Episode 417: International Growth Funds, DSTs, Portfolio Transitions And Other Questions And Quandaries
Apr 24, 2025
This discussion dives into building a diversified Roth portfolio for a teenager, inspiring long-term investment strategies. The complexities of Delaware Statutory Trusts and their role in asset allocation are examined. Listeners gain insights into transitioning from an all S&P 500 allocation and the pros and cons of using M1 Finance for account management. Additionally, strategies for maximizing retirement income, including Roth conversions and Social Security timing, are explored, all sprinkled with humor and relatable anecdotes.
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volunteer_activism ADVICE
Prefer IDMO International Fund
Choose IDMO over EFG for international growth funds due to better performance and lower fees.
Having fun with investment strategies at a young age is important for long-term engagement.
insights INSIGHT
DSTs Are Like REITs, Not Bonds
Delaware Statutory Trusts (DSTs) should be modeled like REITs, not bonds, in portfolios.
DSTs lack recession insurance characteristics typical of treasury bonds in risk parity portfolios.
volunteer_activism ADVICE
Tax-Efficient Portfolio Transition
Transition portfolio gradually by selling recent tax lots with losses to offset gains and minimize taxes.
Stop mega backdoor Roth conversions, roll 401k to an IRA after job change to widen investment options.
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In this episode we answer emails from Marco Esquandolas and Multi-Family Investor. We discuss a long-term diversified Roth portfolio for a 13-year old, modelling Delaware Statutory Trusts in a portfolio, transitioning out of an all S&P 500 allocation in a taxable account, PFIX, Sabine Royalty Trust and individual stocks in retirement portfolios, and M1 Finance.
Note/Correction: Sabine is actually NOT structured like an MLP but as a true trust and therefore issues 1099s, not K-1s like most companies in the oil & gas royalty space.
Dive into the world of strategic portfolio building with this illuminating episode where Frank tackles questions from two distinct investors at opposite ends of the age spectrum. A father shares his 13-year-old son's Shannon's Demon-inspired portfolio that's being built for an ultra-long 50+ year time horizon, featuring a balanced approach to growth and value across both domestic and international markets. Frank offers targeted advice on fund selection while celebrating this young investor's precocious financial journey.
The conversation shifts dramatically when an engineer earning $250,000-300,000 annually shares his detailed retirement strategy with hopes of financial independence before 50. With $3.4 million spread across multiple investment vehicles including real estate, this listener puzzles over how to transition to a risk parity portfolio without triggering a substantial tax bill. Frank methodically dissects several aspects of this complex situation, questioning the wisdom of backdoor Roth conversions during peak earning years and clarifying misconceptions about Delaware Statutory Trusts as bond substitutes.
What makes this episode particularly valuable is Frank's blend of technical advice and practical wisdom. He cuts through complex tax and investment strategies to offer straightforward solutions - identifying tax-loss harvesting opportunities, rethinking account structures, and focusing on expenses rather than arbitrary portfolio targets. The discussion extends to specialized investments like royalty trusts and interest rate hedges, providing listeners with a masterclass in portfolio construction that balances theoretical ideals with real-world constraints.
Whether you're managing investments for the next generation or planning your own early retirement, this episode delivers actionable insights on building resilient, tax-efficient portfolios tailored to your unique circumstances. The principles shared apply across market conditions and investment goals, making this essential listening for any DIY investor seeking to optimize their financial future.
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