Episode 363: Making Adjustments To An RPR Portfolio, Musings About Factor Investing And HECOMs, And A Semi-Rant About Ill-Advised IUL

In this episode we answer emails from Anderson, Camille, and Chris.  We discuss and HSA vs. a Roth IRA for a lower-taxed earner, the tax, brokerage account, and portfolio considerations for a globe-trotting Canadian, and the gestalt of this podcast.Links:Father McKenna Center Donation Page:  Donate - Father McKenna CenterPortfolio Charts Portfolio Matrix:  Portfolio Matrix – Portfolio ChartsAmusing Unedited AI-Bot Summary:Imagine navigating the world of international investment with the finesse of a seasoned traveler—all while balancing the priorities of a large family. Join me on Risk Parity Radio, where we explore Anderson's financial journey. With six kids and a modest income, Anderson seeks guidance on whether to prioritize his HSA or Roth IRA. We dissect the advantages and pitfalls of each option, examining long-term growth and inheritance implications, and offering a balanced approach to alleviate his concerns. Spoiler: a Roth IRA might just be his golden ticket.As you contemplate international retirement, consider the intricate dance of managing a portfolio across borders. We discuss the indispensable role of a savvy accountant to navigate tax complexities and the potential necessity of relocating assets to sidestep onerous US regulations. Discover how Interactive Brokers can be your go-to platform for seamless international transactions and learn from real-world investment scenarios, like the unpredictable journey with MGK and real estate ventures. Our strategic planning insights will steer you clear of unreliable assets, paving a path to financial independence.Trading stock charts for crystal balls, we venture into forecasting with a twist—relying on historical data instead of mere speculation. By leveraging portfolio matrices, we guide you through the labyrinth of investment possibilities beyond traditional stocks and bonds. Balance simplicity with complexity as you craft a robust portfolio that withstands market volatility. And as always, we cap off with a dose of humor—a nod to Monty Python’s "silly place"—reminding you that while we’re serious about finance, we’re equally serious about having a good laugh.Support the show

In this episode we answer emails from Frank and Dan.  We discuss investment considerations in the 32% marginal bracket, reallocating a cash holding to bonds and alternatives and common withdrawal mechanisms for taking monthly distributions.Link:Father McKenna Center Donation Page:  Donate - Father McKenna CenterAmusing Unedited AI-Bot Summary:Ever pondered how to perfectly balance your portfolio in a high tax bracket? We promise you'll gain actionable insights from Frank, a generous donor and semi-retired investor navigating his complex asset allocation strategy. At 60 years old, Frank seeks our advice on his bond investments, with options like EDV, VGLT, and VGIT on the table. His financial journey becomes a fascinating case study as we unravel the best strategies for optimizing his diverse portfolio of stocks, gold, municipal bonds, and cash. Plus, we emphasize the importance of giving back, spotlighting our cherished cause, the Father McKenna Center.The episode takes a deeper dive into tax strategies tailored for substantial assets, providing listeners with the tools to maximize their retirement portfolios. Learn how retirement accounts like IRAs and solo 401(k)s can be leveraged to defer taxes, especially for those enjoying a higher tax bracket. We discuss the benefits of municipal bonds for tax efficiency and highlight the necessity of professional financial advice. Our focus remains on maintaining a balanced mix of investments to ensure growth and stability as you transition into retirement.Finally, we explore effective strategies for managing portfolio drawdowns and monthly distributions. We introduce Harold Avinsky's bucket strategy and its psychological benefits, drawing inspiration from financial expert Paul Merriman. As we wrap up, we encourage you to reflect on aligning with your personal values and the universe's natural flow, all while enjoying light-hearted exchanges that underscore these financial principles. Join us for an enlightening conversation designed to empower your financial planning journey.Support the show

In this episode we answer emails from Gordon, Roger and John.   We discuss the ChooseFI podcast and podcast appearances, modern trends in fund construction and considerations with leveraged funds while transitioning to a drawdown portfolio, along with some basic guidelines.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:Roger's Bloomberg Article:  Goldman’s Kostin Urges Putting Brake on Stock-Index Reshufflings - BloombergReturn Stacked Webinar:   Diversification 2.0: Mastering the Art of Portable Alpha (youtube.com)Amusing Unedited AI-Bot Summary:Ever wondered how to construct a portfolio that balances risk and return while maximizing your investment potential? On this episode of Risk Parity Radio, we promise to demystify the art of alternative asset allocation for all you do-it-yourself investors out there. Join me, Frank Vasquez, as we transform a complex topic into an engaging conversation reminiscent of a meet-up at your favorite dive bar. We'll share our latest portfolio updates, address intriguing listener questions, and explore the emerging industry of podcast guesting, with a special nod to Gordon for his feedback on my recent appearance on the ChooseFI podcast.How do index funds really work, and could their construction hold the key to better diversification? Listen in as we tackle these questions, dissecting the process of index fund innovation and highlighting the shift from traditional cap-weighted indexes to the realm of sectors, factors, and thematic indexes. We explore the exciting potential of algorithm-driven fund construction and replication strategies, inspired by examples like the DBMF Managed Futures Fund. This episode uncovers the abundant opportunities that ETF experimentation brings to savvy investors looking to broaden their horizons with advanced strategies.Looking to craft a retirement drawdown portfolio that stands the test of time? We guide you through the nuances of constructing a portfolio that supports sustainable spending rates while leveraging funds for enhanced returns. Using John's real-life portfolio as a case study, we analyze components like NTSX, AVUV, GLDM, and DBMF, focusing on risk parity and return stacking principles. We also review recent market performance and introduce you to our newest portfolio, Optra. Before signing off, connect with us through our provided contact info, and remember, our content is here to inform and entertain, not serve as professional financial advice.Support the show

In this episode we answer emails from David, Jennifer and Byron.  We discuss Risk Parity books and finance books and sources in general, considerations in taking control of a complicated portfolio from a (former) AUM advisor, and portfolio considerations for the younger investor considering tech, leverage and other various and sundry things.Links:Book #1:  Risk Parity: How to Invest for All Market Environments by Alex Shahidi | GoodreadsBook #2:  Risk Parity Fundamentals by Edward E Qian | GoodreadsBook #3:  Introduction to Risk Parity and Budgeting by Thierry Roncalli | GoodreadsRisk Parity Radio RSS Feed Page:  Risk Parity Radio RSS Feed (buzzsprout.com)Ben Felix Video On Leverage:  Investing With Leverage (Borrowing to Invest, Leveraged ETFs) (youtube.com)Amusing Unedited AI-Bot Summary:Prepare to unlock the secrets of risk parity investing and transform your retirement portfolio. Ever wondered which books can truly elevate your understanding of risk parity? We offer a curated list of essential reads, including Alex Shahidi's "Risk Parity: How to Invest for All Market Environments," to guide you in this complex yet rewarding approach. These books cater to the savvy investor ready to harness academic and professional insights, focusing on diversification and modern portfolio theory as powerful tools for financial success.Navigating the maze of investments alone can be daunting, especially post-advisor. Jennifer's story highlights the challenges and opportunities of consolidating a vast portfolio without triggering hefty tax bills. We provide actionable strategies to streamline investments, emphasizing the critical role of cost basis data and aligning your current holdings with future goals. Tax efficiency takes center stage, with insights into evaluating investment overlaps, leveraging different account types, and smartly planning around income changes to maintain a cohesive and tax-savvy portfolio.Are you ready to supercharge your investments for growth? Self-employed young investor Byron's journey reveals the excitement and risks of tech and leveraged ETFs in an aggressive growth strategy. Balancing high-risk potential with a thoughtful approach is key, and we emphasize the importance of a low-cost index-based portfolio strategy. With humor and practicality, we explore how to achieve impressive returns while managing risks, encouraging a balanced investment approach that doesn't gamble your financial future. Clear financial goals and consistent strategies are your allies in navigating the unpredictable markets.Support the show

In this episode we answer emails from Lucas, Hannelore and Joe.  We discuss databases, where to put your gold ETFs and how it is taxed, and a modelling recommendation for testfol.io and modelling OPTRA.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 CenterKen French Database Page:  Kenneth R. French - Data Library (dartmouth.edu)Portfolio Charts Portfolio Matrix: Portfolio Matrix – Portfolio Charts Investopedia Article About Taxation of Gold and Collectibles:  How Collectibles Are Taxed (investopedia.com)  (See also notes to Episode 303).Joe's UPRO Model:  testfol.io/?d=eJytkF9LwzAUxb9KuQ8%2BVakrCBaGDP%2BgIFg2BccY5drcdtE0mWnaKqPf3dtWZhH2tjwl5NxzfufuIFfmDVWMFosSoh2UDq1LBDqCCMAH0mL0Gn5rVBCdB3x8QPGeSJ0pdNJoiDJUJfmQYrnJlGkgCv4eSWbpk32WhFZ9s5s1SkmdJ43UotNeBK0PW2NdZpQ0jLPagcaiy148FBVnkPBe4vkTz0pdU%2BluZC0FI7LW2YqDLXEb1Cnd%2FctyMv0gO3gO9841Xj7Prx6n4cntNDi7nLBuSzYl7fp%2B7doHYTHnFq2%2FRwm%2FvH7Oa6TbeJpyrl6T17U8KtcYJgx6gr3gera4fx0LTieHcGepq1AddW2%2FXodWtW5%2FALcmxls%3DAmusing Unedited AI-bot Summary:Unlock the secrets to smarter investing with us at Risk Parity Radio! What if understanding the complexities of asset allocation could transform your investment strategy? That's exactly what we explore as we tackle Lucas's burning question about robust databases for backtesting historical financial data. With a sharp focus on resources like the Fama French database, Bogleheads, and Portfolio Visualizer, we emphasize the power of broad asset class data over individual tickers. Plus, we highlight how using multiple tools, including the nifty Portfolio Matrix at Portfolio Charts, can lead to consistent, reliable investment results.As we navigate the world of investing, we sprinkle in humor with a ferry trip anecdote that doubles as a clever metaphor for strategic thinking in finance. With insights on choosing between traditional IRAs, Roth IRAs, and brokerage accounts, we spotlight listener Joe's stellar contribution on leveraging funds and performance modeling using the Testfolio tool. Our lively discussion doesn't end there; tune in for our weekly portfolio performance reviews, featuring everything from small-cap value stocks to gold and treasury bonds. We won't leave you guessing about sample portfolios like the All Seasons and Golden Butterfly, as we break down their substantial returns and year-to-date gains. Packed with practical advice and engaging stories, this episode is a must-listen for any investor looking to refine their financial approach.Support the show

In this episode we answer emails from Anderson, Sean and Colin.  We discuss the OPTRA sample portfolio, using rising glidepaths or bond tents in portfolio management and Colin's "Smooth Operator" Portfolio.Links:2016 Kitces Article re Bond Tents and Glidepaths:  The Portfolio Size Effect And Optimal Equity Glidepaths (kitces.com)Portfolio Charts Portfolio Matrix Comparison Tool:  Portfolio Matrix – Portfolio ChartsColin's Portfolio:  Backtest Portfolio Asset Allocation (portfoliovisualizer.com)Portfolio Charts Article:  When Past Performance Is Absolutely Indicative of Future Results – Portfolio ChartsAmusing Unedited AI-bot Summary:Discover the secrets to crafting a retirement portfolio that balances risk and reward in episode 371 of Risk Parity Radio. We introduce the Optra portfolio, a unique blend of risk parity with a hint of leverage, and explore why a descriptive name was chosen over the suggested Uncle Frank portfolio. This episode gives you a backstage pass to our discussion on managing equity exposure and sequence of return risks with innovative strategies like bond tents and equity glide paths paired with risk parity styles, as proposed by our listener Sean.Unlock the power of portfolio construction tools and techniques with us. We demystify the use of Portfolio Visualizer's Monte Carlo Simulator and delve into expert insights from Bill Bengen and Wade Pfau on optimal equity allocations. You'll grasp the significance of historical data as we dissect how different portfolio compositions can affect decumulation strategies, touching on metrics like CAGR and the ulcer index. Our conversation extends to Colin's Smooth Operator Portfolio, which cleverly uses ETFs to enhance diversification and reduce volatility, showing the value of innovative approaches to portfolio performance.As we wrap up, expect a playful twist with Frank Vasquez's rendition of "Smooth Operator" and a reminder that our advice is designed to inform and entertain, not replace personalized financial consultation. We stress the importance of consulting personal advisors for tailored decisions. Join us for an engaging and enlightening session that combines financial wisdom with a touch of humor, ensuring you're well-prepared for your financial journey.Support the show

In this episode we answer emails from Jimmy, Dave and Richard.  We discuss the joys of Joe's Garage, the Bogleheads Simba spreadsheet and Lazy Portfolios and a revisit of the ETF SVOL.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:Simba's Spreadsheet (Article And Link):  Simba's backtesting spreadsheet - BogleheadsSVOL Webpage:  SVOL Simplify Volatility Premium ETF | SimplifyRichard's SVOL vs. Equity ETFs Analysis:  testfol.io/analysis?d=eJxdikEKwjAQRa8S%2FjoL68JFruEBwtCkMu04kUmaIuLdDbgR3%2B7x3guN5y1bRYC79iKuPp5ur%2FfuqO8dHrWRtZio5bEMz5p%2B7Fs7CcJ0GnhQWiPrItS4KMJCUrOHFRHWWzxYUzkQLuOci1n8D9P5%2FQF55jJ4Richard's SVOL Portfolio Analysis:  https://tinyurl.com/bddjy2k4Eric Balchunas Interview:  Eric Balchunas on The Hidden Gems of the ETF World You Need to Know! (youtube.com)Amusing Unedited AI-bot Summary:Imagine a finance podcast that's as entertaining as a night out at your favorite dive bar. I'm Frank Vasquez, and on this playful yet insightful episode of Risk Parity Radio, we hit a milestone of 750,000 downloads, a delightful gift for my 60th birthday. Join me as I reminisce about the impact of Frank Zappa's "Joe's Garage" on my youth and answer listener emails, including a deep dive into Simba's Backtesting Spreadsheet. We ponder the Bogleheads' seemingly timeless investment models and their reluctance to embrace change.Turning our focus to innovative ETF strategies, we dissect the SVOL ETF, an inverse VIX fund with the potential to spice up your portfolio. Despite its lack of historical data and the risk of significant distributions in taxable accounts, this ETF might just find its rightful place in your retirement portfolio. We examine the broader trend of creative ETFs, thanks to recent SEC rule changes, and weigh the psychological appeal against the need for financial prudence. Curiosity piqued, we also explore SVOL's correlation with growth or value stocks.Rounding out the episode, we analyze weekly portfolio performances with strategies like the All Seasons, Golden Butterfly, and Risk Parity Ultimate. I update you on specific portfolio allocations and performances, highlighting the beauty of consistent returns, even if they might seem uneventful. Engage with us through questions or comments, subscribe, and leave a review. As we wrap up, enjoy a humorous tale that weaves together music, relationships, and personal growth, leaving you informed and entertained. Remember, this episode offers insights for entertainment and informational purposes, so consult your personal advisor for tailored financial advice.Support the show

In this episode we answer emails from Frank, John, Aaron and Pete.  We discuss bond allocations in treasuries of various durations, when retirement account space is limited and the tax bracket is high, the reasons for the strange presentation of this podcast and how to use a new AI-Bot to circumvent them (with an embedded example of an AI-Bot podcast created from Episode 333 about target date funds), the joys of having younger listeners and Derek Tharp's Monte Carlo based variable withdrawal strategies.Links:The New Google Notebook AI-Bot That Creates Podcasts:  NotebookLM | Note Taking & Research Assistant Powered by AIDerek Tharp Podcast:  Busting the 4% Rule Myth - Retirement Revealed | Podcast on SpotifyDerek Tharp Article:  A Monte Carlo 50% Retirement Success Probability Can Work (kitces.com)Amusingly Inaccurate Unedited AI-Bot Summary:Unlock the secrets of smarter investing and redefine how you approach your portfolio with our latest episode of Risk Parity Radio. Ever wondered if your 401k rollover could be optimized for greater returns? We dive into a listener's question about achieving a 30% bond allocation, weighing the pros and cons of treasury versus municipal bonds. You'll discover insights into balancing tax implications and investment goals, while also considering the volatility of different bond types. Our conversation guides you toward a holistic view of your investment strategy, ensuring your portfolio aligns with your personal financial objectives.Challenging the status quo, we welcome guest Frank Vasco to dissect the perceived simplicity of target date funds. Could these popular investment vehicles be holding your growth potential back? Frank shares compelling findings from a 2022 study, revealing how TDFs might underperform significantly over decades. Even industry stalwarts like Vanguard aren't immune to these criticisms. With this in mind, we encourage you to critically evaluate your 401k plan choices, embracing a mindset of informed skepticism and strategic thinking.Finally, we examine the fascinating world of index funds and question traditional retirement withdrawal strategies. Drawing an analogy to betting on the entire Kentucky Derby, we explore how index funds offer diversification and often outperform active management. As you rethink retirement, we discuss utilizing Monte Carlo simulations to create flexible withdrawal strategies that adapt to changing circumstances. This episode is all about empowering you with financial literacy and the tools to challenge conventional wisdom, putting you in control of your future wealth.Support the show

In this episode we answer emails from Andrew, Jeff, Ron and Javier.  We discuss analysis tools for leveraged funds like UPRO and TNA, Tactical Allocation Strategies, how and where this podcast is distributed, and brokerage account options for foreign (to the US) nationals.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:Andrew's Portfolio Visualizer Link:  Backtest Portfolio Asset Allocation (portfoliovisualizer.com)Testfol Portfolio Analyzer (see the Help link in the drop-down menu for instructions):  testfol.ioAllocate Smartly Website:  What We Do - Allocate SmartlyInteractive Brokers Introduction For Accounts:  Introducción a IBKR | Trading Course | Traders' Academy | IBKR Campus (interactivebrokers.com)Amusing Unedited AI-Bot Summary:Ready to rethink your investment strategy? Uncover the secrets of a diversified portfolio with leveraged funds like TNA and UPRO in our latest episode of Risk Parity Radio. We'll guide you through the nitty-gritty of managing such portfolios, emphasizing the significance of fee considerations and the mechanics of monthly rebalancing. Explore alternative strategies, including rebalancing bands, and discover the power of tools like Portfolio Visualizer and TestFol to optimize your investment approach. We blend humor and savvy insights to create an inviting atmosphere, reminiscent of a friendly chat at your favorite local dive bar.Our exploration doesn't stop there. We tackle Jeff's curiosity about tactical allocation strategies for retirement, diving into the complexities and risks, including overfitting and tax inefficiencies. While some approaches might tempt with short-term outperformance, we advocate for simpler, more reliable diversification techniques. Tune in for our market performance review, where we assess the minimal shifts in major indices and the dramatic moves in commodities and long-term treasury bonds. From the All Seasons to the Risk Parity Ultimate portfolios, we ensure you have the insights needed to navigate your financial journey through market volatility and distribution strategies.Support the show

In this episode we answer emails from Mark, Jon and Richard.  We discuss the perils of income investing, covered call funds and SPYI, one potential future of DYI investing using levered and unlevered risk-parity style portfolios, and the use and misuse of historical data in various analyses with a reference to a blog post from Cliff Asness.Links:Video re SPYI:  SPYI Squeezes 12% Yield from the S&P 500 (SPYI ETF) (youtube.com)Portfolio Visualizer Litmus Test of SPYI:  Backtest Portfolio Asset Allocation (portfoliovisualizer.com)Cliff Asness Article:  Efficient Frontier “Theory” for the Long Run (aqr.com)Father McKenna Center Donation Page:  Donate - Father McKenna CenterNote that the usually "Amusing Unedited AI-bot Summary" was so ridiculously inaccurate I had to omit it.Support the show