Aloha Inspired Money Makers if this is your first time here, welcome. If you're returning member of our audience and community, welcome back. In today's episode, Investing for Retirement Growth Beyond Stocks and Traditional Assets, we're going to explore the strategies, tools and insights of retirement investing beyond the S&P 500 or the traditional 6040 portfolio. I saw the figure that alternative investments have grown significantly now accounting for over 12% of global investment
portfolios. Notably, university endowments like Harvard and Yale have successfully leveraged alternatives like private equity, hedge funds and real assets, contributing to their strong long term returns and portfolio resilience. How can you further diversify your retirement portfolio to maximize growth and manage risk? And perhaps most importantly, should you in this episode we're going to discuss real estate, alternative investments, digital currencies, ESG strategies and risk management.
Whether you're planning for retirement, navigating your financial future, or just curious about what's next in investing, this episode is packed with actionable insights that you don't want to miss before we get started. This episode of Inspired Money is brought to you by my my company Runnymede Capital Management, a fee only registered investment advisor helping you to plan
for retirement and align your investments with your goals. If you want to get started today with our free 3 minute plan, visit InspiredMoney.fm/GetPlan. You'll answer a few questions to see if you're on track with your retirement goals. And if you do it, I'm happy to schedule a short call to review it with you. Now let's bring in our expert panelists, some of the most innovative minds in finance. We have five panelists today, so I'm very excited. Let me start with Shana
Orczyk Sissel. She's founder and CEO of Banríon Capital Management, specializing in alternative investments and portfolio solutions for financial advisors. She's known as the Queen of Alternatives. Shana is a sought after speaker and media contributor, leveraging her two decades of industry expertise and personal resilience to advocate for women in finance and demystify complex investing strategy. A shout out to Dr.
Preston Cherry who was on last week. He was talking about the real secret to emotional spending and mastering your credit score. He made the introduction and that's why Shana's here. Shana, welcome. Thank you so much for having me. Excited to have you. We have Roger Whitney back on the show, the Retirement Answer Man. He's a certified financial planner with more than 27 years of experience. He's author of Rock
Retirement and founder of the Rock Retirement Club. He's also the voice behind the popular Retirement Answerman podcast that has over 8 million downloads. Roger, welcome back. Excited to be here. I think I might be the or should you voice of this conversation. All right. Looking forward to it. We have Teresa Ghilarducci. She's a labor economist and retirement security expert serving as the Bernard L. And Irene Schwartz professor of Economics at the New School for Social Research.
She directs the Schwartz center for Economic Policy Analysis and the Retirement Equity Lab. She's known for her influential work on pension reform. She proposed guaranteed retirement accounts to address the retirement savings crisis and has authored several books including Rescuing Retirement, how to Retire with Enough Money and Work Retire, Repeat the Uncertainty of Retirement in the New Economy. Teresa, so glad that you're here. Thank you.
And then Rich Carey, back on the show. He successfully built a substantial real estate portfolio while he was stationed in Germany and Korea. He managed to acquire over 20 properties and be debt free. Today, he's retired from he's retired from the military and living off passive income generated from, I think his 30 plus properties. He lives in Montgomery, Alabama where he's a
Realtor. He manages his investments and learn about building wealth through his real estate on his TikTok and YouTube channels. Rich on money. Rich, welcome. Thanks. Glad to be here again. And rounding out our panel today we have Barbara Friedberg. She is a veteran portfolio manager, fintech consultant and investing expert dedicated to simplifying
wealth building strategies. She's author of several books including Invest and Beat the Pros, Personal Finance, An Encyclopedia of Modern Money Management and How to Get Rich Without Winning the Lottery. Her work has been featured in U.S. news & World Reports, Investopedia and Yahoo. Finance. You can visit her YouTube channel and her website, barbarafriedbergpersonalfinance.com for more information. So glad that you're here, Barbara. Thanks for having me,
Andy. All right, well, we have a lot to cover. We have five segments. Let's jump right into segment one. Alternative investments provide options beyond traditional stocks, bonds and cash, aiming for diversification and potential growth. These assets include private equity, hedge funds, real estate, commodities and collectibles, each carrying unique risk and return profiles. Private equity involves direct investments in private companies, often targeting long
term value creation through strategic management. Hedge funds, meanwhile, use diverse strategies such as long, short equity and derivatives to generate active returns. Real estate investments range from residential and commercial properties to real estate investment trusts. Commodities including gold and oil offer inflation protection, while collectibles like art and rare coins may appreciate over time, these assets can reduce portfolio volatility due to their low correlation with traditional
markets. However, Many alternative investments involve lower liquidity and higher minimum investment thresholds, often appealing to institutional and high net worth investors. Recent innovations, however, are making them increasingly available to retail investors seeking growth and stability beyond conventional assets. Teresa, I want to start with you. Many experts say that we're living longer, so we need to work longer to save more for retirement. What's your view on the retirement
crisis today? Well, we have a retirement crisis and a lot of it is because we've had this experiment for 40 years where American individuals have been asked to shoulder the risk of the market risk, the systemic risk, their own risk of making a portfolio allocation mistake of their own risk of actually being out of the labor market for a while is inappropriate shift in risk and it didn't work. It's a
failure. We've had a generation of workers living under this experiment and we now have the results of it. The median amount of retirement assets to supplement Social Security is zero. If we, conditional on people having a retirement access, having a retirement account, the median amount is $90,000, which is kind of a dinner in a movie, you know, once a month for the rest of your life. It's not anywhere near adequate. And it's because we've had this do it yourself system where
people individually direct their portfolio. So I'm very worried about these new asset classes in individual portfolios. Interesting. Shana, as the queen of alternatives, can you explain how retirees and their advisors can include alternatives in a portfolio
construction? Sure. So I'm going to start out by addressing what I think are going to be the vast majority of the concerns from the other panelists, which is, you know, the lack of transparency, the lack of liquidity, the lack, the complexity of these types of products and are they suitable for the average investor? And my answer to that is it depends.
So if you look at alternatives, broadly speaking, I like to say there are diversifying alternatives and then there are just alternative ways to get access to traditional areas. So private equity and private credit are still equity and credit and they have the same risk associated with them, whether or not you know it that traditional equity markets
have. Just because they don't have to mark to market doesn't mean that they, if they had to sell during times of stress, that they wouldn't experience similar drawdowns and they should be considered as part of your equity or credit portfolios. Now the benefits, of course, to these types of strategies is that by being in a less efficient private market, you have the better
opportunity for alpha creation. But the average person who doesn't have sufficient Retirement savings probably isn't even eligible for these products in the way that they have historically been offered. There's been a change in the market where we have this idea of this democratization of these products. And more and more we're seeing strategies come to market and packages that are available
to any investor. So things like Interval Funds, which is a fairly new innovation, I mean the Interval Fund is not new, but the more broad use of it in the alternative space is. But they still have similar issues as it pertains to liquidity and ability to get access to your, your, your funds in time of need. But I do think from a retirement perspective the benefits that alts really play is in the risk management as a risk tool.
And I'm sure there are plenty of people on this panel that would disagree with me. But I, I can firmly say with a lot of conviction because I wrote the module for it for the CAIA (Chartered Alternative Investment Analyst) Association, that the actual research supports the fact that alts are diversifying to portfolios, allowing for you to as an investor to take risk in places that make more sense.
And the diversifying alter things like hedge funds and things that are not related to equity or credit. So things like collectibles, sports, things of that nature fall into that diversifying bucket. And research shows that about a 20 allocation to that usually coming out of fixed income. Because a lot of these things do actually generate substantial cash flow, sometimes even better than fixed income. They can support your income needs in retirement, but at the same time provide you a
diversification benefit. So the ride is smoother because at the end of the day the portfolio that works best is the one you can stick with. And when you have less volatility as a whole, and some of it I will firmly admit is somewhat of a charade in that they don't have to market all the time. But psychologically, from a client perspective that doesn't really matter.
It really is about smoothing out the ride to make the portfolio that they're in positioned better for them to stick with it to help them meet their end goal in retirement. Well, I think that's what's important. And I think it gets interesting because access is increasing. I'm seeing more ETFs where they're actively managed strategies. There are different hedge fund managers who are launching ETFs because they want more distribution. Roger, just because you can doesn't mean you should. I think
that's the point. And it's, it's, you have to approach this by where. What are you trying to solve for first? If you are at retirement, you're trying to solve to meet the liabilities of your spending over a period of time. You're not trying to solve for alpha. As an example and an important thing to understand when we're talking about alternatives is that a quote from my favorite economist which is there are
no solutions, there are only trade offs. And it's important to make your retirement plan as simple as process now in terms of the increase in access to alternatives and it going down market from a net worth standpoint after 30 years in this business I it's just really marketing. Nobody's asking for this. It's a distribution. We have new ways that are legal to distribute products that are more sophisticated. And it's always about grabbing assets from a
product manufacturing standpoint. That is just the nature of the system, not good or bad. As someone trying to actually solve for their retirement plan, it's important to know is it worth the extra complexity and execution risk to add it to the portfolio. And most of the times it really isn't. Now this is a very different issue than what Teresa was sharing which is a major issue. Most people just don't have the money to retire for a variety of reasons. I
do agree that it's. I do agree that is a part of the transition from pension to 401k but I think it's much more multi dimensional in that you can factor in consumerism and debt and our consumer society to contribute to that as well. But I think it's a tool in the toolbox but a much more complicated one that needs to be used very carefully. I do want to just interrupt if you don't mind to address the comments
about going down market and being an asset grab. To some extent that's true but there's also a very overwhelming demand. We see it all the time in the REA market. Clients are asking for this. There are a couple of things that you'll see in generational evolutions right now. So if you take out the baby boomers who are in retirement and you think about the generations behind them, those generations want to invest in a way that aligns with their personal values and passions. And traditional
investments don't necessarily do that really. It's only the alt space that allows for that. By having more liquid and more accessibility to it, advisors can provide their clients with things that they are more excited about that work for the portfolio. And I will note that if you were to look at I used to work at Mercer and I worked in and the whole idea of doing liability driven investing
ldi. Most LDI models stay out of equities and really focus heavily on the whole goal is to have just fixed income, meet the liabilities of your portfolio. In order to do that, you have to have a risk budget and you have to stick with that risk budget. And then as you get closer to being able to meet your liabilities with the least amount of risk, you take the risk down by adding alternatives into a portfolio that actually reduces the overall
risk of not being able to meet your liabilities. Now, I will also say that yes, they are complex, but they don't have to be. I think as an industry, we treat investors and their advisors a little bit in a condescending way, as if they're not smart enough to figure this stuff out and don't give them the information they need to actually learn. I actually disagree with so much of what you said, Shana, in terms of consumers asking for
it. And I think it's probably more advisors asking for it as a means of telling a story to a client. And within the context in retirement planning, there are very few retirement planning advisors. There are a lot of advisors that were trained via CFP and the normal certifications on accumulation. And now that they're approaching clients that are in retirement, they're thinking from an asset allocation optimization mindset, which is a strategy that was never intended for
decumulation. And so the process they're using to try to generate alpha or manage asset allocation in a retirement complex is totally wrong. So I disagree with a lot of what you said. I don't think asset alternatives are wrong. I just think in retirement they introduce a lot more uncertainty than people realize. I don't want to monopolize time from Barbara and Rich, but you know, all this works on paper. Of course, we all know that diversification, you know, lowers
your risk and raises your risk adjusted return. But that's not the point. It's about how this works in real life. But I'm going to stop. Rich and Barbara need a chance to. I want to turn to Barbara because Barbara, I know that you've looked at apps like Titan Invest good people, including retirees be considering hedge funds, crypto, venture capital, private credit, etc. Yeah, I've looked at a lot of the new crowdfunding type apps that open the door to alternative type
investments to the little guy or the little gal. Now, some of them will require you to be an accredited investor, which is a little more wealthy, but some of them are open to anyone. And so my concern with the apps that democratize alternatives as well as products such as Shana discusses which are likely just available to accredited investors and that includes hedge funds, those types of things. Look at the fees because fees are inversely correlated with
returns. Research has shown that. And typically hedge funds have huge fees and many of these apps have huge fees. And so you need to be aware of that. That is my main point for now. I'm not saying good or bad, but whatever you invest in, know what you're investing in,
understand it. Shana, I, I get that. You know, people can invest in alternatives and people are not stupid, but they need to really have a good idea what are the underlying products you're investing in and what are the potential losses. I want to ask Teresa, can you talk a little bit about this motivation for savings and what your research says? Yeah.
I've looked at wealth accumulation for the past 40 years to see if it's actually consumer debt that is causing the low amount of wealth by the time you reach
retirement. And it absolutely isn't. When we knock people out of a wealth accumulated retirement wealth acuity institution like defined benefit plans or what should have happened 40 years ago is a universal pension system that was professionally managed with pooled assets to exist alongside of Social Security like all of our other sensible peers do, then we would see actually wealth accumulate. The 401k has actually made retirement much retirement assets. That means all wealth assets
much more unequal. And so Shana is talking to a tiny sliver of individuals accumulating their retirement. They're at the very, very top. Perhaps they could take a spreadsheet and diversify, manage the cost of management and manage the correlation. But if they want to do that, they should do it outside of tax favored retirement accounts and just do it with their own money, not with the
government's money. So it's not the fault of people spending habits or debt accumulation habits that is causing the retirement crisis. It's inadequate system for accumulating wealth for the bottom. Really it's actually the bottom 80% of the population just don't have the secure lives and the secure incomes and the employers that have offered a retirement account. Thank you. I'm so glad that we have a diversity of opinions here. Let's go straight to segment two.
Real estate investments offer retirees options for income stability and portfolio diversification through two primary vehicles, real estate investment trusts and real estate crowdfunding platforms. REITs are publicly traded companies that own or finance income producing properties. They provide liquidity as shares can be bought and sold on exchanges. REITs distribute at least 90% of taxable income as dividends with an average
yield of 3.8% in 2025. But their prices can fluctuate with market conditions and interest rate changes. Real estate crowdfunding allows multiple investors to pool capital for specific projects through online platforms, often requiring lower minimum investments. While it can offer higher returns due to direct project involvement, it comes with greater risk and limited liquidity since funds are tied up for the duration of the project.
Both options offer diversification, but REITs are suited for those seeking liquidity and passive income, while crowdfunding may appeal to investors looking for project level involvement and potentially higher returns. Rich, can you talk a little bit about how for you, you came to select real estate as an important part of your retirement plan? Well, actually, that's an, that's a good question, and I don't think you necessarily know the answer. But for me, I was in
the military for 20 years. You think of military as something that's very stable. If you want to, you get your 20 years in and you get that pension. But what I kept seeing was that the military kept doing these downsizings every four to five years where they would get us all together, rack us and stack us and chop off a certain amount at the bottom. I invested in real estate because I was worried that there wasn't going to be a retirement for me, that
I would potentially get kicked out before the 20 year point. And I wanted to build up a passive income should that happen and should I not get a retirement like military retirement, then I'd have that passive income to fall back on as I went back to the workforce. And of course, if I made it to 20 years, then the retirement is just gravy. And luckily that's what happened. Barbara, what metrics should retirees focus on when evaluating REITs for dividend stability?
I love real estate. I love actual real estate. I love REITs. I've invested in all of them since 1980s. So what metrics should they look at? REITs are a totally different asset class and they package together different types of real estate estate into investable securities. They have differing tax consequences than your typical dividend paying stocks. So that's something to be aware of. They don't provide qualified dividend status, so you're going to pay higher
taxes. They also come in a general type or you can buy like a storage REIT, or you can buy senior citizen REITs, or you can buy student housing REITs. So they're all different types. They typically have pretty good dividends. So what metrics should you look at, well, you want to look at yield, you want to look at diversification. Do you want just buy a big REIT ETF and be done with it and have access to all different types of real estate properties?
The advantage of REIT has over say a crowdfunded real estate project is that your money is totally liquid. You can get in, you can get out whenever you want. You might not get as high a yield, but you've got a lot more flexibility with REITs. I think if you want some real estate exposure, it is somewhat uncorrelated with stocks and bonds and they're worth looking at. Understand the tax
consequences. Maybe you're a millennial or someone that wants to invest with their values and you believe certain types of real estate cater to certain segments. Choose that type of real estate. The best place to get more information is the real estate REIT website. Thank you, Roger. As a cfp, what are the pros and cons of including real estate in a retirement plan? Are you looking for inflation protection? I'm a big fan of real estate if you're
interested in it. Again, it's one of those trade off things that, and we're talking very different kinds of real estate here. REITs are, have a long history. They are going to provide income. Generally that income is going to be inflation protected, which is really nice. So it's a form of safety first. The income generally
are stable in those although the prices will go up and down. And then the opposite extreme is the individual real estate which we have a number of clients that own and manage residential and commercial properties as part of of their retirement plan. And I think the key here is understand the trade offs and incorporate it into your withdrawal strategy. Because retirement for the individual is essentially an asset liability matching exercise.
I have these, the spending I have to make over the next 20, 30 years and how am I going to have money come due either in the form of income or a bond maturing to match that. But I think real estate's a great asset. One thing I like about it is I think of investing like eating food. I always want to try to eat food and not food product. And there's a scale there from organic. I you know, Rich owns a house, Roger owns a stock to a Twinkie which is something that is much more
manufactured. And that doesn't mean the Twinkie is bad. It just means it has more complexity and more things to understand. Try not to eat the Twinkie. I do think that it's important to note that REITs aren't alts. REITs are equity. They have equity beta, they perform like equity, they are highly correlated to equity, they trade on exchanges, they are tax beneficial structure. But they very much are no different
than equity in that respect. The diversifying aspects of real estate do not come from REITs. They come from actually investing in real estate, whether that be through an interval fund that's doing private real estate debt through you going and buying property and then using it for income purposes. But REITs are not an alternative. There's another aspect of me that people might not know, but I've been a trustee of ERISA of funds and public pension funds for the past 25 years. So 12 billion, 25
billion, a billion, $63 billion. And we look at all the asset classes that we've been talking about because we have professional consultants. One is Mercer, one was Mercer, and we only invest in REITs tailored to even tax exempt organizations. The only fund that had actual real estate like Rich succeeded in is actually in the building which our offices were in. We own that building. Rich, you did really well. I am really impressed.
But your individual experience is really not a lesson for any of us, because what we don't have is a counterfactual. What would you have, how rich would you have been with your talent and attention if you had a more diversified portfolio? On paper, we would suggest that you would have actually had more money. Um, but I'm so glad you have plenty of money. Well, I think in my particular case, I was never one to say, hey, forget about, you know,
forget about traditional retirement accounts. Go all in on real estate. You know, cash out your 401k, cash out your IRA, and let's, let's do this real estate thing. I'd say that about half my net worth is still in traditional events, investments. You, I think Andy mentioned earlier something about going beyond the S&P 500 index. That's where the rest of my money is. I did the whole S&P 500 index in IRAs and 401ks and normal retirement accounts for the past 25 years. And
I've done very well in that. And of course, as you guys know, that's done very well in the past just three or four years as well. What I found interesting that I just noticed today, because I've never been a big REIT person, but when I did a little research on it, I found that it was, it outperformed The S&P 500 index over, I think it was 1972 to now. I think it was something like 12% to 10%.
Now what's interesting also is that in the shorter term, five years, three years and one year, I think it was 10 years, five years and one year, the S&P 500 has outperformed. It's just been a good run. But it's more likely that The S&P 500 is in the near future going to take a massive dip. And those kind of massive dips aren't as typical with real estate.
Yeah, maybe Shana, I can chime in there. I think that it's one thing if Nvidia is dominating performance and you have like the Magnificent Seven, but under more normal circumstances there's a benefit to having asset classes that are behaving differently than the S&P 500. So curious looking at your technology platform, like what are people seeking? Absolute return,
less volatility, what is the goal? The vast majority of the individuals that use our platform are looking for risk reduction and income. And I will say that I spend a lot of time trying to educate on how those things play in a portfolio. They're not really, some things aren't really alt stuff, they're just, you know, a different package like private credit and
private equity. I'm, I'm pretty outspoken about this. If you want the diversification benefits, the risk management benefits, the things that are in there are things that are like CTAs and managed futures are things like using option overlay strategies to manage downside risk and equities. It's things. While I am not a fan of Buffer ETFs, they serve a place.
There are a lot of income related strategies that are derivative based that generate substantial income that very much can provide the opportunities for exposure to equities with substantial distributions of anywhere between 15 and 18% based on the option strategies that have long successful track records. The problem which I think has been touched on here is that most people don't use them appropriately and size them appropriately in
portfolios. I think it is very narrow minded and not fair to say that retail investors shouldn't have alts in their portfolio. I would argue that anything that has liquidity limitations absolutely is a different conversation. But there are a number of strategies that are quite frankly in the alternative space that are still publicly traded, fully liquid types of strategies and in a 40 act wrapper have limitations on them that really limit, you know, the potential for
too much leverage or lack liquidity. And I firmly believe that needs to stay that way. There has been talk about having private credit ETFs which I think is a horrible idea. There's A reason they should be in interval funds. If you can't mark the market every day, there's no point. And those markets are critical to their capital markets. We should be able to allow individuals to invest and build their wealth
with the same tools that the wealthy do. And by suggesting that they shouldn't, whether it be in retirement or otherwise, I think is, you know, kind of like parenting people. The. The goal should be to as an industry commit to proper education. And that's something we do at Bonri. And if you go and watch any of our podcasts or web series, we do plenty that are not positive on certain alts and the uses of alts. Roger, you had something to say
and. Andy, you brought up a really good point. Throwing Nvidia in there as equity, as an equity proxy in. There's a serious problem with index investing in how they are structured. And they're essentially momentum strategies. The larger the companies get, the more influence they have on whichever index. And it works great. When it works great.
And just like where Shana and her organization works, I think is important in that people are struggling to figure out how to have diversification because even in equities and you could argue, you know, lower credit bonds, even if there have some mix in correlation, when things are bad, correlations collide. And that's one of the problems that alternatives are trying to solve. And I think that's something we would is we need to
think about and we need to look at the products. A good example I think Shana brought up was private equity and credit product in that traditional finance markets have abandoned a huge part of the credit market and that is being who is coming into that are these private credit vehicles and private lenders because the major banks, the too big to fail banks just aren't playing in that field
anymore, which creates a big opportunity. So I think and last point I'll say is I do agree with Shana in terms of we all should have options. I think we all should have the ability to have more tools in the toolbox. And it's reliant upon us and our advisors, if we have them to evaluate how complicated or whether we pull those tools out. I think that is always a healthy
thing. But this search for diversification, for diversification, real estate and alternatives are ways of trying to find that because they're really not there in equities. May I just appeal to the parts of your brains, of everybody on this call, the part of your brains that know that when we're talking like this, we're talking to the top 5%
that we understand diversity. We actually can take in education and use it as education and filter out the marketing part that we can weigh the evidence pro and con. And therefore I want Shana to come to my to my trust meetings and sell me an alt, sell me a reit because I have a army of professionals to get to my efficient
portfolio. How in the world can we expect people to get to their efficient frontier with just another very, very opaque product when they can't even get to the efficient frontier with the simple products and transparent products they have now? So people don't. People want freedom. Also people want, you know, apple pie. But when we do the focus groups and I've done, I've researched my guaranteed retirement assets from the point of view of what people
want over and over again. People say they want their money professionally managed at the highest risk, adjusted rate of return, adjusted for fees and they know what their limits are. They know they would rather be a nurse or an emergency room doctor and not a professional manager. All other countries have retirement money managed by
professionals. Why in the world would we go down this road and advocate even more complexity when we have a 40 year track record to know that individuals will get a much lower risk adjusted fee, adjusted rate of return if these products are in their choice set? That's an excellent point. I think that this podcast could probably go two hours in the interest of time we're going to go to segment. Three Digital currencies and blockchain technology are becoming
increasingly relevant in retirement planning. Cryptocurrencies like Bitcoin and Ethereum have been considered for diversification due to their potential to behave differently from traditional assets. Self directed crypto IRAs now allow investors to hold digital assets within retirement accounts, offering tax advantages while expanding investment
options. Blockchain technology itself enhances transparency and security in financial transactions, while innovations like tokenization provide fractional ownership of traditional assets, increasing portfolio flexibility. However, volatility remains a core risk, with significant price swings potentially impacting portfolio stability. Regulatory uncertainty also poses challenges as policies governing digital assets continue
evolving. Experts recommend keeping cryptocurrency exposure limited to 1 to 5% of a retirement portfolio, emphasizing long term strategies and proper due diligence. Despite the risks, blockchain's ability to streamline processes and enhance asset liquidity makes it an emerging consideration for forward looking retirement strategies. I don't know where where our panelists fall on crypto. I'm going to ask the same question of all of
you. Do you see digital assets as a short term trend or A lasting component that should be included in retirement planning. Roger, you want to kick us off? My opinion on crypto, I have no idea. I have no idea. But I think of it in two buckets. One is if you have won the game and you are overfunded for your retirement and you want to have a portion to crypto to see if it's the next thing, go for
it. If you are constrained in your assets relative to your spending and or underfunded, I don't think it's a good bet to try to go into an emerging field to catch up. You know, when you're down, you double up the catch up. I think that's not necessarily a good strategy. You actually conversely have to get a little bit more conservative because you can't really afford
to lose your money. I don't have any strong opinion about crypto other than if you can afford it and you want to have a 1 to 5% allocation which isn't going to make a difference in any portfolio, really go for it. But it's not a way of solving the under savings for whatever reason in terms of making a resilient retirement. So don't gamble just because you can. Teresa, what are your thoughts?
Yeah, it might be fun to be to buy a bansky, you know, to buy an antique, to buy a crypto, but it is probably not appropriate in your retirement portfolio no matter what age you are. If it's a tiny little bit, just know you're playing with money. Crypto is not good for much except for speculation. It's sold as an alternative to money and transactions currency, but it's way too volatile for even that. So if you have a stomach for this kind of volatility,
play with it like you would in Las Vegas. I would think Las Vegas would be more fun. Shana, your thoughts? So I, as I'm sure anybody who's watching and listening knows at this point, I'm going to say that I, I think crypto has a place I am concerned that people don't understand the risks associated with it. But I disagree that it's a speculative asset that has no real value. Crypto's value is inherent on the blockchain which actually has
purpose. It's a protocol like voice over IP is a protocol like HTTP that created the Internet as a protocol. Blockchain is a protocol that serves a purpose and the crypto assets are necessary for these blockchains to work effectively. The problem is that the industry has introduced a lot of just crappy coins that are out there looking for assets that don't have a use case and don't have a blockchain. Dogecoin is a great example of that. And there's a new one every day. Digitization
of assets I think has value. You know, we, we're seeing it in a major way. I think crypto really requires a deep and knowledgeable understanding and that people shouldn't be doing it willy nilly. It's very volatile, but I'm not negative crypto. I include it in some of our alt portfolios and what I call our alpha, which is meant to have a little bit more risk. They certainly have diversification benefits if you can stomach the
volatility. But I would argue that there's a number of mutual funds and ETFs out there that also are just equities, leveraged equities that two times levered and things of that nature which are equally as volatile. It's an asset class that I don't think you should go into without working with somebody who understands it professionally. And I think unfortunately right now there's an entire generation of investor, the younger investor, that their first introduction to investing
is happening through crypto. And you know, they think this is the get rich quick status. But as it becomes further and further adopted and regulatory function comes into it, it's not going to be the same. But the risks associated with it, especially this risk associated with lack of diligence,
is definitely problematic. Yeah, it's a good point. I think it's very different, especially if you're just getting started investing, picking a blue chip stock that has very consistent earnings versus going for crypto that can be highly volatile rich. Have you personally explored any digital assets? So I haven't. And I think when this all started to explode, I can't remember how long ago it's been, I don't know, six or seven years ago when it seemed like
I'm in a lot of like conservative investor groups. One of them was called Choose a five. And I was just kind of always like one of the people that contributed. Well, eventually the popular popularity of crypto got to the point where even in these conservative groups everybody was like, hey, we got to get into this, we got to do it. Like this is, we're losing out, you know, and I kind of always fought that and I sort of almost left the group.
And I think that around that time things just sort of fell out of crypto and not, not much happened with it. And a lot of people in those conservative circles kind of gave up on it. I think it's too, you know, it's just too new and too unproven to think of as a retirement asset. I have to agree with this idea that I'd even say 10%, you know, if you have the money, you think this is the next big thing. I think
this could really be something. I believe in it. I believe in these people that are leading this effort to reorganize the way that money is handled, invest 10% of your money in it. If you're right, that money will do a lot better than the other 90% of your portfolio. And of course, if you lose that, you're not ruined. But I think on average, there's a lot of. And I mean, everybody's alluded to this. Every person and every
person on the panel said this. There's just a lot of maybe people that don't understand it or people that are susceptible to marketing, that are misunderstanding the risks and are jumping in the crypto, especially the bad coins or the celebrity coins and losing money. Barbara, as a former portfolio manager, curious what your thoughts are and how does one assess the risk versus reward when considering something like
cryptocurrencies? Well, the upside is huge, as we've all seen, but the downside is zero. So the question is, do you want to gamble on the possibility that crypto is going to. I'm going to say bitcoin, because bitcoin is really the only crypto I believe is even close to legitimate today. Do you want to gamble that you have a, you know, a decent likelihood of increasing your money exponentially and a much smaller likelihood of going to zero? I'm going to put
it out there. Don't invest in crypto. Sure wish I had. When it was selling at 14,000, I said to myself, God damn it, I've got to get in now. But I didn't. And I think everyone has time to get in on it because it is still super, super new. And the idea is when I see a real viable use for it, I get blockchain. I think blockchain is wonderful. It has a tremendous amount of uses. I'm still not understanding practically what is the use of bitcoin. Thank you for that. Probably the most honest answer
that could be said. So appreciate that. Let's go to segment four. Environmental, social and governance. Investing continues to gain momentum as a strategy for retirees seeking both financial returns and alignment with personal values. ESG investments. Consider a company's environmental impact. Social responsibility in governance practices alongside financial performance. By 2025, ESG related assets under management in the US are projected to reach $52.5
trillion. This strategy offers potential benefits such as competitive returns and risk mitigation, as companies with strong ESG practices may be better positioned to manage regulatory and reputational risks. However, challenges remain, including inconsistent reporting standards and the risk of greenwashing where companies exaggerate their
sustainability efforts. Retirees can adopt ESG strategies by diversifying across asset classes, conducting due diligence on ESG ratings, and actively participating in shareholder advocacy. With proper research, ESG investing can balance financial security with the pursuit of positive societal and environmental outcomes. Foreign. Do you think that ESG considerations are becoming a standard or having influence in the alternative investment space?
Or is there resistance? So I think esg, we've all talked about marketing here. ESG is a marketing tool. But I do think that investors would like to align their investments with the things that they have. They can or their core values. And alts can very much do that. So I'll give you an example.
We talked real estate. If you really want to improve your community, maybe you look at things like workforce housing, maybe you look at things like, you know, we, we looked at a fund and brought it to some advisors that was partnering with, you know, the city of South Bend to completely revamp and improve the living conditions and public housing and provide them with better services and the like. And it was a co investment. It was hugely
successful. That aligns with a lot of people's values. Things like, you know, micro financing for female entrepreneurs and you know, very poor countries. Those are the types of things that people want to align themselves with. They in my mind are value based investing. But ESG as an idea is really just the definition is
not agreed upon. In many ways what had become was it became a marketing term and anything anybody who signed the UN pledge could say that they were esg, even if they weren't actually investing in a manner that aligned with that. Teresa, you teach a class socially responsible investing history, theory and practice. Are ESG investments a luxury for the wealthy or can they be inclusive for
everyone? We had, we just had Stuart Kirk, who is a Financial Times columnist and got fired from HSBC as a longtime money manager and global and the head of global responsibility for ESG because he was critical of ESG. So I agree 100% with Shana that and so does a Texas judge yesterday who found for a pilot who sued American Airlines esg, but not but for the wrong reasons. ESG is an inconsistent criteria to screen companies.
Look, you could screen companies with esg, but if the company that doesn't meet has allowed the ESG score is actually really cheap. That fund will buy it or it's a divestment tool, which means that your portfolio really does get a inferior risk adjusted rate of return. Shana is so right. And I lived in South Bend for 25 years teaching at the University of Notre Dame, that impact
investing is really much more promising. There is so many interesting things we do with a bond secured with bonds, impact bonds, and also with securitization, other even kind of equity products. So I agree 100 with Shana. All right. Roger, have you noticed demand happy that we have some. We have peace agreement here. I'm interrupting your question, Andy. We have peace and harmony. Do you see rising demand for. No, I don't see any at all. I don't see any at all. Where we approach it
from is from the ground up. And this is an interesting. When we talk about, you know, education on alts or other topics, it's from the top down or the bottom up. And I think there's obviously been some debate here about that. But we think about ESG or just doing
good in the world from the bottom up. And I think of a charity that I've supported in Chicago, which I believe you're from, Shana, called My Block, My Hood, My City, which works in inner city starting from the ground up to try to create real change. And I think that's where ESG or doing good really hits, really makes a difference. Barbara, your thoughts? You know, I'm on the board of the investment committee at my synagogue and we have a mission that we have to invest our funds in
sustainable securities. My personal belief is it's really tough to measure. And I really kind of like what Roger said. It's like I am a big supporter in improving our world, in helping improve climate change. Of all those things with my money, with my charity, etc. With my investing, I'm not so sure sure how easy it is to do that accurately. Fascinating. Shana, I wanted to ask you because it's sort of open ended. You had mentioned like four alts in a portfolio. What percentage is a
good rule of thumb? So I'm gonna have to run as soon as I answer this question because I have a client meeting right at the top of the hour. But I will say this. It depends. There's two
types of alts. I've talked about this. Private equity and private credit are conversations about liquidity and they belong in your equity and fixed income allocations, not in your alternatives allocation diversifying alts, which can be Highly liquid things like managed futures, options overlay strategies, equity market neutral, things of that nature. The evidence really suggests that a 20% allocation in that space, mostly coming out of fixed
income, is kind of the optimal way to do it. Anything less than that, it doesn't really have the diversification benefits and doesn't really make a difference in risk. But a 20 allocation typically will improve your risk adjusted return in a meaningful way. But it can't be one alt. It has to be. We talk about building equity, we talk about building fixed income, we don't teach anybody how to build alts. It's not one size fits all. It's not just, oh, all right, 20%
of managed futures. It needs to be built with the same thoughtfulness that exists in the traditional spaces, but 20% in the diversifying alt, I. E. Things that are not highly correlated to equities and fixed income, like private credit and equity, is generally the optimal range that we see. Bye, Shana. Sorry, everybody. Really great, Teresa. Thank you, Shana. Rich, any closing thought on this topic?
Well, I mean, I feel like there's a lot of agreement on this topic, but I think for me personally, and I kind of like, I don't know, again, I'm around, I think I'm around other investors a lot. I'm in groups with other investors. There really isn't a large appetite for worrying about this too much. I think that it sounds good, it briefs good in certain cases, it sells, but it's of zero interest to me.
That is great. I'm going to leave it there because the top of the hour came really quickly and many of our panelists have other time commitments. We're dropping the last segment, but I've got to say that this was a really incredible conversation today. It reminds me that the key to growing wealth, especially retirement, isn't just about choosing the right
assets. Yeah, it's so much about education, because when we talk about alternative investments and choice, increasingly it just seems that we have more choice today. And sometimes that's a great thing and other times it's not. So educate yourself, think about diversifying and being intentional with your choices and what makes sense to you. I think it's important to understand as best you can what you're investing in. And so as a call to action, take a look at your current
retirement plan. Identify one area where maybe you could diversify or maybe you shouldn't diversify. Think about things like real estate, exposure to esg, to digital assets, and have conversations with your spouse, with your family members, with your friends. To talk about what makes sense. And I think that having that conversation and seeking to educate yourself, that's going to make a big difference to your retirement and your financial future. If you need help with aligning your
investments with your goals, remember that I'm here for you. You can go to InspiredMoney.fm/GetPlan to do a 3 minute plan and get started today. Thank you to our panelists. Shana Orczyk Sissel, you can find her at shanasissel.com. Roger Whitney, the retirement answer man. You can find him at rogerwhitney.com. Teresa Ghilarducci, thanks so much for sharing all your insights and knowledge. I know that there's so much more. We could have gone like five hours. But you can, you can find Teresa
at teresaguilarducci.org. Rich Carey, you can find him on YouTube and TikTok RichonMoney. And finally, Barbara A. Friedberg, Barbara A. Friedberg. Check out her books and visit her YouTube channel and https://barbarafriedbergpersonalfinance.com for more information. Thank you inspired money makers for joining us today. Thank you to the panelists. It was a very insightful and thought provoking discussion. I encourage everybody to join us. Next week we have another
Inspired Money episode. The topic is the Power of Philanthropy Making a Difference Through Charitable Giving. That will be on January 22nd at 1pm Eastern. Until next time, do something that scares you because that's where the magic happens. Thank you so much, everyone.