Risk Parity Radio

In this episode we answer emails from Marco Esquandolas and Multi-Family Investor. We discuss a long-term diversified Roth portfolio for a 13-year old, modelling Delaware Statutory Trusts in a portfolio, transitioning out of an all S&P 500 allocation in a taxable account, PFIX, Sabine Royalty Trust and individual stocks in retirement portfolios, and M1 Finance.
Note/Correction: Sabine is actually NOT structured like an MLP but as a true trust and therefore issues 1099s, not K-1s like most companies in the oil & gas royalty space.
Links:
Shannon's Demon Article: Unexpected Returns: Shannon's Demon & the Rebalancing Bonus – Portfolio Charts
IDMO vs EFG (and other international growth funds) Analysis: testfol.io/analysis?s=4PEQ1YvTbAM
Breathless Unedited AI-Bot Summary:
Dive into the world of strategic portfolio building with this illuminating episode where Frank tackles questions from two distinct investors at opposite ends of the age spectrum. A father shares his 13-year-old son's Shannon's Demon-inspired portfolio that's being built for an ultra-long 50+ year time horizon, featuring a balanced approach to growth and value across both domestic and international markets. Frank offers targeted advice on fund selection while celebrating this young investor's precocious financial journey.
The conversation shifts dramatically when an engineer earning $250,000-300,000 annually shares his detailed retirement strategy with hopes of financial independence before 50. With $3.4 million spread across multiple investment vehicles including real estate, this listener puzzles over how to transition to a risk parity portfolio without triggering a substantial tax bill. Frank methodically dissects several aspects of this complex situation, questioning the wisdom of backdoor Roth conversions during peak earning years and clarifying misconceptions about Delaware Statutory Trusts as bond substitutes.
What makes this episode particularly valuable is Frank's blend of technical advice and practical wisdom. He cuts through complex tax and investment strategies to offer straightforward solutions - identifying tax-loss harvesting opportunities, rethinking account structures, and focusing on expenses rather than arbitrary portfolio targets. The discussion extends to specialized investments like royalty trusts and interest rate hedges, providing listeners with a masterclass in portfolio construction that balances theoretical ideals with real-world constraints.
Whether you're managing investments for the next generation or planning your own early retirement, this episode delivers actionable insights on building resilient, tax-efficient portfolios tailored to your unique circumstances. The principles shared apply across market conditions and investment goals, making this essential listening for any DIY investor seeking to optimize their financial future.

Support the show

In this episode we answer emails from Anonymous, Tim, Mark and Luc. We celebrate the overwhelming generosity of our listeners and discuss using risk parity style portfolios for intermediate savings, heavy metal, tax efficient portfolio management, and some investing and retirement resources.
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.
To donate to the Top of the T-Shirt campaign and double your fun, please visit the Father McKenna Center donation page and note "Risk Parity Radio Match" when making your contribution.
Additional Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
FIRE Takes Podcast Page: FIRE Takes Podcast
Michael Kitces Page and Resources: Kitces.com - Advancing Knowledge in Financial Planning
Andy Panko Resources: FREE Retirement Planning Education
Cody Garrett Page and Resources: Meet Cody - Measure Twice Financial
Sean Mullaney Page and Resources: The FI Tax Guy – The Tax Efficient Path to Financial Independence
Wade Pfau Book: Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success (The Retirement Researcher Guide Series): Pfau, Wade: 9781945640155: Amazon.com: Books
Ashvin Chhabra Book: Amazon.com: The Aspirational Investor: Taming the Markets to Achieve Your Life's Goals eBook : Chhabra, Ashvin B.: Kindle Store
AQR and Antti Ilmanen: AQR Principal Antti Ilmanen Authors New Book on Investing in a Low-Return Environment

Breathless Unedited AI-Bot Summary:
Have you ever wondered what to do with money that's not for emergencies but not quite for retirement either? Today we tackle the often-overlooked middle ground of intermediate-term savings and reveal why risk parity strategies offer a powerful solution for these "in-between" financial goals.
Most financial advice focuses heavily on either emergency funds or retirement accounts, leaving a significant gap in guidance for money you're saving for goals 3-10 years away. Whether you're planning for a home down payment, vehicle purchase, or building a Roth conversion ladder, the traditional advice to simply park this money in savings accounts is leaving significant opportunity on the table. We explore how portfolios like the Golden Butterfly and Golden Ratio can provide meaningful growth while keeping drawdowns manageable, typically recovering within 3-4 years at most.
Beyond just investment selection, we dive into the tax efficiency of managing these portfolios in taxable accounts. Unlike high-yield savings accounts that generate ordinary income taxed at your highest marginal rate, properly managed risk parity portfolios create opportunities for tax-loss harvesting and strategic rebalancing. We explain how directing new contributions to underperforming assets eliminates the need for selling investments to rebalance, substantially reducing your tax burden while maintaining your desired allocation.
For younger investors, managing an intermediate-term risk parity portfolio serves anoth

Support the show

In this episode we answer questions from Nonamed, Ronald, and Jose. We discuss how sensational financial media works and why you should ignore it, being thankful for our listeners and how correlations work and relate to macro-economic environments in the context of the Holy Grail principle. And we discuss our charitable match outreach for the Father McKenna Center.
And then we go through our weekly portfolio reviews of all eight of the sample portfolios you can find at Portfolios | Risk Parity Radio.
Additional links:
Father McKenna Center Donation Page -- Remember to mention "The Financial Quarterback match" in new donations: Donate - Father McKenna Center
Risk Parity Radio RSS Feed Page For Word Searching The Podcast: Risk Parity Radio RSS Feed (buzzsprout.com)
UNC Paper (not Duke!) Re Treasury Bond Correlations In Recessions (see Page 53 for Chart): ssrn_id4768684_code533828.pdf (elsevier-ssrn-document-store-prod.s3.amazonaws.com)
Ray Dalio Explains The Holy Grail Principle: Ray Dalio breaks down his "Holy Grail" (youtube.com)
Bridgewater Paper With Basic Quadrant Model Example (see Page 8): Bridgewater Paper 2009.12 AW Info Pack.doc (granicus.com)

Support the show

In this episode we answer emails from Dave, Jeff and Peter. We discuss a new risk parity ETF, ALLW, a social security claiming question and considerations, and how a listener has been misled regarding so-called dividend investing by misinterpreting a misleading source.
Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
ALLW Fund Main Page: ALLW: SPDR® Bridgewater® All Weather® ETF
Open Social Security: Open Social Security: Free, Open-Source Social Security Calculator
Hartford Funds Dividend Fund Page: The Power of Dividends: Past, Present, and Future
Ben Felix Dividend Video: The Irrelevance of Dividends
Ben Felix Dividend Video #2: The Relevance of Dividend Irrelevance
Breathless Unedited AI-Bot summary
Financial misconceptions can cost you dearly. This eye-opening episode tackles three critical investment topics that challenge conventional wisdom and may transform how you approach your portfolio.
When State Street and Bridgewater Associates launched their All Weather ETF (ALLW), it promised the stability of risk parity with the pedigree of Ray Dalio himself. We dissect this new offering—examining its 175% leverage, complex asset allocation, and 0.85% expense ratio—to determine whether it delivers on its promises or falls into the same traps as similar products like RPAR and UPAR. For investors approaching retirement, understanding these nuances could be the difference between confidence and confusion in the decumulation phase.
Delaying Social Security benefits remains one of retirement planning's most debated decisions. We cut through the noise of oversimplified break-even calculators to explore what truly matters: appropriate risk-free rate calculations, the value of guaranteed income streams, and perhaps most importantly, how your family's longevity history should influence your claiming strategy. For married couples, the analysis becomes even more critical as spousal benefits create powerful optimization opportunities that generic calculators often miss.
The episode concludes by dispelling one of investing's most persistent myths: the magical power of dividends. When Hartford Research noted that "85% of the S&P 500's return came from reinvested dividends and compounding," many investors misinterpreted this to mean dividends themselves were responsible for these returns. We reveal how this fundamental misunderstanding leads investors astray, explain why dividend payments offer no advantage in today's zero-commission environment, and demonstrate why creating your own "dividend" through strategic selling provides superior tax control.
Whether you're building wealth or planning your withdrawal strategy, these insights will help you see beyond marketing claims to make decisions based on financial reality rather than comforting illusions. Listen now to align your investment approach with actual market mechanics instead of persistent financial folklore.
Have a question about risk parity investing or portfolio construction? Email [email protected] or visit riskparityradio.

Support the show

In this episode we answer emails from Dustin, MyContactInfo, and Mark. We discuss the ETF GDE and combo return stacked funds generally, why you probably don't want to use economists' "life cycle model" for personal finance planning due to its unrealistic underlying assumptions, and whether we could use historical high interest rates to create market timing and allocation signals between stocks and bonds.
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:
Article About BTGD: New ETF Offers Dual Exposure to Bitcoin, Gold | etf.com
Optimized Portfolios Site: Optimized Portfolio - Investing and Personal Finance
Rational Reminder Podcast Re Lifecycle Model: Ben Mathew: The Lifecycle Model vs. Safe Withdrawal Rates (SWR) | Rational Reminder 340
Debunking Economics: Debunking Economics - Revised and Expanded Edition: The Naked Emperor Dethroned?: Keen, Steve: 8601406370678: Amazon.com: Books
Amusing Unedited AI-Bot Summary:
When market turbulence strikes, diversification proves its worth. This week, as the S&P 500 tumbles nearly 4% year-to-date and the NASDAQ falls over 6%, gold emerges as the standout performer—surging past $3,000 an ounce with returns exceeding 13%. These dramatic market movements create a perfect real-world demonstration of why uncorrelated assets matter in portfolio construction.
We dive deep into the limitations of economic models for personal financial planning, examining why the Life Cycle Model—while logically sound in theory—falls apart when confronted with life's inherent unpredictability. The assumption that we can accurately forecast our lifespans, relationships, and changing preferences decades in advance reveals a fundamental disconnect between theoretical economics and practical personal finance.
A thought-provoking listener question explores whether allocation strategies should shift dramatically if interest rates ever reach levels where risk-free returns match or exceed historical stock returns. Drawing on lessons from the early 1980s when Treasury yields exceeded 15%, we consider why developing investment rules based on rare historical anomalies rarely serves investors well.
The weekly portfolio review shows mixed performance across our eight sample portfolios, with those holding significant gold allocations weathering the current volatility far better than stock-heavy alternatives. We also examine rebalancing decisions for the Levered Golden Ratio portfolio, making thoughtful adjustments to improve its value tilt and diversification characteristics.
Whether you're curious about combining assets in hybrid funds, wondering how managed futures perform during market corrections, or simply wanting to see how different portfolio strategies are navigating current conditions, this episode delivers practical insights for the thoughtful, independent investor. Join us for this exploration of asset allocation in uncertain times.

Support the show