BiggerPockets Money Podcast - The 4% “Rule” is Wrong for FIRE—Here’s a Better Alternative

Episode Date: May 6, 2025

For decades, the 4% rule has been the calculation every FIRE chaser has used to determine when they can retire early—risk-free. The math is simple: have a portfolio big enough to withdraw 4% per year to fund your lifestyle. But there’s one BIG problem with the 4% rule that nobody is talking about—a problem that could force you to work longer, ruin your retirement lifestyle, and put your portfolio in jeopardy if you don’t plan carefully. Tyler Gardner, former portfolio manager and financial advisor, is back on the show to share why much of the FIRE community may be wrong about this “rule.” Scared of not having enough to retire, retiring during a market crash, or being forced to be frugal once you leave the workforce? That’s precisely what we’re talking about in today’s episode. The 4% rule has become untouchable within the FIRE movement, but its hard-and-fast downsides may lead to your FIRE’s demise.  Tyler shares what he thinks is the ultimate FIRE portfolio allocation, why he’s way more bullish on stocks and index funds than bonds, EVEN during retirement, and why target date retirement funds—often scoffed at—can actually help protect your portfolio once you FIRE. If you’re planning on retiring early with the 4% rule, think again. All of us have our doubts, and we’re sharing them today.  In This Episode We Cover Why the 4% “rule” is WRONG for most FIRE chasers, and why withdrawing only 4% could be a mistake  The new (updated!) FIRE number that most people should be chasing  Hate your job and want to retire early? Here’s why you should find a better career (NOT quit) instead  The ultimate FIRE portfolio allocation and why a target date retirement fund actually makes sense for many  And So Much More! Links from the Show Mindy on BiggerPockets Scott on BiggerPockets Listen to All Your Favorite BiggerPockets Podcasts in One Place Join BiggerPockets for FREE Email Mindy: [e-mail] Email Scott: [e-mail] BiggerPockets Money Facebook Group Follow BiggerPockets Money on Instagram “Like” BiggerPockets Money on Facebook Subscribe to the BiggerPockets Money YouTube Channel! Connect with Tyler on Instagram Connect with Tyler on TikTok Your Money Guide on the Side Podcast Want to FIRE in 2025? How to Prepare for Early Retirement w/Emma von Weise Maximize Your Real Estate Investing with a Self-Directed IRA from Equity Trust Get to FIRE Faster with “Set for Life” Sign Up for the BiggerPockets Money Newsletter Find an Investor-Friendly Agent in Your Area (00:00) Intro (02:05) Is the 4% Rule Wrong?(06:05) This Saves Your FIRE (10:09) “One More Year” Syndrome(14:33) Healthcare in Early Retirement(16:34) Ultimate FIRE Portfolio Allocation(24:29) Include Real Estate?(29:49) Target Date Retirement Funds(36:25) Don’t Quit Working? (54:30) Find a Job You LOVE(57:02) Connect with Tyler!(58:30) FIRE Chasers Are Wrong! Check out more resources from this show on ⁠⁠⁠BiggerPockets.com⁠⁠⁠ and ⁠⁠⁠https://www.biggerpockets.com/blog/money-637 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠[e-mail] Learn more about your ad choices. Visit megaphone.fm/adchoices

We are so excited to be joined by Tyler Gardner again for a follow-up episode. In our last episode, we talked about the psychology of what drives people to retire early and if our current societal work systems are broken. And today we're diving back in with Tyler, a former financial advisor who loves to push back on the sacred tenets of financial independence. 4% rule? Not one size fits all. Early retirement?

Not so fast. Portfolio management? There's a lot more. nuance than most fire adherents want to admit. We'll get into all of this today. This is a conversation you will not want to miss. And welcome to the Bigger Pockets Money podcast. My name is Mindy and with me as always is my Swifty co-host, Scott Trench. Thanks, Mindy. Great to be here. We always talk about our song, which is financial freedom here on Bigger Pockets. Bigger Pockets is a goal of creating one million millionaires. You're in the right place if you want to get your

financial house in order because we truly believe financial freedom is attainable for everyone, no matter when or where you're starting, as long as you plunge headfirst, fearless. All right. Today we've got Tyler back for part two. Last time we went at it a little bit about some of the fundamental assumptions that we've got around fire. And I think that there's a lot more, I think that both of us agree, or all three of us agree, in a long-term kind of rational optimist's world, that things will generally tend to get better. but I was bringing a lot of questions and concerns around,

can you really get another job if you're like a high income earning doctor, for example, that pays anything close to what you're going to be earning today in early retirement? How do we think about those things? And I think it was a great discussion. But I want to translate that today, and Tyler had some really good pushback on those and some really good thoughts there. But today I want to frame that into how does Tyler's worldview

and the beliefs that you bring to fire translate to portfolio planning in the context of the real world and early retirement decisions here in 2025. And I think that the first part of that, Tyler, comes in with asking you, tell us about your viewpoint on the 4% rule and whether it applies in real world financial planning. Sure. First off, it's great to be back. Great to continue the conversation.

I appreciate being welcome back. And when I think about the 4% rule and when we used to think about it with clients, I think that the number one thing we always tried to make clear as early as possible is that there is, I believe, an inherent problem with the word rule just to begin with, that people come to expect that on an annual basis they should be taking 4% no matter what. And to an extent, this A kind of ignores the dynamism of humans to begin with, that every single year you're going to be in a different financial scenario, you're going to have different wants and needs. but additionally, it ignores what the market did this year. And so I think that it's worth, and I think we highlighted this and touched on this a little bit last, you know, last time we chatted. But it's worth always knowing the origins of the 4% rule, understanding that it came from an attempt by three professors in Texas to basically come up with as formulaic of an outcome as possible for people who would retire. the issue that I feel a lot of people are not looking as closely at now as they should be

is it doesn't have to be a rule. It can be incredibly and wonderfully dynamic. If the market crushes it one year, you can take out 10% for all I care. And if the market does not do well, next year might not be a great year to take out even the 4%. So most of the texts that I've seen that have responded really nicely to this encourage us to really think through the dynamic nature of humans and understanding too that to put any rule in place when we retire is in and of itself potentially problematic. Awesome. So I think the obvious follow-up question to that is if there's not rules is the wrong word, but are there guidelines that you would have for like responses? What do you think the logical responses that folks should have who have retired on a 4%

rule or close to it in the first few years after early retirement that that maximize their happiness, well-being, long-term health of their portfolio, all of the above. Yeah, absolutely. And I love the word guideline. That and that, honestly, I would welcome the opportunity to have everyone shift it to the 4% guideline. Because, again, the study basically showed that 100% of the time people would be fine over a

bunch of different 30-year time horizons if they only withdrew 4%. But I think, as we touched on last time, too, what the that also ended up, what ended up happening if you only withdrew 4% was that the median net worth, the median portfolio value at the end of those 30 years, if you were 100% invested in stocks, was $10 million. And if you were 75 stocks, 25 bonds, it ended up being about $6 million. So as a guideline, I think it is safe to go into retirement with the 4% number in mind, because one of the biggest fears that I have and that most people have, obviously, is running out of money. No one wants to run out of money. And if you go into retirement with, let's just say,

$2 million and the first year you get particularly greedy and say, and greedy might even be the wrong word, you get particularly excited. And you want to go do a bunch of things in retirement that you've never done and you take out 9%. And then that year and the year following, we have two big market downturn years. That's called sequence of returns risk. And it is highly problematic in life if you retire, if you all of a sudden don't have a source of income, and the market also happens to take a couple down years in a row. So the guidelines nice to have is let's start conservative, and then let's see where we go as we progress throughout retirement, as the markets progress throughout our time doing that. Yeah, I was speaking with Emma von Wisey on the Life After

Fire video series that we have on our YouTube channel, and she is a CFP. She recommends having two years of cash when you retire, starting, like if you're within a couple of years of retirement to start saving up cash so that you have two years of spending in cash in, you know, maybe a high yield savings account, but it's not in the market. It is liquid cash that you can access at any time, specifically to kind of combat these sequence of returns risks. These down years don't tend to last super long time. And then, of course, if you pull back, you see the Great Depression, didn't come back up until, like, the 50s. So they can last a while.

But her argument is that in recent history, they don't tend to stay down for a super long time. You withdraw from the cash when you need it when the markets are down. And then you replenish when the markets are going back up again. She got it. Yep. Yeah, she's awesome. Her wisdom belies her years. Emma's point is spot on.

And one of the things that that also allows anyone to do is that by having two years, and you could call it an emergency fund, you could call it cash reserves, but by having those two years, you can also basically give yourself much more freedom in investing the rest. So if you have that two year cushion, you can almost be 75 to 100% growth assets and not be as concerned that all of a sudden if the market tanks, you're going to be out of love. So it really is nice to have that two-year cushion. That's a great timeline. Is two years enough? I know that we are currently in some market instability right now, and people are saying, oh, this time it's different, this time it's different, which is, you know, every time, every time it's different. But it's also like not different because the market, I believe, and, you know, we're in the

middle of it right now, so I haven't seen it yet, but I believe the market will go back up. Does two years feel like enough to you? Or would you, in your own personal planning, would you go a little bit more? I think this is one of the things that unfortunately it's where the rich get richer, and this is the privilege of wealth. If you have, let's just say, more than about $3 million, even sequence of returns risk doesn't actually make as big of a difference as people might expect. If you have under $2 million, it's a really big deal. Right. So I crunched numbers a while back where again, I kind of ran my own numbers of starting in 2000. The worst time you ever could have started to retire and draw down four. or five percent. And if you start that with a $1 million portfolio, pardon my language, but you end up being basically screwed. Because just remember again, as we're drawing down, if you have a couple bad market years, you're not taking 4% of a million anymore. You're taking 4% of 500,000. So your spending power gets reduced very, very quickly. For me, two years is plenty if you are relatively

well off. And obviously, I think that's kind of a subjective term. Everybody has their own definition of what is okay to be spending on an annual basis. I'm also very highly risk tolerant. So I get criticized on one end because I'm not fearful enough. I have an immense faith, as Scott was saying earlier. I'm an optimist with all of this. I don't believe this time is different. I don't believe this is going to be the 10-year period where all of us have no more concept of growth assets anywhere. So I think a two-year safety margin tends to be enough, but any, you know, kind of like you're pointing at, Mindy, it just depends on your risk tolerance because what is enough for me is not necessarily enough

for you, is not necessarily enough for Scott. So I think it's what lets you literally, I know it's a cliche, but it's what lets you sleep at night saying, I'll be okay, you know, in any one of my most worst-case imagined scenarios. Yo, listeners, we need to take a quick ad break, but when we're away, we'd love for you to check out our new Bigger Pockets Money newsletter. You can subscribe at Biggerpockets.com slash money newsletter. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening.

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Don't put this one off. Join thousands of small business owners who have streamlined their finances with Found. Audible has been a core part of my routine for more than a decade. I started listening years ago to make better use of drive time and workouts, and it stuck. At this point, I've logged over 229 audiobook completions on Audible alone, and I still regularly re-listen to the highest impact titles. Lately, I've been listening to Bigger Liener Stronger for Fitness, the Anxious Generation for Parenthood. The Anxious Generation for Parenting Perspective and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful as its breadth.

Beyond audiobooks, you also get Audible Originals, podcasts, and a massive back catalog across business, health, parenting, and more. All accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years. Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at Audible. Welcome back to the show with Tyler Gardner. I just spoke with a couple who have a much higher fire number than most people to specifically account for these unknowns like inflation. You know, inflation is like the biggest unknown there, the down markets, et cetera. How do you balance not working too long with not working enough, not saving enough?

Like I think that this couple is going to be working, you know, two or three times longer than they need to because their fire number is so high versus, you know, getting out of the workforce thinking, oh, well, I'll, I'm, I have 750,000. It won't take that long to have it grow. I'm just going to leave anyway. There's, there's risks on both sides. How would you advise somebody to balance that? Oh, I never would even dare risk advise somebody because. Only because that it was one of the most wonderfully personal components of, again, fear-based thinking heading into retirement. I don't know if we did touch on this last time, but the majority of people with whom I connect these days are people that are close to or are just in retirement. And every single one of them is asking the same question. And this is not the fire community, mind you. These are people who have worked until 65, potentially 70, and are still still, stuck with the identical question you just posed, which is, do I work that one remaining year?

And it's so wonderful to work one more year only because it's a known, it's a known entity. And if we stop working, all of a sudden we're leaving something a little bit more to chance than controlling the own outcome of that year's income. And so for so many people I know, we choose the work because it's the lesser of two evils. Actually, I'll kind of go to Shakespeare on this one. The reason Hamlet does not take his life is because the life, even though he's not happy in his current life, is known. And the great unknown of death is what prevents him from wanting to off himself in the play. So there's actually a very similar psychological tendency here of saying, look, I'd rather put up with one more year of work because it's the no, it's the lesser of two evils.

It's the known evil. It's the evil within. however you want to phrase it, right? Whereas the second I stop, what happens? What happens if I run out of money? What happens if I can't get a job five years from now because of ageism? What happens if we have five down years in a row? The what ifs will almost always outweigh the, well, I'll just do this for one more year. And I know I'll be guilty. I think I've mentioned this before. I know I'll be guilty of that. I know that I'm going to probably end up working until I'm 85 years old because I'm just going to go, well, you know, it's one more year of income. I can control it. It's one more year, but when does one more year stop? I have no idea. It doesn't. I'm with you. I have no answer there. I think that that's part of our psychological

underpinning is that we consistently go back to this idea of just wanting more just in case. And it's really hard. So there's almost an argument or a potential argument there for saying someone should just force you to retire, that you don't get the choice, that at a certain point they say, sorry, you're out and we don't get that choice anymore. I mean, at 40 or 42, where I am right now, no way. I mean, I have, there's nothing but respect I have for the fire community who takes that leap of faith and is able to do it. That's an incredible gift that I do not have. Yeah, my husband's been retired for nine years. He retired when he was 43. And almost as soon as he retired, he's like, I can't believe that I ever had enough time to have a job. I'm so busy in retirement doing all of

these things. But he also, I mean, let's let's admit, I'm still working. So he's also got nine years of me working and covering our expenses. So we didn't need to save any more for retirement. We did because once you start, you can't stop. And now our original FI number is, well, with the recent downturn, I think we're now 5x our original FI number. but we were even more. And at what point do you stop one more year syndrome? I don't know, especially when it comes to the two things we haven't quite addressed yet, too, are also healthcare.

Healthcare comes up with a lot of different people, is that there's obviously this gap pre-Medicare, of trying to figure out how we fund that. And let's just go back to either the $40,000 or the $80,000 examples. You try funding health care for a family on $80,000 a year, and additionally that $80,000 is pre-tax. It's not $80,000. It's at best $60,000.

So we're looking at $60,000, then less health care. Now we genuinely are probably looking at close to 40, now the 80,000 person is back to around the $40,000 of disposable income that we actually started with. So $2 million to an extent is the number that I would propose to somebody thinking about fire if they wanted a genuine margin for error of taxes, of health care, of unknown, of putting aside some money in the money markets, that would be kind of my new one million if I were to think about proposing that to anybody, is that once you have kind of double, I hate to say it, because I know that's daunting, but double what you think you'd need, then maybe. We did some very precise polling of the Bigger Pockets Money YouTube audience with a four-question

poll that like four answers, one question poll. And according to them, two and a half million is the new million. for exactly the reason you just described. That's the mid-point for what folks believe is necessary for fire inside of our community. Some folks think less, half the folks think more. But that's the midpoint. So I think that's what I think is in the minds of most folks accounting for those things, right? Hey, there's three, four, four thousand, five, you know, a year or four, those kinds of core expenses with basic housing, basic, if one has a paid off home, for example.

health care and those types of things, plus that extra quality of life spending. And I think that's what a lot of folks are targeting here. Let's go back to a question around the portfolio here. I have spent the entire discussion so far, assuming that we're talking about a 6040, 70, 30 stock bond portfolio, but we've talked nothing about allocations. So that's a complete assumption. What do you advise or how would you build a just two and a half? million dollar portfolio if you agree with that as the baseline here. I love it. There you go. We saw eye to eye with a two and a half million. I'm glad to hear that a lot of the community thinks that's the new million because even though I don't always love it when people say, oh, you know,

why bother saving because of inflation and because of this? But I am glad that two and a half is kind of a new number because I think that's going to be safer. As far as asset allocation goes, the only question I ever ask people when we think through how to allocate for retirement, regardless of age, is what's your goal with the money? If you say I have $2.5 million, and my goal is to protect this $2.5 million at all costs, and I'm okay living on 4% of that $2.5 million. The good news is that there are ample fixed income products, including just playing the asset class of government bonds that can more often than not accomplish

getting you a 4% real return. You could more likely than not do that, even in 100% fixed income portfolio, right? However, a lot of people I know kind of again back to Mindy's point about like, well, what's enough? You know, is this enough money for me? A lot of people might have the two and a half million, but still be thinking, well, I want to keep up with inflation, right? Let's just say that on average, that's between 2 and 3% per year, just historically.

And so I do need some growth assets. So it becomes a, well, what is it that you want to accomplish with this portfolio? So again, if you're just 2.5 million, you say, I'm fine with the 4%. You can actually do that relatively low risk as far as bonds and other fixed income products, even I dare say annuities. But the second you say, well, look, I'm a little more focused on growth than I would encourage growth assets. And there are countless growth assets out there. For me, I keep it very simple. As I think I'll tell you, I keep it very simple and low cost with different types of index funds going forward. So for me,

the ideal would be probably a 90-10, but that's just me because I would always err on the side of growth, particularly if I had a lengthy enough time horizon ahead of me. Because there's no 20-year period in history, I think we've touched on this, where stocks do not beat bonds over a rolling 20 years. Is there any price to earnings multiple in the stock portfolio or any yield on bonds, high enough or low enough, I'm sorry, low enough or high enough respectively? Is there any price to earnings multiple that's so preposterously expensive on stocks that that would change your viewpoint on that? Or any interest rate on bonds that would be so high that it would change your viewpoint on the returns for stocks that would change that allocation? It's funny you

bring that up because a couple of folks just last week were commenting, to me, they saw a video of mine where I said I would never invest in bonds. And they said, if you had been alive in the 80s, my friend, you would have been happily invested in bonds. And they were quoting, you know, between 12 and 17 percent returns on bonds. Scott, I would invest in bonds in a heartbeat if they were giving me 15 percent. I'd put my entire net worth in bonds if they were giving me 15 percent on a long enough time horizon, right? If I could lock in to 10 years and out, and out, with that type of return, fantastic. But we can't right now. And we're not in a bad interest rate environment. We're actually still in a very healthy interest rate environment. We're on risk-free assets you are getting between 4% and 5%. And that's fantastic, maybe a little lower now. But that's fantastic. However, again, if you're looking to spend 4% post-tax, you can't afford to do that. At the very least, you're going to need something that will outpace it, whether it's real estate, whether it's alternative investments beyond real estate, whether it's stocks, you need something that's going to

potentially generate between 6 and 10%. Awesome. Yeah. And I just want to call that out because I think that a lot of folks listening, based on polling I've done for the bigger pockets money community as well, are in this mentality of I want a portfolio that I just don't have to ever think about or touch again. And I'm of the belief. I'm starting to come around that. That's not ever, that's a, that vision will never be achieved in practice here. You know, because at some point, point, right? Bond yields would get so high, you'd obviously change things over. Right? And I think the inverse, at some point, stocks could get so expensive that that would change things. And I think that's where folks kind of have to, there's a little bit of a brain has to flip on with the portfolio

allocation piece a little bit more than I think people have, have liked to believe over the last 10 years in order to truly sustain retirement. Do you agree with that statement? I love what you just said. I love it. Because keep in mind, too, we're in an era where not only would people like to set it and forget it, but people are now given the best options of all time to set it and forget it in the form of target date retirement funds. A target date retirement fund is the new end all for someone who just says, I believe that they will appropriately reallocate and rebalance my funds on an annual basis for relatively low cost. And that is true. All of the big firms can get you more conservatively focused as you get closer retirement.

But what you said, which to me is gold in going back to the beginning of this conversation, is that you need to always be looking and you need to have a dynamic mindset, understanding that, yes, there will be a time when you look up and the PE ratio of the entire S&P 500 is absurdly, absurdly overvalued. And you go, wait a minute, historically, that's way beyond what it should. be in what it has been, and maybe this is not the best time for me to put my 2.5 million nest egg that I'm relying on for 30 years into that space, right? Especially if that's coordinated with a 5 to 7 percent bond return. That's fantastic. So I love it. And I agree wholeheartedly that I think the

punchline here is always be watching, be looking at it. So then do you agree with the answer that that $2.5 million portfolio, move one is million dollar paid off quadplex? objection leading the witness. I did not prep Tyler on that response, guys. That was all him. That was a wonderful, Socratic approach of leading me to a question that I, if I say no,

you go, sorry, I just led you there. And yes, absolutely. But Scott, I've been thinking about this since the last time we talked to. That I,

again, like I, and I think I left it by saying, if I had the desire to invest in real estate, if I had the time to do it, again, as a tax haven, as potential income, it's so obviously a good move and as obviously an alternative asset class that has a non or negatively correlated component with stocks and bonds. But I don't.

I have no interest in going to find it, nor this is actually a bigger one that I wanted to bring up with you, nor do I have any concept of expertise in that area. I know how to value a stock. I know how to look at a company and say, I think I understand what is. over undervalued, I don't necessarily know how to value real estate. And so I don't know how I would go about finding a positive cash flowing source that would be a good idea for me. It makes complete sense on that. Tyler, you have said multiple times alternative investments like real estate. So I, we have a chat going on this on this show and I typed in all caps.

Real estate is not an alternative asset class. I think that you can invest. in stocks, you can invest in bonds, but those aren't the two only two main ones. I think real estate can absolutely be another main form of investments. I do like what you said. You don't have the inclination to do it. Great. Then don't do it. But are you of the opinion that it's only stocks and bonds are the investments? Not even close. No way. But I also think that that might be attaching too much weight to what I'm using relatively lightly versus, you know, versus I see exactly where you're going, Mindy, and no part of me is saying real estate's kind of on the peripheral and should be treated as an alternative or an other, right? It is absolutely a major asset class.

When I say alternatives to me, right, one of the reasons I say alternatives is just that traditionally throughout, I mean, if you look back, and again, our finance history is actually very brief. We don't have that much finance literature in the U.S. But if you look back over the last 40 or 50 years of traditional portfolio theory, right, even modern portfolio theory and all this, this was literally kind of invented in the 1950s. We have about 75 years of thinking about modern portfolio theory and asset classes of investing. And since and from that time, almost all literature that does, and including the Trinity study, including the famous Trinity study, it's just stocks and bonds.

It literally is just stocks and bonds. So one of the things I try to do with people is help them explore the idea of what are other things that you can invest in and why would you invest in those things. So when I call real estate an alternative investment, right, I just look at it as something that is slightly different than the traditional forms of investing that I could go to a brokerage account today on my computer and invest in. that said, even just in the last decade now, we can invest in real estate investment trusts. It's become so democratized to invest passively in real estate that it has become a major form of investing. And now, ALTS, to an extent, are more defined as private credit, private debt, artwork, commodities. Those are kind of now considered the alternative investments in a formal sense. So yeah, so no part of me is trying to put real estate into a bucket that

doesn't belong in. Here's a fun one, and this is something that wasn't possible a couple years ago. Go to chat GPT or GROC or whatever your favorite AI is and ask them to do an analysis on the portfolio, on portfolio outcomes if you reallocate from stocks to bonds or whatever at various high price points when things are particularly expensive in some of those asset classes are particularly low yield to an 8% inflation adjusted bond, which I'm using as a proxy for real estate, right? because, you know, like a lot, you throw a dart at the wall in a lot of markets, you can get a four or five cap rental property that'll appreciate a 3 to 3.4% a year paid off, right, if you just don't use a new average at all.

And that's roughly what that will be. It won't be perfectly smooth. There will be ups and downs in that cash flow and appreciation over years, just like any other asset class. But that's a reasonable proxy, I think, for that. And that's fun to play around with the analysis. You got to double check it and be really careful with it when you're feeding that. But that's a fun little use case for AI. that would have taken me months to really run those kinds of analyses previously.

And AI can do that. Not 100% trustworthily, but usefully enough in quick bursts with the right prompt. Yeah, I was going to say, how do you know that those are the right numbers? That's where you got to do. You got to follow up with the research there. But it begins to provide really nice starting points for that research there. It is such a good resource these days. I don't ever use it for coming up with the exact right number, Mindy, ever.

If I'm doing a video and I need to come up with sort of, obviously I crunch my own numbers there. But as a guide, it has become really helpful with questions like this audience might have. You know, tell me five benefits of investing in real estate over investing in stocks. Tell me what the last decade has looked like as far as correlation between government bonds and real estate properties in California. It can find some of this so quickly. that even just in a broad sense, it can give you a really nice starting point of what would work for you. Additionally, you can obviously put in all of who you are. You can just, you know, if you have the right prompts, you can then say, hey, here's who I am.

I don't want to go buy this property. I don't want to. I'm not an expert in this. And it will really help you with that. Hey, Grock, what happens when Bitcoin falls below the cost of the cheapest 1% electricity to mine it worldwide? So can Bitcoin sustain a price drop when its price falls below the price required at electricity at 2 cents a kilowatt hour to mine a Bitcoin? That's a fun one to go in there. That'll scare some people.

This has been fun here. Let's go back for a second here to something you said earlier with Target Date retirement funds. Those are pretty bad words in the financial independence and retire early communities here. Not bad words, but they're kind of like poop. Pood is not the optimal approach there. Why do you like this? Do you do you want to do you really like the target date retirement funds? Do you think people should can reset their mentality around the use of these tools? I will answer that question once you expand on a why the fire community doesn't like that concept. I'm interested in that. I really don't know why and what. So tell me a little bit more about

that. I would say that it's just it's just not brought up. It's not it's not widely used. I've talked to dozens of people, not dozens, I've talked to a thousand people at this point, 600 of which have been on this show about retiring. It's almost never mentioned. It's almost always viewed as a personalized choice between stock and bond portfolios. And overwhelmingly folks simply seem to put most of their net worth into total market stock index funds. And here on bigger pockets money, a little bit of real estate allocations on it. So it's just not widely used. Maybe I'm phrasing it improperly as the bad words. Oh, no.

No, you're, I'm, I'm just interested. Yeah. Yeah. No. So what number, what is my target retirement date? Is it in five years? Then that's going to put me into a very different allocation than even though I'm 30 and I want to retire at 35 versus I am 30 and I'm going to retire at 65.

So I'm going to have a lot more growth opportunities in that larger timeframe. But it's, or I'm sorry. in the 35-year time frame, they're going to put me into more growth stocks. If I've got a five-year time frame left, they're going to put me into far less growth stocks. It's going to be more wealth preservation. So in our community, we are focused on fast-tracking our retirement. That means that we need to be in growth stocks, aggressive growth stocks, that we hopefully

are understanding that we are trading more of a secure balance for the, uh, the growth so we can retire early. So I don't, I don't know that I know how to use a target date retirement fund. I never have. But what date do you put in? Yeah, let's go through them. I love this. This is a great conversation because going back to where we said, okay, is $2.5 million dollars the new million, and is that enough? Let's just say it is. Two point five million dollars is enough and someone has established that's enough. And someone is five years out from retirement and let's just say they have around $2.1 or $2.2.2 million. In a situation like that, that is what the target date retirement fund is designed to do very, very well,

which is make it more conservative and make it more principal protection as you get closer to a date that you have decided you're going to start drawing out money. Let's just say 4% as a guideline. Because of that, it is a very good idea. I would think that a lot of fire community members would want that because if you say, I want $2.5 million in five years is when I want to start drawing. I'm five years away. And I'm going to go 100% into stocks or total stock index, et cetera. I mean, that's me.

I love it. By the way, I love the risk. That's who I am as a person. But it is absurdly risky because now you're jeopardizing that five. year time frame, big time. You have just said, okay, great, you might wind up with $3 million by the time you retire in five years. You also might wind up with 1.8. And if you had a number in mind that could sustain you and your family and your expenses, then the Target Date Retirement Fund is actually very well designed to do what we emotionally can't always do, which is actually to make you more

conservative. But again, now I kind of want to play the other side, which is I, what I don't like about the target date retirement funds is that they are a one size fits all based on age. And I think that is one of the silliest ways that you could ever invest or think about investing in your life. I am not the same 42 year old as my 42 year old neighbor with three kids, uh, college debt looming over them and a 40 year time horizon ahead of them, right? So the Target Date Retirement Fund specifically, it says every single 40-year-old is going to be the same risk profile. That to me is highly problematic. So do I like them?

I like them just as much as I like any single financial product in as far as it can be very useful for the right person at the right time for the right goal. But do I like them for my personal scenario? No, I wouldn't use a Target Date retirement fund. Yeah, I have never used it. I wasn't quite sure how to set it up in the first place, but also I am just like you. I am very pro-risk, and I want my portfolio to grow as big as it can. So I'm going to make choices that somebody who is risk-averse would definitely not make. Yep, 100%.

And one of the hacks that might seem obvious, but it is something that helps a lot of people, is let's say that you have that exact mindset, Mindy, but you still don't want to self-invest. You still aren't actually comfortable each year saying, well, like, is it 90-10? Is it 85-15? That's where you could say, I want to retire in five years, but instead of doing the target-date retirement fund that's five years from now, I'm just going to put my money in the target-date retirement fund that's set for 20 years from now. Because then all you're doing is just taking on a little more risk within that. But as you begin to go into your retirement years, it will continue to take a little risk off, a little risk off, a little risk off. that can be helpful during times of volatility, that can be really helpful. I promise. A Target's 8 retirement fund did much better over the last month than 100% stock fund. We know that. It just,

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All eight episodes now streaming, only on Disney Plus. Thanks for sticking with us. Okay, Tyler, other than the sequence of returns risks that we were, we just mentioned, which honestly have not been at the forefront of my mind because we've had such an upswing for so long, what are some other investment or draw down strategies, draw down detriments that the fire community might not be talking about but should be thinking about? I think one, and this isn't necessarily investment related, but it is fire related.

And I've just been thinking about this one for a while, which is I'm fine with the concept of establishing a portfolio where you say we have enough money, we're going to be fine for the next 40 years, everything's okay, we've done all the calculations. But what I struggle with, not as a criticism, but as a genuine curiosity, is what if in 10 years you decide it's not for you? The amount of times in my life that I've wanted to change jobs or change interests has been plentiful. I'm always kind of trying something new and I've taken a lot of different paths in my life. And I just wonder if be, I wonder if either of you kind of have a textbook response or a communal response to what if in 10 years you decide this was not necessarily the right

choice, but now I've been out of the job market for eight to 10 years and might not be as employable or again, you know, not claiming that ageism is necessarily a thing, but maybe your skills have just softened a little bit based on where the skills are needed right now. How do you all talk about that? Well, that's why I spent so much time fighting you last episode on all your assumptions about being able to continue getting work with that. I think the answer is if you're going to retire early, retirement is is used intentionally in the fire language here. It means a permanent absence from wage income or work on a long-term basis. And I think that's why people take this discussion of the 4% rule so seriously, why the math has been so exhaustively discussed,

why people still don't trust it and build up huge cash positions on top of it, side businesses, part-time income, and all these contingency plans, is because that's absolutely the core risk to this lifetime financial goal that we talk about here on Bigger Pockets Money ad nauseum about, is that the goal is, how do I spend Tuesday for the rest of my life, never having to go back to work? And nobody wants to be listening to this podcast, retiring at 40, 50 years old, and then at 70, back at work in the supermarket. Right? That's the goal.

That's the fear, I think, in people's minds about all this. And they're going to work really hard and spend a lot of time, mental energy to make sure that every possible mitigant is employed to forest all that risk. First I want to make a comment. Tyler said, well, you know, assuming ageism is a thing. Let's absolutely assume ageism is a thing because when you are going to, not you, Scott, because I know you would never, but when you are going to hire somebody and you've got two candidates, there's a 20 year old and a 70 year old, who are you going to pick? Absolutely, you are going to find a way to choose the 25 year old over the 70 year old unless it's like who's got lifelong experience. And I'm not saying I advocate for this. I think it's horrible. that this happens, but it absolutely does happen. And it's something that you, as the early retiree, should have in your mind. The concept of enough, a million dollars used to be what we were reaching for and in the FI community in general. And now it's not. I don't hear much million dollars anymore. I hear 2.5. I hear three. And I wonder what people are are going to do should they decide to go back to work. I would hope that they would decide to go back

to work near the beginning of their retirement versus the middle or, you know, as they are getting into their like traditional retirement ages. Traditional retirement is part of early retirement. And you need to make sure that that part of your your life is covered. And I, my husband's been retired for nine years. He has no plans to go back to work. He is, is I watch him and I'm like, there's no way he would ever have not, like, we talk about going back to work and he's like, I would never, I would never want to go back to work. Your skill set will atrophy is what's going to happen. Well, not even that.

He doesn't want to spend the time in a job, but he has also created a very full life in retirement. And I'm wondering if Tyler is saying, are you thinking people are going to run out of money or are you thinking people are going to be bored in retirement? Is that where that question's coming from? Unless you're Carl. Carl's only gotten better at picking stocks the whole time, by the way, on this. So I'm not saying that. But I think that that's the real list. Like, let's just call what it is.

If you're out of the workforce for 10 years, your skill sets going to atrophy. No question. Like, there's no world where I'm reviewing someone's application for a job. And there's a 10-year work history gap. And I'm wondering what's going on. The only role that that's appropriate for is podcast host. But hey, as we all know, that's a pretty good gig. I guess this is what I'm advocating for.

I'm advocating for the lifestyle that the three of us have. And I say that quasi ingest and quasi not, right? Is that part of what, and this does go back to part one of our conversation, is part of what I think I'm advocating for is that we could think of our financial portfolios in such a philosophical sense of saying, look, fine, you've got your $2.5 million. But if you go to zero with your. income as far as anything that's coming in, you've just given so much up to chance versus saying, I know why I'm a, I know why I want to leave this work. I don't like it. I know what I want my

lifestyle to be. But are there skills and you bring up the future of AI? Is there a skill set that you can develop over the next 10 to 20 years, especially if you have some more hours now at your disposal where you can make a type of income? And it doesn't have. to be much. It just has to be enough, even just to cover what Emma Van Wiesie was saying, of that two-year component of risk aversion. It's like if we could have enough to just say, I don't have to touch my assets in a truly down year because I run this really great podcast, and I love it. And again, I know we joke that like, we could do this until we're 90, but seriously, not only can we do this till we're 90, I think this would be really exciting

to do throughout your life and see how your perspective. changed and see how content change. So we're in a world where I don't have as much, I won't say, again, it's not a criticism. I don't have as much understanding of someone who says, well, I'm just stuck in this toxic job and I have no other options. We have a lot of options right now. There are so many ways to connect with the world and the marketing is free with all of these platforms.

And I would just hope that there was a part. And please tell me if there is, because again, I just probably haven't done enough on different components or niches within the fire movement, is there a group that does say, we want to get to our 2.5 million, but then we're going to kind of slowly head into this space, and we're going to have a part-time gig. So we get the lifestyle we want to an extent, but it doesn't put as much pressure on this perfect portfolio allocation, on this standard 4% rule, on health care expenses, on all of that. Does that exist or is it or no? Yeah, that exists. The contradiction inherent in what we do here at Bicker Pockets Money is we talk about fire as like, what is the portfolio capable of sustaining a permanent state of Tuesday doing whatever you want on your own. And we define that as a 4% rule portfolio, two and a half million dollars invested in a mixed stock bond portfolio, withdrawing the $100,000 a year and spending all of it. And nobody does that, right? I get a response every once in a while from people who think they do that. And like, oh, yeah, I'd also have

have a rental property and I have $5 million instead of the two and a half that I actually need for this. There's a huge margin to say or I have four years of cash on top of my portfolio. Everybody or I'm still working a per time job or I just fired it but my wife still works and brings in more income but a standalone than the entire cost of our lifestyle our lifestyle without the need for my several million dollar portfolio. So everybody has these huge baked emergency. People come in and they'll say they'll talk about a finance Friday and they'll beg. And my fire, I have $2.5 million. Oh, and I also have a pension that brings in $6,000 a month. Oh, well, we didn't mention that previously. So everybody's got some sort of ace in the hole on this. And that's what I keep emphasizing here is the community. These are smart people. These are people who spent a decade, in most cases, at least, building up huge piles of assets, obsessing over investment theory and who listened to this podcast about money instead of Taylor Swift in the car on the way to and from work or at the gym for a reason. And none of them actually follow the specific advice. Everyone does something like what you're talking about, Tyler,

um, in there in terms of the transition period. You know what? I think that's what the fire community conversation is missing. We talk about this is what we're going to do, but we actually do all of that that Scotcha said. Um, my husband has been retired for nine years. I've been working at bigger pockets for 10. So how, how did you get up the courage to leave your job? well, my wife was making enough money that it covered all of our expenses, and we already had our fire number met. Mindy, don't you also sell like a house a month on the side in Colorado and high cost living area? I'm a real estate agent on top of that, and I have a fairly steady real estate business

that is, I don't consider that a job. So, yeah, I think that that is kind of the unspoken secret of the Phi community is, yes, you did all this great work to amass a net worth that is sitting over here that you're not even spending or you're only pulling out 1%. And I believe that Bangan's original study said that you could, you know, 4% is a withdrawal rate. If you went down to 3.5 or 3.25, then there's a 100% rate of success over a 30 year period. Bigern is saying it's more like 3.25 because the timeline is extended.

And we're going to talk to him in a future episode to get his money. Once you get below the 4% rule, I just, I pet peeve of mine. It gets really silly. Like if you say, oh, the safe withdrawal rights 3.3% for a 30-year withdrawal rate, well, guess what 3.3 times 30 is? So you just draw 1.30th of your money every year. And it just doesn't have to do anything, right, on there. So then, of course, you're safe for 30 years because you just like put a pile of money in, you know, and there and index it to inflation and tips. And you just withdraw one 130th of it every year.

year and you don't run out of money. And let's look at two. I mean, I thank you for bringing up Bangan because that'll be a really good conversation. But Bangen's study too was based on worst case scenarios, period. Period. Period. And I like I can't emphasize that enough that this to me, this is my, so Scott has his pet peeve. My pet peeve is anything talking about 4% because it's all fear-based conservative withdrawal rates. And that's fine. If someone wants to go in and say, look, if the worst comes to worse comes to worse, will I be okay, well, if the worst comes to worse, you're going to die tomorrow and it's completely irrelevant. So there's a spectrum, I'm just saying, but bluntly, right, there's a spectrum of, it's not about money. It's, I mean, we have this

expected idea that we're going to live for 30 years and have endless money. That's best case scenario, but best case scenario also has to do with life fulfillment. So best case scenario is also that I figure out what the heck I want to do with this money to begin with. But if we're always driven by this idea of worst case scenario, most conservative I can be 100% safety, 100% success rate, I don't know. I think that's a overly conservative way to look at finance. And there's a great saying that, you know, that absolutely not taking on enough risk is one of the riskiest things you can ever do in investing. Absolutely. One of the riskiest things you can do is be overly involved in fixed income products when we have

this monster called inflation that eats away at us every single year. So my only, kind of closing encouragement based on everything you were just reflecting on Mindy. It's by real estate. Yeah. Maybe in part three, Scott. Maybe, maybe, maybe. But at this one, I think that the way that I would look at it, if I really were thinking that I were going to be involved in a fire movement, let's just say five years from now,

I would make sure, going back to our point about alternative assets, I would label an alternative asset as something I could do skill-wise to generate money. That's something we do not talk about enough. We talk about stocks. We talk about bonds. We talk about real estate, commodities, et cetera, cryptocurrency. We don't ever. No financial advisor, no financial textbook will ever put into that little pie chart that 25% of that should be focused on what is the skill you have that can be exchanged for money at any time, regardless of ageism, regardless of where you are, that to me would be the dream because it's additional fixed income, it's additional security, and it's additional involvement in life. That to me would be your perfect portfolio. I love it. I love

that we are talking about this. I hope that people are listening and start thinking to themselves, what is my unfair advantage? What is my ace in the whole? What is my extra above the 4% rule that I am not accounting for. And what is that going to do to my timeline? Because I think people are working, there are some people who aren't working long enough, but I think there's a lot of people who are working much longer than they need to at the job that they hate, at the job that they don't feel fulfilled with, and aren't focusing on the fact that they do have enough to make a jump.

And that's the whole reason people are looking at the FI community in the first place is I hate my job. I want to leave my job. Retire early. Yes, how do I do that? And once you get to a certain place, just leave the job that you hate and find something else. Even if it doesn't pay as much as the job that you hate, even if it doesn't have as much status. That is a much better answer. Yeah.

Like that one, like if you really hate what you're doing, that's it. Like fire, the journey towards fire. You don't have to get to fire to quit your job and do something better. you can just take a pay cut and do something better as you move along that journey and your quality of life may dramatically improve. Fire provides better optionality the whole way through for it. But once you decide to leave the workforce on a permanent basis, then your skill set does begin to atrophy pretty materially. And like, forget this concept of ageism or around it. Like, I'm just not going to bet on my being able to generate income the same way when I'm 75 as I can

today at 34, 34, almost 35 in there. It's just not going to happen. I'm just not going to be able to do it. I would not be as effective as an entrepreneur at that point, I believe, in there. And that's going to be a challenge. And I think that not stating that reality out there is problematic for folks, right? Like, I think most people take that for granted as an obvious fact of life, that that's going to be a challenge at that point in life. There's things that could still do absolutely in there. But like, I don't know if I could perform as CEO at bigger pockets at that age personally. Like maybe some folks can, but like I think that my, my body will begin to give out. My energy will begin to decline at that point. And I think that that's like we have to

factor that in as a risk later in life. I don't think you can count on that in perpetuity. There's a reason social security exists in this world. Because people don't say for retirement. And because people are unable to generate income after a certain point in their lives. Well, and that's exactly why I am saving for retirement, because I don't anticipate generating income forever. Although as a real estate agent, that's going to be a bit different because, I mean, there's a lot of older real estate agents out there. You can still show houses. I was going to say, Mindy, that's your ace in the hole. I'm not kidding. I love it. And I love that you brought that up. And I love that language, too. I'm definitely using that language going forward

with people because I do think it's important just for everyone to just think whether it's, I hate to call a pension or Social Security, the ace in the whole. But any of these little things that we don't talk about, they're all part of it. And we've got to look at it as one big portfolio. And now, so I've just got to start thinking of what mine is so I can transition wherever I'd like. I do want to do one quick counter argument to my own thing that I just said there. Apparently, the American people totally disagree with me and have now twice in a row elected folks. over the age of 75 to the highest office in the land for the presidency. So maybe that's changing. Maybe there's a new world, new world coming, and the world has shifted and changed, and that

is all a different thing, and I should be planning around it. But you can tell, Tyler, I take the pessimistic worst case view, but then I invest, you know, I think in a way that, or I have until February at least, invested in a way that also takes advantage of long-term growth trends and assumes inflation and long-term growth in the U.S. economy. I guess where I bring up a good, I talk about him a little bit of my content sometimes, but my father is 76 years old. And he's done perfectly fine for himself, but he's the type of person. And I guess this maybe is where my bias comes from here or my values is a better way to think about it. But he's still working part time as a part time doctor.

And he enjoys the work so much that the work is actually what keeps him focused, what keeps him going, what keeps him fulfilled. and that becomes his ace in the hole very easily. I mean, that, that in and of itself can fund his annual expenses perfectly fine, and then he can invest in whatever the heck he wants to invest in. So when I tell people that he's 100% invested in tech stocks and everyone screams, how the heck is a 76-year-old invested that aggressively, I say, well, because he has the ace in the hole, because he's still working and he loves what he does.

So he, to an extent, actually, I would even say philosophically, that he embodies a lot of what the fire movement is, is that he has found a way to do exactly what he loves doing, and it's not work for him. It's not just a cliche. It really isn't. He would be miserable if you took him away from that job and those interactions and those touch points on a daily basis.

And I can say that too. Like, during COVID, those were two of the toughest years of my life. I was a teacher during COVID, and the world shut down, and we were doing this. We were interacting with each other via Zoom, and it was so hard to go from having 100 touch points a day with high energy and lots of positivity and lots of interaction to being behind a screen. That was really difficult to kind of have this glimpse into a void of interacting and finding a way to make money for engaging with the world and solving fulfilling problems. That's the dream, right?

is to be able to do something that you love long, late, late into life, but never to have to do something at that point. And I think that's the fear. Like that's that like the fear and optimism. There's up there should be optimistic to be a fire to be in the fire community. And it's at your core. You have to be optimistic at the end of the day. At the end of the day, there's a, there's a light at the end of the tunnel that leads to perpetual financial freedom in there. And I think there has to be a fear. Almost everyone has a fear of. of if I pull the trigger and don't do that, well, I'm going to forego options that are very real in my life on there. And the goal is to never have to work again. That's my goal. I like that

distinction. All right, Tyler, this was yet another amazing episode. I really appreciate your conversation, your point of view, and the fact that you're taking time out to share your information and knowledge with us. Where can our listeners find you online? Oh, sure. Well, I mean, just the most fun I'm having right now is the same fun you all are having as the podcast. I, yeah, about a month and a half ago started a podcast and I'm having a great time with that. Yeah, so I'm welcome to your world and it's hard and it's fun and it's exciting and hope I can do that until I'm 76. Where can you find this podcast? It is called Your Money Guide on the Side.

And it is on wherever I believe podcasts probably appear. Your Apple, your Spotify, your Amazon, your I-Hard. etc. And then most of my content is through Instagram or TikTok. And it is under the handle social cap official or social cap on TikTok. And in transparency, I'm growing very tired of making 60-second videos about finance because you can't really unpack much in 60 seconds. Absolutely. You're right. You could just touch on a topic and be like, okay, bye. Yeah. Whereas with a podcast, you could just talk forever. I know. I love it. Yeah. Well, I am really looking forward to checking out your podcast. Thank you again so much for your time. And we will talk to you soon.

Of course. Thanks, Mindy. Thanks, Scott. I appreciate your time. Thank you, Tyler. All right, Scott, that was yet another amazing conversation with Tyler Gardner. What did you think? I think that the intellectual basis for portfolio theory in the fire community is sketchy and totally ignored by most. Ooh, I'm going to stick up for all of my fire peeps and say, please elaborate. Like, you're a perfect example. You, not of your portfolio, your portfolio doesn't have any grounding in the intellectual framework of the 4% rule. You're 100% in stocks and a little bit of real estate. Like there's nothing in it, right?

I don't do it. I don't know many people who do it. Most of the people I've talked to who are fire continue to maintain largely stock-based portfolios. So there's a huge body of research on portfolio theory that is promptly ignored. And then I also think, Mindy, I think I'm at the point where I'm going to say, if someone comes in and I ask you the question, is there a price to earnings ratio for stocks? Is there any price at which stocks are so absurdly expensive that it would force you to reconsider? Or any bond yield high enough that it would force you to reconsider reallocating to bonds? And the answer is no. I think you out of your mind. I think there's an insanity point if people would take those to such extremes that they would totally set it and forget it, not ever tweak. modify their portfolio. And I love the way he answered that question. He said, of course I'd account for it. J.L. Collins, of course I'd account for it. He'll be coming out in a few weeks. So spoiler alert on that one. But I think that that's the big takeaway on this.

And I think there's a lot of work to do to go and explore this. And it comes down to what's going to help you sleep at night. And to Tyler's point, a personalized approach for everyone with the best defense being income generation by the person in perpetuity, kind of antithetical to fire. But I think that's the frustrating takeaway from today's episode and the conversation for the last two. What do you think? I think that today's episode was kind of eye-opening, or I hope it's eye-opening for some of the listeners who are, and I don't mean this in a bad way, but blindly following the 4% rule in theory. And it's just like me. I am blindly following the 4% rule in theory, but not in actuality.

Like you said, I don't have a 60-40 stock portfolio, stock bond portfolio. I have a 100% stock portfolio. And I have some real estate. but more and more my portfolio is pushing towards more stock heavy. It used to be 50-50, and now I want to say it's 70% in stocks. I don't have the numbers in front of me right now. And who knows with the ups and downs of the market lately, what it even is. Maybe I'm back to 50-50.

Look, here's a fun one, Mindy, on this. People regularly miss, like, not only do they ignore the portfolio theory, they totally, like, they don't even understand it in here. This is a great one. I pulled the Bigger Pockets Money community. community with this. After I've been discussing this over and over again, and I said, true or false, J.L. Collins, author of The Simple Path to Well, invest in a portfolio that is 100% in broad-based equities via low-cost index funds, and recommends the same for everyone, from those just getting

started to those in traditional early retirement. 62% of the Bigger Pockets Money audience said true to this. It's unequivocably false. And at the 200-boat mark, I posted in there the answer that it was false. And people still continue to vote. with the true false spread on this one without reading the, after reading the comments on it. So it's like people don't understand this. Portfolio theory in the fire community is totally ignored, misunderstood in most places,

and the actual research that is grounded in basis. Like people are defending the all-stock portfolio allocation sent me a link to a study that came out a few weeks ago. We should definitely get these people on the podcast, by the way. And they're like, yeah, see, 100% stock portfolio, are actually the safest when you account for inflation at risk. Well, yeah, those portfolios are generally 100% allocated, not 100% allocated to domestic, specifically U.S. stocks.

They have heavy concentrations international. In fact, most of the allocation is international in those portfolios. And when the stock market is priced at its current relative price to earnings level, the top quintile, the portfolio recommends that allocation to bonds in there. And it also recommends an allocation to cash in the first, couple of years facing retirement. So again, this portfolio theory stuff, like I'm going down the rabbit hole big time. Everybody's got a freaking different answer to it. And the answers that are actually widely established in research like the 4% rule are totally ignored and works that are

our gospel in the fire community like the simple path to wealth that are treated as like the Bible for early financial freedom for a lot of folks and how to invest, specifically say the opposite of what people state they say. He does not state you should be in 100% index funds on there. He says that for people getting started in the beginning of the journey in there, but he does not say that that is the case for someone about to or at retirement. Sorry, this rant continues week to week. I have continued to be in 100% stocks because there's what the growth is. Once I retire, Carl and I have talked about putting money into more into bonds. It's not 40%, but maybe 10.

It's just a different place that we are coming from now as opposed to I have a job that covers all of our expenses. I don't need to think about bonds yet. My job is my bond. Yeah, absolutely. All right, Scott, should we get out of here? Let's do it. That wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench.

I am Indy Jensen saying, Tudaloo, kangaroo.