Risk Parity Radio

In this episode we answer emails from Jeffrey, Bryan, and Erik.  We discuss the trade-offs of direct indexing in small cap value, why modest leverage on a diversified mix can outperform stock-heavy portfolios with fewer drawdowns, and modelling an early extra spending plan for retirement.  And talk about forecasting with Base Rates.

And THEN we our go through our weekly and monthly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.

Links:

Fairfax CASA Donation Page:  Donate - Fairfax CASA

Father McKenna Center Donation Page:  Donate - Father McKenna Center

Bigger Pockets Money Small Cap Value Discussion:  Small Cap Value Funds for FI: Why AVUV?

Bryan's Risk Parity Explainer Videos:  Kardinal Financial - YouTube

Bryan's Leveraged Golden Ratio Portfolios:  testfol.io/?s=jXswQKw6avr

RSST and GDE Comparisons:  testfol.io/?s=dc0nz7avynF

Ben Felix Video On Leverage:  Investing With Leverage (Borrowing to Invest, Leveraged ETFs) (youtube.com)

Erin on Money Truth About Spending Smirk and LTC:  The Retirement Spending Smile Is Dead (Here’s What the Data Actually Shows)

Breathless Unedited AI-Bot Summary:

Markets don’t hand out easy wins, so we lean into clarity: what actually works for DIY investors, what’s noise, and how to make choices you’ll stick with when regimes shift. We start with a pointed look at direct indexing in small cap value. The promise of tax loss harvesting sounds great, but the reality is messy: hundreds to thousands of tiny positions, frequent graduations at index cutoffs, and “optimized” portfolios designed to hug an index rather than truly replicate it. We break down why small cap value behaves more like equal weight, why that raises the bar for tracking and taxes, and where direct indexing makes more sense—large caps, cap-weighted sectors, and places where a handful of names dominate the exposure.

From there, we unpack a smarter use of risk: applying modest leverage to a diversified portfolio instead of dropping diversifiers to chase higher returns. Think of it as scaling a better mix rather than concentrating into stocks. We compare tools like NTSX, GDE, GOVZ, and managed futures, and discuss why the 1.25x to 1.7x range often hits the sweet spot for return per unit of pain. We also stress-test composite ETFs against DIY equivalents for transparency and control. The goal is a higher Sharpe ratio and fewer bone-crushing drawdowns, not bravado.

Planning meets practice when we tackle a common early-retirement question: how to model a 10,000-dollar travel burst for the first decade. The simplest answer is often best—set aside 100,000 dollars and spend it down—or use a Monte Carlo tool that handles time-varying cash flows. Keep three to five years in cash, refill from gains, and let base rates guide expectations. Research shows a spending bump near retirement and a gentle decline afterward for most households, with far fewer late-life spikes than fear-based sales pitches suggest.

We close with portfolio reviews across eight sample allocations, highlighting how gold, commodities, and managed futures have led while mega-cap tech cooled and small cap value caught a bid. 
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In this episode we respond to emails from Nick, Ginna, Ashley, Chris and Sara.  In our Queen Mary segment where we are raising money for Fairfax CASA, we express our gratitude for the outpouring of listener support and tell Noah and Taylor’s story of reunification.  We then dive into two big portfolio questions: do managed futures replace gold, and how to fund an eight-year break without derailing long-term plans. We build a conservative drawdown portfolio, weigh taxes in taxable accounts, and explain why good portfolio construction beats market timing.

Links:

Fairfax CASA Donation Page:  Donate - Fairfax CASA

Wilka's in NYC:  Wilka's Sports Bar | Women's Sports Bar | New York, NY, USA

Chris's Portfolio Constructions:  testfol.io/?s=lwnOaJGvzDj

Sara's Portfolio Analyses:  testfol.io/?s=htNZVoZOZn4

Breathless Unedited AI-Bot Summary:

Start with purpose: a child’s safety, a mother’s grit, and a community that shows up. We open with a moving Fairfax CASA story—Noah and Taylor—that reminds us why steady advocacy and second chances matter. Listener donations pour in, and Mary shares how CASA pairs rigorous oversight with real compassion. From there, we pivot to the other kind of safety net: portfolios designed to fund real lives.

A longtime listener asks if managed futures make gold redundant. We break down what trend-following actually captures, why gold’s long history and different crisis behavior still earn it a seat, and how the two hedges fit together when you care about drawdowns, not bragging rights. Then we tackle Sarah’s bold plan: an eight-year pause from work to care for family, spending about $90k per year from taxable savings before returning to the workforce. Rather than a classic risk-parity blend, we map a more conservative drawdown portfolio: roughly 30% equities with a large-cap value tilt and a sleeve of property-and-casualty insurers, 25% cash and short-term Treasuries for three years of runway, 25% intermediate Treasuries for recession insurance, and 20% in alternatives split between gold and managed futures. The goal isn’t to win a backtest—it’s to keep maximum drawdowns shallow and flexibility high.

We also unpack taxes in the 0% capital gains band, why ordinary-income assets aren’t the villain during low-income years, and how realizing gains strategically can preserve ACA subsidies. For long-horizon IRAs, we keep it simple: a 100% equity mix across large-cap growth or blend and small-cap value, with an optional tilt to international small-cap value for broader diversification. No crystal balls, no heroic timing—just construction that respects time frames and human needs.

If this episode helps you think differently about money, advocacy, or how to buy time for what matters, share it with a friend, subscribe, and leave a quick review so more DIY investors can find it.

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In this episode we answer emails from Tim, Anderson, and Pete. We discuss using a Golden Butterfly portfolio for intermediate accumulation, converting 529s to Roths and excessively levered portfolios for small children.  (I can't make this stuff up.)

But first we share Mary’s mission with Fairfax CASA and explain how steady advocacy changes a child’s path, and roll out our Fairfax CASA fundraising campaign in connection with National Child Abuse Prevention Month.

Links:

Fairfax CASA Donation Page:  Donate - Fairfax CASA

The Starfish Thrower Philosophy from Episode 441 (Cool New Video!):  The Starfish Thrower Philosophy With Mary.mp4 - Google Drive

Mary's CASA Case Adoption Story:  The Johnson’s Foster Care & Adoption Story

FIRE Takes Podcast:  FIRE Takes Podcast

Portfolio Charts Drawdown Calculator:  Drawdowns – Portfolio Charts

Testfolio Backtester:  testfol.io

Pete's Leveraged Leeroy Jenkins Portfolios:  testfol.io/?s=l7aMOsy4720

Breathless Unedited AI-Bot Summary:

Ever wonder how to save for a goal that’s a few years away without riding stock-market whiplash or leaving too much on the table in cash? We walk through a practical, risk-aware path for mid-term savings and pair it with something close to our hearts: Mary’s work with Fairfax CASA, where trained volunteers are a constant for kids navigating abuse or neglect cases. You’ll hear what CASA volunteers actually do—attend hearings, coordinate services, write court reports, and keep showing up—plus the data that proves consistent advocacy moves outcomes.

From there, we dig into building an intermediate-term portfolio using a risk parity approach like the Golden Butterfly. We explain how to model a real alternative to HYSAs: use long-history T-bill data instead of SHY, add regular monthly contributions to reflect real life, and examine drawdown length and worst-case windows over three to five-year spans. You’ll learn why shorter, shallower drawdowns can matter more than headline returns when timing is uncertain, and how Testfolio helps you compare paths with clarity. We also unpack a powerful planning angle: rolling leftover 529 funds to a Roth IRA under current rules, including holding periods, beneficiary considerations, earned income needs, and why Roth contribution capacity is too valuable to waste.

We don’t shy away from the spicy stuff either—managed futures, leverage, and the gap between theory and practice. Rather than letting fear set the rules, we talk about small, controlled experiments that build skill and confidence. That shift—from anxiety to informed action—can change both your portfolio and your peace of mind.

If this resonates, support Fairfax CASA via the link in the show notes and mention Risk Parity Radio or Mary Vasquez in the comment box. Then hit follow, share the episode with a friend who’s stuck between stocks and savings, and leave a quick review to help more DIY investors find us.

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In this episode we answer email Serge, Nielsen, Paul and Loren.  We dig into the core question that drives every portfolio -- when will this money be spent and by whom -- which dictates how it should be invested, and talk about the website, ETPs and their variations, and thinking about sabbaticals and Coast FI.  We also mention our Risk Parity Radio gathering at EconoMe on Friday at the Celare Hotel.

And THEN we our go through our weekly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.

Additional Links:

The New(ish) Web Page:  Risk Parity Radio

Retire Often Book:  Retire Often | Create a meaningful and enjoyable life

Breathless Unedited AI-Bot Summary:

What is this money actually for—and when will it be used? We build from that deceptively simple question to map two clear paths: an equity-heavy accumulation approach for wealth you won’t touch for decades, and a diversified, endowment-inspired design for money you plan to spend or share in the near term. Along the way, we unpack revealed preferences, why giving while living can outperform hoarding for family outcomes, and how to convert volatility into usable cash flow with risk parity principles.

We share practical playbooks for different life chapters. If you’re sitting on a seven-figure portfolio and dreaming of a sabbatical, hold 1–2 years of cash and let the rest compound in accumulation mode. If you’re leaning toward Coast FI, keep retirement assets in equities while your current work covers life today. If you aim to fund 4–5 percent distributions to family or philanthropy, build a portfolio with multiple return drivers—equities for growth, Treasuries for crisis defense, gold and commodities for inflation, and managed futures for trend resilience—plus disciplined rebalancing to support withdrawals through market cycles.

We also clear up product confusion: GLD lives under the broader ETP umbrella while functioning like an ETF to most users—structure matters for risks and taxes, so read the prospectus and know what you own. To ground it all, we review the latest market moves—small-cap value strength, gold’s lead, managed futures momentum—and walk through sample portfolios, including rebalancing thresholds and what’s working now. Ready to align your portfolio with your real timeline and purpose? Hit play, subscribe for more smart, research-backed investing talk, and leave a review to help others find the show.
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In this episode we answer questions from Ben, Todd, and Tom. We discuss how managed futures differ from momentum, differentiating Monte Carlo simulations and why you need to be careful with parameterized simulations, and flexible withdrawal strategies generally and applied to the sample portfolios.
LInks:

QMOM and DBMF comparison and correlations:  testfol.io/analysis?s=5lCK1KCsAsx

Morningstar 2025 State of Retirement Income Report:  Morningstar State_of_Retirement_Income_2025.pdf - Google Drive

Portfolio Charts Annual Returns Calculator:  Annual Returns – Portfolio Charts

Stress Test Comparisons (Golden Butterfly, Golden Ratio, 60/40 and Three Fund Portfolios) Starting in 2000 with 5% withdrawal rate and CPI Inflation:  testfol.io/?s=7jwHMS4FogB

Breathless Unedited AI-Bot Summary:

Ever wondered why a momentum stock fund and a managed futures fund can look similar on the surface yet behave like opposites when markets lurch? We dig into the real differences between equity momentum strategies like QMOM and multi-asset trend programs like DBMF, explaining how managed futures trade across stocks, bonds, commodities, and currencies with the ability to go long and short. That breadth—and the discipline to follow trends over weeks to a year—creates low correlation to traditional portfolios and turns macro chaos into potential opportunity.

From there, we tackle the Monte Carlo confusion that trips up even seasoned planners. We compare historical shuffles that preserve real-world co-movements with parameterized simulations that assume normal distributions and independence—two assumptions markets love to break. You’ll hear why fat tails matter, how “impossible” scenarios sneak into naïve models, and where to find usable inputs without double-counting inflation. We also share a simple framework: use multiple calculators, add historical stress tests starting in rough windows like 1968 or 2000, and look for consistent results across tools before you trust any forecast.

Finally, we turn to retirement withdrawals and the habits that actually hold up. Instead of rigid CPI bumps, we walk through constant-percentage withdrawals, guardrails, and the reality that retiree spending tends to run at CPI minus 1–2 percent outside healthcare. We highlight how flexible rules can raise sustainable withdrawal rates and why resilient portfolio design—think Golden Butterfly or Golden Ratio—can outperform a classic 60/40 under severe sequences. If you’re ready to upgrade your plan with better diversification, better testing, and smarter spending rules, you’ll leave with practical steps you can apply today.

Enjoyed the conversation? Subscribe, leave a review, and share this episode with a friend who’s serious about building a portfolio that survives bad markets. What testing change will you make this week?

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