Risk Parity Radio

Episode 469: Risk Parity For Charity, Managing Indvidual REITs, And Reverse Glidepaths

• Frank Vasquez • Season 6 • Episode 469

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In this episode we answer emails from Patrick, Kyle, and Dave.  We discuss the advantages of using risk parity style portfolios for higher withdrawal rates, how to manage a sleeve of individual REITs, the joys of giving in its various forms, a risk parity style portfolio in a Donor Advised Fund, and reverse glide paths.  We share how planned generosity, donor-advised funds, and employer matches can make retirement more meaningful.

Links:

Father McKenna Center Donation Page:  Donate - Father McKenna Center

Kitces & Carl podcast about "Frugal Bob":  Helping Retired Clients To Actually Start Spending And Enjoying Their Money - Kitces & Carl Ep 178

Bigger Pockets Money Test Risk Parity Style Portfolio:  We Built a 5% SWR Retirement Portfolio Using Fidelity in 48 Minutes (Golden Ratio Portfolio)

Choose FI Podcast #574:  Top Five Regrets of the Dying (Book Club with Frank Vasquez and Ginger) | Ep 574

Kitces Reverse Glidepath Article:  The Benefits Of A Rising Equity Glidepath In Retirement

Breathless AI-Bot Summary:

Most retirees don’t fail because they spend too much; they struggle because their portfolios weren’t built for withdrawals. We unpack how risk parity, smarter rebalancing, and a reverse glide path can protect early-retirement years while keeping growth on the table. Along the way, we share listener stories that show what happens when a 100% stock believer embraces diversification and discovers the joy of giving—through donor-advised funds, employer matches, and a simple plan to distribute one percent or more each year.

We start with a real allocation shift: blending large growth, small value, long Treasuries, gold, managed futures, and a small sleeve of REITs to reduce sequence risk. Then we get tactical. For individual REIT holdings, we treat the sleeve as one allocation and only rebalance when the sleeve moves versus the rest of the portfolio. Inside the sleeve, focus on outliers—trim oversized winners, reassess laggards with deteriorating stories—and keep transactions light to minimize taxes and churn.

The heart of the episode explores how generosity reshapes retirement planning. Using a donor-advised fund to “stress test” withdrawals at high rates teaches mechanics and builds confidence, while employer matching turns donations into leveraged impact. We talk practical tools—automating gifts, donating appreciated shares, setting “use-by” dates on giving accounts—and nontraditional forms of giving that create work, support local businesses, and deepen relationships.

We close by breaking down the reverse glide path championed by Michael Kitces and echoed by Bill Bengen: start retirement with lower equity exposure and increase it over time. Our working template moves from the low 40% equity range toward 60–70% as years pass—an evidence-informed band that historically supports higher safe withdrawal rates and tamps down sequence risk. Paired with risk parity diversification and a deliberate giving plan, it’s a path that funds a life you actually want to live.

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Voices:

A foolish consistency is the hobgoblin of little mind, 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:

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:

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

Voices:

Yeah, baby, yeah.

Mostly Uncle Frank:

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

Voices:

Top drawer. Really top drawer.

Mostly Uncle Frank:

Along with a host named after a hot dog.

Voices:

Light in the French.

Mostly Uncle Frank:

But now onward, episode 469.

Voices:

Inconceivable!

Mostly Uncle Frank:

And so without further ado.

Voices:

Here I go once again with the email.

Mostly Uncle Frank:

And first off. First off, we can email from Patrick. Patrick, just how dumb are you? And Patrick writes.

Mostly Queen Mary:

Hi Frank. I've been on the fire path since April 2016, and I'm about 75% of the way there at age 44.

Voices:

Yeah, baby, yeah!

Mostly Queen Mary:

I've been following standard Mr. Money Mustache and JL Collins' advice to go 100% VTI VOO and chill. Following Big Earn's safe withdrawal rate series, I assumed I was shooting for a 3.25% withdrawal rate, with early retirement not likely until age 48 to 50.

Voices:

Forget about it.

Mostly Queen Mary:

I discovered your podcast in August, and it has rocked my world in a major way.

Voices:

No more flying, Solo.

Mostly Queen Mary:

After digesting hundreds of risk parity radio episodes and doing simulations with portfolio charts, portfolio visualizer, and Big Earns Toolkit, I realized that a transition towards a risk parity structure would allow me to likely pull the plug by the end of 2026 or 2027 at the latest.

Voices:

That's what I'm talking about.

Mostly Queen Mary:

I've shifted to a transitional allocation of 30% VUG VTI VOO, 30% VIOV, 16% VGLT, 10% GLDM, 5% DBMF, and 9% split evenly among nine individual REITs in diversified industries. Once my wife retires, we'll shift further to an allocation of 25% VUG, 25% VIOV, 20% VGLT, 15% GLDM, 10% DBMF, and 5% REITs. That lets me hit all of the sweet spots for macro allocation and is a bit more aggressive than the standard Golden Ratio portfolio.

Voices:

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

Mostly Queen Mary:

My question is in regarding to rebalancing the individual REITs. Do you recommend rebalancing the REITs individually so they each maintain an even 1% of the total portfolio? Or is there some other way of rebalancing you would recommend? The performance of these companies has been all over the map, with the best of them gaining 20% in a handful of months, with the worst of them looking at you, Iron Mountain, losing 20% in that same time frame. The second and hopefully more important impact from discovering your show was getting me to think more about charitable giving.

Voices:

Yes!

Mostly Queen Mary:

Your work with the Father McKenna Center and Mary's work with Casa inspired me to drop my default hoarder setting and donate to local youth, arts, and athletic groups, my local food pantry, and now, as you see, attached the Father McKenna Center.

Voices:

Real wrath of God type stuff.

Mostly Queen Mary:

It also motivated me to look into my company's match program, and lo and behold, I discovered they will match up to $15,000 of annual donations to thousands of charities.

Voices:

Excellent!

Mostly Queen Mary:

I feel like I have suddenly gained a superpower in being able to expend my employer's money on behalf of such a good cause. I'm now adding a big charitable giving line in my post-financial independence budget to make use of that extra 1.75% of safe withdrawals. Keep doing what you're doing and thank you so much for the wonderful podcast, Patrick.

Voices:

Patrick, this trophy's for you!

Mostly Uncle Frank:

Well, first off, Patrick, thank you for being a donor to the Father McKenna Center. And mentioning charity, which we'll talk about. We are recording this on Giving Tuesday, although you don't need to wait until the first Tuesday in December to uh exercise your right to give to charity.

Voices:

You gotta fight! Fight a right.

Mostly Uncle Frank:

Anyway, as most of you know, we do not have any sponsors on this podcast. We do have a charity we support. It's called the Father McKenna Center, and it supports hungry and homeless people in Washington, D.C. Full disclosure, I'm in the board of the charity and I'm the current treasurer. But if you give to the charity, you get to go to the front of the email line, as Patrick has done here, and also our second emailer today. Two ways to do that. You can either do it directly at the donation page of the Father McKenna website, which I'll link to again in the show notes, or you can become a patron on Patreon, which you do through the Risk Parity Radio website. Go to the support page and follow the links there. Either way, you get to go to the front of the email line, but make sure you mention it in your email so I can duly move you to the front of the line.

Voices:

You're in the wrong shape, buddy. Come on. Oh, I must be in the front.

Mostly Uncle Frank:

But now let's get to your email. First, welcome to this program. Since it sounds like you've been around here just since August.

Voices:

Welcome to the message.

Mostly Uncle Frank:

And hopefully what you've discovered is that there are more and better ways to approach decumulation than just not spending money.

Voices:

That's the fact jack! That's the fact jack!

Mostly Uncle Frank:

Because I think that actually is the dominant strategy for most of popular personal finance, even prior to Phi. Well, especially prior to Phi, that is still the most dominant strategy in personal finance later in life is don't spend money and just keep accumulating.

Voices:

Oh boy, I'm rich! I'm wealthy! I'm independent! I'm socially secure! I'm rich! I'm rich! I'm rich.

Mostly Uncle Frank:

I was listening to some financial advisors on another podcast recently, and they were talking about this: that when you look at the decumulation strategies of retirees, or most people are retirees, something like only about 14% of decumulators are willing to contemplate having their stash of money go down in retirement, that most either insist on maintaining at least that amount of money or continuing to grow their money in retirement. There was also a recent podcast by Michael Kitsis and Carl Richards, the Kitsis and Carl show, it's what they call that, where they were talking a lot about this too, that the main problem there is what they call the quote frugal Bob, unquote, identity, which I think kind of sums it up that frugal Bob's been a saver all his life and so looks for ways to continue pursuing that identity in retirement, even though it doesn't make a whole lot of sense. And a lot of the advice you've seen or you've been exposed to is of that variety.

Voices:

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

Mostly Uncle Frank:

That lets solve our withdrawal rate conundrum with just not spending money. Which always works, but it's not really maximizing life. It's maximizing money.

Voices:

I don't care about the children. I just care about their parents' money.

Mostly Uncle Frank:

That kits used in Carl podcast is actually quite well worth listening to. I'll link to it in the show notes. So getting to your questions, your question was on rebalancing the individual REITs. Now, I would treat all of your REITs together as one allocation and probably would not mess with it at all until you were going to rebalance that whole allocation against something else in the portfolio and not worry about internal rebalancing of that allocation, particularly because it's so small. I do the same thing with an allocation to property and casualty insurance companies because I use that as part of our value tilt allocation and hold essentially the 10 largest ones, but don't really look to reallocating amongst those companies unless and or until we're going to either buy more of that allocation or sell some of that allocation for rebalancing purposes against other allocations. I think that makes things simpler and cleaner and also reduces the number of transactions for tax purposes. Now, as for what to do about the individual allocations to REITs in this case, or property and casualty insurance companies or whatever you're grouping as your allocation, I don't know what the best strategy for that is, honestly. There are two schools of thought. One would simply be to trim the winners, which always makes sense in a fund context, but if you are really thinking about people that invest in individual companies, the usual advice is to let your winners run, or at least let them run for a very long period of time until they're a very large proportion of the portfolio. And to trim the losers, because unlike funds, individual companies don't necessarily revert to any known mean. Some of them go out of business and some of them multiply greatly in value. But I do find when I'm looking at something like this, in terms of rebalancing one of these kind of allocations with a bunch of stuff in it, that I am looking at the ends of the spectrum, either things that have grown much larger than everything else in that section, or things that have fallen off or deteriorated and just aren't very good investments anymore. If you were going to allocate a whole lot more to the sector, you might also consider, should I be buying something new in this sector? Now, obviously, this doesn't make for a clean set of rules, but on the other hand, if you're only looking at this question when you're actually going to rebalance this allocation, it does reduce the number of decisions to be made. You mentioned Iron Mountain specifically. That has been a really funny reek to watch because it was a really boring thing for a very long time. They specialized in, you know, storing actual paper in salt mines and other places like that, essentially. But since the age of artificial intelligence and data centers has become a thing, that stock has become much more volatile, first growing by leaps and bounds, and then more recently having a downturn. And it makes you wonder what it's going to do next.

Voices:

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

Mostly Uncle Frank:

So anyway, I would create a set of rules that minimizes the number of transactions that you actually have to do with a sector that's composed of individual components like that. But no, I do not have a magic formula. Maybe I will someday, but I certainly don't today. Look, it's MacGyver! Do you know how to pick locks? Just the observation that individual stocks are not like funds. They're two different animals, actually. So buying a lot more of something that is doing badly often is not a really good idea. So getting to the last part of your email, it sounds like this is an example of you actually changing your identity from somebody who defaulted towards hoarding money to somebody who's now looking at what else can they do with the money.

Voices:

No one can stop me.

Mostly Uncle Frank:

And I think that's the right approach, and I think it's going to make you a happier and more fulfilled person overall as you go forward.

Voices:

Yes, Cat, now I should be ruler of the world.

Mostly Uncle Frank:

Because being a distributor of resources is just much more fulfilling than being a hoarder of resources.

Voices:

That goes without saying. Woof. It's gonna be very popular.

Mostly Uncle Frank:

And I suppose if I had my brothers or could be dictator for a day or whatever, as far as a recommendation for this is concerned, I would think that, you know, living off three or four percent of your accumulated assets and then having one percent available to essentially distribute, I think would make the distributors better off, but certainly would make the people around them better off as well. Surely you can't be serious.

Voices:

I am serious, and don't call me surely.

Mostly Uncle Frank:

And when I say distribute, that could be to would-be heirs, it could be to charities, it could be to other projects. I'm not limiting what that actually means. But when you think about it, there's no reason most people can't actually do that because obviously that is a discretionary expense, and so if you needed to cut it because things weren't going well, you certainly could. Which builds in just a lot of flexibility in into any plan that involves a planned distribution, as you're talking about here, and maybe gives a new definition to the concept of being a one percenter. I haven't taken leave of my senses, Bob.

Voices:

I've come to them. From now on, I want to try to help you to raise that family of yours. If you'll let me. Well, we'll we'll talk it over later, Bob, over a over a bowl of hot punch.

Mostly Uncle Frank:

So I'm very glad that you're very motivated and that you're finding joy in this process in what you can actually do with what you've accumulated.

Voices:

It's right, it's true. It all happened to me. I don't know what day of the month it is. I don't know how long I've been amongst the spirits. I don't know anything. I never did know anything. But now I know that I don't know anything. I don't know anything. I never did know anything, but now I know that I don't know all of the Christmas morning. And I must stand them ahead. I must stand them ahead.

Mostly Uncle Frank:

And so thank you for being a donor to the Father McKenna Center. Thank you for being a one percenter in your own life, and thank you for your email.

Voices:

Aren't you Patrick Starr? Yep. And this is your ID. Yep. I found this ID in this wallet, and if that's the case, this must be your wallet. That makes sense to me. Then take it.

Mostly Uncle Frank:

It's not my wallet.

Voices:

Second off.

Mostly Uncle Frank:

Second off, we have an email from somebody named Kyle. Ky and Kyle writes.

Mostly Queen Mary:

Hi, Frank and Mary, Kyle here. I have recently set up a donor advised fund. My wife and I are in our 30s, 40s and have reached the Coast V phase and on pace to hit our fine number in the next five to ten years. But we do not foresee ourselves stopping working. So instead of being a greedy slob and just looking at all the money, I can't help it.

Voices:

I'm a greedy slob.

Mostly Queen Mary:

I decided to open a donor advised fund. As my first donation, I sent a gift to the Father McKenna Center in all in appreciation of all the information you provide for free through your work.

Voices:

You get a bunch of people around the world who are doing highly skilled work, but they're willing to do it for free and volunteer their time, 20, sometimes 30 hours a week. And then what they create, they give it away rather than sell it. It's going to be huge.

Mostly Queen Mary:

I set up my donor advice fund through DAFI and created a golden ratio portfolio, but as the fund does not have managed futures, I had to use the original golden ratio portfolio, modified a bit to include 14% of VIOV, USM V and VUG, 25% VGLT, 15% of IAUM, 11% of REET, and 6% of SGOV.

Voices:

The Golden Ratio. The Golden Ratio. What's the answer what's the answer?

Mostly Queen Mary:

I will be withdrawing at 8% per year to stress test the portfolio. And it's gone. Poof. I view this as a benefit to try to understand how withdrawals work in retirement and also to push myself to give a bit more. I don't know what to do.

Voices:

I'm as light as a pillow. I'm as happy as an angel. I'm as happy as a schoolboy. I'm as giddy. I'm as giddy as a drunken man.

Mostly Queen Mary:

If and when the portfolio turns into a pumpkin, I will end up adding more to the fund. Thanks for all you do, and feel free to spread some South Park references in.

Voices:

I want to hold you every morning and love you every night, Al. I promise you nothing but love and happiness.

Mostly Uncle Frank:

Well, thank you also for being a donor to the Father McKenna Center, Kyle. I think it's funny and appropriate that there is a donor-advised fund company called Daffy, given the Daffy Duck reference that we use here sometimes.

Voices:

Help! Okay then. What's with you anyway? I can't help it. I'm a greedy slob. It's my hobby. Save me! Hush!

Mostly Uncle Frank:

It sounds like you have a good plan here, and this does also give you some valuable experience in experimenting with a drawdown portfolio, which, as I've come to learn particularly this year, is something that a lot of people find valuable since we had that episode on bigger pockets money with Mindy, where we set up a sample portfolio for her to experiment with. And since we live in this era of fractional shares and no fee trading, there's no reason that anyone can't set up their own experiment with a drawdown portfolio, either in a donor advised fund or in some other capacity.

Voices:

We can put that check in a money market mutual fund, then we'll reinvest the earnings into foreign currency accounts with compounding interest, and it's gone.

Mostly Uncle Frank:

But your question was how do we think and plan our charitable giving, which is also appropriate for Giving Tuesday, I suppose, how serendipitous that is. But honestly, I think this is very personal. I think it's something you ought to kind of experiment with, find out kind of what trips your trigger and gives you the most joy or feeling of well-being as to what kind of giving or distribution you want to participate in. This kind of goes to something that Richard Rohr wrote in the book Falling Upward, which is about kind of approaching retirement or your second part of life, in which he says you kind of need to go back to the starting point because by the time you had your career, you kind of know everything about that career and can kind of shortcut things and just not do things that don't appear to be useful. But when you're going back to kind of figure out what am I gonna do next and what am I gonna do next with respect to charity and things, he says it's kind of like being a kid again that you need to go out and try a few things and see which ones you like and which ones you don't, and sort of be willing to fish or cut bait depending on which ones appeal most to you. But the only way you're really gonna figure that out is by actually participating.

Voices:

You must unlearn what you have learned. Alright, I'll give it a try. No, try not. Do or do not. There is no try.

Mostly Uncle Frank:

For Mary and I, I think we both like being able to actually participate in the organization we're also giving money to, or raising money for, because it's also a source of new relationships and creativity and something besides just writing a check. There's also some amount of money we'll just give to people who ask, our friends and family. Or for me, I like giving money away to kids that come to the door raising money for their band or things like that, just because I played in band as a child.

Voices:

Must create a desperate need in your town for a boy's band.

Mostly Uncle Frank:

And I suppose equally important is to figure out what you don't get as much joy out of giving to. So, for example, for me in particular, I don't really enjoy giving money to educational institutions, even though they're always asking for money. Not only the ones I went to, but all of the ones our kids went to. I'd rather give money to something that is likely to feel more impact from what I can do, since I'm not going to be buying any buildings and putting my name on them or anything like that. But I also think you should think beyond traditional charitable giving. Because what some people like to do is just hire people to do work that maybe they could do themselves, but that other person really does need a job. Or you might use some of it to support a local business. Or if there is somebody in your family or a community that is starting a business and asks for an investment. It may not be a good investment from a purely business perspective, but you may think of it as a form of gifting if you think the person is sincere and their idea is reasonably decent.

Voices:

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:

It's not wrong to put up some money for something like that, even though you need to treat it as a write-off, essentially. At least so long as it's not perpetuating some kind of bad behavior or avoidance behavior in the person receiving the money.

Voices:

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

Mostly Uncle Frank:

So don't be afraid of being creative. But on the other hand, don't be afraid of making mistakes. That if you're going to give money away, sometimes you'll give money away and decide later that probably wasn't a good place to give the money or a good thing to do with the money. And that's okay. You don't want to get caught up in some kind of analysis paralysis.

Voices:

You will have to be somebody. You will have to be somebody. You will have to be somebody.

Mostly Uncle Frank:

Which is actually a problem that a lot of large charities or foundations have in which they spend so much time analyzing what they're about to do that they're really wasting money and time by not just getting on it and getting going. You don't want to turn into a control freak about this stuff or act like you are buying somebody's performance because that's likely to lead to dissatisfaction, not more satisfaction. Now, mechanically, if you're not accustomed to giving money away regularly, what you need to do is make it part of a budget, or even make a separate account where you put the money. And for traditional charities, that could be a donor-advised fund. But for something else, it could be just some account, and you tell yourself, I need to give this money away by this date, and if I haven't done it, then it's going to go to a default usage, if you will. And then periodically you reassess where the money is going. In that light, don't forget the option that many of us have, which is to donate shares to avoid the capital gains on them. Because they're very tax-efficient ways of giving money, and that's one of them. In the end, I think that to the extent you can make your giving also a way of either forming new relationships or deepening old ones, or some kind of self-expression or creativity, particularly if you're working on something where the object is to build something or create something, those are going to be essentially the best bang you can get for your charitable buck, if you will. I know what you're thinking. Did he fire six shots or only five? Because they will help you avoid some of the five regrets of the dying. And if you haven't listened to my recent appearance on the Choose FI podcast with Ginger talking about that, it's probably something you want to check out as well. And I'll link to that again in the show notes. I think what you are doing here with your donor advice fund, where you're also using it to experiment with a portfolio as a creative outlet, also is going to give you more bang for your buck than you otherwise would get simply by writing a check somewhere. So thank you for writing in and telling us about it. Thank you for being a donor to the Father McKenna Center. And thank you for your email.

Voices:

Oswalda stars in the sky. I'll be there, Cam. Oswe Like the shell that's by the camp ready, Cambi Dave. Last off last off?

Mostly Uncle Frank:

We have an email from Dave.

Voices:

Who is it? It's it's Dave, man. Will you open up? I got the stuff with me. Who? Dave, man, open up. Dave? Yeah, Dave, come on, man, open up. I think the cops are. Dave's not here.

Mostly Uncle Frank:

And Dave Wright.

Mostly Queen Mary:

Hi, Frank. I'm doing about 15 episodes a day to catch up.

Voices:

A very sick man.

Mostly Queen Mary:

I'm soon to retire, and I'm so glad I found you. You are an excellent teacher. The debunking of BS rants are my favorites. I once heard Kitsis mention that he has been working on the benefits of going 100% equities 15 years into retirement. I would love to hear your thoughts.

Voices:

Hey, come on, man. Who is it? It's Dave, man. Will you open up? I got the stuff with me. Dave, man, open up. Dave! Yeah, Dave. Dave's not here.

Mostly Uncle Frank:

Well, Dave, I'm glad you're enjoying the show, including the rants. Although I believe I've slowed down a little bit in my old age here. But part of that is because I have a lot more emails to answer than I used to. And the rant was something that I used to fill episode time in the first six months to a year of this podcast.

Voices:

I want you to be nice. Until it's time to not be nice. Well, uh, how are we supposed to know when that is? You won't. I'll let you know.

Mostly Uncle Frank:

If you're a lawyer and particularly a litigator, you do enjoy having a good rant now and again.

Voices:

I don't like your attitude. What else is no? I'm holding you in contempt of court. Where's that money, you silly stupid old fool? Where's that money? You realize what this means? It means bankruptcy and scandal and prison. That's what it means. One of us is going to jail. Well, it's not gonna be me.

Mostly Uncle Frank:

Now, getting to the substance of your email, what you are talking about for Michael Kitsis is called a reverse glide path. And it was born out of some interesting research that he did. I can't remember who he did it with, whether it was Wade Phoe or somebody else, but they were looking at the Traditional advice about using a glide path for a long period of time as somebody ages and going from essentially fewer bonds to more bonds over some extended period of time. And they actually determined that that was a bad strategy and was likely to be counterproductive, which is something that a lot of personal finance still does not get because it completely turns on its head this old idea or wives' tale that you should hold something like a hundred minus your age in stocks and the rest in bonds. That's really stupid advice that nobody should be following.

Voices:

Are you stupid or something? Stupid is, stupid does, sir.

Mostly Uncle Frank:

But it's a good litmus test if you hear somebody advising that or saying that people should do that because that person does not know what they're talking about.

Voices:

I award you no points, and may God have mercy on your soul.

Mostly Uncle Frank:

So what they found was actually you were probably going to be better off if you were using a glide path to use the reverse glide path, in which case you would start right before retirement or at retirement with a lower amount of stocks and then increase the amount of stocks in your portfolio over time. And that seemed to play out well. Now, Bill Bangin has also mentioned this in his most recent book that came out last summer. And so I think this is an area that I'm certainly interested in exploring, given where we are in retirement, basically five or six years in. And according to what Bill Bengen wrote, it does seem to work with a variety of portfolios, because the original portfolio that Kitsus was looking at was a simple like 60-40 was just, you know, one stock fund, one bond fund kind of thing. But essentially, this may be another way of effectively increasing a safe withdrawal rate over time, particularly if it's coupled with the idea that an average retiree is not going to experience inflation at the same rate as the general population, and so can take more portfolio risk, both for that reason and because they're closer to death, frankly. Death stocks you at every turn. What we really don't know about this, however, is what would be the optimal way of implementing something like this. And over how many years should it be implemented? I mean, should it be implemented over 10 years? Should it be implemented over 30 years? And should we be going to a portfolio that looks more like an accumulation portfolio, or maybe just to the upper limits of good retirement portfolios for higher safe withdrawal rates?

Voices:

And you've gone over something again and again and again and again, like I have. Certain questions get answered, others spring up. The mind plays tricks on you, you play tricks back! It's like you're unraveling a big cable knit sweater. That someone keeps knitting and knitting and knitting and knitting and knitting and knitting and knitting.

Mostly Uncle Frank:

My gut feeling or hypothesis is something like this. We know from Bill Bengin's research that the portfolios with the highest safe withdrawal rates seem to have somewhere between 40-something percent in stocks and 70 some percent in stocks. So, just from that information, it would seem that an ideal glide path might look like something that starts with 40 some percent in stocks and then gradually increases it over some period of time to get up to somewhere in the 60s or maybe 70% in stocks, depending on how many bonds you also had in the portfolio and what else was in there. I don't have any proof that that's the best strategy, but to me, it seems to tick all the boxes, if you will, because you're taking more risk and are likely to get higher returns over time as you increase the amount of stocks in the portfolio. Yet if if you're staying within those kind of framework, you know that your ultimate safe withdrawal rate is not going to be dropping by significant amounts because you're having 80 or 90% of stocks in the portfolio or only 10% of stocks in the portfolio. I'm not sure increasing it to 100% makes any sense unless you are really just dropping your expense levels to rates below 3%, in which case you're just talking about creating a an accumulation portfolio. At that point, I would think the solution would be to spend more money and not continue to increase the percentage in stocks. At least that would be my preference. So I am thinking of implementing something like this or a variation of this. Given I'm 61 now, so I could do it between the ages of 61 and 70, and maybe we will take one of the sample portfolios and implement something like this. I'm thinking if we took the sample golden ratio portfolio and gradually increased it over ten years from its forty-two percent in stocks to something like sixty-two percent in stocks, in which case it could still be a golden ratio portfolio.

Voices:

A number so perfect.

Mostly Uncle Frank:

Perfect. You find it everywhere, everywhere. That might be something that is interesting and useful. So I'm thinking of starting something like that at the next rebalancing next July. But I have not worked out all the details. I'm not a smart man.

Voices:

Uh what? The money in your account. It didn't do too well, it's gone.

Mostly Uncle Frank:

Anyway, I'm glad you brought this up because this is one of the sort of unanswered questions in my mind. Now that we know that a reverse glide path is probably a good strategy, let's see if we could flesh out some of the details of what that should look like or be like. Because I don't think there's a clean answer to that question right now. And it's something that could be developed over the next ten years. Not that I'm likely to be doing the research myself. At least not in the details.

Voices:

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

Mostly Uncle Frank:

So, those are some of my thoughts.

Voices:

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

Mostly Uncle Frank:

Glad you're enjoying the podcast. And thank you for your email.

Voices:

Open up the door, it's Dave! Dave, D A V Dave! Yeah, Dave! Dave! Right, man. Dave, now will you open up the door? Dave not here!

Mostly Uncle Frank:

But now I see our signal is beginning to fade. We are gonna try and get back on our regular two podcasts a week schedule, at least for the next month or so. I'm sure you're all excited about that. This is pretty much the worst video ever made. And in the meantime, if you have comments or questions for me, please send them to Frank at RiskPardyRader.com. That email is Frank at RiskParodyRader.com. Or you can go to the website www.riskparty radio.com and fill out that contact form, and I'll get your message 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 Basquez with Risk Party Radio. Signing off.

Voices:

Yeah, yeah.

Mostly Queen Mary:

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.

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Frank Vasquez

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