November 10, 2026 – Risk Parity has been one of the most requested topics for years. I always pushed back, finding the approach silly, inefficient, and thus useless for retirement portfolios. But finally, in July of 2026, I published two blog posts: one on the safe withdrawal rate impact of Risk Parity (SWR Part 64) and one more general post about the lies and misunderstandings in Risk Parity, Part 4 in my “How to Lie with Personal Finance” (tongue-in-cheek!) Series. I thought that was it, and I would leave it at that. But I certainly stepped on somebody’s toes: my old financial influencer buddy Frank Vasquez wasn’t happy. He issued his reply recently. I thought long and hard about whether I should even reply, but in the end I wrote some notes that filled an entire blog post. So, let’s take a look and put this crazy Risk Parity idea to bed, once and for all…
Continue reading “The Risk Parity Saga Continues”Tag: equities
Can a TIPS Allocation raise my Safe Withdrawal Rate? – SWR Series Part 66
October 19, 2026 – Welcome back to a new installment of the Safe Withdrawal Rate Series. Please check the Series Landing Page. Today’s topic is an update on a post I published in 2024, Part 61, Safety First, where I examined whether a significant shift into (relatively) safe financial instruments and asset classes, single-premium immediate annuities (SPIAs) and inflation-protected Treasury bonds (TIPS), can improve my retirement safety. The verdict back then was mixed: For early retirees with long horizons, TIPS didn’t offer much security at the real rates prevailing in 2024, and annuities carry significant inflation risk. We’ve come a long way since 2024; TIPS real rates have risen significantly, and one of the most requested topics recently has been whether today’s impressive TIPS real rates, north of 3% for the 20- and 30-year maturities, warrant a second look.
Let’s get started…
Continue reading “Can a TIPS Allocation raise my Safe Withdrawal Rate? – SWR Series Part 66”Can the new Bill Bengen Portfolio Increase My Withdrawal Rate to 4.7%? – SWR Series Part 65
September 28, 2026 – Welcome to a new installment in the Safe Withdrawal Rate Series. You can find the series landing page here. Today’s topic is the new portfolio allocation recommended by Bill Bengen, the inventor of the traditional 4% Rule. He’s making the rounds recommending an innovative portfolio allocation philosophy (his words, not mine) that will ostensibly raise your withdrawal rate to between 4.7% and 5.5%, depending on how flexible you are. And potentially 7% once equity valuations normalize again. I’m mostly unconvinced of this new approach, and I’ve responded to inquiries about it here and there. I also posted a short note on the ChooseFI site. But it’s always best to have a dedicated post in my series with detailed simulation results.
Let’s take a closer look…
Continue reading “Can the new Bill Bengen Portfolio Increase My Withdrawal Rate to 4.7%? – SWR Series Part 65”How to “Lie” with Personal Finance – Part 4: Risk Parity
July 29, 2026 – I’ve written several posts in the “How to Lie with Personal Finance” series, all dealing with common misconceptions and, well, sometimes outright lies in the personal finance world: General Personal Finance Lies, Homeownership Lies, and Diversification Lies. Today I collected a set of lies for another interesting topic. Recently, I’ve heard and read a lot about an ostensibly innovative asset allocation strategy, Risk Parity, and its advantages, especially for retirees. Among some of the purported benefits are lower volatility, less stock market exposure, and higher sustainable withdrawal rates. The rationale for the superiority of this asset allocation is that it covers all the bases and hedges against different economic regimes, i.e., high growth vs. low growth and high inflation vs. low inflation. Some folks claim you can raise your safe withdrawal rate from 4% to 5% if you use Risk Parity in your retirement portfolio. So, why haven’t I proclaimed victory over Sequence of Return Risk yet? Mainly because there is a lot of hype, false advertising, and misunderstandings about Risk Parity. Here are several reasons to be skeptical…
Continue reading “How to “Lie” with Personal Finance – Part 4: Risk Parity”Can we increase the Safe Withdrawal Rate with Risk Parity? – SWR Series Part 64
July 27, 2026 – Welcome back to a new part of my Safe Withdrawal Rate Series. In my 10-year quest to study safe withdrawal strategies and find ways to hedge or at least alleviate Sequence of Return Risk, I’ve come across a lot of purported “solutions.” Some actually work to at least some degree. For example, a reverse glidepath can improve outcomes. Momentum strategies look promising. But most proposed solutions to Sequence Risk are ineffective (e.g., dividend yield, bucket strategies, small-cap value stocks, etc.). The flavor of the season right now seems to be Risk Parity. My blogging colleague Frank Vasquez has been making the rounds on various podcasts over the last year or so, touting the benefits of Risk Parity, a supposedly brilliant and innovative portfolio construction method that will miraculously increase your safe withdrawal rate in historical simulations. Supposedly up to 5% or more. I’m less optimistic, though. Let’s take a closer look…
Continue reading “Can we increase the Safe Withdrawal Rate with Risk Parity? – SWR Series Part 64”Is Social Security a Ponzi Scheme?
June 5, 2026 – Almost to the day, today, eight years ago, was my last day at work. One thing I always looked forward to in retirement was never having to pay those dreaded payroll taxes again. Alas, eight years into retirement, I’ve picked up a few side gigs to stay involved and now run my own small financial advisory business. Not only do I pay Social Security and Medicare taxes again, but I now pay the full 12.4% Social Security and 2.9% Medicare taxes, i.e., the employee and employer portions out of my pocket. Ouch! I had hoped I would never have to put money into that stupid Social Security Ponzi Scheme again. Oh, wait, what did I just say? I must have heard this somewhere, probably from Elon Musk on Joe Rogan’s show. He probably said this mostly for the shock value without thinking too much about the financial nuances.
Nevertheless, the Ponzi Scheme comparison got me thinking: While Social Security is certainly not a literal Ponzi Scheme, where some scam artist runs off with the money, and the investors lose all their funds, is Social Security a Ponzi Scheme, at least to a degree? Are the ways in which Social Security differs from a Ponzi Scheme really only distinctions without a difference? How much better could I have done if I had invested my personal payroll contributions into the stock market or some other financial asset portfolio? All interesting questions! Let’s take a look…
Continue reading “Is Social Security a Ponzi Scheme?”Can an Oil Price Shock Derail the US Economy?
April 15, 2026 – Welcome back to another post. This time, I want to do another economic update, which many readers seem to enjoy. Today’s topic is whether the recent oil price shock, driven by Middle East geopolitical uncertainty, poses a threat to the U.S. economy. That risk is certainly pushed by the news and also reposted by some folks in the personal finance sphere. For example, the recent post on The Motley Fool, claiming their Moody’s AI model (which has never been wrong for 80 years), almost certainly predicts a recession over the next 12 months. What to make of that? After all, the Fool/Moody’s model is AI, so it must be right, right? They wouldn’t publish any clickbait, right? Well, not so fast! There are many reasons to feel much more relaxed about the recent oil price spike. Let’s take a look…
Continue reading “Can an Oil Price Shock Derail the US Economy?”Options Trading Series: Part 14 – Year 2025 Review
January 30, 2026 – Happy New Year, and welcome to a new installment of the Options Trading Series. I hope you had a peaceful Christmas break and a good start to the New Year. I certainly did; I took my family to South America, where we visited Argentina, then took an amazing cruise to the Patagonia (Southern Argentina and Chile), the Antarctic Peninsula, the Falkland Islands, and Uruguay. But now life is back to normal, and I’m back in business again. And as usual, at the beginning of the year, I publish my annual options trading strategy review. In short, it was another profitable and prosperous year. Let’s get started and look at a quick strategy summary, performance, and strategy changes and updates…
Continue reading “Options Trading Series: Part 14 – Year 2025 Review”How to “Lie” with Personal Finance – Part 3: Diversification
December 10, 2025 – Welcome to another post on the ERN blog. This is the third installment in the “How to Lie with Personal Finance” series (please also check out Parts 1 and 2). Part 4 is about Risk Parity. As always, this is not an instruction manual for deception, but precisely the opposite: it points out the misunderstandings circulating in personal finance. Think of it as an homage to the classic book “How to Lie with Statistics.” On the program today are the lies and misunderstandings surrounding diversification. Don’t get me wrong, I worked in finance, math, and statistics long enough to appreciate the beauty of diversification. But diversification seems to be one of the more misunderstood and misrepresented concepts in the personal finance world. I want to highlight some of those misunderstandings in today’s post.
Let’s get started…
Continue reading “How to “Lie” with Personal Finance – Part 3: Diversification”The 50-year mortgage is not as bad as we’ve been told!
November 19, 2025 – Recently, there has been a lot of chatter about a policy proposal: the 50-Year Mortgage. The proposal received significant pushback from all corners of society. Almost the entire political spectrum agreed that this was a bad idea. It’s rare these days that everyone agrees on something. So, I’ve been sitting back and watching the public outrage unfold. Oh, how terrible and irresponsible this is! You’re paying too much in interest over the life of the loan. You’re paying more in interest than the total value of the loan. You’ll still have a mortgage when you’re 90! Instead of passing wealth to your heirs, you only pass on a mortgage. The horror! For the record, I’m not a big fan of a 50-year mortgage. However, most reasons presented are not particularly convincing. Let’s take a look…
Continue reading “The 50-year mortgage is not as bad as we’ve been told!”