Voices [0:00]

A foolish consistency is the hub goblin of little mind, adored by little statesmen and philosophers and divine. If a man does not keep pace with his companions, perhaps it is because he hears a different drummer. A different drummer.

Mostly Queen Mary [0:18]

And now, coming to you from Dead Center on your dial, welcome to Risk Parity Radio, where we explore alternatives and asset allocations for the do-it-yourself investor. Broadcasting to you now from the comfort of his easy chair, here is your host, Frank Vasquez.

Mostly Uncle Frank [0:37]

Thank you, Mary, and welcome to Risk Parity Radio. If you are new here and wonder what we are talking about, you may wish to go back and listen to some of the foundational episodes for this program.

Voices [0:49]

Yeah, baby, yeah.

Mostly Uncle Frank [0:51]

And the basic foundational episodes are episodes 1, 3, 5, 7, and 9. Some of our listeners, including Karen and Chris, have identified additional episodes that you may consider foundational. And those are episodes 12, 14, 16, 19, 21, 56, 82, and 184. And you probably should check those out too, because we have the finest podcast audience available.

Voices [1:26]

Top drawer. Really top drawer.

Mostly Uncle Frank [1:30]

Along with a host named after a hot dog.

Voices [1:34]

Lighten the French.

Mostly Uncle Frank [1:37]

But now onward, episode 460. Today on Risk Party Radio, it's time for our weekly portfolio reviews of the eight sample portfolios you can find at www.riskparty.com on the portfolios page. Before I put you to sleep with that.

Voices [1:57]

I'm intrigued by this. How you say email?

Mostly Uncle Frank [2:02]

And first off. First off, we have an email from Ava. Well, it could be Eva, too. I'm not sure how you pronounce it.

Voices [2:12]

Are you stupid or something?

Mostly Uncle Frank [2:14]

So I'm sure I'll get it wrong.

Mostly Queen Mary [2:16]

Right?

Voices [2:17]

Wrong!

Mostly Uncle Frank [2:18]

But Ava or Eva writes.

Mostly Queen Mary [2:20]

Dear Mary and Frank, your podcast has provided me a valuable education on portfolio construction for the deaccumulation phase. Thank you for sharing your time and research with the community. As a token of my appreciation, I've made a donation to the Father McKenna Center from my donor-advised fund.

Voices [2:38]

Yes!

Mostly Queen Mary [2:39]

I hope you can provide your thoughts on how you'd think about reallocating my current portfolio to a modified golden ratio portfolio. I'm 54 and have reached my Phi number and am preparing to retire in the first quarter of 2026. Yeah, baby.

Voices [2:55]

OB!

Mostly Queen Mary [2:59]

Yeah, baby! During my accumulation phase over the last decade, I've been saving aggressively in a brokerage account mostly invested in VTI after maxing out employer-sponsored 401k plans and executing the occasional backdoor Roth conversion. Currently, 55% of my portfolio is in a brokerage account with the Lion Share, approximately 85%, in a large cap blended ETF, VTI. This is where my concern lies, and one of the reasons for this email. 35% of the portfolio is in a tax-deferred 401k that I intend to roll over to an IRA when I terminate employment. 5% of the portfolio is in a Roth IRA. The remaining 5% is cash, spread across a high-yield savings account and a money market fund. I will be 55 when I retire, and my intention is to draw down 4-5% of my entire portfolio from the brokerage account to fund my living expenses at least until I reach age 70. By that time, I expect to pay off my mortgage, which has an attractive 3.265% fixed rate, so I'm in no rush to pay it off. Although the thought of paying it off before I retire is appealing at times just for the added peace of mind. I also intend to start collecting Social Security benefits at 70. I'd appreciate your thoughts on 1. The general approach I've constructed of withdrawing from the brokerage account at a withdrawal rate of 4-5% of the entire portfolio until about age 70 and allowing the tax-deferred and tax advantage accounts to continue to grow, and 2. How to go about rebalancing my entire portfolio to construct a modified golden ratio portfolio. I'm aiming for the following modified golden ratio allocation. 55% equities split between US large cap growth, US small cap value, and international tilted to small cap. I appreciate this may be challenging to do considering my large concentration in VTI, but would appreciate your thoughts. 25% bonds split equally between intermediate and long-term treasuries, 10% gold, GLDM, 5% managed futures, DBMF, 5% cash, high yield savings, and money market. I am writing because I suspect I am overthinking or overly concerned about the large VTI concentration in the brokerage account. I don't see a way to rebalance to a classic golden ratio portfolio or a modified version without selling off significant chunks of VTI. Even if I were to rebalance the 401k and Roth to sell off my positions in US large cap growth and small cap value and purchase treasuries, gold, and managed futures in those tax-deferred and tax-exempt accounts, I'd still be highly concentrated in VTI in the brokerage account. And, with a high concentration to treasuries and gold in tax-deferred accounts, I expect I won't see much growth over the coming 15 years. But given gold's recent tear, I suppose we just don't know.

Voices [6:00]

Who do we know? You don't know, I don't know, nobody knows.

Mostly Queen Mary [6:05]

Do I hold the VTI position in the brokerage account and focus on rebalancing the 401ks, soon-to be IRAs, to add treasuries, gold, and manage futures? Do I slowly sell off VTI in the brokerage account over the next 15 years to fill the cash bucket that will be funding my spending needs? Could such a large concentration in VTI compromise my ability to safely withdraw 4-5%? I'd love to hear your reaction to this plan generally and how you would go about rebalancing this portfolio. Thanks for all you do, Eva. That was good. Mostly short sentences, not too many dependent clauses, all those paragraphs.

Voices [6:44]

Mary, Mary, I need you hugging.

Mostly Uncle Frank [6:53]

Well, first off, thank you for being a donor to the Father McKenna Center. As most of you know, you do not have any sponsors on this program. We do have a charity we support. It's called the Father McKenna Center, and it supports hungry and homeless people in Washington, D.C. Full disclosure, I am the board 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 here, which Ava or Eva has done today. There are two ways to do that. You can either go directly to the Father McKenna website and donate there on the donation page. I'll link to that in the show notes. Or you can go through our support page at www.riskparty.com and become one of our patrons on Patreon. And then I collect all that money and also give it to the Father McKenna Center. Either way, you get to go to the front of the email line. Just make sure you mention it in your email so that I can duly move you to the front of the line. And I should say this is a very good time to be giving to either the Father McKenna Center or your local charitable food provider. There's a lot more demand these days as these government programs have shut down or semi-shut down. We had a thousand clients at our food pantry just last week who were served by about a hundred volunteers. So anything you can do would be greatly appreciated. And I'm not only talking about just the Father McKenna Center, but in your local communities, if there are food drives being run, please do try to participate in those. I know the Boy Scouts generally run what's called scouting for food in the first week of November every year, and that is probably a good opportunity for most people to participate in something in their local community. But the charitable providers are in kind of a crisis mode at this point, and anything you can do would be greatly appreciated. But now getting to your email. First, congratulations on your upcoming retirement. It sounds like you've been working hard and accumulating hard over many years, and I think in general you're in very good shape to go into retirement. Now I can't answer your question very specifically here, something because I don't know your actual numbers. And part of what goes into this is what tax brackets you're going to be in and how much you're actually spending, and then how much is going to actually be covered by Social Security benefits when you hit age 70? How much is your mortgage, a percentage of your overall expenses? All of those details do matter and could matter a lot depending on what those numbers actually are. But overall, I think you're going to be just fine. And I think we need to step back before we talk about the portfolio to talk about the fact that there's more than one lever to pull to give yourself effectively a higher safe withdrawal rate, or to make sure you don't run out of money, depending on how you want to phrase that. But a safe withdrawal rate calculation is built on three things essentially. The first one is the portfolio and the portfolio construction. Different portfolios have different baseline safe withdrawal rates. Shirley, you can't be serious.

Voices [10:01]

I am serious.

Mostly Uncle Frank [10:02]

And don't call me Shirley. The second one is your baseline expenses and whether those can be reduced or not. The assumption in the main calculation is that those expenses are hard and can never be reduced. And then the third lever, if you will, is your personal rate of inflation because the baseline calculation of a safe withdrawal rate assumes that you will be taking CPI-based inflation and you will be taking it every year for the rest of your life. That is actually a overly conservative or it's a it's not a real assumption, because as we've known from many studies, and there's another one coming out from David Blanchett, that the average retiree experiences inflation at 1 to 2% less than CPI, which effectively adds 0.5 to 1% to a baseline safe withdrawal rate. So even if you just did that, even if you just had an average experience of inflation as a retiree, you're probably going to be fine just with that. And on the expenses, as you've said, in your case, your baseline expenses are going to go down for sure, because you are going to be getting rid of this mortgage. And then you're also going to be getting Social Security, and that is effectively reducing your expenses as well, or at least reducing the expenses that need to be covered by a portfolio. So just incorporating all of those factors into your situation here, I think you're going to be fine even before we get to start talking about your portfolio, unless you were planning on increasing your lifestyle in some way that you haven't presented that would increase your expenses by some incredulous amount. You also have an option with respect to Social Security, and that you could claim it earlier if you wanted to, if you had to for some reason that you're not aware of right now. And so that is another option in your favor that's going to make this plan work. I would expect your health insurance costs also to decline when you hit Medicare age at 65. But that kind of depends on what the cost of your health care is now or what's what it's going to be in retirement after accounting for any subsidies. Okay, now let's talk about this portfolio as is. As is, you have 55% in equities in a total stock market fund, 25% in intermediate and long-term treasury bonds. I'm assuming a 50-50 split there, 10% in gold, 5% in managed futures, and 5% in cash. This kind of portfolio easily has a projected safe withdrawal rate of between 4% and 5% over the past 100 years. And if you use portfolio charts, you can see that it's got a projected safe withdrawal rate of 5% since 1970. And that's using commodities for managed futures. Managed futures are actually a better choice in that slot. So if you are spending between 4% and 5%, you are well within the wheelhouse of a safe withdrawal rate for this kind of portfolio as it stands right now. Particularly since you only really have to withdraw at that rate for the first 15 years, and then you're going to be subsidized.

Voices [13:18]

And for anybody listening to this who is babbling in their head or listens to people who babble the oh the safe withdrawal rate only works for 30 years, then your portfolio turns into a pumpkin. It's never gonna work. I have to spend only two and a half percent. That's just all lies.

Mostly Uncle Frank [13:38]

It doesn't work that way.

Voices [13:40]

That's not how it works. That's not how any of this works.

Mostly Uncle Frank [13:44]

The function is asymptotic. It doesn't go down that much. It goes down a maximum of 0.6 for forever, from 30 years to forever, which is easily covered by the other levers we talked about pulling, taking less than CPI inflation or otherwise adjusting expenses. But you should question anyone who says things like that, because they either don't know what they're talking about or they're fear-mongering. One of the two. And many of them are financial advisors who have podcasts, and we know where their interests lie.

Voices [14:20]

Always be closing. Because only one thing counts in this life. Get them to sign on the line which is dotted.

Mostly Uncle Frank [14:30]

Now, could you improve your projected safe withdrawal rate by shifting some of the equities to the value side of things? Small cap value would be the most logical choice on the value side, but it's not the only choice. If you look at portfolio charts and compare another portfolio that has the equities split more into value, you would see that at least since 1970, there would be a safe withdrawal rate boost of approximately 0.5 to 1%, which would put you between 5 and 6% as far as a safe withdrawal rate is concerned. So you probably don't need it, but if you can move some of that total stock market allocation over to a small cap value fund like AVUV or several other ones, that would be advantageous to you and would reduce the overall volatility of your portfolio. But the question there is kind of what kind of tax hit would you take for doing something like that? There are a few ways to reduce that. One has to do with what your tax rate is right now, because it is possible that you are in the 0% capital gains tax bracket. It's probably not likely, but it's possible, and you should check that out. Because obviously, if you are in the 0% long-term capital gains tax bracket, you could be selling some of this every year and essentially converting it to small cap value without paying any taxes at all, at least federal ones. If you are not, what you should also be looking at is your tax lots, because you are allowed to sell the shares you bought most recently. You wouldn't want to sell shares that were purchased less than a year ago, unless you were losing money on those, in which case go right ahead, because that would subtract from your taxes. But if you were to look at the tax lots of the VTI you purchased one year ago, say between one and three years ago, perhaps the selling those would not incur much of a tax liability at all. Because you're likely only to be in the 15% long-term capital gains tax bracket, unless you're withdrawing four or five hundred thousand dollars a year out of this, which I don't think you are. Now, as to these sub-questions about what you should do with the IRAs, yes, you should put your treasuries in particular and the managed futures in the IRA. And if there's room, also you can put the gold in there too. And you're actually going to be kind of happy those don't grow a whole lot, or at least don't grow as much as the stocks do, which is likely, because then you're going to be paying less taxes overall on the whole setup there. That's tax optimized to put your ordinary income payers like bonds and managed futures in your traditional IRA. Now, what you are going to be selling over time depends on how things perform going forward. It is most likely you're going to be selling lots of the VTI because it's most likely that that will be the best performer most years, but you will need to rebalance the portfolio every year and take this into consideration as to what's performing well and what's not performing well. You may also need to do what's called an asset swap. I will link to a video in the show notes to show you how to do that, because it's possible that you would want to sell some things in the IRA, but not necessarily take all that money out of the IRA. And there's a way to do that. But rather than explain it here, I will link to the video, which was created by our friend Justin at Risk Parity Chronicles, and is a very nice instructional video.

Voices [18:03]

Wow, we're very nice.

Mostly Uncle Frank [18:07]

So the bottom line is overall, I think you're in good shape, at least what you've presented to me, without the actual numbers there. And one thing I would do is if you haven't done it already, really go through your expenses in a granular manner and separate out what are your mandatory expenses from your discretionary expenses. Because what you really want to be in a situation is where your mandatories only cover up to say around 3% of your total withdrawals. Because if your mandatories were 5% of your withdrawals, then you would be in that situation where you were forced to take a certain amount of expenses and had no flexibility in them. For most people, about 60% of their annual expenses are in the mandatory category and the rest are discretionary, and that's a good ratio to have. And finally, let's talk about one of my pet peeves, because we all know that's the most important thing to talk about here. After all, that's what the entire series of Seinfeld was based on, wasn't it?

Voices [19:13]

Oh, I'm sorry, we have no mid-size available at the moment. I don't understand. I made a reservation. Do you have my reservation? Yes, we do. Unfortunately, we ran out of cars. But the reservation keeps the car here. That's why you have the reservations. I know why we have reservations. I don't think you do.

Mostly Uncle Frank [19:31]

And my pet peeve here is something that has been perpetuated by the financial services industry with many other confusing labels for various and sundry activities, funds, and whatever. In this case, it is not distinguishing between the terms rebalancing and reallocating. Properly understood what you are doing when you are changing the base allocations in your portfolio is reallocating. You are going to something different than what you had before, and you're intending on keeping that new allocation long term. The term rebalancing actually means taking your portfolio as it stands and restoring it to your long-term planned allocation. So what you do every year is rebalance your portfolio back to the planned allocations when you are changing, say, from an accumulation portfolio to a decumulation portfolio. That's not rebalancing, that is reallocating. Unfortunately, the financial services industry often uses the term rebalancing for both of those things, which makes it extremely confusing. And I'm not sure whether that confusion is intentional. Bing! Which wouldn't surprise me, or it's just rank incompetence, which also wouldn't surprise me.

Voices [20:51]

Bing again.

Mostly Uncle Frank [20:53]

One of my other pet peeves is when the financial services industry tries to distinguish between what they call index funds and ETFs, which makes no sense at all. Because you can have an index fund in a mutual fund form or an ETF form. Those are both index funds. Or you can have a managed fund or an actively managed fund in a mutual fund form or an ETF form. So there is no rational difference between index funds and ETFs. It's like comparing apples and oranges.

Voices [21:29]

Hello? Hello, anybody home?

Mostly Uncle Frank [21:34]

Anyway, it's no wonder to me that people get confused by those terms and many other terms that are bandied about in popular financial press.

Voices [21:43]

You know, I got friends of mine who live and die by the actuarial tables, and I say, hey, it's all one big crapshoot, anywho.

Mostly Uncle Frank [21:51]

But we're not gonna be confused here.

Voices [21:54]

Not gonna do that. Wouldn't be prudent at this juncture.

Mostly Uncle Frank [21:58]

Anyway, you're in very good shape. Thank you for your donations and thank you for your email.

Voices [22:07]

Why do they call it oval team? The mug is round, the jar is round, they should call it round team. It's coming, Jerry. Second off.

Mostly Uncle Frank [22:22]

Second off, we have an email from Jess. Jess from Alaska.

Voices [22:28]

Hey channel, you know it's kind of funny. Texas always seems so big, but you know you're in the largest state of the Union when you're hanging down like a rich.

Mostly Uncle Frank [22:44]

And Jess writes.

Mostly Queen Mary [22:46]

Hi Frank. Thanks so much for sharing with the folks at Bigger Pockets Money. I really loved your episode. Nanu! Nanu! You all set up the test account on Fidelity. I would love to do the same thing by setting up a test account, and I'd prefer to use Vanguard. Or my second choice would be Schwab. Do you have a preference? Or are there reasons that Fidelity works best? Thanks so much, Jess.

Mostly Uncle Frank [23:21]

So Jess is referring to one of the interviews I did on Bigger Pockets last July when she sent me this email. And I will reference in the show notes, it's there on YouTube, where I helped Mindy Jensen set up a risk parity style portfolio in Fidelity using $10,000. And she made it a little more complicated than it needed to be, but we had some fun with it. And she's got it there, and she's taking withdrawals out of it every month now and seeing how it all works out. That seemed to be very popular, and I've realized since doing that that that does seem to be a very good learning tool that I wouldn't encourage people to use if you're interested in this style of portfolio construction. Because we live in this era of fractional shares and no fee trading, it is possible to just set up small brokerage accounts where you run little experiments and see how things work. Because it seems like the mechanics are often more daunting than the actual implementation of the portfolio. And once you get this sort of thing set up and going, you'll see that it is way more simple to manage something like this than some kind of complicated thing involving a lot of buckets, ladders, and flower pots and all manner of moving cash around between a whole bunch of different accounts and all of those time segmentation things that people go on and on about that actually obscure what's going on and really don't help you, at least in any financial way.

Voices [24:52]

Rex Quando, we use the buddy system. No more flying solo. You need somebody watching your back at all times.

Mostly Uncle Frank [25:00]

So you asked whether you can do this at Vanguard and Schwab as opposed to Fidelity. The answer is yes, you can, but I'm not sure how well it's going to work, and it will probably not work as well with a smaller account. The reason for this is that I know for sure that Fidelity allows you to do not only no fee trading of all ETFs, but also allows you to do fractional buying and selling of ETFs. So you can buy or sell as little as $1 worth of any fund, which makes it possible then to have one of these portfolios with as little as maybe $1,000.

Voices [25:39]

That's the fact, Jack! That's a fact, Jack!

Mostly Uncle Frank [25:43]

So you're gonna need to check with Schwab or Vanguard to see whether they allow the trading of fractional shares. Because otherwise, some of these funds have very expensive shares right now. I think VUG shares cost around $400 each. And so that's not gonna be very practical for a portfolio that is only worth $1,000 or $10,000 or something like that. But that's the only real limitation. It's just a question of sizing. I will also say that Fidelity is extremely easy to use, has a nice phone app. So if you're a youngster and like things like Robin Hood, you could do the same thing on the Fidelity app that you can do on one of those. But I do encourage you to take something like this out for a spin, not only to learn about these kinds of portfolios, but just to learn the mechanics of managing money in a brokerage account. I really think that every adult now should have a brokerage account, even if their only thing in it is a few dollars in a money market, because that is just part of financial literacy these days. Every adult in the US should have an employer retirement account, some kind of IRA, and a brokerage account. And if you have those three things, you may not need anything else. You especially don't need to have a whole bunch of high yield savings accounts and CDs and other sorts of things hiding out at banks or in robo places or wherever you else you might put things. Because your emergency funds can naturally just reside in the money market fund in the brokerage account. Anyway, I would be interested to find out what you set up and how it's working, and if others of you have set up similar kinds of test accounts, maybe we can aggregate a few of them, or at least the descriptions of them, because I do think this would be a good learning tool for a lot of people. And I would especially encourage people in their twenties and thirties to be doing things like this.

Voices [27:45]

That way. You got yourself a surprise sentence. Oh, I get it. Let me try. Hello, Patrick. Lovely day we're having, isn't it?

Mostly Uncle Frank [28:17]

Because you want to learn when the stakes are low so you don't make mistakes when the stakes are high.

Voices [28:22]

And uh I'll go ahead and make sure you get another copy of that memo.

Mostly Uncle Frank [28:25]

Okay. So I wish you good learning and thank you for your email. Last off, we have an email from Mr. Toxic. And Mr. Toxic writes Hello Frank and Mary.

Mostly Queen Mary [29:18]

One area of retirement spending that I think has been neglected is the use of HSAs, specifically when to start withdrawing from them. The general consensus is to max HSA contributions and pay for medical expenses out of pocket to allow the balance to grow. I've been fortunate enough that I've been able to follow this advice and now have a good sized HSA. I've continued to grow the HSA even after I retired, but finally have some good sized medical bills, which has caused me to rethink this strategy and look more into HSAs for inheritance purposes. I learned that HSAs are not good inheritance accounts, so continuing to grow the account to leave to children is inefficient. For inheritance, I believe it's better to leave. Any leftover money in an IRA rather than the HSA. Working on the assumption that a retiree wants to drain the HSA before death, when should they start pulling from it? It may be obvious to some, but it took me some thinking. I believe the most efficient time to start pulling from the HSA is when retirement income is highest. For retirees, that would be at the beginning and end of retirement due to the retirement spending smile. One could argue it's better to wait for the tail end of the spending smile, but then one runs the risk of death before spending it down. And I think it's better to save on taxes today than some possible future date. At first, I thought the answer was going to be complicated and not universal, but now I think it's actually pretty simple and applies to all retirees with an HSA. Not sure there's a question, but looking forward to your thoughts. Thank you, Mr. Toxic. All I can hear when I'm reading that part about death is death sucks you at every turn.

Mostly Uncle Frank [31:00]

Well, Mr. Toxic, that's a very good question.

Voices [31:03]

Death sucks you at every turn! Grandpa? Well, it does. There it is! Death!

Mostly Uncle Frank [31:12]

I don't usually address it because we don't have an HSA.

Voices [31:16]

You're too stupid to have a good turn.

Mostly Uncle Frank [31:18]

It didn't make sense the way my employer's insurance situations were set up. And it doesn't make sense now because we are a higher consumer of medical interventions, including some for my gout. Which thankfully is under control. And it's got poof. But for those who don't know what an HSA is, it is a health savings account, and you are allowed to put money in a health savings account up to a limit that changes every year if you have certain kinds of health insurance. And the way the new law is going to work, if you have what is the equivalent of a what they call a bronze plan, which has a high deductible, you are allowed to put money into an HSA. Now, what people have discovered is that these also make good retirement accounts because they have a lot of useful features in terms of saving on taxes. But they have a lot of peculiar rules too, some of which don't make a whole lot of sense, but they're kind of just slapped together. I know people that have used this very successfully in significant ways. Jackie Cummings Koskey, who's one of the co-hosts at Catching Up to Phi, has a very large HSA. And I would look up her name and HSA to see interviews of her and explanations of this to see how to use it at scale. Because I'm only going to go through some of the highlights here. So before age 65, you are allowed to contribute to these, and you can do what are called catch-up contributions between age 55 and 64. But you are only allowed to take money out of them if you are taking out money that is going to be used for healthcare expenses. And some people just take it out as they go, but a lot of people leave the money in the HSA to grow and then just pay the health expenses out of pocket and keep the receipts with the idea that they're going to reimburse themselves later because there doesn't seem to be any time limit on when you have the health expense and when you reimburse yourself out of the HSA. So the advanced strategy has been to pay for the health expenses out of pocket while you are working, keep the receipts and then reimburse yourself at some later point in time. Now this changes when you get to age 65, and when you enroll in Medicare, you're not allowed to put money into an HSA anymore. But once you're age 65, you are allowed to start taking out money out of the HSA as if it were an IRA. And so when you're taking money out after age 65, if you're taking money out for health expenses, those are not taxed at all. If you're taking money out for any other purpose, then it is subject to ordinary income tax like a traditional IRA. And there never are any RMDs for these things. Now that all sounds great. They do have one big drawback, and it has to do with inheritances. If somebody inherits your HSA who is not your spouse, they are forced to disgorge the whole thing right away, and that would be income for them, the entire HSA in one year, and then they would have to pay taxes on it. So it's a terrible inheritance vehicle, at least to non-spouses. Now your question was when should somebody start pulling from an HSA, assuming I guess they've been using it as an accumulation vehicle for a good part of their working years. I think you're probably correct that the most efficient time to start pulling from that is when your retirement income is highest and near the beginning of retirement, at least to reimburse yourself for all those medical expenses that hopefully you've been saving receipts for, or maybe you've got other medical expenses that you can pay for right up front there. And you would probably spend it down to some lower level, although maybe it doesn't matter if you have a spouse. But you don't want to leave somebody with a gigantic tax bomb if you can avoid it. Now I wouldn't necessarily count on you being able to use the HSA for healthcare at the end of your life, because you may die just really quickly. And that is actually what happens to most people.

Voices [35:43]

You know, at my age, the mind starts playing tricks. So death! That's only the cat. Oh, death! That's Maggie again, grandpa. Oh, where were we?

Mostly Uncle Frank [35:59]

They either just drop dead one day or after a relatively short illness, there is a misconception in society that most people hang on for years and years and years in long-term care. That is actually the exception, not the rule. It is interesting, that is actually what distorts the retirement spending smile. What the retirement spending smile shows is that over the average of all people, spending tends to go down as you go through retirement and then goes up at the end. But there probably is no average person that applies to. And the reason that's the case is that for a lot of people, it just goes down and then it stops because they're dead.

Voices [36:41]

Dead is dead.

Mostly Uncle Frank [36:43]

And they don't have a lot of expenses at the end of life because they don't live that long in a medically compromised situation. But there are a relatively few people who have extraordinary expenses towards the end of their life, and that is what makes that smile go up at the end. It's not the average person, it's the outlier. But when you aggregate all of that into one data set, it looks like the average goes up at the end. I don't think the median person has the experience of the retirement spending smile. So I wouldn't necessarily count on there being significant medical expenses at the end of life that aren't covered by Medicare. But you can still use it to pay for your Medicare. One issue on that that many people don't realize is that if you are in that state where you are spending most of your money on long-term care at the end of your life, you can then be taking out of traditional retirement accounts and not paying any taxes on that money. And the reason that is the case is because of this provision in the tax code saying that if your expenses are, I think it's over 7.5%, are medically related, and if you're in long-term care, they're probably 90% medically related. None of that money is taxed, or it can be deducted from your gross income. And that's why keeping around a traditional retirement account all the way until death of some amount as essentially long-term care insurance also makes a lot of sense. Of course, you're still gonna have to take RMDs on that. Anyway, I do not consider myself to be an expert on HSAs, and every time I hear about them, there's a new wrinkle. But if you have one, particularly a significantly large one, or if you are a younger person interested in looking for additional retirement vehicles to put money into, you should definitely do some research on this. Because I'm not sure that best practices for using them have been firmly established. Anyway. Hopefully that helps even a little bit, even if I did screw something up. And there's a good chance I did on this topic.

Voices [38:52]

It's not that I'm lazy, it's that I just don't care.

Mostly Uncle Frank [38:57]

But thank you for your email. Now we are going to do something extremely fun. And the extremely fun thing we get to do now is our weekly portfolio reviews of the eight sample portfolios you can find at www.riskpartyweaver.com on the portfolios page. Lots of volatility last week, not much movement. But if we look at the markets for the year so far, the SP 500 represented by VOO is up 16.63% for the year so far. The NASDAQ 100, represented by QQQ, is up 21.16% for the year so far. Small cap value, represented by the fund VIOV, is up 5.60% for the year so far. Gold finally dropped after nine weeks of going up. So our representative fund GLDM is only up 56.24% for the year so far. Long-term treasury bonds are having a good year. Representative fund VGLT is up 8.36% for the year so far. REITs represented by the fund REET are up 10.53% for the year so far. Commodities represented by the fund PDBC are up 4.7%. Preferred shares represented by the fund PFFV are up 2.77%. And managed futures represented by the fund DBMF are managing to be up this year so far to the tune of 11.01%. Now moving to these portfolios. First one's this reference portfolio of the all seasons. It's only 30% in stocks, it's got 55% in intermediate and long-term treasury bonds, and the remaining 15% in gold in commodities. It's up 2.23% for the month of October. It's up 13.94% year to date and up 23.7% since inception in July 2020. Moving to these kind of bread and butter portfolios, first one's Golden Butterfly. This one is 40% in stocks in a total stock market fund and a small cap value fund, 20% each, 40% in treasury bonds divided into long and short, and the remaining 20% in gold, GLDM. It's up 2.71% month to date, it's up 17.92% year to date, and up 57.92% since inception in July 2020. Next one's the golden ratio.

Voices [41:17]

A number so perfect. Perfect. We find it everywhere, everywhere.

Mostly Uncle Frank [41:26]

A very special portfolio. The golden ratio. Next one's the Risk Parity Ultimate, kind of a kitchen sink here. I'm not going to go through all 12 of these funds. It is up 2.9% month to date for the month of October. It's up 17.85% year to date and up 40.65% since inception in July 2020. Now moving to these experimental portfolios.

Voices [42:21]

Tony Stark was able to build this in a cave with a box of scraps.

Mostly Uncle Frank [42:29]

These all involve leveraged funds and have a lot of volatility to them, so don't try this at home.

Voices [42:36]

Well, you have a gambling problem.

Mostly Uncle Frank [42:40]

But the first one is the accelerated permanent portfolio. This one is 27.5% in a levered bond fund TMF, 25% in a leverage stock fund UPRO, 25% in PFF V, a preferred shares fund, and 22.5% in gold and GLDM. It's up 4.5% month to date, it's up 24.47% year to date, and up 25.75% since inception in July 2020. Next one's the aggressive 50-50. This is our most levered and least diversified of these portfolios and worst performer. It's one-third in a leverage stock fund UPRO, one-third in a levered bond fund TMF, and the remaining third divided into a preferred shares fund and an intermediate treasury bond fund as ballast. It's up 3.79% month to date. It's up 16.09% year to date, and up 2.25% since inception in July 2020. Moving to a slightly newer portfolio, the Levered Golden Ratio. This one is 35% in a composite levered fund called NTSX, that is the S P 500 in Treasury Bonds, levered up 1.5 to 1. 15% in AVDV, which is an international small cap value fund. 20% in gold, GLDM, 10% in a managed futures fund, KMLM, 10% in TMF, a levered bond fund, and the remaining 10%. In two levered funds, UDAO and UTSL, which follow the DAO and a utilities index. It's up 3.86% for the month of October. It's up 25.96% year to date and up 19.73% since inception in July 2021. It's a year younger than the first six portfolios. And now moving to our last but certainly not least, the OPTRA portfolio, which is a return-stacked kind of portfolio that's only a little over a year old. This one is 16% in a levered stock fund UPRO, 24% in AVGV, which is a worldwide value tilted fund, 24% in GOVZ, which is a government strips fund, and the remaining 36% divided into golden managed futures. It's up 3.74% for the month of October. It's up 23.68% year to date and up 27.28% since inception in July 2024. And that concludes our weekly portfolio reviews. So you all can wake up now.

Voices [45:12]

Snooze and dream. Dream and snooze. The pleasures are unlimited.

Mostly Uncle Frank [45:18]

But now I see our signal is beginning to fade. If you have comments or questions for me, please send them to Frank at RiskPardiRader.com. That email is Frank at RiskPardyWader.com. Or you can go to the website www.riskperdiradio.com. Put your message into the contact form and I'll get it that way. If you haven't had a chance to do it, please go to your favorite podcast provider and like, subscribe, give me some stars, a follow, a review. That would be great. Okay. Thank you once again for tuning in. This is Frank Vasquez with Risk Pradi Radio. Signing off.

Voices [46:04]

I got a brand new eight month old baby girl. I feel like a housewife. Yeah. Housewife.

Mostly Queen Mary [47:26]

The Risk Parody Radio Show is hosted by Frank Vasquez. The content provided is for entertainment and informational purposes only and does not constitute financial, investment, tax, or legal advice. Please consult with your own advisors before taking any actions based on any information you have heard here, making sure to take into account your own personal circumstances.