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052 | FIRE State Of The Union | Todd Tresidder | Risk Management

Todd Tresidder from Financial Mentor comes on the show to share his perspective on the traditional way FI is taught ( FIRE State of the Union)  and where it could be improved. We discuss the unique characteristics of all three asset classes and the advantages and disadvantages of each. Create a framework for your wealth plan and understand the importance of risk management.

Podcast Episode Summary

  • An in-depth conversation with Todd Tresidder from the Financial Mentor on the State of the FIRE Union
  • The math behind financial independence and how traditional FI-thought is about lowering expenses and investing in low-cost passive index funds
  • Todd believes there’s more to the situation than commonly believed
  • Todd does not want to optimize relentlessly based on price
  • What is Todd’s definition of Fat FIRE?
  • There are multiple paths to FI such as pursuing the business and real estate asset classes to get you to FI quicker in Todd’s opinion

Where does Risk Management come into play?

  • Risk management also needs to be discussed in the FI community
  • A nuanced, dynamic, “Level 2” understanding
  • Finding the right plan for different people and different situations
  • The point of FI is happiness
  • What Todd values: Experiences not stuff, and buying conveniences
  • How Todd disconnects when he is on vacation with his family
  • Todd has focused on all three asset classes in his life and background info on his history
  • Todd is always focused on risk vs. reward at different points in time
  • Todd’s on the ground view of the housing bubble as an apartment owner
  • Paper assets do not lead to a “predictable” return
  • As an investor you always want to look for the “obvious thing nobody else is looking at.” Todd’s discussion of inflation
  • Todd doesn’t predict the future, but he manages risk
  • Manage the downside and risk management. Buffett quote on not losing money
  • What situation would it make sense for someone to invest in index funds, real estate, business, etc.? Everyone needs their own plan for wealth building
  • The business asset class – inventing equity out of ‘thin air’
  • The downside characteristics of each of the three asset classes
  • Hot Seat questions
  • Todd exercises and eats local and organic food to stay healthy
  • Todd’s lifestyle play to sell his hedge fund. He was already financially independent before the sale as he didn’t raise his lifestyle expenses after college
  • Todd’s safe withdrawal rate is higher than 4% due to his investment management and risk management skills
  • Todd would have went back and invested in rental real estate if he could advise his younger self
  • Todd wants to stay liquid with his assets

Listen to Brad and Jonathan’s thoughts about this episode here.

Links from the show:

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