The Portfolio Strategy That Could Double Your Safe Withdrawal Rate

BiggerPockets Money Podcast

BiggerPockets

Investing, Education, Business

4.6 • 2.9K Ratings

🗓️ 18 July 2025

⏱️ 53 minutes

🔗️ Recording | iTunes | RSS

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Summary

In this episode of the BiggerPockets Money podcast, hosts Mindy Jensen and Scott Trench welcome Frank Vasquez back on to challenge everything you thought you knew about safe withdrawal rates. Frank reveals how a properly constructed risk parity portfolio can support a 5% withdrawal rate—meaning you could comfortably pull $125,000 annually from a $2.5 million portfolio without the traditional fear of running out of money. This isn't theoretical; it's a practical strategy that sophisticated investors have been using for decades. Frank takes listeners step-by-step through building this portfolio on Fidelity, demonstrating real-world implementation rather than just concepts. You'll discover how mathematical principles like the Fibonacci sequence can guide your allocation decisions, why traditional diversification falls short, and how to rebalance effectively without overthinking the process. Most importantly, Frank shows how to customize this approach to your specific situation, making risk parity accessible whether you're approaching FIRE or already financially independent. This Episode Covers: Risk parity fundamentals - Understanding true diversification beyond stocks and bonds Asset class breakdown - Specific investments across equities, bonds, commodities, and alternatives Rebalancing strategies - When and how to adjust your portfolio without constant tinkering Withdrawal techniques - Practical methods for taking income from multiple asset classes And SO much more! Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	We literally just had Frank Vasquez on the podcast on Tuesday, and I was so excited about the
0:06.3	idea of creating a risk parity portfolio that we're having him back on to walk me through
0:12.5	exactly how to do it. As a reminder, a risk parity portfolio is one in which many people
0:18.3	feel comfortable with drawing at a 5% rate for a $2.5 million portfolio,
0:24.5	for example, many following this portfolio feel comfortable spending $125,000 per year,
0:30.9	inflation adjusted in perpetuity. Today, Frank is going to show me step by step how to create
0:36.4	that same portfolio on Fidelity.
0:38.8	This is an amazing episode to watch on YouTube because I am going to be sharing my screen.
0:43.2	So if you've been waiting on the sidelines to open up a brokerage account, because it feels
0:47.1	too overwhelming, this episode is for you.
0:57.7	Hello, hello, hello, and welcome to the Bigger Pockets Money podcast.
1:02.3	My name is Mindy Jensen, and with me as always is my risk averse co-host, Scott Trench.
1:03.0	Thanks, Mindy.
1:03.5	Great to be here.
1:09.5	I'm super excited to discuss the principles for spending principles of our investors' portfolios here listening to Bigger Pockets Money.
1:12.3	I am so excited to take a backseat today and learn even more from Frank. If you didn't catch Tuesday's episode, a quick
1:16.9	refresher for everyone. Frank Vasquez is the host of the Risk Parity Radio podcast and a former
1:22.7	lawyer-turned-retirement junkie. Frank, welcome back to Bigger Pockets Money. Thank you. It's good to be here.
1:28.2	It's good to be here in the summertime. We're going to have a little bit of portfolio camp today.
1:33.3	So hope the campers are ready. Perfect. Frank, can you give us a quick rundown on what a risk
1:39.3	parity portfolio is? Okay. A risk parity portfolio, as this has been commonly, that term is commonly used now.
1:47.5	There are actually two definitions. One's technical. I'm using the more colloquial definition.
	...

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