In this episode we answer questions from Chris, George and "I Have No Name." We discuss a transition situation with bonus portfolio question, the plusses and minuses of Pralana and similar calculators, and an amusing take on the Golden Butterfly portfolio reimagined.

Links:

Father McKenna Center Donation Page: Donate - Father McKenna Center

Rational Reminder Podcast: David C. Brown: The Underperformance of Target Date Funds | Rational Reminder 374

Breathless Unedited AI-Bot Summary:

What happens when you need to transition from a high-equity portfolio to a risk parity approach but face limited investment options in your 401(k)? How reliable are those fancy retirement calculators that promise to predict your financial future? And do those neatly organized "bucket strategies" actually improve portfolio performance, or are they just psychological comfort tools?

Frank Vasquez tackles these pressing questions from listeners who are navigating the complexities of retirement planning and portfolio construction. Beginning with practical advice for a listener four years from financial independence, Frank explores how to handle the transition to a risk parity portfolio despite restrictive 401(k) investment options. Rather than fixating on finding the perfect funds immediately, he suggests focusing on getting the macro-allocations roughly right until more flexibility becomes available through an IRA rollover.

The conversation shifts to a critical examination of retirement calculators like Pralana that rely on parameterized returns rather than historical data. Frank cuts through the marketing hype to reveal why these tools often function more like crystal balls than reliable forecasting instruments. "You're supposed to use base rates," he explains, "not make up things from a crystal ball that says things are going to be worse than they were before, better than they were before." This segment offers a masterclass in distinguishing between good forecasting methodologies and mathematically sophisticated but fundamentally flawed approaches.

Perhaps most illuminating is Frank's analysis of bucket strategies in retirement planning. While organizing investments into conceptual buckets labeled for different time horizons may feel reassuring, these psychological tools don't fundamentally alter portfolio performance. "Looking at personal finance and separating what is finance from what is personal" becomes the key insight, helping listeners distinguish between strategies that actually improve financial outcomes versus those that simply make complicated concepts easier to visualize.

Ready to see beyond the marketing gimmicks and focus on evidence-based approaches to retirement planning? Listen now, then like, subscribe, and leave a review to support the show while Frank takes a brief hiatus until mid-October.

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In this episode we answer one big long email from Mr. Bill (actually Dr. Bill). We discuss a planning process grounded in good data science, forecasting techniques and decision theory, and how we incorporate the concepts described in Bill Bengen's new book, using Dr. Bill as our guinea pig.

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

Risk Savvy Lecture: Risk Savvy: How to Make Good Decisions

Bill Bengen's New Book: Bill Bengen's New Book | A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More.

Portfolio Charts Safe Withdrawal Rate Calculator: Withdrawal Rates – Portfolio Charts

Breathless Unedited AI-Bot Summary:

Retirement planning doesn't have to be rocket science. In this illuminating episode, we dive deep into the transition from accumulation to distribution phases of financial independence, offering a clear-eyed approach based on data science and practical wisdom.

At the heart of effective retirement planning lies proper forecasting methodology. Most financial advisors miss this crucial foundation – they load forecasts with conservative assumptions rather than using base rates, creating unnecessarily fearful projections. We explore why understanding the difference between risk (what's calculable) and uncertainty (what isn't) transforms how you should approach planning for the decades ahead.

The four levers that control your retirement success form our central framework: supplemental income, asset selection, flexible withdrawals, and fear/hoarding. Each lever offers unique opportunities to optimize your financial independence. Risk parity portfolios consistently demonstrate 1-2% higher safe withdrawal rates than traditional portfolios, while simply accounting for retirees' typical lower inflation experience (CPI minus 1-2%) can safely increase withdrawal rates by 0.5-1%.

We tackle the psychological aspects of retirement planning too. Most retirees underspend significantly, pulling the "fear and hoarding" lever while ignoring the other three, ultimately sacrificing quality of life and relationships. Instead, we advocate for thoughtful legacy planning while alive – supporting family members, teaching financial literacy, and creating meaningful impact with your resources.

Whether you're approaching retirement or already there, this episode offers practical wisdom to simplify your planning process. By focusing on tracking expenses meticulously in the early years and using simple rules of thumb for long-term forecasting, you'll create a retirement plan that maximizes both financial security and life satisfaction.

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In this episode we answer emails from Adam, Private Cowboy, and Jose. We discuss managed futures (again with references!), Bill Bengen's latest book and how it integrates into our approach, and the pros and cons of a Vanguard Personal Advisor-created portfolio and the hypocritical quandaries it creates with the gods of Simplicity.

Links:

Demystifying Managed Futures: Demystifying Managed Futures

Bloomberg Presentation On Investments In Inflationary Environments: MH201-SteveHou-Bloomberg.pdf

Dunn Capital Analysis: High-Vol-Trend-Following-Trend-Index-Edition-0825-DIGITAL.pdf

Kardinal Financial Video: What is Alternative Investing?

Interview of Bill Bengen: Episode 195: The 4% Rule and Beyond: Retirement Strategies with Bill Bengen

Weird Portfolio: Weird Portfolio – Portfolio Charts

Afford Anything Episode: #618: How to Retire at 50 While Supporting Aging Parents, with Frank Vasquez - Afford Anything

Corey Hoffstein Interview: Show Us Your Portfolio: Corey Hoffstein

Breathless AI-Bot Summary:

The perfect asset allocation isn't a formula—it's a framework built on uncorrelated assets that dance to different drummers during market storms. This episode dives deep into managed futures, one of the most powerful yet misunderstood portfolio diversifiers available to individual investors.

Three listener questions explore how managed futures fit within retirement portfolios, particularly for those approaching their post-career years. Frank breaks down why managed futures have essentially zero correlation to stocks, bonds, and even gold, making them uniquely valuable during both inflationary crises (like 2022) and deflationary periods (like 2008). He references new research from Dunn Capital comparing various alternative strategies and explains how ETFs like DBMF have democratized access to institutional-quality diversification.

Beyond managed futures, the episode synthesizes Bill Bengen's latest safe withdrawal rate research with Ray Dalio's "Holy Grail" principle of uncorrelated assets. While Bengen's new book doesn't explicitly analyze alternatives, Frank connects these complementary approaches to formulate practical guidelines: maintain 40-70% equity exposure divided between growth and value, use 15-30% treasury bonds for recession protection, allocate 10-25% to alternatives, and limit cash to under 10%.

The discussion takes a critical look at cookie-cutter financial advice, particularly questioning whether paying 0.3% annually to a Vanguard advisor provides value when their recommendations often involve overlapping funds and questionable international bond allocations. Frank challenges the "worship of simplicity" that permeates financial discussions while exposing the irony that these same advisors often recommend complex multi-fund portfolios.

What emerges is a call for "system two" thinking—the willingness to incorporate new information rather than clinging to outdated formulas out of consistency.

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in this episode we answer emails from Chris, Trudie, and Earl. Highlights: The Father McKenna Center "Top of the T-shirt" campaign raised over $66,624 thanks to generous listener contributions; financial advisors are conflicted and also relatively uninformed marketing machines who are not very curious about finances and are too reliant on calculators; AI tools like Copilot can help implement risk parity strategies when fed quality information.

And THEN we our go through our weekly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.

If you have comments or questions, please email frank@riskparityradio.com or visit www.riskparityradio.com.

Breathless AI-Bot Summary:

What happens when financial wisdom meets unconventional thinking? This episode of Risk Parity Radio opens with Emerson's timeless quote about foolish consistency being "the hobgoblin of little minds" – perfectly setting the stage for a fresh look at portfolio management that marches to a different beat.

The Risk Parity Radio community shines as Frank announces the remarkable success of the Father McKenna Center fundraising campaign, which raised over $66,624. This achievement showcases the extraordinary engagement of listeners who value both financial knowledge and giving back. As Frank puts it, "I never really cared about having the largest audience. I just wanted to have the most engaged audience" – and with 2,500 regular listeners who actively participate in such initiatives, that goal has clearly been achieved.

Diving into listener correspondence, Frank explores how one community member has leveraged AI tools like Copilot to implement risk parity strategies. This sparks a broader examination of technology's role in personal finance, with Frank cautioning that AI is only as good as the information it's fed. In an age where many advisors have become what Frank calls "calculator jockeys" – professionals who rely on planning software without understanding its limitations – this distinction between tools and expertise becomes crucial.

The episode delivers a masterclass in practical financial knowledge, including an elegant explanation of the 240/200 rule for calculating monthly distributions. This mathematical shortcut exemplifies the podcast's approach: making complex concepts accessible without talking down to the audience. Frank demonstrates how dividing a portfolio value by 240 yields a monthly distribution equivalent to a 5% annual withdrawal rate – the kind of straightforward, useful information that listeners can immediately apply.

The weekly portfolio review reveals impressive performance across all eight sample portfolios, with gold continuing its remarkable run at 36.91% year-to-date. From conservative allocations to more experimental leveraged strategies, these real-world examples provide valuable insights for listeners navigating their own investment journeys.

Ready to break free from financial convention and build a portfolio that truly reflects your goals? Subscribe now and join a community of independent thinkers who know that sometimes the most rewarding path is the one less traveled.

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In this episode we answer emails from Andy, Phil and Brady. We entertain Andy's musings on small cap value and the economy with crystal balls and complex adaptive systems theory, discuss the foibles of radio personalities attempting to try to be able to comment on what we do -- and their hypocrisies and conflicts of interest --, and touch base with the parent of a special needs child.

Links:

Phil's link to Radio Personality Podcast: Query Day - Talking Real Money - Investing Talk - Apple Podcasts

Mary Tyler Moore Episode: The Mary Tyler Moore Show S5E23 Ted Baxter's Famous Broadcasters' School (February 22, 1975)

Comparison of 60/40 and Golden Ratio Portfolios: https://testfol.io/?s=eUbVJ2frelJ

Apella Wealth Form ADV: APELLA WEALTH - Investment Adviser Firm

Morningstar Article Re GLDM and DBMF: How ETF Diversifiers Performed During Market Turmoil | Morningstar

Breathless Unedited AI-Bot Summary:

Ever wonder why financial advisors insist DIY investing is "too complicated" while charging fees that can consume a third of your retirement income? In this eye-opening episode, Frank Vasquez exposes the hypocrisy behind mainstream financial advice and offers practical alternatives for truly resilient portfolios.

When a listener asks whether structural market changes warrant portfolio adjustments, Frank dives into the nature of financial markets as complex adaptive systems. Like a sandpile where it's impossible to predict which grain will cause an avalanche, markets respond to events in unpredictable ways that even the most sophisticated models can't forecast. This reality doesn't mean we should abandon strategy—rather, it underscores why diversification across truly different asset classes matters more than ever.

Frank takes aim at financial media personalities who promote oversimplified solutions while dismissing alternatives they don't fully understand. Through careful analysis of SEC disclosures, he reveals how some advisors criticize strategies on air that their own firms use with paying clients. The fixation on "simplicity" often serves as marketing to convince DIY investors they need professional help, while masking fee structures that can extract 1-1.5% of assets annually—an enormous drain on retirement resources.

The episode highlights recent Morningstar research confirming what Risk Parity Radio has long advocated: portfolios incorporating alternative assets like gold and managed futures demonstrably outperform traditional 60/40 allocations while reducing volatility. As Frank notes, echoing Einstein, we should make investing "as simple as possible, but no simpler." This wisdom proves especially crucial during withdrawal phases when sequence risk poses the greatest threat to retirement security.

Whether you're planning for your own retirement or, like one listener, strategizing for a dependent with special needs who may require lifelong support, this episode offers both practical insights and a framework for evaluating financial advice with clear eyes. In a world where conflicts of interest often distort financial guidance, Frank's independent perspective provides a refreshing and valuable counterpoint.

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In this episode we answer emails from a Mysterious Visitor, Pal and Byron. We review our approach to international stock funds and how to improve their diversification, try to help out a Canadian nomad and discuss some new Vanguard funds.

And THEN we our go through our weekly and monthly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.

Additional Links:

US vs International Stocks In Strong And Weak Dollar Markets (link from Episode 393: us-dollar-strength-has-correlated-with-performance-03312023.pdf

Testfolio Analysis of VXUS vs. AVDV and IDMO: testfol.io/analysis?s=eDLfJ4jcFLK

Constructing a Golden Ratio Portfolio with International Components: We Built a 5% SWR Retirement Portfolio Using Fidelity in 48 Minutes (Golden Ratio Portfolio)

Byron's Link: Vanguard Launches a New Actively Managed Bond ETF | Vanguard

New Wellington ETFs: Vanguard to Launch First Stock-Picking ETFs With Wellington — at Its Highest Fees Yet

Breathless Unedited AI-Bot Summary:

Conventional wisdom about international diversification gets turned on its head as we explore what truly drives the performance difference between domestic and international stocks. Far from being about different economies or company headquarters, approximately 40-50% of this performance gap stems directly from currency fluctuations between the US dollar and foreign currencies. When the dollar weakens, international stocks surge; when it strengthens, US stocks lead.

For investors focused on building resilient portfolios with sustainable withdrawal rates, this revelation reshapes diversification priorities. Value versus growth diversification emerges as significantly more important than geographic diversification, followed by size factor (small versus large caps). This hierarchy challenges the simplistic notion that pairing a total US market fund with a total international fund provides meaningful protection.

Large US companies already operate globally, selling into worldwide markets regardless of headquarters location. This makes traditional total international funds less diversified from US large caps than many investors realize. Instead of blanket international exposure, we explore more effective approaches using specific international value, small-cap, and emerging market funds that provide genuine diversification benefits.

The episode also tackles practical implementation questions, including how expatriates and nomadic investors might construct globally resilient portfolios using Irish-domiciled ETFs for potential tax advantages. We briefly examine Vanguard's new ETF offerings and explain why their corporate bond funds hold limited appeal for investors seeking recession insurance rather than income.

Our monthly portfolio review highlights gold's stellar performance (up 31.56% year-to-date) amid dollar weakness, demonstrating the principles discussed throughout the episode. These eight real-world portfolios showcase different approaches to implementing risk parity principles, with performance and distribution data available at riskparityreview.com.

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In this episode we answer emails from Nick, No Name, and Nathan. We discuss transitioning at 70% to FI, the inherent problems with a lot of psychology-based and convenience-based finance media and personal finance that fails to do the finance part first, Mary's amusement with Frank's ego (don't encourage him), and financial coaching.

And we get to hear from Abby at the Father McKenna Center.

Links:

Father McKenna Center Donation Page: Donate - Father McKenna Center

Shannon's Demon Article: Unexpected Returns: Shannon's Demon & the Rebalancing Bonus – Portfolio Charts

Video Interview of Abby: The Church's View on Homelessness Amid Trump’s Removal Plan in D.C. | EWTN News Nightly

If you have comments or questions, please send them to frank@riskparityradio.com or visit www.riskparityradio.com.

Breathless Unedited AI-Bot Summary:

When should you transition from a high-equity portfolio to a risk parity approach? This question, posed by a listener at 70% of their FIRE number, launches us into an exploration of timing one of the most critical shifts in an investor's journey.

The ideal transition point typically comes at 80% of your target number and about five years from your goal. The logic is straightforward: you want to secure your gains while your portfolio sits near all-time highs, shifting from aggressive growth to stability as you approach financial independence. Your decision should weigh how much you'll continue contributing and your personal risk tolerance.

This episode also pulls back the curtain on the troubling state of financial media. Too many "experts" repeat outdated concepts like the "100 minus your age" rule—a relic from the 1990s with no empirical backing. We explore how financial advice has become psychologically driven rather than financially optimized, with advisors choosing strategies that are easy to explain rather than those that deliver optimal results.

As Upton Sinclair observed, "It's difficult to get a person to understand something when their salary depends on them not understanding it." This explains why many advisors promote bucket strategies and time segmentation plans despite their inefficiency—they're selling what clients can understand, not what best serves their financial futures.

The DIY investor's advantage is clear: we can focus on data first and psychology second. Your financial behaviors should align with your goals—if you want to spend more in retirement, you need a portfolio designed for that purpose, not just psychological tricks to feel comfortable underspending.

Want to make better financial decisions? Stop trying to predict the future. Adopt a decade-long perspective instead of obsessing over current conditions. Remember that rebalancing works over time due to Shannon's Demon—the mathematical reality that regularly rebalanced diverse assets outperform in the long run.

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In this episode we answer emails from Dave, Mike, and Andy. We discuss an inherited IRA, 529s, how historical data provides more reliable investment guidance than simulated data based on crystal balls, particularly when considering economic environments and asset correlations, and the Rock & Roll Hall of Fame. Cleveland Rocks!

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 Donations: Donate - Father McKenna Center

Listener Blog Post Describing Risk Parity Concepts And Four Quadrant Model: 15 Uncorrelated Assets | SSiS

Bridgewater Research Paper: Bridgewater Paper 2009.12 AW Info Pack.doc (granicus.com)

Rock & Roll Hall of Fame Exhibit: SNL: Ladies & Gentlemen...50 Years of Music | Rock & Roll Hall of Fame

Breathless Unedited AI-bot Summary:

What happens when you try to predict market outcomes using simulated data rather than historical performance? Frank tackles this profound question by explaining why many investment simulations fail to capture the fundamental reality of how assets behave in different economic environments.

Using a brilliant weather metaphor, Frank demonstrates why you "cannot have a drought and rainstorms at the same time" – just as you cannot simultaneously experience a recession and inflation. This insight explains why historical data, which shows how assets perform in specific economic conditions, provides more reliable guidance than simulations that treat each asset class as an independent variable.

The episode also addresses practical financial concerns, including strategies for managing inherited IRAs subject to the 10-year distribution rule and approaches to college savings that balance tax advantages with flexibility. Frank shares his personal approach of using 529 plans primarily for state tax benefits while maintaining additional education funds in more accessible accounts.

Weekly portfolio reviews reveal nearly all asset classes in positive territory this year, with gold shining brightest at +28.47% YTD. This unusual pattern reflects a weakening dollar, demonstrating how macroeconomic conditions influence asset performance across the board. The episode's exploration of base rates in forecasting also explains why predictions based on historical probabilities typically outperform crystal ball prognostications that assign outsized probabilities to possibilities rather than focusing on known patterns.

For investors seeking to build robust portfolios for uncertain times, this episode offers invaluable perspective on understanding economic environments, recognizing asset correlations, and using historical data to prepare for different market conditions. Listen now to discover why the lessons of market history may be your most reliable investment guide.

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