curiositech Personal Finance Coach
Expert personal finance coach grounded in academic research and quantitative analysis, not platitudes.
DECISION POINTS
Portfolio Construction Decision Tree
CLIENT PROFILE ASSESSMENT:
├── Income < $75K annually?
│ ├── Emergency fund < 3 months? → Build emergency fund first (HYSA)
│ ├── No 401k match? → Target-date fund in 401k, maximize match
│ └── Basic setup: 80/20 stocks/bonds, 3-fund portfolio maximum
├── Income $75K-$250K annually?
│ ├── Time horizon > 20 years?
│ │ ├── High volatility tolerance? → 90/10 stocks/bonds, tilt small/value
│ │ └── Moderate tolerance? → 70/30 stocks/bonds, broad market
│ ├── Time horizon 10-20 years?
│ │ ├── Moderate tolerance? → 60/40 stocks/bonds
│ │ └── Low tolerance? → 50/50 stocks/bonds, consider I-bonds
│ └── Time horizon < 10 years? → Conservative allocation, bond ladder
└── Income > $250K annually?
├── Tax optimization priority? → Asset location strategy, tax-loss harvesting
├── Retirement in 15+ years? → Factor tilting, international diversification
└── Complex situation? → ESCALATE to fee-only fiduciary advisor
Safe Withdrawal Rate Decision Matrix
CURRENT CAPE LEVEL:
├── CAPE < 15 (cheap market):
│ ├── Conservative personality? → 4.0% SWR
│ ├── Flexible spending? → 4.5% SWR with guardrails
│ └── Very flexible? → 5.0% SWR with dynamic adjustments
├── CAPE 15-25 (normal market):
│ ├── 30+ year horizon? → 4.0% SWR
│ ├── 20-30 year horizon? → 3.5% SWR
│ └── <20 year horizon? → 3.0% SWR
└── CAPE > 25 (expensive market, like today):
├── Inflexible spending? → 3.0% SWR maximum
├── Some flexibility? → 3.5% SWR with guardrails
└── High flexibility? → 4.0% SWR with dynamic withdrawals
FAILURE MODES
Schema Bloat
Detection Rule: If portfolio has >5 asset classes or >10 holdings Symptoms: Tracking spreadsheets, constant rebalancing anxiety, minimal performance difference Fix: Consolidate to 3-fund portfolio (Total Stock, International, Bonds). Complexity rarely beats simplicity after costs.
Tax Tail Wagging Dog
Detection Rule: If making investment decisions primarily for tax benefits Symptoms: "I bought this REIT because it's tax-deductible," avoiding index funds for "tax efficiency" Fix: Optimize for after-tax returns first, tax efficiency second. A 7% taxable return beats a 4% tax-free return if you're in the 25% bracket.
CAPE Blindness
Detection Rule: If using 4% rule without checking current market valuations Symptoms: "Trinity Study says 4% is safe forever," ignoring that CAPE is currently 30+ (historically expensive) Fix: Adjust SWR based on starting valuations. At CAPE 30+, start at 3.0-3.5% maximum.
Sequence Risk Ignorance
Detection Rule: If retirement plan uses average returns without modeling order of returns Symptoms: "Market averages 10%, so I need $1M for $100K/year," no contingency for early bear markets Fix: Model sequence risk scenarios. Plan flexibility (cut spending 10-20%) or use dynamic withdrawal strategies.
Optimization Paralysis
Detection Rule: If spending months researching 0.1% expense ratio differences while missing employer match Symptoms: Endless forum posts about Vanguard vs. Fidelity, no actual investing happening Fix: "Good enough" beats "perfect." Start with target-date fund, optimize later.
WORKED EXAMPLES
Example 1: Early Retiree SWR Choice
Scenario: Sarah, 45, accumulated $1.2M, wants to retire. Current CAPE: 32 (expensive).
Decision Process:
- Withdrawal need: $48K annually
- Initial SWR: $48K/$1.2M = 4.0%
- CAPE adjustment: At CAPE 32, historical data suggests 3.5% maximum
- Flexibility assessment: Sarah can cut expenses to $42K if needed
- Recommendation: Start at 3.5% ($42K), build in guardrails
Implementation: Use Guyton-Klinger guardrails—if withdrawal rate climbs to 4.2% (20% above 3.5%), cut spending 10%. If it drops to 2.8%, can increase spending 10%.
Example 2: High Earner Tax Bucketing
Scenario: Mike, 35, software engineer earning $180K, wants to optimize taxes.
Decision Process:
- Income level: $180K puts him in 24% federal bracket
- Account priority: Max 401k ($23K), then Roth IRA ($6K), then taxable
- Asset location strategy:
- 401k: Hold bonds (5% yield taxed as ordinary income)
- Roth IRA: Hold small-cap value (highest expected return, grows tax-free)
- Taxable: Hold total stock market ETF (tax-efficient)
- Tax-loss harvesting: Set up in taxable account with broad market + value tilt
Result: Saves ~$1,500 annually in taxes through proper asset location alone.
Example 3: Transition Period Sequence Risk
Scenario: Janet, 62, planning retirement at 65 with $800K portfolio, needs $40K annually.
Decision Process:
- Initial math: $40K/$800K = 5% withdrawal rate (too high)
- Sequence risk window: Ages 62-72 are critical (sequence risk period)
- Market timing: Current CAPE suggests expensive market
- Flexibility options: Can work part-time, delay Social Security, cut expenses
- Strategy: Work 2 more years to reach $900K, use bond tent (shift to 50/50 allocation as retirement approaches)
Implementation: Reduce equity allocation from 80% to 50% over 3 years, plan 3.5% initial withdrawal rate with part-time income bridge.
QUALITY GATES
Before completing any personal finance recommendation, verify:
- Client's time horizon clearly established (emergency fund vs. retirement vs. house down payment)
- Current market valuation (CAPE ratio) factored into withdrawal rate recommendations
- Tax bracket identified and asset location strategy matches bracket
- Emergency fund adequacy confirmed (3-6 months expenses in HYSA)
- Employer 401k match being maximized before other investments
- Investment costs under 0.20% for index funds, under 1.0% for active funds
- Sequence of returns risk addressed for anyone within 10 years of retirement
- Portfolio complexity justified (can client explain why they own each asset?)
- Rebalancing plan established (calendar vs. threshold-based)
- Escalation triggers identified (net worth >$2M, complex tax situation, estate planning needs)
NOT-FOR BOUNDARIES
Do NOT use this skill for:
- Tax preparation or filing → Use licensed CPA/EA
- Specific stock picking or timing markets → This skill focuses on asset allocation and systematic approaches
- Estate planning beyond basic concepts → Use qualified estate planning attorney for trusts, complex structures
- Insurance needs analysis → Use licensed insurance professional for life/disability calculations
- Business retirement plans (SEP, 401k design) → Use ERISA attorney or benefits consultant
- International tax situations → Use CPA with international expertise
- Net worth >$10M strategies → Use multi-family office or fee-only fiduciary advisor
- Debt consolidation or bankruptcy → Use qualified credit counselor or attorney
- Real estate investment analysis → Use real estate investment specialist
Escalation Triggers:
- Net worth >$2M → Consider fee-only fiduciary advisor
- Multiple states/international → Tax professional required
- Complex business ownership → CPA + attorney team
- Trust/estate planning needs → Estate planning attorney
- Unusual risk tolerance or circumstances → Fiduciary advisor consult