just going to probablytake a little longer to get to
your FI number if you are usingthe more conservative portfolio
to accumulate in.
So that's the real trade-offthere.
Certainly, when you are decadesaway or haven't invested very
much at all, it does not makesense to go into a conservative
portfolio because, inparticular, if your future
(29:23):
contributions are going to be alarge part of your overall
portfolio, then you really wantto have what you have invested
in stocks because you'reessentially sitting on a pile of
future cash.
And so your portfolio isnaturally conservative in that
manner.
So if you were 25 years old andthen planning on investing from
(29:45):
then until you were 45, thosefirst few years are relatively
trivial amounts compared to the15 more years of future cash
that is going to be invested.
And therefore, you want thatall to be the end of the most
aggressive investments possible,and that's those index funds.
That calculus changes,obviously, the further along you
(30:08):
go, and the less money youintend to put in prospectively.
So you could do as you suggest.
These days, however, the biggerissue most people have is not
converting soon enough.
Because we've had such a goodrun for such a long time.
I think a lot of amateurinvestors in particular can't
(30:28):
comprehend the idea that nextyear could be starting like the
year 2000, and the next decadecould be horrible.
Voices (30:36):
You can't handle the truth.
Mostly Uncle Frank (30:39):
I think a lot of people just can't
comprehend that, and that's whythey maintain their all-stock
portfolio, or they've justcommitted to continuing to work
regardless.
Voices (30:49):
You can't handle the gambling problem.
Mostly Uncle Frank (30:52):
Or just not spending much money, which is
always a viable solution.
Voices (30:57):
I can't help it.
I'm a greedy slob.
It's my hobby.
Save me!
Mostly Uncle Frank (31:02):
So I think you are correct that it's better
to be safe than sorry,particularly if you have a very
kind of specific date that youreally want to say, I am
retired, and not have topotentially work longer due to
market conditions.
Voices (31:17):
You can't handle the crystal ball.
Mostly Uncle Frank (31:20):
So hopefully that helps.
I'm glad you're enjoying thepodcast, including the sound
clips.
Voices (31:27):
You can't handle the dogs and cats living together.
Mostly Uncle Frank (31:31):
And thank you for your email.
And the extremely fun thing weget to do now is our weekly
(32:05):
portfolio reviews of the eightsample portfolios you can find
at www.riskperry.com on theportfolios page.
And just looking at how themarkets are finishing out the
year.
The SP 500, represented by VOO,is up 17.44% for the year so
far.
The NASDAQ 100, represented byQQQ, is up 20.48% for the year.
(32:29):
Small cap value represented bythe fund VIOV is now up 9.25%
for the year.
It's gaining.
Voices (32:44):
I love gold.
Mostly Uncle Fra (32:47):
Representative fund GLDM is up 63.69% for the
year.
Voices (32:56):
And that's the way uh-huh uh-huh.
I like it.
Casey and the Shunshine Band.
Mostly Uncle Frank (33:02):
Long-term treasury bonds represented by
VGLT are up 4.87% for the year.
REITs represented by the fundREET are up 7.03%.
Commodities represented by thefund PDBC are up 4.93%.
And preferred sharesrepresented by PFFV are up 2.12%
for the year so far.
(33:23):
And finally, managed futuresrepresented by the fund DBMF are
managing to be up doubledigits.
They are up 12.85% for the yearso far.
Moving to these portfolios,these sample portfolios.
First one's a referenceportfolio.
It's called the All Seasons.
It is only 30% in stocks, ithas 55% in intermediate and
(33:45):
long-term treasury bonds, andthe remaining 15% in golden
commodities.
It is down 0.99% for the monthof December so far.
It's up 13.17% year to date andup 22.85% since inception in
July 2020.
Next one's a golden butterfly,the first of our bread and
butter kind of portfolios.
(34:06):
This one is 40% in stocksdivided into a total stock
market fund and a small capvalue fund.
40% in treasury bonds dividedinto long and short, and the
remaining 20% in gold, GLDM.
It's up 0.63% for the month ofDecember so far.
It's up 19.46 year to date andup 59.98% since inception in
(34:28):
July 2020.
Next one's a golden ratio.
What's the answer, Mr.
Voices (34:36):
Sacred Geometry, Sacred Geometry, Sacred Geometry?
The Golden Ratio.
The Golden Ratio.
Mostly Uncle Frank (34:47):
This one is 42% in stocks divided into a
large cap growth fund and asmall cap value fund.
26% in long-term treasurybonds, 16% in gold, 10% in
managed futures, and theremaining 6% in cash and a money
market fund.
It's up 0.25% for the month ofDecember.
It's up 18.95% year to date andup 54.58% since inception in
(35:13):
July 2020.
Next one's the Risk ParityUltimate.
It's kind of our kitchen sinkportfolio.
We're not going to go throughall 12 of these funds.
It is down to 0.35% for themonth of December.
It's up 17.11% year to date,and up 39.76% since inception in
July 2020.
Now moving to theseexperimental portfolios, these
(35:37):
all involve leveraged funds.
Voices (35:39):
You have a gambling problem.
Mostly Uncle Frank (35:42):
There's a lot of volatility here.
Voices (35:44):
Well, you have a gambling problem.
Mostly Uncle Frank (35:47):
First one's called the accelerated permanent
portfolio.
This one is 27.5% in a leveredbond fund, TMF, 25% in UPRO, a
levered stock fund, 25% in PFFV,a preferred shares fund, and
22.5% in gold, GLDM.
It's down 1.82% for the monthof December.
(36:08):
It's up 21.92% year to date andup 23.17% since inception in
July 2020.
Next one's the Aggressive 5050.
This is the most levered andleast diversified of these
portfolios, and by far the worstperformer.
It is one-third in a leveredstock fund UPRO, one-third and a
levered bond fund TMF, and theremaining third divided into a
(36:31):
preferred shares fund and anintermediate treasury bond fund.
It's down to 3.03% for themonth of December.
It's up 11.56% year to date anddown 1.75% since inception in
July 2020.
We may be doing a rebalancingon this.
We have to check how it playsout on Monday to see whether it
(36:52):
meets the criteria becauseMonday is the 15th.
Next one's a levered goldenratio.
This one is 35% in NTSX, whichis a composite levered fund that
invests in the S P 500 andTreasury bonds.
It's got 15% in AVDV, which isan international small cap value
fund, 20% in GLDM, that's gold,10% in KMLM, that's a managed
(37:18):
futures fund, 10% in TMF, that'sa levered bond fund.
The remaining 10% divided intoa levered Dow fund and a levered
utilities fund.
It is down 0.97% for the monthof December so far.
It's up 24.89% here to date,and up 19.37% since inception in
July 2021.
(37:39):
And the last one is our newestone, the Opter Portfolio.
One portfolio to rule them all.
And it is ruling this year,actually.
This place rolls.
It has 16% in UPRO, a leveredSP 500 fund, 24% in AVGV, which
is a worldwide value tiltedfund, 24% in GOVZ, which is a
(38:02):
Treasury Strips fund, and theremaining 36% divided into gold
and a managed futures fund.
It's down 0.01% for the monthof December.
It's up 25.04% year to date andup 28.69% since inception in
July 2024.
And that concludes our weeklyportfolio reviews as we slide
(38:26):
into the end of the year.
December is turning out to befairly uneventful here.
Voices (38:32):
Merry Christmas.
Ho, ho, ho.
Mostly Uncle Frank (38:37):
But now I see our signal is beginning to
fade.
If you have comments orquestions for me, please send
them to Frank atRiskPartyRadio.com.
That email is frank atriskparty.com.
Or you can go to the websitewww.riskparty.com.
Put your message into thecontact form and I'll get it all
that way.
If you haven't had a chance todo it, please go to your
favorite podcast provider andlike, subscribe, give me some
(39:00):
stars, a follow, a review.
That would be great.
Okay.
Thank you once again for tuningin.
This is Frank Vasquez with RiskParty Radio.
Signing off.
Voices (39:15):
You wanna go where people know people know how to
see.
You wanna go where everybodyknows your name.
Mostly Queen Mary (39:33):
The Risk Parody Radio Show is hosted by
Frank Vasquez.
The content provided is forentertainment and informational
purposes only and does notconstitute financial,
investment, tax, or legaladvice.
Please consult with your ownadvisors before taking any
actions based on any informationyou have heard here, making
sure to take into account yourown personal circumstances.
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