Risk Parity Radio
Episode 363: Making Adjustments To An RPR Portfolio, Musings About Factor Investing And HECOMs, And A Semi-Rant About Ill-Advised IUL
Aug 29, 2024
Phil engages in a lively discussion about investment strategies, prompting insights on portfolio adjustments and the intricacies of factor investing. Eric dives into the world of reverse mortgages, unveiling critical considerations around HECOMs. They scrutinize the often-misunderstood Indexed Universal Life (IUL) insurance, emphasizing its pitfalls and the wealth required to utilize such products effectively. Their blunt honesty is refreshing, reminding listeners to rethink conventional investment wisdom and approach with caution.
34:27
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Quick takeaways
- Reducing bond allocations in favor of stocks can jeopardize safe withdrawal rates, especially during economic downturns, necessitating careful simulations.
- Factor investing, particularly the balance between growth and value, is essential for portfolio construction while being cautious of high-volatility options like momentum.
Deep dives
Email Insights on Portfolio Allocation
A listener named Phil sought advice on his portfolio adjustments aimed at increasing his safe withdrawal rate. He suggested a significant shift from a current allocation of 60% stocks and 20% bonds to 75% stocks and only 5% bonds, which could jeopardize his withdrawal strategy. The response emphasized that bonds act as recession insurance, and a reduced bond allocation might negatively impact the safe withdrawal rate during market downturns. The conversation highlighted the importance of running simulations through various financial analytic tools to adequately understand the implications of the proposed changes.
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