Risk Parity Radio

In this episode we answer emails from I Have No Name, Shellie, Midwest Nice, and Mr. Ed (a motley crew indeed!).  We discuss some massively funny generosity to our Top of the T-Shirt Campaign for the Father McKenna Center, an odd small cap value fund in a 401(k) and the issues surrounding holding too much cash, how stocks and long-term treasury bonds can both rise while still showing negative correlation and how that relates to the Four Quadrant Model, and redeploying proceeds from the sale of real estate.  And lutefisk.

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

Links:

Father McKenna Center Donation Page (please mention Risk Parity Radio in the comment section with your donation):  Donate - Father McKenna Center

PMJAX at Morningstar:  PMJAX – Portfolio – PIMCO RAE US Small A | Morningstar

PMJAX Comparison:  Asset Analyzer for ETFs, Stocks, and Funds | testfolio

Portfolios With More and Less Cash Comparison:  Portfolio Backtester for ETFs and Asset Allocation | testfolio

S&P500 and LT Treasury Bond Comparison:  Asset Analyzer for ETFs, Stocks, and Funds | testfolio

The Four Quadrant Model Exquisitely Explained With Illustrations Inspired By Vermeer:  The Four Quadrant Wealth Atlas.pdf - Google Drive

Four Quadrant Model Video:  Understanding Correlations and Diversification Using the Four Quadrant Model

Breathless Unedited AI-Bot Summary:
A listener spots a new “small cap value” option in a 401(k) and asks the question most DIY investors eventually face: how do you tell what a fund really is when the plan uses a custom name and no ticker? We walk through a practical, repeatable research process using an AI chatbot (Gemini or ChatGPT) to find the closest public equivalent, then confirming style exposure and performance on Morningstar and Testfol.io. Along the way we discuss what “micro” exposure can mean, why “perfect” isn’t required inside a restrictive plan, and how you can still build a solid risk parity-style asset allocation with the tools you have.

Then we tackle the comfort blanket that can quietly cost you money: cash. We explain cash drag, why holding 25% in cash can act like you’re not investing a quarter of your portfolio, and why bucket strategies don’t magically solve sequence of returns risk just by relabeling accounts. We also dig into tax-efficient investing and asset location, including why taxable cash interest can be brutal in retirement and when it may make sense to reposition assets between taxable and retirement accounts.

A father writes in with his son’s surprisingly sharp question about bond stock correlation: if stocks go up over time and long-term Treasury bonds are negatively correlated, do bonds usually go down? We answer with long-run data, show why both can rise while still diversifying each other, and point to specific regimes like 2000 to 2010 versus 2022. We also field a real-world planning scenario on investing property sale proceeds while keeping ACA premium tax credits in mind by managing MAGI, before wrapping with our weekly portfolio review across the eight sample portfolios (VOO, QQQ, VIOV, GLDM, VGLT, PDBC, PFFB/PFFV, DBMF and more).

Subscribe for more practical risk parity investing guidance, share this with a friend who’s stuck in a confusing 401(k), and leave a rating and review so more DIY investors can find us.

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In this episode we answer emails from Ethan, Joe, and Jim.  We discuss a plan for young teachers to reach early financial independence with the right accounts and a little encouragement, the peculiar benefits of 457s and Roth contributions, a critical read of an academic article about an impractical TIPS ladder strategy, and the real-world problems with 30-year TIPS ladders, including complexity, tax issues, and longevity risk.  We also discuss catastrophe bonds as an asset class and and why the new ILS ETF looks expensive and underwhelming at the moment

And we touch on our fund raising campaign for the Father McKenna Center.

Links:

Father McKenna Center Donation Page (please mention Risk Parity Radio in the comment section with your donation):  Donate - Father McKenna Center

ChooseFI Teacher Podcast:  The Unfair Financial Advantage of Teachers | Ep 13

ARVA TIPS Ladder Article:  Full article: The Only Other Spending Rule Article You Will Ever Need

Breathless Unedited AI-Bot Summary:

A 457(b) can be the difference between “retire early” and “wait it out,” and we dig into why. We start by answering a detailed email from a young pair of teachers building wealth with a golden ratio portfolio while trying to bridge the years before age 59.5. We talk through tax buckets, account access, and what actually matters when you have Roth IRAs, taxable brokerage money, HSAs, employer plans, and the unique early-withdrawal rules of a 457(b) after you separate from service.

Then we switch gears to retirement drawdown strategies and put a popular “spending rule” article under cross-examination. We walk through the assumptions behind ARVA and a 30-year TIPS ladder approach, why ultra-variable withdrawals may be unrealistic, and why complexity does not automatically equal safety. If you care about safe withdrawal rate research, inflation protection, and building a portfolio that can handle real life, you will hear exactly where the paper breaks down and what we would focus on instead.

We wrap with a listener question on catastrophe bonds and the Brookmont Catastrophic Bond ETF (ILS). Cat bonds can look like the perfect uncorrelated alternative asset on paper, but fees and implementation details matter. If you’re building a diversified risk parity style asset allocation, we explain where cat bonds might fit, why this ETF doesn’t yet, and what we’d watch going forward. Subscribe, share this with a friend who’s planning early retirement, and leave a review so more DIY investors can find the show.

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In this episode we answer emails from Joe, Ashley, and Chris.  First, we celebrate the early retirements and generosity of our listeners, spotlighting what retirement feels like when it is driven by joy and choice instead of fear. Then we answer a near-retirement question about bubble warnings, international investing, the proper way to use expert opinions, and how to build a risk parity style portfolio that can survive drawdowns and fund withdrawals.  With the help of Claude.

And we discuss our Top of the T-shirt Campaign (Part Deux!) for the Father McKenna Center.

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 (please mention Risk Parity Radio in the comment section with your donation):  Donate - Father McKenna Center

Yours Truly on Jesse Cramer's Podcast:  Are You Hoarding, Hustling, or Harvesting in Retirement? - E144

Video Summary Version:  The Harvesting Imperative: Structuring Retirement Around Well Being, Not Money

Slide Show Summary Version:  Jesse Cramer Presents The Three H's.pdf - Google Drive

Video Summary of RPR Episode 508:  RPR Episode 508 Illustrated: The Three H’s of Retirement

Jeremy Grantham on the Long-View (forward to minute 42 for his diversification recommendations):  Jeremy Grantham ‘Almost Everything Looks More Attractive Than the US Equity Market’ - YouTube

Michael Batnick (not Josh Brown!) Critique of CAPE Ratio-Based "Predictions":  Stocks Are More Expensive Than They Used to Be

Breathless Unedited AI-Bot Summary:

You can do everything “right” for decades and still blow up retirement by making one mistake at the wrong time: heading into the drawdown years with a stock-heavy portfolio and no ballast. We kick off with a listener note that hits the best part of financial independence, retiring at 45 with true optionality and a plan built around joy instead of restriction. That story opens a bigger question: what is money for once you’ve already proven you can save it?

We dig into the psychology of harvesting wealth and the practical realities of sequence of returns risk, especially in the five years before and after you stop working. We talk about spending that actually improves well being, including relationships, experiences, buying back your time, and giving, plus why so many high savers get stuck in hoarding or hustling modes. Along the way, we share updates on the Father McKenna Center and how listener generosity turns portfolio talk into real-world impact.

Then we tackle a timely investing worry: bubble warnings and Jeremy Grantham’s cautions around US equities and AI hype. We break down why opinion shopping is a dead end, why growth vs value diversification matters more than US vs international for drawdown safety, and how funds like long-term Treasuries, gold, and managed futures show up in resilient risk parity style portfolios such as the Golden Butterfly and Golden Ratio. We also cover TSP international limitations, plus our weekly portfolio reviews and July withdrawal amounts. If you found this useful, subscribe, share it with a friend who is near retirement, and leave a review so more DIY investors can find us.

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In this episode we answer emails from Sarah, Tyler and Luc.  We Sarah's detailed plan to take a one to two year family gap year, travel, and unpack tax-smart ways to fund short-term spending, why we keep long-term money invested simply, more cowbell, and why complicated advisor math can be more noise than help how it can mask conflicts of interest.  We also touch on the Cederberg paper (yes, with a C and not an S despite my mis-statement) and why it is of little or no practical use for investors even though it may be of academic interest.

Links:
Father McKenna Center Donation Page (please mention Risk Parity Radio in the comment section with your donation):  Donate - Father McKenna Center

Jillian Johnsrud's "Retire Often" Book:  Book | Retire Often

Referenced PWL Link:  Canadian Portfolio Manager: Introducing the “Plaid” ETF Portfolios | PWL Capital: Bender Bender & Bortolotti
Breathless Unedited AI-Bot Summary:

A one to two year career break with three kids sounds like the kind of plan personal finance forums love to dunk on. We take it seriously, run it through a real-world investing lens, and show how a “mini-retirement” can be both joyful and financially survivable when the time horizon and the portfolio match.

We walk through Sarah’s numbers, the stress points, and the decision that matters most: separating short-term spending from long-term compounding. For a gap year (or two), we prefer building a large, boring cash pile fast and funding it primarily from the taxable brokerage account, so a sudden market drop doesn’t force you to sell stocks at the worst possible moment. We also talk through keeping a HELOC as a backup plan rather than the main plan, and why retirement accounts often belong in simple equity index funds when you truly don’t need the money for a decade or more.

Then we get tactical on taxes. Lower-income years can open the door to tax loss harvesting and tax gain harvesting, including the often-missed 0% long-term capital gains bracket if your total income stays low enough. We also explain why we treat taxes as an expense that changes based on what you sell and when, instead of playing confusing games that “discount” the value of entire accounts.

To round it out, we respond to listener skepticism about after-tax portfolio valuation frameworks, advisor incentives, and the Cedarberg paper’s practical limits. If you like smart investing, plain language, and a dash of “more cowbell” diversification talk, hit subscribe, share the episode with a friend, and leave us a review so more DIY investors can find the show.
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In this episode we answer emails from Tim, Avid Listener, and Aaron.  We discuss bond allocation in an intermediate accumulation Golden Butterfly style portfolios, the follies of fixating on fund or ticker symbol returns instead of the purpose of an asset in a portfolio,  and the follies of holding too much in cash.

And we discuss our Top of the T-shirt Campaign (Part Deux!) for the Father McKenna Center.

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 (please mention Risk Parity Radio in the comment section with your donation):  Donate - Father McKenna Center

Analysis of TLT, MBB and SPY:  Asset Analyzer for ETFs, Stocks, and Funds | testfolio

Analysis of gold royalty companies:  Asset Analyzer for ETFs, Stocks, and Funds | testfolio

Liz Ann Sonders interview of Keith McCullough:  What Happens After Peak Inflation? (With Keith McCullough) | Charles Schwab

Breathless Unedited AI-Bot Summary:

Chasing a higher yield can feel like progress, but what if it is quietly breaking your portfolio? We take on three listener questions that all circle the same core problem: fund shopping without a framework. From a Golden Butterfly style intermediate-term risk parity portfolio stuck with a limited 401k bond menu, to the temptation to use stable value funds, Roth space, and asset swaps to “fix” taxes, we talk through what matters most when your goal is steady accumulation for a real-world timeline like three to seven years.

Next we get blunt about substitutes. Mortgage-backed securities ETFs may look like a better bond deal on paper, and gold royalty companies may look like “gold with higher returns,” but risk parity investing is not built by grabbing the flashiest ticker. We explain the four quadrant model and why each sleeve has a job: stocks for long-run growth, Treasury bonds as recession insurance that can be rebalanced when equities drop, and alternatives like gold or managed futures for low correlation during inflationary or stagflationary shocks. The right question is not “what returned more,” but “what will behave the way I need when the economic weather turns.”

We also address a popular habit that masquerades as investing: moving cash between HYSAs, money markets, and short-term funds to optimize yield. If tiny rate differences feel meaningful, it may be a sign you are holding too much cash and taking on cash drag over the long run. We close with our weekly portfolio reviews across the eight sample portfolios and a reminder that nobody knows what markets will do next, so a sturdy process matters more than predictions.

If this helps, subscribe, share the episode with a fellow DIY investor, and leave a review so more people can find Risk Parity Radio.

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