Voices [0:01]

A foolish consistency is the hub bobbling of a little mind. Adored by little statesman 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

Welcome To Risk Parity Radio

Voices [0:18]

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.

Mostly Uncle Frank [1:14]

Top men. And you can find those on the episode guide page at www.riskparody radio.com. Inconceivable! All thanks to our friend Luke, our volunteer in Quebec. 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 [2:14]

But now onward, episode 547. Today on Risk Party Radio, it's time for our weekly portfolio reviews of the eight symbol portfolios you can find at www.riskpartyreaderio.com on the portfolios page. Yeah, the bees did kind of show up this week. Except for treasury bonds. But before we get to that, one of my listeners alerted me to the fact that Richard Reeley, the character actor who played Tom in Office Space, has passed away.

Voices [2:56]

What what would you say you do here? Well look, I already told you. I deal with the customers so the engineers don't have to. I have people skills. I am good at dealing with people. Can't you understand that? What the hell is wrong with you people?

Mostly Uncle Frank [3:14]

That guy was an enormously talented actor, and we're gonna miss him.

Voices [3:19]

You know, I had an idea like that once, a long time ago. Really? What was it, Tom? Well, all right. It was a jump to conclusions, Matt. You see, it would be this mat that you would put on the floor and would have different conclusions written on it that you could jump to. That is the worst idea I've ever heard in my life, Tom. Yes. Yes, it's horrible, this idea.

Mostly Uncle Frank [3:54]

But we'll throw a little more of that at the end of the podcast. Now, moving on to your favorite part of the program.

Voices [4:00]

I'm intrigued by this. How are you saying? Emails. And first

Listener Builds A Custom Portfolio

Voices [4:08]

off.

Mostly Uncle Frank [4:08]

First off, we have an email from Alex.

Voices [4:12]

From the middle! I checked for $800. Alex did my taxes, and this is the refund. $800? Mallory, that's more than you made.

Mostly Uncle Frank [4:32]

And Alex writes.

Mostly Queen Mary [4:34]

Hi, Frank and Mary. I really appreciate the show, and I have learned a lot. Attached, find evidence of my donation to the Father McKenna Center. It is a privilege to support what seems to be a great institution.

Voices [4:51]

Yes!

Mostly Queen Mary [4:52]

I'm 56 years old, about six months from early retirement, and my wife just retired this past summer.

Voices [4:59]

Don't you think you ought to cover yourself with a towel first, Mr. Brown? We're out of towel. I'm too old to go diving in a locker. I can take it if you can.

Mostly Queen Mary [5:10]

I just finished transitioning our portfolio into a risk parity style portfolio.

Voices [5:16]

I guess you could say things are getting pretty serious.

Mostly Queen Mary [5:19]

Following the Bruce Lee principles of taking something useful, discarding what was not, and adding something uniquely my own, I used the OPTRA portfolio as a template, but lowered the overall leverage to 1.25 to 1 while retaining the CAGR and max drawdown and slightly increasing the perpetual withdrawal rate. Here's a link to a testfolio backtest going back to 1968 and the start of GLDM with the OPTRA portfolio as a reference. The portfolio is 55% stocks, 20% bonds, and 25% commodities slash alternatives. The 55% stocks are 35% small cap value, gotta have cowbell.

Voices [6:06]

I gotta have more cowbell. I gotta have more cowbell.

Mostly Queen Mary [6:10]

10% QQQi, a covered call income fund that approximates the NASDAQ 100, and 10% UPRO. The 20% in bonds are 10% G O V Z and 10% MCI. The 25% commodities and alternatives are 2.5% cash, 2.75% Bitcoin, 8.5% gold, and 11.25% DBMF.

Voices [6:42]

Invention, my dear friends, is 93% perspiration, 6% electricity, 4% evaporation, and 2% butterscotch ripple. That's 105%. Any good?

Mostly Queen Mary [7:00]

We've got about $1.25 million in a brokerage and $2 million in IRAs and 401ks, so I allocated things between those tax locations using the principles in the book Tax Planning in and through Early Retirement, which you have mentioned several times and I very much recommend. MCI is a managed corporate bond fund with a long history and nearly zero correlation with anything else in the portfolio, including GOVZ, and it has internal leverage similar to GOVZ. I looked at every ticker with simulated extended data in testfolio, and this seemed like the most likely candidate to add something with no correlation and a nice expected return. In episode 546, a listener asked if you had any ideas about extending DBMF data. Someone on Reddit came up with some data in this post linked here. And I've also attached his data as a text file. I imported that data into testfolio to extend KMLM SIM, which extends DBMF SIM. That gets you to 1971, so I further extended it with XLB SIM to get to 1968. XLB is a materials fund and not managed futures, but I figured that data slap of only two years shouldn't hurt things too much. I listened to all your rants about covered call income funds, and I'm not disagreeing with anything you've said, but I want to convert my $2 million in IRA 401k funds into Roth over about the next 15 years. So I like the tax-free return of capital income that QQQI provides in my brokerage account. I've looked at the numbers and I calculate that in my situation, the tax benefits outweigh the performance loss to the underlying QQQ. And I also like the idea of having some theoretical insurance in case of stagflation. So at least I'm going into my decision with eyes open. I do appreciate your commentary on the covered call funds, even if I didn't follow your advice. And it's gone. Another listener mentioned online forums. I'll post this on Risk Parity Radio on Reddit, which is slowly gaining some traction. I hope to hear from some of your listeners there. Lastly, I'd like to recommend OpenSocialsecurity.com as a great free resource for planning Social Security withdrawals. I think people will find that useful.

Voices [9:31]

The best, Jerry.

Mostly Queen Mary [9:32]

The best. Thanks again for the fantastic podcast, for your commitment to community service and a full life, and your thoughtful insights. Alex. Let's talk about something important.

Voices [9:45]

Put that coffee down.

Mostly Uncle Frank [9:49]

Well, first off, thank you for being a donor to the Father McKenna Center. As most of you know here, we don't have any sponsors on this program. We do have two charities we support. One is called the Father McKenna Center. It supports hungry and homeless people in Washington, D.C. And I am currently chairman of the board. And the other is Fairfax Court Appointed Special Advocates, of which Mary is one. And they work with children in our local foster system. But if you give to either one of the charities, you get to go to the front of our email line, as Alex has done here. Just make sure you mention it in your email so that we can duly move you to the front of the line. And thank you for your support. But before we get to your email, and second off, I do have an apology I need to make to our listener, Adrian.

Covered Call Funds And ETF Hype

Voices [10:40]

Yo Adrian!

Mostly Uncle Frank [10:51]

And you mentioned in this email a Reddit subgroup devoted to Risk Perry Radio. And this was created by a listener, Adrian, all the way last year, September of 2025. And I was supposed to tell you all about that. I thought I did. I don't think I did. At least I couldn't find it.

Voices [11:12]

Are you stupid or something?

Mostly Uncle Frank [11:15]

My excuse is we were on our trip to South Africa then, and so maybe that's my problem. Or maybe I was just having a senior moment.

Voices [11:25]

Why I go in and out of coma's all that French toast, please.

Mostly Uncle Frank [11:31]

But in any event, Adrian did create a place for people to go talk about Risk Parity Radio over at Reddit. I will link to that again in the show notes. I'll link to it for the first time in the show notes, so you can all check that out. But no, I will not be participating in that, as I told Adrian. I do not wish to have that job. The thing is, Bob, it's not that I'm lazy.

Voices [11:57]

It's that I just don't care.

Mostly Uncle Frank [11:59]

And I do not wish to be monitoring any fora which tend to become filled with trolls and spammers when they become popular or too popular.

Voices [12:10]

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

Mostly Uncle Frank [12:20]

But I have to tell you, I do become very enthused about this community when I see what you've done with respect to your email and others who have created tools and other places for people to share information all for free. Whether that's you or Adrian or Justin from Risk Parity Chronicles or Luke, our friend in Quebec, and many others, I have this romantic notion, romantic nostalgia for the internet and the sharing of information that existed over 20 years ago when none of this was popular. And so the only people you would find on these boards were people who are actually curious about the topic or the information being shared, and there wasn't anybody trying to make money off of it or having ads on things or creating things for people to buy. It was really non-commercial, and in my mind, that was the best of the internet. Those were the best days, the golden era. I appreciate that as things become more popular, people do want to try and make money off them. But it kind of sucks the life out of it for me because I'm more interested in sharing information on a curiosity basis and not on a promotional or money-making basis. And so I'm very heartened and enthused when I see people doing that, particularly in the context of what we talk about around here.

Voices [13:49]

I got this inkling, I got this idea for a business model. I just want to run it past you. Here's how it would work. You get a bunch of people around the world who do highly skilled work, but they're willing to do it for free and volunteer their time, 20, sometimes 30 hours a week. Oh, but I'm not done. And then what they create, they give it away rather than sell it. It's gonna be huge. What's going on? Why are why are people doing this? Why are they why are these people, many of whom are technically sophisticated, highly skilled people who have jobs? Okay? They have jobs. They're working at jobs for pay, doing challenging, doing sophisticated techno technological work. And yet, during their limited discretionary time, they do equally, if not more, technically sophisticated work, not for their employer, but for someone else for free.

Mostly Uncle Frank [14:43]

So I'm glad you've been able to take what you've learned here and actually use that Opter Portfolio as a template for creating something that is useful to you and maybe useful to many others. You gave a link to this portfolio and testfolio. I tried to open it, unfortunately. For some reason, that goes to a paywall, even though it usually doesn't for these sorts of portfolios. But anyway, I will include the link in the show notes because I know some people have already subscribed to Testfolio can get through the paywall anyway. But I'm sure others can create variations of this just from the description in your email. I did go take a look at this fund MCI. It looks like a short-term corporate bond fund. And so in my mind, that actually kind of takes the place of a cash allocation in one of these kind of portfolios. And that's how I would look at it because it is relatively short term. It's not as short term as say three-month T-bills, but it's short enough that I would consider it to occupy that kind of space in one of these portfolios. And there are multiple things with the ticker symbol MCI in various countries, but the one I was looking at was the Bearings Corp Fund, if anybody's also looking for that. This data creation you found to extend back the managed futures data, I think, is really excellent. And I will link to the Reddit post there because it very accurately describes what is going on there and then also provides the data. And so you can take that data and you can put it into your portfolio charts analysis if you've subscribed to that, or you can put it in your test folio, and I'm sure other people are using it in many other ways in spreadsheets. But that is also a lot of value add. Since I wasn't able to do any better in our last episode when we're talking about this, it is certainly an improvement over a straight commodities fund. Now, as for covered call funds, I don't have any objection to anybody using something like that as long as they know what they're getting into, but they are generally relatively inefficient from a tax perspective, and unless, of course, you're getting back return of capital, in which case they're just giving you your money back, and so that's not a return.

Voices [17:03]

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

Mostly Uncle Frank [17:07]

My general rule with all such things, whether it's a covered call fund or a buffered thing or a structured thing, is that you are not changing the performance of the underlying index. And generally you're going to be better off with the underlying index. All you are really doing is changing the way it pays out. And to the extent there are changes in the actual return, it's because you're either reducing the risk through your strategy, in which case you're going to get a reduced return, and that's common in covered calls and structured products, or you're increasing the risk, in which case you're taking a form of leverage. And you can also do that with options. But in almost all circumstances, you are just better off holding the underlying asset and perhaps holding less of it in many circumstances and making room for other things. As I mentioned before, Ben Felix over at Rational Reminder has done an excellent series of videos about covered call funds and then all of these other creations, which he refers to as ETF slop as a category, because these things are heavily promoted now and they make a lot of money for their providers. They're really an excuse to have more fees on top of things from the provider perspective, which is why they're so heavily marketed.

Voices [18:27]

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

Mostly Uncle Frank [18:34]

Because if you can't make money selling managed funds anymore, these provide another outlet for fund providers to make an extra buck on their creations.

Voices [18:44]

Always be closing. Always be closing.

Mostly Uncle Frank [18:49]

And that's the funny thing about the ETF world these days. They're just ETFs on top of ETFs coming out since they changed the rules as to what you could put in an ETF back in 2019. Most of those things are not that useful. They're more useful for the parties that are marketing them. But a few of them are extremely useful, and we see those come out over time. One of those happens to be DBMF, which is the closest thing to an index fund in the managed futures category and has performed better than expected, actually. So you really do have to do some serious Bruce Leeing when you are confronted with all of these new ETFs because a few of them are useful. Most of them are useless, though, and don't really have a place in a portfolio or most people's portfolios. Finally, I agree heartily with your recommendation to open social security.com as an excellent resource. And I've used that to take our Social Security statements and model out when we should claim. Not surprisingly, it says Mary should claim right away and I should wait till age 70. That's Mike Piper's website. And if you're interested in anything about Social Security, I would definitely take your information and go over there and run it, whether or not you're going to run it elsewhere. You might also be interested in going back to episode 504 where we talked about valuing Social Security and the reasons people might take it earlier or later. It's best valued as an annuity and not in some kind of discounted cash flow analyses, which is always subject to fudging.

Voices [20:25]

Am I right or am I right or am I right? Right, right, right.

Mostly Uncle Frank [20:29]

But I will leave you with that. Thank you for all your contributions here. I think a lot of these links are going to be very useful to people, and I'm glad you reminded me about the Risk Purdy Radio Forum on Reddit. So now we have a link to that as well.

Voices [20:47]

Great success.

Mostly Uncle Frank [20:49]

Feel free to talk amongst yourselves over there. I will not be participating, but I'll be there in spirit. Hopefully that helps. And thank you for your email.

Simple UK Risk Parity Allocation

Mostly Uncle Frank [21:31]

Second off, we have an email from Superb. Superb Diamond Range.

Voices [21:38]

Welcome to All Things Scottish. Our slogan is if it's no Scottish, it's clap.

Mostly Uncle Frank [21:44]

And Superbrights.

Mostly Queen Mary [21:46]

Hi, Frank. I hope you are keeping well. I was thinking more about a risk parity portfolio for when I get closer to my decumulation stage. I downloaded an RP guide that had suggested amounts for a potential construction. Here's what I'm Thinking equity 70%, 35% large mid cap stocks VWRP, 35% small cap value stocks, AVWS, 20% long-term bonds, probably iShares or Vanguard ETF, 10% gold, SGLN. First question: Is the split of equity half and half correct? Or should there be more large cap total global market and less small cap value? Or should it be 50-50? I realize the equity as on the higher side, i.e., 70% is this too much risk? Long-term bonds are not correlated with stocks, and obviously gold isn't correlated at all with both stocks and bonds, which is ideal. I love gold. A few things I've heard you say, like once you've hit your desired fire number, it's no longer about growing the portfolio, so you can obviously reduce risk, but part of the worry is if you have two little stocks, will it still grow? I realize it's more about maintaining at this stage, but obviously you want it to grow to some extent. The big thing I've learned from listening to you in various interviews is that in accumulation, we've spent so long saving and sacrificing that to be told you can only withdraw 3-4% is tough. That's not an improvement. Especially with these risk parity portfolios, there is potential to withdraw higher amounts like 5-6%, and they're less volatile.

Voices [23:29]

You are correct, yes!

Mostly Queen Mary [23:31]

I think what I'm struggling with is as the portfolios take less risk, how do we afford the higher withdrawals without running out of money at some point? I guess when you've grown your pot to such a height, even small amounts of growth can be substantial at that level, if that makes sense. Maybe that's what I'm missing. I should never stop learning this stuff. Anyway, would having four to five different funds lead to higher overall fees? Or not if aiming for the most low-cost ETFs? Sorry, it's a lot to unpack. Thanks in advance. Thanks, Superb. P.S. I'm not sure we have many managed futures funds in the UK, and the ones I found are really expensive.

Mostly Uncle Frank [24:11]

Now how much would you pay? Well, it's been a long time since we rocked and rolled, Superb. About five years, in fact, we last heard from you in episode 135 with other references in episodes 96, 104, and 130, if anybody's looking for those. And I actually appeared on Superbs Podcast way back in the day. Probably one of the first people that listened to this and wanted me to appear on their podcast.

Voices [24:49]

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

Mostly Uncle Frank [24:55]

I think we had all of a few hundred listeners at the time, if that. So looking at your portfolio, and looks pretty good as a very simple and elegant risk parity style portfolio for somebody outside the US. This fund VWRP, just so people know, is a global all equities index. So it's similar to VT in the United States. And then this fund AVWS is a global small cap value fund. And so if you're not in the US, I think those are very useful. I should mention that Superb is in Scotland, by the way. Which explains why he's chosen the funds that he's chosen.

Voices [25:39]

You shouldn't have wear underwear under that kilt. A real man doesn't wear shoes. Yeah, well, a real man doesn't wear a skirt. How very clever. But I don't know why you'd say something like that, knowing that I might come after you with butchering tools.

Mostly Uncle Frank [25:57]

You asked about the split you have. I think it's fine. You're really splitting hairs when you're just moving things by a little bit, but basically the general rule is have at least half of a value tilt to the portfolio, and this does that. Whether you would add a little more growth or a little more value is probably not going to change the overall outcomes of something like this too much. The fact of the matter is you have two things in those two categories and you can rebalance them against each other, which is really what you're looking for. Now you asked whether having 70% equities is too much risk. The answer is no, if you're willing to take the risk. You just have to recognize that what a portfolio like that is going to give you is higher long-term average returns, but the potential for higher volatility on shorter time frames. But it is well within the parameters of having a portfolio with a high safe withdrawal rate, if that is what you're interested in. Now you asked about managed futures, and your email is from May, but there is a good managed futures fund for people in Europe now, and that is DBMFE. It's from DBMF, and it's essentially the same DBMF we have in the United States, and the fees are about the same. I think they actually might be a little bit lower for the USITS version of that. But that's what I would use if you're interested in managed futures. Now, is that a high fee? Well, if you compare it to a standard equity fund, yes, it's a high fee. If you compare it to other managed futures funds, no, it's a reasonable fee, it's a low fee. And in fact, one of the selling points of DBMF and what it has succeeded on is reducing the fees that you ordinarily had to pay for one of these strategies. And you can see that just by comparison with its own index, because the SOCGEN CTA index includes the fees of the funds that it tracks in there, which are generally like two and twenty. And so when you actually look at the performance of DBMF compared to the index, it actually outperforms its own index by about two to three percent, and that's by design. And I would expect it to outperform its own index over time, given the way it's structured. I don't think fees in one of these kind of portfolios are all that big of a deal, actually, particularly when you're only going to be having a relatively small allocation to something like Managed Futures, which has the highest fees, the rest of these funds have relatively low fees. I think people misapply that notion today because they're reading books from 20 years ago when you were comparing funds with fees around 0.1 or 0.2 at the time, that's what standard index fund fees were, with managed funds with fees of over 1% and sometimes even 2%. And so it's sort of an order of magnitude difference that what people are were talking about with respect to avoiding high fees was something that it was like avoid a fee that is 10 times what you can pay for an index fund, those comparisons are not valid anymore because the fees on everything is just a lot lower, and that has changed over time. So I think the obsession with low fees is often misplaced and misguided in the modern era. For instance, I would never say that a fund like AVUV has too high of fees, and I wouldn't choose it over a standard small cap value index fund. It way more than makes up for the fees that it's charging. And that's also a big change when you think about it, because if you go back 15, 20 years, you couldn't get access to a fund like AVUV or a DFA fund unless you went through an advisor. And guess what? That advisor was probably going to charge you an AUM fee of 1% just for access to this fund, which also had a higher fee on it. So the conversation and fee structure of what went on back in the day is just completely gone and completely different from what we're dealing with today. Today, fees in most cases are just not that big of an issue given what else you're getting for the slightly higher fees you're being charged these days. What you're getting out of these funds. Anyway, you're definitely on the right track here. I think what you've got should work pretty well. I will give you a little shout-out and a little kick with a link to your podcast or something related to it in the show notes, just so people can check that out. And thank you for your email.

Voices [30:41]

Run! Runny, get my boots and tools! I'm gonna deep him like a shank! I hope you got a thirsty muffled lady, because this is gonna be a blood mum. Give me a dent. It's not a very nice way to speak to you, only so much just like in the movie Ghost.

Retirement Withdrawals Are Tax Specific

Mostly Uncle Frank [31:12]

Last off, we have an email from Mark.

Voices [31:17]

Oh, hail the commander of his majesty's Roman legions, the brave and noble Marcus Vindictus.

Mostly Uncle Frank [31:25]

And Mark Wright.

Mostly Queen Mary [31:27]

Frank and Mary, I came across your show last summer when researching safe withdrawal rates. It's the best intro I've encountered for thinking critically and quantitatively about portfolio construction. And we have the tools, we have the talent. I leveled up through listening and reading the resources you share. I planned to do a longer introduction and share my portfolio and withdrawal plans for retiring very early, but as you've recently been talking about how there is no correct order for drawing down from accounts, I wanted to share slides I made for Bigger Pockets money on this topic. I would have liked to expand on cyclical drawdown, but there are limits to what free labor can accomplish. Maybe when I'm retired. Thanks for the hard work and the laughs. More to come, Mark. I'm funny how I mean funny like I'm a clown, I amuse you. I make you laugh.

Mostly Uncle Frank [32:18]

Well, Mark, thank you for writing in, and I'm glad you're enjoying the podcast and getting something out of it. I did listen to your Bigger Pockets interview, and I thought that was very useful and insightful. I will link to that in the show notes as well as the slides that you provided. What Mark was talking about was the complexities of drawing down from various different accounts and which order you might draw down from in. I think you hit upon a good point here, that this really is going to vary a lot from situation to situation. And the only mistake you can make here is thinking that there's some general rule about how you should withdraw from particular accounts or a particular set of accounts. Because chances are, whatever this general rule it is, it's not going to apply to more than a quarter or maybe a third of the people involved. Because the truth of this is you have to look at this individually based on your own tax situation and what is going on there, and also your expense situation, because that may play into your tax situation. And the other truth of this is it's going to change from year to year. Taxes are something that you need to work with every year. You are not going to come up with a plan for the next 10, 15, 20, 30 years about how to manage your taxes that's going to be valid. It's just not. Things are going to change too much, both in your own life and in the tax law itself. What you should be thinking about is I want to set this up so I have options. I can be nimble as to how I'm pulling from these accounts, because then you can make the decision every year, which is really what you ought to be doing for things like Roth conversions or other things, because it has a lot to do with how much you've already withdrawn in a particular year. You do need to look at this every single year in the fourth quarter to determine whether there's something you need to do before the end of the year in terms of withdrawals or management of taxes. I found generally that if you are in the 0% capital gains tax bracket, which means for a couple you're withdrawing on less than $100,000 in a modified adjusted gross income, that is one set of people. Then there's a set of people who have capital gains in the 15% tax bracket, and a general set of rules is going to apply to them. And then there's another set of people who are high income and they're going to be in the 20% tax bracket for the purpose of capital gains. And another set of rules follows them because those also correspond to the regular tax brackets. But then you have to consider all of the other things that you're doing. And so you may get very different answers depending on who you are. For instance, I had one listener I've been talking to recently who's helping his parents out, and one of his parents had to go into assisted living relatively early, and they have a large balance in retirement accounts. And he was sort of wondering, do we need to convert any of that or how do we need to use that? But the truth is if you are in a situation where most of your expenses are going to be medical related and they're going to qualify for the medical deduction, which is on Schedule A of your 1040, that is a huge deduction. You just need to be over 7.5% of the total if you're in assisted living. Most of your expenses are going to be covered by that. Most of your expenses are going to be deductible. And so you want to start pulling all that money out of there pretty much as soon as you can because you're going to be able to write all of it off on your Schedule A.

Voices [36:10]

It's a write-off for them. How is it a write-off? They just write it off. Write it off what? Jerry, all these big companies, they write off everything. You don't even know what a write-off is. Do you? No, I don't.

Mostly Uncle Frank [36:28]

But they do. And they're the ones writing it off. So you don't want to be doing conversions. You don't want to be withdrawing from your taxable accounts. You want to be withdrawing all of your money out of your traditional retirement accounts because you're writing all of it off. But that is a particular strategy that applies to that particular situation. We have another listener, Rebecca Herbst of Yield and Spread, our philanthropist, who we talked to back in episode 514. And they have an interesting situation where they are committed to leaving most of their retirement account money eventually to charities. And although they are early retired, most of this money is going to be sitting in retirement accounts until they're over age 70, at which time they're probably going to be using QCDs and just sending this money to charity. Or if they die with it and it goes to charity, nobody's ever going to be paying any taxes on it. So they looked at this and originally thought maybe we should do Roth conversions. And then said, wait a second, that doesn't make sense for us because our use of this is going to be going to a place where it's not going to ever get taxed. So why should we pay taxes on it now or pay taxes on it ever?

Voices [37:47]

Not going to do it. Wouldn't be prudent at this juncture.

Mostly Uncle Frank [37:50]

Again, the rules that they need to follow are going to be much different than somebody else's because of the choices that they've made in terms of where their money is eventually going and how that's going to happen. So I would urge everyone not to go looking around for rules of thumb about how to manage your taxes or withdrawals in retirement. Those are going to be fairly useless once you get past not being the particular person they're modeling in those studies. What I found is quite useful actually is to use artificial intelligence and have a number of conversations, both about where you are currently in the tax year and what you might be thinking about or considering, and then other considerations. Now be careful with that as well, because I found if you don't phrase your questions the right way, you're not going to get the right answers or the best answers that you can get. But that is a very valuable tool, mostly to identify things you may have not have thought of, or provisions of the tax code that may apply that you haven't thought of. And finally, you should also recognize that most personal finance podcasts, blogs, popular stuff that you listen to, most of it is pretty bad about this or pretty ignorant about this because they are running around looking for these rules of thumb. And that is not a way to look at this. That's why I really appreciated your interview on that podcast because it got at a few more subtleties on things. And I do appreciate Sean and Cody's book, which also got at a lot of these things, because the other thing that goes on here is a lot of fear-mongering about taxes, and it leads to poor decision making or buying of products or falling prey to free steak dinners and people selling things or overpaying advisors to do things that are just not that complicated. Because frankly, most financial advisors don't know enough about taxes to even give you good advice. That is one thing you should be interviewing any potential advisor about is are they going to help you with that? A lot of large retail advisors won't even touch it at all. But the truth is you can get the most alpha out of managing your taxes properly. That is more important even than what you're investing in. And so if your advisor is not helping you with that, they are not doing their job. You need to go to somebody that's going to help you. That's why we don't have a financial advisor. We do pay a lot of money for good tax advice from a CPA. Now, Mark is an enrolled agent, which is also a qualified professional that can help you with this. And some of you probably need to be talking to somebody like that as well. But good tax advice is one of the most important parts of retirement planning, and it is frankly very much neglected by most of the financial services industry. So make sure you're getting what you pay for if you are paying somebody to help you manage your finances. And I'd rather pay for tax advice than any other kind of advice that you can get. Because after I've been talking to my AI for a while and come up with some bright ideas, eventually what I'm going to do is take them to my CPA and ask them whether it makes sense or not, and they're going to tell me pretty quickly. And that way I'm not wasting money asking them to do simple research that I can do myself. I'm just asking them for the actual advice as to whether it's a good idea or not. But enough on that. Finally, I'm glad you're enjoying the laughs, as you say. At some point I want to go back and find all of my bad reviews and put them together in some sort of a thing. I think it'd be really funny.

Voices [41:40]

Ha ha ha!

Mostly Uncle Frank [41:42]

Because almost all of them have to do with the sound bites of my quirky sense of humor and nothing to do with the real content of what goes on around here.

Voices [41:51]

This is pretty much the worst video ever made. Napoleon, like anyone can even know that.

Mostly Uncle Frank [41:58]

But I do find that there is actually a high correlation between people who are curious and open-minded and people with a sense of humor. It's a lot of nonsense.

Voices [42:09]

A little nonsense now and then is relished by the wisest men.

Mostly Uncle Frank [42:16]

Or maybe I'm just biased about that.

Voices [42:19]

I'm happier than a peg and slop.

Mostly Uncle Frank [42:22]

Anyway, thank you for writing in. Thank you for the work you've done for the community. And thank you for your email.

Voices [42:31]

Let me tell you how to live with it.

Weekly Review Of Eight Portfolios

Mostly Uncle Frank [42:58]

And the something completely different thing we get to do now is our weekly portfolio reviews of the eight sample portfolios you can find at www.riskpartyra.com on the portfolios page. Expired ham. Well, this time I've gone too far.

Voices [43:13]

No, no one will fall for Woohoo! Cheap meat! Ooh, this one's open. I'm an oil man.

Mostly Uncle Frank [43:31]

Just looking at the markets this year so far. The SP 500, represented by the Fund VOO, is now up 12.37% for the year so far. The Nasdaq 100, represented by QQQ, is up 15.05% for the year so far. Small cap value has regained its preeminence over the larger caps.

Voices [43:52]

Guess what? I got a fever. And the only prescription is more cowbell.

Mostly Uncle Frank [44:00]

Representative fund VIOV is now 16.94% for the year so far. Gold has been taking it on the chin.

Voices [44:07]

It's gold, Jerry. Gold.

Mostly Uncle Frank [44:08]

I think it's at its lowest point this year so far. Representative fund GLDM is now down 7.31% for the year so far. Long-term treasury bonds have been recovering. Representative fund VGLT is now down 3.21% for the year. REITs, represented by the fund REET, are up 6.94% for the year. Commodities, represented by the fund PDBC, continue to be the gigantic winner this year on the strength of oil mostly. Welcome to my show.

Voices [44:41]

Oil.

Mostly Uncle Frank [45:01]

Preferred shares represented by the fund at PFFV are up 1.22% for the year so far. And managed futures are managing to beat the stock market this year. Representative fund DBMF is up 18.22% for the year so far. Moving to these portfolios. First one's this reference portfolio. We keep around for reference because it's really too conservative for most people. It is only 30% in stocks in a total stock market fund. It's got 55% in intermediate and long-term treasury bonds. And the remaining 15% divided into gold and commodities. It's up 1.96% for the month of October. It's up 5.11% year to date and up 29.57% since inception in July 2020. Moving these more bread and butter kind of portfolios. First one's Gold and Butterfly. In this slightly modified version now, which is on an equity glide path. We have 41% in stocks divided into a total stock market fund and a small cap value fund. 20% in long-term treasury bonds, 19% in short-term treasury bonds, and the remaining 20% in gold. JLDM. It's up 0.65% for the month of October. It's up 3.99% year to date, and up 65.92% since inception in July 2020. Next one's Golden Ratio. This one's 42% in stocks divided into a large cap growth fund and a small cap value fund, which are going in different directions these days. 26% in long-term treasury bonds, 16% in gold, 10% in managed futures, and 6% in cash. It's up 0.22% for the month of October. It's up 4.88% year to date, and up 61.93% since inception in July 2020. Next one's a risk parity ultimate. This is our kitchen sink of a portfolio. I'm not going to go through all 12 of these funds. One of them that's been doing quite well this October, though, has been BTAL, which is a long short fund. That is essentially long value stocks and short the S P 500 or growth stocks. So overall, this portfolio is up 1.21% for the month of October. It's up 5.22% year to date and up 47.04% since inception in July 2020. Now moving to these experimental portfolios that all involve leverage funds. Don't try this at home.

Voices [47:28]

Well, you have a gambling problem.

Mostly Uncle Frank [47:32]

First one's the accelerated permanent portfolio. This one is 27.5% in TMF, that's a leverage bond fund. 25% in UPRO, that's a leverage stock fund. 25% in PFFV, a preferred shares fund, and 22.5% in gold. It's up 1.81% for the month of October. It's a 1.02% year-to-date, and up 24.69% since inception in July 2020. Next one's the aggressive 5050. This is the most levered and least diversified of these portfolios and worst performer by far. It's one-third in a leverage stock fund UPRO, one-third in a levered bond fund TMF, and the remaining third in ballast, and a preferred shares fund and an intermediate treasury bond fund. It's up 3.66% for the month of October. It's actually doing the best in October so far. It's up 2.81% year to date and up 1.06% since inception in July 2020. Moving to the next one, which is the Levered Golden Ratio. It's a year younger than the first six. This one is 35% in NTSX, that is a composite fund of the S P 500 and Treasury Bonds, levered up 1.5 to 1%. 15% in AVDV, that's an international small cap value fund. 20% in gold, 10% in KMLM, that's a managed futures fund. 10% in TMF, that's a levered bond fund, and the remaining 10% divided into UDOW and UTSL, which are levered funds following the Dow and Utilities Index. It is up 0.81% for the month of October. It's up 4.61% year to date, and up 25.39% since inception in July 2021. And we do this last one and newest one, the OPTRA portfolio. One portfolio to rule them all. It is ruling them all. This is a return stacked style portfolio. So it's got 16% in UPRO, that's a letterate SP 500 fund. 24% in AVGV, which is a worldwide value tilted fund, 24% in GOVZ, Treasury Strips Fund, and the remaining 36% divided into Gold and Managed Futures. It's up 1.35% for the month of October. It's up 10.31% year-to-date, and up 42.33% since inception in July 2024. And that concludes our weekly portfolio review. Things actually did not move that much, I can tell you that. But October's been kind of like that with some stuff doing very well and some stuff doing very poorly. It all comes out in the wash. That's diversification for you.

Voices [50:14]

Before we're done here, y'all be wearing gold-plated diapers.

Mostly Uncle Frank [50:20]

But now I see our signal is beginning to fade. If you have comments or questions for me, please send them to Frank at RiskPartyRadio.com.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, and give 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.

Closing Notes And Actor Tribute

Voices [50:57]

I've been looking all over for you guys. Have you seen this? A character actor who may have played a small but memorable role in many of your favorite movies. Timel, get over here! You got to do something! Unlock me! Richard Realy, who amassed more than 400 acting credits across 50 years, has passed away at the age of 78. Now, where would that power come from? Alright, alright. Come come on. You may have first seen this Wisconsin native quarreling with Matthew Broderick in the Oscar-winning film Glory back in 1989. Before his signature mustache popped up in Fried Green Tomatoes two years later.

Mostly Queen Mary [51:32]

I think I want my money back.

Voices [51:37]

And then a few years after that, he played Joe Pesci's lucky banker in casino, who receives many threats in this scene that we can't air. You physically take the specs from the customer? Well. But perhaps Reely is best known for playing Tom Smikowski in the cult classic comedy Office Space, where his character is incredibly paranoid about losing his job. I have people skills. I am good at dealing with people. Can't you understand that? But also cannot exactly explain what his job entails. But stinks! And besides playing Walt in the sitcom Grounded for Life, we have to get back to the North Pole at once. Really also had a gift for playing Santa Claus. Appearing in at least eight different projects as Jolly Old St. Nick. We are finalists for the fan of the year award. What? And speaking of Christmas, in 2024, Reely also appeared alongside Donna Kelsey and many Kansas City Chiefs in the Hallmark movie Holiday Touchdown, a Chief's Love Story. For the record, Reely was actually a big Green Bay Packers fan, being born in Wisconsin and all. And also he never really stopped working, and he still has multiple projects that are currently in post-production and should hopefully be out soon.

Mostly Queen Mary [53:00]

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.