Welcome And Show Setup

Voices [0:00]

A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines. 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 [0:36]

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. And the basic foundational episodes are episodes 1, 3, 5, 7, and 9. Yes, it is still in my memory banks. We have also created an additional resource, a collection of additional foundational episodes and other popular episodes.

Voices [1:07]

We have top men working on it right now. Ooh.

Mostly Uncle Frank [1:14]

Top men. And you can find those on the episode guide page at www.riskparty radio.com. Inconceivable! All thanks to our friend Luke, our volunteer in Quebec. Sacosh. We'd be helpless without him.

Voices [1:35]

I have always depended on the kindness of strangers.

Mostly Uncle Frank [1:41]

Because other than him, it's just me and Marion here. I'll give you the moon, alright?

Voices [1:46]

I'll take it.

Mostly Uncle Frank [1:48]

We have no sponsors, we have no guests, and we have no expansion plans.

Voices [1:52]

I don't think I'd like another job.

Mostly Uncle Frank [1:55]

Over the years, our podcast has become very audienced focused, and I must say we do have the finest podcast audience available.

Voices [2:05]

Really top drawer.

Mostly Uncle Frank [2:07]

Along with a host named after a hot dog.

Voices [2:10]

Lighten up Francis.

Fundraiser Update For Fairfax CASA

Mostly Uncle Frank [2:13]

But now onward, episode 499. Today on Risk Party Radio, we're just gonna do what we do best here, which is answer your emails. But before we get to that, I think we need to have a little Queen Mary segment. As you all know, we are raising money for Mary's charity, the Fairfax Court Appointed Special Advocates. And she has some news and some messages that she would like to share with you about those efforts which are going on in March and April this year. April is Child Abuse Prevention Month. And if I can just find her introductory music here. And they're quite spectacular, actually, but I'll let her share the news with you. And here she is.

Mostly Queen Mary [3:35]

Before I read today's CASA success story, I want to provide an update on our CASA fundraiser. We're incredibly proud to announce that the Risk Parity Radio listeners have come together to donate over $24,000 to Fairfax CASA. And that doesn't include the $20,000 in matching funds promised by our very generous donor, Matthew 6-3. Your amazing generosity supports CASA's mission to ensure that abused and neglected children have a consistent, compassionate voice in the courtroom, to helping children navigate the foster care system towards safe, permanent, and loving homes, and to give vulnerable youth the advocacy they need to thrive despite their circumstances. To everyone who contributed, thank you, thank you, thank you. You've proven that the Risk Parity Radio audience isn't just a group of savvy investors. You're a community with incredible hearts, and we can't thank you enough.

Voices [4:31]

The best, Jerry, the best.

Mostly Uncle Frank [4:34]

And now for some bonus merry time. She's also going to share with you another vignette from some of the work that the Fairfax Casas do with the foster children that they serve. And so here she is back for that.

Mostly Queen Mary [4:49]

Three teen sisters were removed from their mother and stepfather's care due to abuse. Immediately, a maternal uncle, still in his twenties, stepped up to be a placement for the sisters, keeping them out of foster care, allowing them to stay together. At first, the uncle and sisters reported many challenges and expressed apprehension about being involved with the department, the court system, and the CASA program. However, thanks to the trust and relationship the family built with their CASA volunteer, they grew to embrace the work the team was doing to ensure that the girls were safe and thriving. What follows is the uncle's reflection, in his own words, about the impact of their CASA volunteer. The role of CASA was huge for my girls and for me. Our CASA appointee is someone the girls genuinely appreciate in their lives. When this all started, the girls and I were all so overwhelmed. Employees from the Department of Family Services were coming in and out of our home with lawyers, caseworkers, counselors telling us about court dates, etc. With all of this going on at the same time, the casa was the one person the girls learned to confide in if they needed to share something. The girls, for a good majority of the time, viewed everyone else as someone trying to take them away from their mother. However, they saw their casa as someone they could confide in when they thought no one else was listening. They viewed their casa as the one person on their team. I think the role that casa plays is significant. It's a way to show the child that even though you might think everyone here is against you, I am here to make sure your voice is heard and not silenced. To this day, their casa's involvement means a lot to them, and I genuinely thank her from the bottom of my heart.

Mostly Uncle Frank [6:39]

And so we hope you will give or continue to give to Fairfax Casa. And whether that's tens of dollars, hundreds of dollars, or thousands of dollars, it's all very much appreciated. And as an extra added bonus, you get to go to the front of the email line if you do give to Fairfax Casa or to my charity, the Father McKenna Center. We will be putting Fairfax Casa's donation page in the show notes. Make sure that you tell us that you are a donor in your email so that we can duly move you to the front of the line. And actually, all of our emailers today are donors to at least Fairfax Casa, if not the Father McKenna Center as well.

Voices [7:20]

Inconceivable!

Mostly Uncle Frank [7:22]

So thank you all again for that. But speaking of emails, it's about that time.

Voices [7:27]

Here I go once again with the email. And first off.

Mostly Uncle Frank [7:33]

First off, an email from Jose.

Mostly Queen Mary [7:37]

No way.

Mostly Uncle Frank [7:38]

And Jose Wright.

Mostly Queen Mary [7:41]

Hello, Frank and Mary. I want to thank both of you for the incredible work you are doing both on this podcast and with your respective charities. This is our second email to you, and we're still giving to the Father McKenna Center via Patreon. Yeah, baby, yeah! My wife and I have been very moved by Mary's charity, so we have donated to Fairfax Casa as well.

Voices [8:03]

Yes!

Mostly Queen Mary [8:04]

Your response to our first email in episode 453 was very informative but raised new questions. Also, we would like to hear your thoughts on some recent developments. First, the developments. One, we have canceled the personal advisor service with Vanguard.

Voices [8:22]

Each week on I Drink Your Milkshake, we visit a famous ice cream parlor or soda fountain.

Mostly Queen Mary [8:29]

While we did learn quite a bit from him, we were troubled by what appeared to be a cookie-cutter approach, and frankly, we couldn't bear to hear your There Will Be Blood milkshake reference anymore while using this service.

Voices [8:42]

Let's go drink a milkshake, shall we? Good day, sir, ma'am. Uh hello. I'm Daniel Plainview. This is my partner in Son HW. I'm an oil man, but I also love milkshakes. And now I'm going to drink your milkshake. What do you think of that? Um, something I don't understand. Well, let me explain it to you. You have a milkshake, and I have a straw. Well, that's a really big straw. My straw goes across the room, and I drink your milkshake. I drink it up!

Mostly Queen Mary [9:31]

We feel comfortable that we can manage our own money into retirement. We took your advice and recently opened a small account with Fidelity using the Golden Ratio Investments and plan on practicing withdrawals with that account. Two, we have purchased GLDM and DBMF in our rollover IRA, and each is about 5% of our portfolio. By the way, it felt like we were moving heaven and earth to get our advisor to allow us to make these purchases.

Voices [10:01]

I'm joined by a special guest. This week it's my good friend, Mexican businessman and assassin Anton Sugar.

Mostly Queen Mary [10:10]

Our current Vanguard portfolio is now comprised of approximately 50% stocks, 40% bonds, 5% GLDM, and 5% DBMF as follows traditional and rollover IRA, VBTLX 13.1%, BNDX 5.25%, GLDM 5%, DBMF 5%, brokerage account, VXUS 18.98%, VOO 9.5%, VTI 15.55%, VTCLX 5.28%, VMLUX 3.72%, VWLUX 5.92%, VMIUX 8.09%, and VMFXX 2.92%. As we previously stated, most of our investments, 71%, are in a brokerage account with the remainder in traditional IRAs and a rollover IRA. We're concerned with the overlap between VOO, VTI, and VTCLX, but not sure we can do anything about it right now without incurring a large capital gains bill.

Voices [11:36]

No! It's a tax collector! Hi there, SpongeBob!

Mostly Queen Mary [11:42]

In general, we are interested in your thoughts on how to begin to transform this portfolio into a risk parity portfolio, but also have the following specific questions. One, we have over 75% in large cap, most of that being growth. The other approximate 25% is in mid-cap and small cap, but all of that is from VXF and VTI. In other words, we do not have a single fund dedicated to small cap value. I could have used a little more cowbell. Based upon your recommendation and Paul Merriman, we're planning on investing some recently earned money to purchase AVUV, but there is no way we can get AVUV to be anywhere close to 50% of our stockholdings without selling some or all of the VTCLX and VOO. Should we wait until I retire to sell these assets to try to take advantage of 0% capital gains tax bracket? How does that work? I tried to look for a prior discussion in your podcasts about it, but couldn't find one. 2. You stated on your podcasts and other podcasts that the minimum amount of gold to have in a decumulation portfolio is 10%. You also stated that it's preferable to have GLDM in an IRA. We are planning on purchasing more shares of GLDM in our IRAs, but may run out of time given the annual contribution limits and the fact that I plan on retiring in three to five years. Should we try to purchase the remaining GLDM in the brokerage account? 3. You stated numerous times that an easy way to acquire the cash we'll need for retirement is to turn off the reinvestment option on our investments. Which ETF should we do this? Bonds, stocks, or both? Do we turn the reinvestment back on if we find we're accumulating too much cash? 4. You've made it clear we should have intermediate to long-term treasury bond funds like VGIT and VGLT in our retirement portfolio. We currently have VBTLX, which is about 13% of our total portfolio. It looks like VBTLX has about 50% of its holdings on intermediate treasuries. Is that enough? Or should I sell VBTLX and BNDX and purchase VGIT and VGLT? That would get us up to approximately 20% treasuries. 5. Lastly, sorry for the long email, Mary. Other than the fact that the simplicity of the Golden Ratio portfolio kicks our Vanguard portfolio's butt, are there any other insights? Please assume that we plan on withdrawing four to five percent of our portfolio during retirement. Thank you again for everything you do. Best Jose and Mary Lou.

Voices [14:42]

Mary Mary, I need you again.

Gold Placement And Turning Off DRIP

Mostly Uncle Frank [14:50]

Well, first off, Jose, thank you for being a donor to Fairfax Casa and being one of our patrons on Patreon. It's another way you guys can give to our charities at the support page at www.riskparty.com. But it is move you to the front of the email line. And I did go back and listen again to my answer to your questions in episode 453. So we'll just try to build on what I said there. At that point in time it wasn't clear to me how much money you were planning on spending from your portfolio, but now you've clarified that as to be somewhere in the four to five percent range. And so we'll answer your questions with that in mind. And get into those questions. Okay, your first one is how to minimize the tax burden from selling shares to convert them to small cap value or something else. You're talking about your large holdings in the SP 500 and the total market fund and VTCLX, which is similar. And there are a few approaches you can make to that. First would be to sell individual tax lots, because if you just sell without any instructions, typically it will sell the funds you bought the earliest, and those usually have the highest capital gains associated with them. But you don't have to do that. You can instruct Vanguard to sell the shares you acquired more recently, and the capital gains on those are going to be a lot less. So that's where I would look first, because maybe if you're selling some of those, your capital gains really aren't that significant, at least for those. And you may need to ask Vanguard how to do that, but they do have a system that allows for that there. Now, your other question is whether you should wait to sell those assets to take advantage of the 0% capital gains tax bracket after retiring. And that is also an option. And the way that works though is you have to be in the 0% tax bracket. In order to be in the 0% capital gains tax bracket, I'll link to an Investopedia article on the show notes. You typically have to be in the 12% bracket or close to it for your regular marginal taxes, which means your income for the year is probably going to be limited to less than 120,000 or somewhere around there if it's a couple we're talking about. So I'm not sure that you're ever going to be in that bracket, is one of the questions I would have because I don't know exactly what your income is now. But since you are holding municipal bond funds, I have to believe that you're in one of the higher tax brackets at the moment. And if that's the case, you might be moving from the 20% tax bracket down to the 15% capital gains tax bracket. The 15% long-term capital gains tax bracket is really large, and it goes from incomes of about 100,000 all the way up to around half a million dollars. So most people generally fall into that, at least most people that have accumulated a lot for retirement. So I would not let the perfect be the enemy of the good and try to minimize the amount of taxes you are incurring, but spread it out over the course of years or do part of it after you retire. But I would look into that tax lots option as your first option here. Your second question is where to put the gold. And yes, if you had room in the tax advantaged accounts, I'd put it in there, but if you don't, putting it in the brokerage account is fine too. It does not pay an income, so it has an advantage there, and you can also tax loss harvest it against other assets, assuming it would go down, which is not a safe assumption these days, but you never know what it's going to do, at least over the short term.

Voices [18:43]

This is gold, Mr. Bond. All my life I've been in love with its color, its brilliance, its divine heaviness.

Moving Bonds Toward Treasuries

Diversification And Safe Withdrawal Rates

Mostly Uncle Frank [18:54]

But it is not wrong to put some of the gold in your regular brokerage account if that's where you have room for it. Question number three, which is about turning automatic reinvestment off. I would just do that with all your things right now. Because since you are making moves, you don't want to get caught in wash sales or other problems. And you really want to limit the number of transactions you're making, particularly if you're changing assets. So I would do this not only to allow yourself to accumulate some cash, but also to have better control over these other sales you may be making, so as you're not doing wash sales and not having a lot of complications with a lot of extra tax lots. It's just easier to manage if you turn all those reinvestment things off. Because even if you're not going to spend the cash, you are likely to want to buy something that you don't already hold. For instance, if you wanted to take some of that cash and buy some small cap value stocks, that would be one way to get more of an allocation in that. So, yes, turn that all off. Alright, question number four. This is about changing out of the total bond market fund VBTLX to either VGIT, that's intermediate term treasuries, or VGLT, which is also long-term treasuries. And you have this B N D X, which I already told you to sell in your last email to me in episode 453. So yeah, that's all in the retirement accounts. You can dump all that and buy VGIT and VGLT. This might be helpful to you in that if you are holding VGLT because it's the long-term treasury bond with a higher duration and more volatility, you basically can hold less of that than you would have to if you're holding VGIT, which is less volatile but also moves less to the positive side during a recession. So, yes, I would just sell all of those and buy the treasury bonds that you really want, and then not have any more of those two funds at all, because it'll just make management easier going forward anyway. And then lastly, as your fifth question, I did take a look at your test folio link about the portfolio you have right now.

Voices [21:11]

You're gonna end up eating a steady diet of government cheese and living in a van down by the river.

Mostly Uncle Frank [21:20]

Basically, I mean it exhibits the lack of diversification that we've talked about. That if you're holding all sort of large cap, bland large cap growth type stuff that's not very well diversified, you want to get some of those stocks into the value side, particularly small cap value, but any kind of value is going to help there. The bonds are mostly munis and corporates, and so you want those to be treasuries because those are the most diversified from your stock holdings. And then you've got 10% and alternatives now, but that's kind of the minimum level you'd want to have.

Voices [21:57]

We need to talk. Do you know what this is about? My uh flair? Yeah. Or uh your lack of flair because uh I'm counting and I only see 15 pieces. Let me ask you a question, Joanna. What do you think of a person who only does the bare minimum?

Mostly Uncle Frank [22:24]

Usually you'd want to have between 10 and 25% as kind of a good number for a guideline for how much of that you want. But it's really the lack of the value stocks and the bond choice that are making that portfolio underperform as far as a safe withdrawal rate is concerned. And if you can remedy those things, I think you'll see that improve substantially, which will reduce the overall volatility of the portfolio. Because you can see at the graph at the bottom that your current portfolio has had drawdowns of over 30%, and actually three big drawdowns.

Voices [23:01]

I've officially amounted to check you squat.

Mostly Uncle Frank [23:06]

Whereas the golden ratio one you're comparing to has its biggest one drawdown of about 20% over the entire course of the history of the thing, which is going back to the 1990s in this case. It would look worse if you went back to the 1970s, I can tell you that. But you do have reasonable macro allocations, which is one of the key factors. If your stock allocations are somewhere between 40 some percent and 70-some percent, usually that's the sweet spot for safe withdrawal rates. So you do have that going for you. That's why your max drawdown there is a little over 30% instead of being more like 40%, which it would be if you had a very stock-heavy portfolio. So hopefully that all helps. Thank you for being a donor to Fairfax Casa, and thank you for your email.

Voices [24:08]

Second off.

Mostly Uncle Frank [24:10]

Second off, we have an email from Luke. Luke from Quebec, who is also our maestro on the website.

Voices [24:20]

We have top men working on it right now. Ooh.

Mostly Uncle Frank [24:27]

Top men. And Luke writes.

Mostly Queen Mary [24:33]

Hi Frank, I hope you and Mary are well. Making a donation to Fairfax Casa has been on my to-do list for a while, and I finally got to it today. I guess that also gives me an opportunity to ask a question. There's one that's been on my mind recently, so here it goes. As my daughters approach university age, I've been wondering about how much financial support to provide as they start their adult lives. While the Show Us Your Portfolio series of podcasts touched on this, the advice often focuses on high to alter high net worth families, which doesn't fit my situation. It seems like most advice coming from AI or public figures also falls in the same category. How do you recommend balancing a head start for children without diminishing their drive to work hard and achieve their own goals? Any guidance or personal experience you could share would be much appreciated. By the time you read this, you will likely have hit the milestone of 500 episodes of Risk Parity Radio.

Voices [25:43]

I don't say it yet. I want to, but I do not say it.

Mostly Queen Mary [26:07]

I should not have read the subject line on this email. What have the children ever done for me before I start to read the email?

Voices [26:17]

Donate to the children's fund? Why? What have children ever done for me?

Mostly Uncle Frank [26:23]

Well, Luke, thank you for being a donor to Fairfax Casa and being our maestro on the website.

Voices [26:31]

I'm sorry, but I didn't mention it earlier, but actually I prefer to be called Maestro.

Mostly Uncle Frank [26:39]

You've probably done more for this in the last year than just about any other one of our listeners. Sakosh. I know you put many, many hours into fixing that thing, and I really do appreciate it. As do the other listeners who can now easily search and find things that they couldn't find before.

Voices [27:07]

I'm not a smart man.

Mostly Uncle Frank [27:10]

I may have a little special slideshow or video retrospective if I can create something interesting using Google Notebook LM, which I've been playing with a lot recently.

Voices [27:22]

This is pretty much the worst video ever made.

Mostly Uncle Frank [27:25]

We'll see what happens. I've got a couple of days to figure that out.

Voices [27:30]

Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.

Mostly Uncle Frank [27:41]

So your question is about financial support for your daughters as they get to college age. And two things. First, I do not consider myself an expert in this area. I will give you some references to people who know more than I do. But second, this is highly dependent on your financial circumstances. And I always like to kind of think about it this way that given whatever your financial circumstances are, would they inherit lots and lots of money? Because if they were going to inherit lots and lots of money, you probably want to be spending some of that earlier on their college education. If you're not in a circumstance where your children would be inheriting lots and lots of money, you probably want to curtail that and talk to them about it. Well, let me give you these other references first, which I don't know will be that helpful since you're in Canada, but maybe they'll help somebody else. So there are a couple of experts that I've heard speak on Choose FI and at the economy conference. One is a guy named Brian Eufinger or Eufinger, and another one is a guy named Chris Corinthian. And these guys are all about finding ways to pay for college and talking about financial aid and scholarships and all of those sorts of things. And depending on your financial circumstances, that may be a big part of what your planning looks like. So if you go to the Choose FI podcast, I'll give you these episodes 114 and 114R, 154, 309, 460, and also maybe episodes 457 and 496. Those are all talking about paying for college. And then if you look up Chris Corinthian, he's got an economy talk, and he's also been on Catching Up to Fi recently. I'll see if I can find that podcast. But I would be looking at people like that who are more in the know and more on the ball than somebody like me, because I rarely pay attention to this very closely anymore since our kids are all out of college now. But getting now away just from the nuts and bolts of that and talking about, well, what do you do or say to your children? I think it's important for everyone that's sending a kid to college and is planning on paying for it or not paying for it to actually have what I call the talk. What what would you say you do here about what your expectations are and what you plan on doing with your child sometime when they're in high school, maybe a little bit before you can preview the conversation. But they need to know what your expectations are and your ability to support them is going to be so that this can all be planned and nobody's surprised by something costing more than you expected, or the child applying to something that you obviously can't afford and can't do. And different families have different reasons for sending their children to college or different expectations of what they hope they're going to get out of it. Some people think that getting the the degree is the most important thing. Some people think preparing them for another degree, a graduate school degree, is the most important thing. They want their children to have more than one degree. For us, though, that wasn't really the priority. We knew that our kids were going to go to college because they're academically inclined. And we have lots of people running around with advanced degrees, but that wasn't the focus or idea. Our main goal for them in their 20s was that they become financially emancipated from us so they could support themselves. And whether that involved a college degree or something else was less important than conveying what that goal was. And so when we talked about them going to college, I told them that basically I wanted them to accomplish three things there if they were going to college. One of them would be to get a valuable certificate out of college. Because the day and age we live in now, you don't need to go to college to study a particular thing. You can study anything you want online or in other ways. But in terms of what you were going to pay for in terms of a degree, we wanted them to get a valuable certificate that they could use. So we have two engineers and one business degree out of the three. The next thing we told them is that we want them to develop some valuable skills while they were in college.

Voices [32:11]

You know, like num Chuck skills, bow hunting skills, computer hacking skills.

Mostly Uncle Frank [32:20]

Not necessarily through their classes, but any other things they might be doing in terms of internships, summer jobs, other things that would launch them on their way. And then the third thing we wanted them to do in college was get connections so that they could get a decent job upon graduating. And we also told them not to think about graduate school, but that our intent was to pay for their first degree, but we were unlikely to pay for a degree after that. So they would have to think about funding that on their own if they chose to do that. And it's not like we might not decide to do that eventually, but that was not the plan. So we did not want them just going to college figuring they could do whatever for their first degree and then figure it out after that, because we see a lot of younger people just kind of becoming serial students and never quite figuring out what they want to do because it's easier just to stay in school. And we didn't want them to have that experience. Now, as it turned out, our eldest one ended up getting a master's degree, and his employer paid for that, which was good.

Voices [33:27]

Show me the money! Jared, you better yell! Show me the money!

Mostly Uncle Frank [33:32]

Our middle one has not pursued another degree, although he could still do that. He's less interested in school overall. And our third one is actually going after the CFA certification. So he's gone through level one of the CFA past that. He's got two more levels to go, but that is a better choice for him than graduate school, given he's in finance. But I also did tell them at the time we I gave them the talk is that we were not sending them to college to go, quote, find themselves, unquote.

Voices [34:02]

You're not going to amount to Jack Squad!

Mostly Uncle Frank [34:06]

Or have some kind of transformational experience.

Voices [34:10]

Well, the frickin' guy.

Mostly Uncle Frank [34:14]

Just because the cost of college is too much for that, that you can go find yourself not in college by having a job or doing something else. So those were our expectations. That doesn't mean they have to be your expectations, but what I'm telling you is you need to convey whatever your expectations are to your children so they have an understanding of that and everybody's on the same page as you go through this process of figuring out what they're gonna do. It's also true that there are a number of children who college is not going to actually be appropriate for and they'd be better off just going and working, like in a sales job or something like that. There's an interesting book called Barking Up the Wrong Tree by a guy named Eric Barker. And if you read the first chapter of that, talks about sort of which kinds of people have a predilection for academics versus entrepreneurship. And they're usually two different kinds of people. It's actually rare to have the same person have both of those skills or abilities or interests. And so chances are if your child is naturally good in school, they should keep going to school because they're good at following rules and going through systems. Whereas if they're not good in school but have other aptitudes, they might be better suited to going the entrepreneurial route.

Voices [35:35]

You know, whenever I see an opportunity now, I charge it like a bull. Ned the bull, that's me now.

Mostly Uncle Frank [35:41]

And I'm just telling you that just so people don't get the idea that there's only one way to do this, that different children are different, and so different choices are different for different children. Different choices are going to be appropriate or better for one child over another.

Voices [35:57]

The good part, William, is that no matter whether our clients make money or lose money, Duke and Duke get the commissions. Well, what do you think, Valentine? Well, it sounds to me like you guys a couple of bookies. I told you he'd understand.

Mostly Uncle Frank [36:20]

All right, then your final question was how do you recommend balancing a head start for children without diminishing their drive to work hard and achieve their own goals? Again, that is child specific a bit. Most people that age, even if they have an idea what they might want to do, it's probably not the end decision, and nobody that age is really capable of deciding what they're gonna do for the rest of their life. I know I wasn't, and most of us probably weren't either. That I started thinking I was going to be an astrophysicist, and look where I ended up.

Voices [36:51]

Do you think I got where I am today because I dress like Peter Pan here? Do you think anybody thinks I'm a failure because I go home to Starla at night? Forget about it.

Mostly Uncle Frank [37:03]

You do need to make sure you give them permission to change their mind. But that's also why I think a goal like becoming financially emancipated from your parents is a much better goal than any kind of particular career or very specific outcome in terms of degrees or who you're gonna work for, any of that sort of stuff. Because there's a lot more permission and flexibility, and then knowing that yes, you do have to work hard to become financially emancipated, that that will encourage that kind of work ethic. And also their personalities, because people that are high on conscientiousness generally don't have any trouble with this kind of issue, and our kids all played sports like their mother, and so Mary's influence was supreme in terms of them being hard workers.

Voices [38:21]

My mom always said life was like a box of chocolates. You never know what you're gonna get.

Mostly Uncle Frank [38:32]

And finally, since I forgot to mention it early, if I had no money and wanted to go to school if I were a young person, what I would probably do if I couldn't get a scholarship is focus on going to a community college, getting credits there, or getting more credits in high school through CLEP tests or other tests to minimize the cost, because at least in the state that I live in, you can transfer your community college credits over to the in-state universities, and that's often a way to go. But if you don't have a a lot of money, or even if you do, but you really want to be spending that on a graduate degree, you've decided you're definitely gonna be wanting to go to medical school or law school, then you just want to minimize the cost of that first degree. And whether that's through scholarships or just going to a less expensive institution, there's always a way that can be done. But I think overall you really want to think of college or education as a tool to get somewhere else and not as an end to its own means, which I think is sort of the popular romantic way people look at college. So, hopefully at least some of my rambling there helped.

Voices [39:44]

You are talking about the nonsensical ravings of a lunatic mind.

Mostly Uncle Frank [39:50]

Thank you for being a donor to the Father McKenna Center, Fairfax Casa, and being our most valuable volunteer as far as this podcast is concerned.

Voices [40:02]

Chris the S Tabarnak Twimots, Chris.

Mostly Uncle Frank [40:06]

And thank you for your email.

Voices [40:18]

Last off.

Mostly Queen Mary [40:58]

I was not headed in a conservative enough direction, so this is a helpful reroute. Getting a testfolio link was like a Christmas present. I'm as a schoolboy. I miss Giddy, I'm as giddy as a drunken man. I played around with it for a very long time. In my interpretation of your suggestions, you were pushing the maximum amount of conservatism in the portfolio construction to last for the least amount of time needed, eight to ten years, to give me the highest chances of success at making the money last, which is exactly what I need. However, I do have a follow-up question. What if we pushed the envelope on either end of the risk or duration spectrum? I'm curious how you would approach flexibility on either end. In scenario one, what if I were willing to take more risk? You have a gambling problem. I found your suggestion of 15% L LCV and 15% KBWP compelling, but I am still holding 30% SP 500 that I don't want to have to sell this year because of the tax hit. I already sold 60% this year, which made me curious about starting off with more risk in the beginning, or even taking on more risk to make the money last longer, or even just what this would look like with a little more risk and chances of higher reward. Scenario 2. What if I wanted to stretch this money to last 15 years? I'm curious about this possibility, since by then I'll be 59 and a half and can start withdrawing from other accounts. In both cases, I wonder if I could afford more risk or stretch the money further because I could pick up consulting gigs and make up some living expenses if needed. I'm also receiving a 1.5 to 2 million-ish inheritance at some point in the future, which will supplement all of these strategies, but of course I have no idea when that will happen. I'm going to get somewhere between 10 to 20 years, and I hope it's closer to the 20 years, of course. Both of these facts make this whole thing not quite as scary. Please, no pressure to respond as you've already spent so much time on my case, and I am so grateful. In any regard, thank you again, and I will continue to enjoy this marvelous podcast and to recommend it to others. Blessings, Single Mom Sarah in Southern California.

Voices [43:24]

Oh, I'll just mom, Sarah.

Mostly Uncle Frank [43:32]

Well, first, thank you also for being a donor to Fairfax Casa. As most of you can surmise, this is also a follow-up email like the first one. And the original email that Sarah sent in to us is in episode 488. So I don't want to rehash all of what we talked about there, but she's got an interesting situation where she wants to take some of her money, spend it early on over a short time frame of eight to ten years. Then go back to work for about a decade and then retire after that. And so we've been mostly focused on that first period. And so, yes, when I answered the question to begin with, I was assuming that you were not going to be making any more money while you're on this break, and that the money that you had had to extend and last for the time period of eight to ten years. And so under those circumstances you just needed a really conservative portfolio. All right, looking at your current questions, what if you're willing to take more risk? Yes, then you could hold a more aggressive portfolio and it would look more like one of our sample risk parity style portfolios, like a golden butterfly or golden ratio kind of thing. Because the truth is, those are probably going to work anyway. And if you wanted to extend the time, that would also be what you'd be looking at doing. Basically, going from a really conservative portfolio of 25 to 30% in equities up to something that's more like 40 to 50% would make the most sense here. Of course, you are taking more risk.

Voices [45:09]

You can't handle the gambling problem.

Mostly Uncle Frank [45:12]

In most cases, these things are going to work out. One calculator that you may look at is the withdrawal rate chart from portfolio charts, which I'll link to in the show notes, because it's got a little slider, so you can l look at like 10 to 15 year retirements, which is essentially what you're talking about here, and see what a safe withdrawal rate would be. And these are high safe withdrawal rates, they're like seven or eight, nine percent, because it's just a very short time frame and you don't care if you run out of money at the end of it, at least for this pot of money. So I would put whatever portfolios you're thinking about in there to kind of get a ballpark idea of what their safe withdrawal rates would be for this eight to ten year period. Test folio also has some data like that, although I'm not sure it's in as useful a form to look at, although do definitely look at the safe withdrawal rate stats on that page that I already gave you. And you can modify the portfolios and look at the safe withdrawal rates for shorter periods of time there. It's under the little tab that are called withdrawal stats. I would also probably try to model these things at portfolio visualizer on their financial goals tool. And one of the other things you can do is you can experiment with if you are having some other side income that's essentially a positive number that's flowing into all of this, that can be modeled both at test folio and at portfolio visualizer on that financial goals tool, which allows you to start and stop various sources of income. Now, of course, if you get the inheritance, then I think all of your problems go away.

Voices [46:54]

Well, you haven't got the knack of being highly rich, you say you should do like me, just snooze and dream, dream and snooze. The pleasures are unlimited.

Mostly Uncle Frank [47:03]

It does seem like there are a lot of moving parts here, so that means you're going to be doing some more modeling using these sorts of tools to try and figure out where you're going to be with this. But yes, the general answer to your questions is yeah, if if you take more risk and you add more stocks to the mix of your portfolio, it probably will last longer. And if we have a good sequence of return risks, then you won't have any trouble at all, that's for sure. Anyway, I think you have some more playing around with tools to do. I will link to them in the show notes so you can find them easy. And hopefully that helps some. Thank you for being a donor to Fairfax Casa. And thank you for your email.

Voices [47:48]

Sarah Smile.

Mostly Uncle Frank [48:00]

But now I see our signal is beginning to fade. If you have comments or questions for me, please send them to Frank at RiskPardyRader.com. That email is Frank at RiskPartyRader.com. Or you can go to the website www.riskpartyradio.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 Party Radio. Signing off.