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: Risk Parity
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”