Welcome And Listener Resources

Voices [0:10]

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. Who?

Mostly Uncle Frank [1:14]

Top men. And you can find those on the episode guide page at www.riskparodyradio.com. Inconceivable! All thanks to our friend Luke, our volunteer in Quebec. Zachosh. 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, right?

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.

Mostly Uncle Frank [2:13]

But now onward, episode 542. Today on Risk Party Radio, we're just gonna do We Do Best here, which is attend to your email.

Voices [2:23]

I don't think it misses what you think it miss.

Mostly Uncle Frank [2:26]

And so without further ado.

Voices [2:28]

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

Donor Thanks And Fundraiser Update

Mostly Uncle Frank [2:34]

First off, we have an email from Mike.

Voices [2:37]

Let's get Mikey.

Mostly Queen Mary [2:39]

Yeah.

Voices [2:40]

He won't need it. He hates everything.

Mostly Uncle Frank [2:43]

And Mike writes.

Mostly Queen Mary [2:45]

Hello, Frank and Mary. You convinced me a couple years ago that a risk parody style portfolio was the way to go for my retirement assets.

Voices [2:53]

Yes!

Mostly Queen Mary [2:54]

I recently checked back into your podcast and was excited to see you added another worthy charity. I was conflicted when deciding between them, so I decided to donate to both. Keep up the great work.

Voices [3:06]

Yeah, baby, yeah!

Mostly Queen Mary [3:09]

My wife has minimal interest in managing our investments, so I have tried to make things as simple as possible with respect to account structure and number of accounts. I have a 401k from a previous employer, a traditional IRA, and a Roth IRA for qualified accounts. I'd love to roll out the funds from the 401k into the other two IRA accounts, but I would lose the federal ERISA protection. I live in Massachusetts, and the state protection for IRAs is good, but not as good as the ERISA protection. I have an umbrella policy up to my net worth, kids grown, no ties to businesses or highly litigious activity, but I'm still nervous about giving away this protection in the name of simplicity. I've asked many people for their opinions, and their answers are all over the map. Do you have any wisdom to share pertaining to this topic in general? I understand that this is 100% my decision and you do not give advice. That said, you are very wise and I'd like to hear anything you are willing to share. Thank you again for all you and Mary do for charity and for us DIY investors. Mike.

Voices [4:18]

He likes it. Hey Mikey.

Mostly Uncle Frank [4:22]

Well, first off, thank you for being a donor to both the Father McKenna Center and Fairfax Casa. As most of you know here, we do not have any sponsors on this program. We do have two charities we support. They are the Father McKenna Center, which supports hungry and homeless people in Washington, D.C. For me, and Fairfax Court Appointed Special Advocates for Mary, of which she is one. And there's more about this on our support page, but if you donate to either one of the charities, you get to go to the front of our email line, which Mike has done here. You just need to mention it in your email so I can duly move you to the front of the line. Now just a note on our recent fundraiser for the Father McKenna Center, the Top of the T-shirt campaign. We did achieve the top of the t-shirt officially. Sweet. And you can see a picture of that t-shirt on the support page at www.riskpartyrador.com. We are actually going to have that walk this Saturday, September 26th. If you are in the DC area, you can come down and walk with us if you like. And we also get ten t-shirts for being a champion size donor. I did finally add up all of the donations, and it's about $70,000. So I thank you all very much. I thought it was about $80,000, but I double counted at $10. That's on me.

Voices [5:48]

Are you stupid or something?

Mostly Uncle Frank [5:51]

Still, it is by far and away the largest donor source for the walk through McKenna because our total money raised for this event is going to be about $200,000. But if you did donate and you want a t-shirt, please email me and I will see what I can do with our most intrepid development associate, Ben, down at the Father McKenna Center, and his new assistant, Claire. And if you're in the local DC area and still want to sign up, you can do that at the Father McKenna website, which I will put in the show notes so you can check that out as well.

Forecasting Lawsuit Risk With AI

Mostly Uncle Frank [6:32]

Now, getting to your email. This is a good exercise in forecasting and the use of artificial intelligence. So whenever you are faced with a problem like this where you are trying to forecast a probability, the first thing you need to do is recognize the pitfalls here and the cognitive biases that are going to be at work. Because most people do this wrong. They naturally do this wrong.

Voices [7:00]

Wrong!

Mostly Uncle Frank [7:01]

And the wrong way to approach this is to think, okay, I've identified a risk here, and I know it's a risk, so there's a possibility, therefore, it's a probability, therefore, I need to assign some large risk factor to it. The possibility equals the probability. That is a cognitive bias called the possibility effect. It is exacerbated if you can tell stories about the calamity in question, or you know somebody who has been subject to the calamity in question, which is a lawsuit, but that doesn't tell you anything about what the actual risk or probability is. And so if you're doing that, that ultimately results in rain man thinking, which is a plane crashed, therefore I shouldn't fly in planes.

Voices [7:57]

Don't be silly, it's the safest travel in the world. You're gonna love this, trust me. Yeah. Come on. Ready? Yeah. We're in an airport. People fly out of airports. What do you think we were doing here this whole time? Yeah, flying very dangerous. 1987 there were 30 airline accidents, 211 were fatalities, 231 were deaf passengers.

Mostly Uncle Frank [8:16]

Alright, so how do you assess a probability like this? I mean, this used to be a very difficult thing to do. The first thing you should not do is ask random other people. Why? Because random other people will also be subject to the cognitive bias of the possibility effect. And they probably are going to tell you what they want to hear, or it's just based on some fear or lack of fear that they personally have. So you would not ask any random person this kind of a question. If you knew somebody who is in the business of assessing these kind of liabilities, either they were a personal injury attorney or they were an insurance adjuster or somebody who is likely to know something about this, then they might be a good source to ask. Although be careful of asking an insurance agent because they are going to be subject to a different bias. Which is the reason you never ask a barber whether you need a haircut. Because anybody who sells insurance will undoubtedly overestimate the risk.

Voices [9:24]

Bing!

Mostly Uncle Frank [9:25]

Because they want to sell insurance.

Voices [9:27]

Bing again.

Mostly Uncle Frank [9:29]

So at that point, you used to be kind of stuck because it's you know very hard to do this kind of research without going into records on personal liability lawsuits or things like that. Fortunately, now we can ask our favorite artificial intelligence bots, and they can usually come up with reasonable answers or a lot better answers than what you're gonna get from asking somebody or just ruminating about it in your head. So that's what I did. I went and asked Gemini, and you can ask your favorite bots and compare them. So the probability of anybody, and by anybody I mean a retiree here, of being sued in a lawsuit like this for personal liability is infinitesimal, is what it said. It's infinitesimal. So ordinarily you might just stop there. But this goes to forecasting. So what are we talking about? You're not just any retiree, you're a retiree with some significant assets to be protected. And that is actually what personal injury attorneys are going to do when they have the possibility of filing a lawsuit. The first thing they're going to investigate is whether the target of the lawsuit has some assets to go after or some wealth because they don't waste time suing people who are deadbeats already. So, what do we think is the reasonable probability of somebody with significant assets actually being sued? And there are insurance statistics out there. What it'll tell you is that for every hundred umbrella policies that are sold, which are designed to protect against this kind of liability, there are a claim rate of about 1.2%. And the average liability in those kind of cases is around $1.7 million. So the expected value of that would be 1.2% times $1.7 million, which is about $20,000. So what does this simple calculation tell you? It tells you that your actual worry here should be somewhere between zero and twenty thousand dollars, not millions of dollars. Okay, so what are the ways to protect against that risk? Well, there are basically three ways. There's behavioral, how do you live your life? What are your real probabilities of getting sued in a liability lawsuit? There's insurance, umbrella insurance that you can buy. And then there are other things you can do, which are what you're describing here is trying to put your money in certain kinds of accounts that have certain kinds of protection under the law. The easy answer and the most recommended answer here is just to get umbrella insurance. It doesn't cost that much. It costs hundreds of dollars a year or maybe a thousand dollars a year to cover your entire net worth. And I suppose over time it'll add up to $20,000, but it's going to be worth it for your peace of mind and for other reasons. Because the other thing that umbrella insurance does is it buys you attorneys to protect you, and that's really what you want. You would not want to be risking the lawsuit and trying to protect yourself by putting your retirement accounts in certain kinds of accounts or leaving them in certain kinds of accounts when you can buy this cheap umbrella insurance and get attorneys there who are gonna settle this claim anyway for you. So that's the real solution. What about the other solutions? Well, there are some behavioral things that are kind of obvious. One is don't engage in reckless driving or have people on your insurance that you think are gonna engage in reckless or drunk driving. In that line, the other major source of liability here is hosting gigantic parties or weddings or something where a lot of people are getting drunk there and you know they're getting drunk, that would also be a source of liability. Worse even yet would be having your children or grandchildren and their friends over and plying them with alcohol. Stupid is stupid does, Ms.

Voices [13:54]

Blue. I guess.

Mostly Uncle Frank [13:56]

So if you can avoid doing those sorts of things, you probably don't have much of a problem here. You can lower your liability that way. The other main source of liability is hiring substandard or unlicensed contractors to do work around your house, which then results in some kind of liability because you know somebody falls off a deck or something like that, or it collapses because you had substandard work done.

Voices [14:19]

That's not an improvement.

Mostly Uncle Frank [14:21]

But if you avoid those kinds of behaviors, you're going to reduce your liability significantly. So that leads us to the other stuff, and the other stuff you're proposing here is leaving it in a 401k to get the protection of the 401k. And that is fine. You could do that with some limitations that we'll talk about. It's not going to be better than getting the umbrella policy, though. Really, this is not the way to go about this. If you have significant assets, you should have an umbrella policy to cover your liability there, and just pay the hundreds or thousands of dollars you need to pay every year and take care of it that

Keep The 401k Or Roll It

Mostly Uncle Frank [14:59]

way. And you say you already have the umbrella policy, so I think you've already solved your problem. Now, the question of whether you want to leave it in the 401k or not depends on how much it costs to leave it there, which may or may not be significant, and then what are the assets in that 401k that you are allowed to buy, because that's the other issue. A lot of 401ks are very restrictive in what kind of assets they want you to buy. Maybe you're not in one of those. Maybe you have one with a self-directed account where you can just move it out and then invest it in whatever you want, or there are enough options in there you can get whatever you want. In those circumstances, if you don't mind the additional hassle of the management in the 401k, then you can go ahead and leave it there if you want to. Where it could hurt you overall, though, is if leaving it in there restricted you from buying the kinds of assets you wanted to buy in these accounts. That would be a problem. The other issue that you'll need to deal with is how difficult is it to take distributions out of these accounts? And I don't know the answer to that either. It may be easy, it may not be easy. The one thing I would agree with you on is that doing things just because it makes it simpler is not really that great of a draw, with the exception of making it simpler for your wife or your heirs. But they are probably going to be moving it out into their own inherited IRA or something similar anyway. So I would say that if you can do all the things you want to do with your investments in the 401k as it sits right now, and you don't mind any hassles of distributions being taken out of that, where that might really become a pain is if you're trying to do Roth conversions, then you can just leave it there. Just make sure that you have this all worked out in terms of your estate planning as to what happens when you die when somebody else has to take this thing over and what they're gonna end up doing with it. But I generally agree with you that we should not be worshiping some god of simplicity just because something is simpler doesn't mean it's meaningfully better than something else. Simplicity is almost always a lower priority, except in estate planning, really. So my ultimate view is you're good either way. And the reason I would not leave something in a 401k has more to do with whether the choices of investments in there are the ones that I actually wanted. I think this may be a larger issue for people with TSPs, because those are very restrictive in terms of the assets you're allowed to invest in, and they are also kind of a pain in the butt to deal with in terms of distributions and other things. But what I really hope you learn from this discussion is the process that you want to follow to make these kind of decisions, because these come up all the time now in planning. There's forecasting involved, and you have to assign a real probability based on something useful and meaningful that is not your own fears, your own possibility effect or opinions from people without actual knowledge in the field. Fortunately, we have artificial intelligence that gets you a lot closer, a lot quicker than you might have been able to do in the past. And I would liberally use it for that purpose and use more than one because that will get you a lot closer to better decision making, and it will also tell you, as in this case, where you're probably magnifying this out of proportion to what it really is or what the real risk is, and also tell you that the better way to deal with it is what you've done, which is buy the umbrella insurance.

Voices [18:49]

That is the straight stuff, oh funk master.

Mostly Uncle Frank [18:52]

So, hopefully that helps. Thank you for being a donor to the Father McKenna Center and a Fairfax Casa, and thank you for your email, Michael Bolton? That's me.

Mostly Queen Mary [19:07]

Wow, is that your real name?

Voices [19:09]

Yeah. You know, there's nothing wrong with that name.

Mostly Uncle Frank [19:14]

There was nothing wrong with it until I was about 12 years old, and that no talent clown became famous and started winning Grammys.

Voices [19:22]

Why don't you just uh go by Mike instead of Michael? No way. Why should I change? He's the one who sucks. Second off.

Ferguson’s Law And Slippery Slopes

Mostly Uncle Frank [19:32]

Second off? An email from Jack.

Voices [19:35]

Here's Johnny and Jack Wright.

Mostly Queen Mary [19:40]

Hey Frank, did you know about Ferguson's law? Once a country pays more in interest than on defense, it often marks the beginning of the end for a superpower. The US crossed that threshold this year. Any concerns? Jack. And it's gone. Poof.

Mostly Uncle Frank [19:59]

Well, we're kind of two for two in forecasting questions today. And talking about process. So, just so everybody knows, Ferguson's law refers to the historian Neil Ferguson, who's a very Aerudited, well-spoken individual, has written a lot of interesting books on economic and other histories. He once spoke at one of my partner retreats back in the day at the law firm.

Voices [20:27]

Well defending die.

Mostly Uncle Frank [20:31]

Okay, so the first thing you should know about historians generally is they are generally pretty bad about predicting the future. They just are because they get fixated on whatever they're studying and think that they can project that into the future in a meaningful way. Generally, they cannot. Yuvil Harari has the same problem. Sapiens was a great book, but the books that he's written more recently trying to predict the future and AI and things like that, eh, I wouldn't put a whole lot of stock in them.

Voices [21:04]

Forget about it.

Mostly Uncle Frank [21:05]

So a lot of this stuff is very interesting to read or think about, but it doesn't make it an actual actionable prediction. And the main problem with historian predictions of the future is that even if they're correct, the time frame is usually just grossly meaningless. So they might say something they think is going to happen in the next decade, and yeah, it'll happen in the next century, but not in the next decade. This is actually a repeated problem that Philip Tetlock found who, when he was researching forecasting, he's the guy that wrote super forecasting. And what he found is that relatively educated amateurs who were not biased in a certain way based on their prior work were just as good as or better than these sorts of experts in predicting the future. I think one problem that historians have in particular is because they usually think of things in In a linear causal way, they tend to over-predict and they tend to overemphasize causation, that since this happened first and then this happened, there's a causal relationship between those two things. Generally, that's not the way life works.

Voices [22:18]

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

Mostly Uncle Frank [22:22]

I think the better approach to history is one that is not popular, and at least among historians, who want to be able to predict things, which is a fractal view of history. Or a sandpile view of history. If you think of history and causation as being this sandpile or rice pile with the events being individual grains of sand or rice being dropped on the pile, the question is which one of those events, individual events, is going to cause the avalanche in the pile. That is the causation issue here. The problem is you can't predict that in any meaningful way. It is about this kind of predicting and applying it to history. The best example of this is the start of World War I, because as we know from history books, was set off by the assassination of Archduke Francis Ferdinand by some Serbian nationalists. But there had to be a whole bunch of other things that happened first to set that up, including all of the treaties and alliances formed by the various European powers. And then there was no guarantee that that particular event, which seems small and seemed small at the time, people did not expect that to erupt into World War One, but it was the grain of rice or sand that triggered the avalanche, which could have been many other things. So to say that that by itself caused World War One would be a mistake. And to also project something like that into the future, that an assassination like that is likely to cause another world war would also be a mistake in analysis and forecasting. Now, historians don't really like that kind of a model because it sort of lessens the meaning of their work. That if we know this history, we can learn from it and predict the future with it. Yeah, I'm not sure that that really works out except in very general terms. And it certainly doesn't work out on a established time frame, and that's the biggest problem with predictions, is that in order for something to be a real prediction, it has to not only have an event, but it has to have a time frame or a time limit on it. Otherwise, it's just, well, someday the Earth will get burned up by the sun in a supernova. Knowing that doesn't tell you anything. Someday there won't be any United States of America. Yeah, that's probably true. But is that going to happen in 10 years or in 500 years?

Voices [25:31]

We don't know. What do we know? You don't know. I don't know. Nobody knows.

Mostly Uncle Frank [25:38]

We don't know that. And I think the fractal model of history is a better one to be thinking about when you're thinking about whether something might cause something else, because just because it caused something in the past doesn't mean that that event is going to cause a similar event in the future. It's not how it works.

Voices [25:57]

Forget about it.

Mostly Uncle Frank [25:59]

Which gets us to Ferguson's law itself. And this is the example of a slippery slope argument. That he's trying to say that we've crossed a magic threshold where the amount paid on interest is greater than the amount paid on defense for the country. Therefore, this is going to trigger a cascade, or we're going to slide down this slope automatically into the end of the superpower.

Voices [26:28]

And I call that sloth. The first big step on the road to the depths of dead grenades. Medicinal wine from a teaspoon, then a beer from a bottle. And the next thing you know, your son is playing for money in a pinchback suit. And listening to some big out-of-town jasper, hear to tell about horse race gambling. Not a wholesome trotten race, no, but a race where they sat down right on the horse. Like you see some stuck-up jockey boy setting on Dan Patch. Make your blood boil, well, I should say. And that's trouble. Yes, you got lots and lots of trouble. I'm thinking of the kids in the Knickerbocker, shirt tail young ones, peeking in the pool hollow window after school. You got trouble, folks, right here in River City. Trouble with the capital T and that rhymes with P and that stands for pool.

Mostly Uncle Frank [27:08]

That sounds attractive on its face, as all slippery slope arguments do, but it's really no different from saying that everybody that crashed going a hundred miles an hour in a car, at some point in the past, they went 70 miles an hour in the car. You can see from that simple example that just because you go 70 miles an hour in a car doesn't mean you are destined to crash going 100 miles an hour in a car later on. And even if you are, it certainly doesn't tell you when that's going to occur because you could be driving 70 miles an hour for most of your life and even go 100 miles an hour on a few occurrences and not crash. So I don't think this particular threshold is meaningful in a predictive way. Because if the United States ends us the superpower in a hundred years, that's not very meaningful. That when somebody's putting out something like Ferguson's Law, they're like, oh, it's imminent, it's going to happen in the next decade or something like that. And that is very doubtful. So I don't place much stock in Ferguson's law as being a meaningful predictor of anything, at least on any established time frame. It's interesting. Another area I see this come up a lot, and particularly with our friend Ray Dalio, who we learned a lot from in terms of analysis, in terms of correlations, but in terms of predicting the future, he's not any better than Neil Ferguson, actually. He came up with an historical analysis which showed that empires generally decline in a predictable sequential way. But the last thing that occurs is the demise of the empire's currency as a reserve currency. So all of these predictions about the demise of the dollar, you have to have a whole bunch of other things happen before that, including the US economy needs to decline and no longer be the world's largest economy. The US military also has to not be the world's preeminent military anymore. And you don't get to the decline of the dollar as a reserve currency until maybe decades after that occurred. At least if you're following, say, the track of the last time this occurred, which was with the British pound, which really did not cease to be the world's reserve currency until arguably the Great Depression, officially 1944. But the US economy exceeded the British economy in 1900, believe it or not. So all of these predictions about the imminent demise of the US as the world superpower or biggest superpower, the decline of the dollar and all that sort of stuff, these are probably decades away. And they're certainly not predictable, and they're certainly not actionable. That is what you need to know. They are not actionable in terms of how you position your assets. Because isn't that what people are ultimately trying to do with this?

Voices [30:11]

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

Mostly Uncle Frank [30:15]

However, if you are worried about all these sorts of things, the answer is very simple. It's simply to diversify your portfolio out of completely US denominated assets and to use things like alternatives like golden managed futures as part of your portfolio, and that will provide you the protection you seek from this upcoming calamity whenever it's upcoming.

Voices [30:39]

Save me.

Mostly Uncle Frank [30:41]

And if you do that sort of thing, you've already solved whatever problem this is likely to be.

Voices [30:47]

No more flying solo. You need somebody watching your back at all times.

Mostly Uncle Frank [30:53]

So hopefully that helps you understand forecasting, why historians are notoriously bad at it, slippery slope arguments, and a few other things, including the fractal view of history. Hopefully that helps. And thank you for your email.

Voices [31:20]

Last off.

Why 25x Expenses Beats 20x

Mostly Queen Mary [31:39]

Dear Uncle Frank and Queen Mary, now that I have powered through all 500 plus episodes of your informative and beautifully crafted podcast, I wanted to say thank you for answering my seemingly redundant questions in episode 463.

Voices [31:56]

Bowdy sensei.

Mostly Queen Mary [31:57]

My question this time has to do with the 4% rule, and is probably a little more psychological in nature.

Voices [32:04]

I am a scientist, not a philosopher.

Mostly Queen Mary [32:07]

I enjoyed hearing the ideas you discussed in episode 294. However, I was curious if you could speak to why you've mentioned on several episodes that one should save 25 times annual expenses to be considered financially independent, versus saving just 20 times annual expenses if we can reasonably assume that a well-diversified portfolio can support a 5% withdrawal rate. Would you consider this an additional safety buffer, knowing that you have enough save to live on 4% while your portfolio actually supports 5%? After tracking our expenses for several years now, I concur with your findings that roughly 60% of our monthly spend is keep the lights on expenses, 20% are comfort, and 20% are extravagances. So I'm thinking that once we hit 20 times our expenses, we are financially free, knowing we can simply cut down on the extravagances when the portfolio takes a big hit. Just curious about your thoughts. Thank you for all that you do, Andrew.

Mostly Uncle Frank [33:30]

Well, Andrew, this gets to the difference between the numerical answer and the practical answer.

Voices [33:36]

Yogi Berra said that in theory there's no difference between theory and practice, but in practice there is.

Mostly Uncle Frank [33:42]

As you've surmised, yes, you could retire with 20 times if you adopt a decent portfolio for that, and you buttress that with a variable withdrawal strategy. But my observation of the real world is that people never stop at where that numerical answer puts them. So if they think they need 25 times, they typically go to 30. If they think they need 20, they typically go to 25. And that is the natural thing to do because typically you are working and investing along and you don't just magically stop everything you're doing just because your assets hit some magic threshold. Typically, people who are getting there are still working a little bit longer, they're gonna tail off their work in some way, they're gonna make adjustments to their lifestyles. There's a lot of variables going on here. And then the truth of the matter is there isn't much difference between having 20x assets and 25 times assets. Think about it. If you are still contributing to the pile and you're getting some growth in your assets, going from 20 to 25 is only growing by 25% of the total. And usually that only takes about three years just sitting there. Because remember, assets typically double in seven to ten years, depending on whether you're using a nominal or a real rate of return and whether you're completely invested in the stock market or something else. So going from twenty times your expenses to twenty-five times your expenses sounds like it's a big jump, but it's really not, because that's not a doubling. It's not like going from ten to twenty.

Voices [35:28]

It's not a tumor. It's not a tumor at all.

Mostly Uncle Frank [35:32]

But that is the nature of compounding. Going from five to ten may take you seven to ten years, but going from twenty to twenty-five, even though it's five, is only gonna take you maybe three years. Maybe not even that. So that's why I generally just go to the twenty-five times annual expenses as a good target for people. Because the other thing that you don't know about somebody's expenses is how hard they are in terms of discretionary versus mandatory. And if you are talking about somebody who is really frugaling down and they are really having all of their expenses be mandatory, I would worry more about that person stopping at 20 times because they just don't have the bandwidth to do a variable withdrawal strategy. And the less flexible your expenses are, the more it makes sense to pad them a little bit and go to 25 and not stop at 20. Anyway, this is really a very academic discussion because I've never actually seen this in the real world where somebody stopped on a dime at a particular level of wealth times their expenses. That just doesn't happen.

Voices [36:43]

Not gonna do that, wouldn't be present at this juncture.

Mostly Uncle Frank [36:47]

So hopefully that explains to you what I've been thinking.

Voices [36:54]

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

Mostly Uncle Frank [37:00]

I don't want you to be confused.

Voices [37:03]

You think anybody wants a roundhouse kicked to the face while I'm wearing these bad boys? Forget about it.

Mostly Uncle Frank [37:10]

And thank you for your email.

Hiatus Note And How To Reach Us

Mostly Uncle Frank [37:13]

But now I see our signal is beginning to fade. Just a little programming note. I think we will have one more episode coming up, hopefully this weekend. Even though we're having the walk, I should be able to do a podcast then. But after that, we're gonna go on hiatus.

Voices [37:30]

Uh, what? It's gone. It's all gone.

Mostly Uncle Frank [37:33]

For about three weeks, I think. Something like that. Two or three weeks. We're gonna take a little vacation. I'll tell you all about that when we get back.

Voices [37:42]

I guess what we do is just drive around a circle here. Should be the second left exit. There's a hotel. Hello, kids! It's a big badge.

Mostly Uncle Frank [38:29]

But in the meantime, if you have comments or questions for me, please send them to Frank at RiskPurdyRaver.com. Then email is Frank at RiskPurdyRaver.com. Or you can go to the website www.riskPardyRaver.com, put your message into the contact form, and I'll get it that way. If you ever 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.

Voices [38:55]

Okay.

Mostly Uncle Frank [38:57]

Thank you once again for tuning in. This is Frank Vasquez with Risk Quarity Radio. Signing off.

Mostly Queen Mary [40:04]

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