Episode 464: More Fun With Leverage, Bad Advisor Incentives, Working With A Substandard 401k And Portfolio Reviews As Of November 7, 2025

14 snips

Nov 9, 2025

This discussion dives into the perils of using leveraged ETFs like UPRO, revealing how they can mask true risks during calm markets. It uncovers the biases built into financial advisory that often lead clients to underspend, highlighting the challenges of 401(k) options. The conversation contrasts a finance-first approach with the psychology-heavy tactics common in retail advice. Finally, performance reviews of multiple unique portfolio strategies illustrate how various allocations fare in current markets, shedding light on withdrawal strategies that impact resilience.

Ask episode

AI Snips

Chapters

Transcript

Episode notes

ADVICE

Backtest Withdrawals Before Deciding

Use Portfolio Visualizer or Testfolio to backtest withdrawals and compare portfolios under equal withdrawal rates.
Testfolio has fewer ticker limits and both tools let you simulate recurring withdrawals to see recovery paths.

INSIGHT

Withdrawals Change Path, Not Ranking

Withdrawal percentage mainly affects volatility path and recovery time, not portfolio ranking.
Relative portfolio performance stays similar whether withdrawing 0%, 3%, or 6% over the same period.

ADVICE

Limit Exposure To Leveraged ETF Bets

Avoid concentrating retirement on 3x leveraged ETFs like UPRO as your sole equity exposure.
They can look great in benign decades but suffer catastrophic drawdowns and volatility drag in crashes.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

In this episode we answer emails from Dave, Isaiah, and Ian. We discuss back-testing tools, revisit UPRO and leverage from the last episode, the inherent biases and incentives for retail financial advisors to recommend underspending and using underspending plans larded with window dressings, and revisit a limited 401k and a retirement scenario from Episodes 420 and 444.

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:

Father McKenna Center Donation Page: Donate - Father McKenna Center

Portfolio Visualizer Backtester: Backtest Portfolio Asset Allocation

Testfolio Backtester: testfol.io

Breathless Unedited AI-Bot Summary:

Think your withdrawal rate is just a number? We dig into why the path matters more than the headline, showing how 0%, 3%, and 6% withdrawals change resilience without altering which portfolios dominate across different eras. Then we pull apart the leverage mirage: why 3x S&P funds can look unbeatable in calm runs yet suffer brutal volatility drag and catastrophic left tails when the decade turns against you. The goal isn’t fear—it’s sizing risk so you don’t bet your future on luck.

We also wade into the psychology of advice. Even fee-only planners face incentives to keep clients underspending, leaning on cash-heavy buckets, retirement “paychecks,” and tidy jargon that soothes but often costs performance. If you’re wired for DIY, you’ll appreciate a finance-first approach: let evidence drive the allocation, not marketing hooks. We contrast retail comfort with institutional discipline and offer a practical way to align your plan with the results you actually want.

For listeners wrestling with constrained 401k menus, we map out how to approximate risk parity using the levers that matter most: low-cost stock and core bond indexes, selective value tilts, and tax-aware placement. We touch Roth versus traditional choices when you’re in a low bracket, how to secure your FI core, and why continuing to work a decade after reaching FI might mean it’s time to spend more on life, not just accumulate more line items.

We close with a sharp market rundown and performance across sample portfolios, from classic diversifiers to levered blends. If you want a clear-eyed, practical framework for withdrawals, leverage, advisor incentives, and building robust portfolios with imperfect tools, this conversation will sharpen your plan. If it resonates, follow the show, leave a review, and share it with a friend who needs a finance-first reset.

Support the show