Episode 390: Single Fund Portfolio Follies, Variable Withdrawal Strategies, Basic Portfolio Considerations, And Portfolio Reviews As Of December 27, 2024
Dec 29, 2024
Discover the quirks of portfolio strategies, as the hosts debate equal-weight versus cap-weighted funds. They tackle the myth of one-fund portfolios and highlight the need for diversification. Get insights into dynamic withdrawal strategies that adjust based on market trends and personal needs. Tune in for an amusing look at common investor missteps alongside practical tips for regular portfolio reviews. Plus, enjoy a recap of market performance with witty commentary that keeps finance light and engaging!
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Supporting the Father McKenna Center
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insights INSIGHT
One-Fund Portfolio Fallacy
One-fund portfolios are not optimal, despite popular belief.
Modern Portfolio Theory and Shannon's Demon demonstrate that diversified portfolios outperform single-fund strategies.
volunteer_activism ADVICE
Cap-Weighted vs. Equal-Weight ETFs
Cap-weighted ETFs are generally better than equal-weight ETFs for most investors.
They are cheaper, better reflect the economy, and avoid the risky small-cap growth sector.
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In 'The Psychology of Money,' Morgan Housel delves into the psychological and emotional aspects of financial decisions. The book consists of 19 short stories that illustrate how personal history, worldview, emotions, and biases influence financial outcomes. Housel emphasizes the importance of behavior over knowledge in managing money, highlighting the power of compounding, the dangers of greed, and the pursuit of happiness beyond mere wealth accumulation. He advocates for a frugal lifestyle, long-term perspective, and a balanced approach to investing, stressing that financial success is more about mindset and discipline than about technical financial knowledge[2][3][4].
The Soul of Money
Transforming Your Relationship with Money and Life
Lynne Twist
In 'The Soul of Money,' Lynne Twist delves into the psychological, spiritual, and practical aspects of money and its impact on our lives. She argues that our relationship with money is deeply intertwined with our values, sense of purpose, and overall well-being. The book provides guidance on how to reevaluate and transform this relationship to achieve greater fulfillment and alignment with one's true values.
Purpose Code
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Jordan Grumet, MD
Your Complete Guide to Factor-Based Investing
The Way Smart Money Invests Today
Larry Swedroe
Larry Swedroe's "Your Complete Guide to Factor-Based Investing" delves into the world of factor investing, a strategy that focuses on identifying and exploiting specific factors that drive returns in the stock market. The book provides a comprehensive overview of various factors, including value, size, momentum, and quality, and explains how to construct portfolios that leverage these factors to enhance returns and manage risk. Swedroe emphasizes the importance of diversification and cost-effective investing, advocating for low-cost index funds and ETFs. The book also includes numerous references to academic research and empirical evidence, supporting the claims and recommendations made throughout. It is a valuable resource for both novice and experienced investors seeking to improve their investment strategies.
Common Sense on Mutual Funds
John Bogle
Written in a straightforward and accessible style, this book examines the fundamentals of mutual fund investing in today's market environment. Bogle discusses the timeless principles of investing, reflects on structural and regulatory changes in the mutual fund industry, and argues that simplicity and common sense are more effective than costly complexity. He advocates for the use of index funds, highlighting how they outperform actively managed funds due to lower costs and broader diversification.
In this episode we answer emails from Kyle, Adam, and Steve. We discuss equal weight vs. cap weighted funds and the fallacy that one fund stock portfolios are optimal, a variable withdrawal strategy plan, and what kinds of portfolios work best for which types of people and purposes.
And THEN we our go through our weekly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.
Step into the world of Risk Parity Radio, where we unravel the mysteries of asset allocations and personal finance. Ever wonder how equal weight differs from cap-weighted index ETFs? We promise to guide you through this intriguing comparison, emphasizing the importance of utilizing multiple funds for a comprehensive market strategy. Together with my co-host Mary, we explore how concepts like Modern Portfolio Theory and Shannon's Demon can elevate your portfolio's performance beyond a single-fund approach. And, in a nod to community spirit, we encourage our listeners to support the Father McKenna Center, weaving philanthropy into our financial discourse.
This episode goes beyond the basics, challenging the notion that one-size-fits-all in the world of investing. We dissect the benefits of combining growth and value funds, and highlight the risk management advantages of cap-weighted ETFs. Our heartfelt retirement segment touches on a listener's email about crafting a sustainable portfolio through variable withdrawal strategies. We navigate the nuances of personal inflation adjustments, equipping you with the tools to fortify your financial future. Join us as we counter cognitive biases and fine-tune strategies to align investments with economic realities, ensuring that your financial journey is as robust as it is rewarding.
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