Episode 423: ALLW (It's New!), Social Security Claiming Considerations And Dividend Delusions
May 15, 2025
Discover the ins and outs of the new ALLW ETF, a collaborative effort meant to bring stability through risk parity. Analyze its complexities and high fees against traditional portfolio strategies. Delve into the confusing landscape of Social Security claiming with practical insights on personal longevity and family histories. Uncover the truth behind dividend investing—most returns stem from reinvested dividends, not just payouts. This episode demystifies common financial misconceptions and helps refine your investment approach.
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insights INSIGHT
ALLW ETF Complexity and Drawbacks
The ALLW ETF is an interesting but complex leveraged risk parity product with 175% leverage and 0.85% expense ratio.
Such funds are not designed well for retirement drawdown strategies as they are costly and complicated.
volunteer_activism ADVICE
Social Security Claiming Advice
When evaluating Social Security claiming, use the risk-free T-bill rate for reinvestment assumptions, not high returns like 6%.
Consider personal longevity and spousal benefits over simple break-even calculators for better strategy.
volunteer_activism ADVICE
Avoid Dividend Reliance for Income
Do not rely on dividends for cash flow; use low-cost, no-fee trading and fractional shares to create income by selling portions of shares.
Avoid dividend investing due to tax inefficiency and misleading peace of mind; focus on proper diversification and total return.
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In this episode we answer emails from Dave, Jeff and Peter. We discuss a new risk parity ETF, ALLW, a social security claiming question and considerations, and how a listener has been misled regarding so-called dividend investing by misinterpreting a misleading source.
Financial misconceptions can cost you dearly. This eye-opening episode tackles three critical investment topics that challenge conventional wisdom and may transform how you approach your portfolio.
When State Street and Bridgewater Associates launched their All Weather ETF (ALLW), it promised the stability of risk parity with the pedigree of Ray Dalio himself. We dissect this new offering—examining its 175% leverage, complex asset allocation, and 0.85% expense ratio—to determine whether it delivers on its promises or falls into the same traps as similar products like RPAR and UPAR. For investors approaching retirement, understanding these nuances could be the difference between confidence and confusion in the decumulation phase.
Delaying Social Security benefits remains one of retirement planning's most debated decisions. We cut through the noise of oversimplified break-even calculators to explore what truly matters: appropriate risk-free rate calculations, the value of guaranteed income streams, and perhaps most importantly, how your family's longevity history should influence your claiming strategy. For married couples, the analysis becomes even more critical as spousal benefits create powerful optimization opportunities that generic calculators often miss.
The episode concludes by dispelling one of investing's most persistent myths: the magical power of dividends. When Hartford Research noted that "85% of the S&P 500's return came from reinvested dividends and compounding," many investors misinterpreted this to mean dividends themselves were responsible for these returns. We reveal how this fundamental misunderstanding leads investors astray, explain why dividend payments offer no advantage in today's zero-commission environment, and demonstrate why creating your own "dividend" through strategic selling provides superior tax control.
Whether you're building wealth or planning your withdrawal strategy, these insights will help you see beyond marketing claims to make decisions based on financial reality rather than comforting illusions. Listen now to align your investment approach with actual market mechanics instead of persistent financial folklore.
Have a question about risk parity investing or portfolio construction? Email frank@riskparityradio.com or visit riskparityradio.
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