June 21, 2025

Episode 432: A Transition Quandary, The 25 x 4 Portfolio, RPR On Afford Anything Podcast, Other Stuff And Portfolio Reviews As Of June 20, 2025

48 minutes

In this episode we answer emails from Isaiah, Jack, Jon and Luke. We discuss preliminary transition issues and de-risking, Jack's "25 x 4" risk parity style portfolio, Invictus and similar themes, treasury bonds and gold as co-diversifiers and ESG funds. And revel on how we Tom Sawyer'ed Paula Pant into creating a nice 'Risk Parity Portfolio Blueprint" for us.

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

To donate to the Top of the T-Shirt campaign and double your fun, please visit the Father McKenna Center donation page and note "Risk Parity Radio Match" when making your contribution.

Additional Links:

Father McKenna Center Donation Page: Donate - Father McKenna Center

Afford Anything Podcast Episode: #618: How to Retire at 50 While Supporting Aging Parents, with Frank Vasquez - Afford Anything

Paula Pant's Risk Parity Radio Blueprint: Frank Vasquez Risk Parity Portfolio Giveaway.docx

Claudia Moise Paper: Flights to Safety, Volatility Risk, and Monetary Policy by Claudia E. Moise :: SSRN

Professor Aswath Damodaran on ESG Funds: The Difficult Truth about ESG Investing with Aswath Damodaran

FRDM Fund: FRDM – Freedom 100 Emerging Markets ETF – ETF Stock Quote | Morningstar

Breathless AI-bot Summary:

What happens when retirement portfolio theory meets real-life investment challenges? In this illuminating episode of Risk Parity Radio, Frank Vasquez responds to listener questions that cut to the heart of creating resilient, diversified portfolios for financial independence.

A military member with six years left before retirement asks how to transition from a heavy equity allocation to a risk parity approach without triggering unnecessary tax consequences. Frank offers practical guidance on using existing retirement accounts to begin de-risking immediately, demonstrating how macro allocation principles can work within institutional constraints. The advice highlights a crucial lesson: reducing overall market exposure takes precedence over perfecting individual asset selections.

The psychological challenges of portfolio construction take center stage when a medical professional shares his "25 by 4" portfolio, showing equal allocations to large cap blend, small cap value, gold, and intermediate treasuries. While validating the approach, Frank addresses the emotional resilience needed when certain assets inevitably underperform for extended periods. This conversation exposes a troubling disconnect between certified financial planning education and practical portfolio construction, particularly regarding gold's vital diversification benefits.

Misconceptions about long-term treasury bonds receive special attention, with Frank explaining why their value in risk parity portfolios transcends historical performance during falling interest rates. Their tendency to show negative correlation with stocks during recessions provides the portfolio protection that enables sustainable withdrawal strategies.

For those interested in values-based investing, Frank challenges the notion that commercial ESG products truly align with personal ethics. His recommendat