Hello, YieldAlley readers! In this issue:

🔮 The Future of Retirement: How Technology Will Make Aging Easier (The Retirement Manifesto)

🚀 The Best Time to Invest (A Wealth of Common Sense)

📝 Trump fires BLS commissioner after weak jobs report (NBC)

🤖 Anthropic Revokes OpenAI's Access to Claude (Wired)

🪙 Are Stablecoins the New Money Market Funds? (SSRN)

Bill Schultheis, a former Smith Barney stockbroker turned financial advisor and author, revolutionized personal investing with his "Coffeehouse Investor" philosophy in 1998. Drawing from his 11 years of making "a hundred cold calls a day" on Wall Street, Schultheis created an investment approach for people who "have better things to do with their lives than pay attention to the stock market." His seven-fund portfolio model offers a middle ground between simplicity and diversification for individual investors seeking market returns without market complexity.

The Coffeehouse Portfolio consists of seven asset classes with a 60% equity, 40% bond allocation:

This allocation reflects Schultheis's "slice and dice" approach to domestic equity while keeping international exposure modest at just 10% (representing 17% of total equity allocation).

Schultheis built his portfolio around three timeless investing principles:

1. Don't put all your eggs in one basket - Diversify asset classes based on your ability and need to take risks

2. There's no such thing as a free lunch - Markets are efficient enough that investors should focus on capturing market returns rather than trying to beat them

3. Save for a rainy day - Develop a financial plan that aligns savings with retirement goals and spending needs

Domestic Equity Slicing: Unlike total market approaches, Schultheis deliberately separates large and small cap stocks while tilting toward value factors. This reflects his belief that these distinct asset classes can provide enhanced diversification and potentially higher returns over long periods.

Conservative International Weighting: The 10% international allocation reflects the portfolio's origins in the late 1990s when home bias was more pronounced. Modern implementations might consider higher international allocations for better global diversification.

REIT Inclusion: The 10% REIT allocation provides real estate exposure and potential inflation protection, though this is more conservative than David Swensen's original 20% recommendation.

Bond Emphasis: The substantial 40% bond allocation enables investors to maintain consistent asset allocation throughout their accumulation phase, embodying the "lazy portfolio" philosophy of "set it and forget it."

Schultheis's transformation from Wall Street insider to index fund advocate began during his stockbroking career at Smith Barney. After 11 years of witnessing clients struggle to beat market returns through stock picking and active management, he realized that "it is pretty darn hard to beat the market over time."

A pivotal moment came through his volunteer work with Hospice of Seattle, which caused him to question his career direction and life priorities. This experience reinforced his belief that successful investing should free people to focus on "pursuing their rich life" rather than obsessing over market performance.

His 1998 book "The Coffeehouse Investor" emerged from his desire to share a simple investment philosophy with "people like my seven brothers and sisters, people who are doing great things with their lives, involved in their careers, their families, communities" who "don't want to pay attention to the stock market."

The Coffeehouse Portfolio has delivered competitive returns while maintaining the simplicity that allows investors to "get on with their lives." However, implementation requires attention to several factors:

Tax Efficiency: Bond funds and REITs generate regular income that may be better suited for tax-advantaged accounts.

Rebalancing Complexity: Seven funds require more maintenance than simpler three-fund portfolios, though still manageable for committed investors.

Factor Tilting: The value and small-cap tilts may underperform growth stocks for extended periods, requiring investor patience and discipline.

Contemporary ETF implementation might include:

While both Schultheis and David Swensen advocate for diversified, low-cost investing, their approaches differ significantly. Swensen's individual investor portfolio emphasizes TIPS and international exposure more heavily, while Schultheis focuses on domestic factor tilting and maintains higher bond allocations. Both reject the complex alternative investments available to institutions, designing their recommendations specifically for retail investors.

Perhaps Schultheis's greatest contribution lies not in his specific asset allocation but in his broader philosophy. As he noted, his initial portfolio recommendation was "intended to be just one example of a Coffeehouse-style portfolio." The enduring value comes from helping investors "capture their fair share of market returns" while focusing on life's more important pursuits.

This mindset-over-methodology approach distinguishes the Coffeehouse philosophy from more rigid portfolio models. Schultheis consistently emphasizes that "by keeping things simple, [investors] actually accentuate their chances of maximizing their returns over a lifetime of investing" because simplicity allows focus on crucial aspects like tax efficiency, asset location, and proper insurance coverage.

Twenty-five years after its introduction, the Coffeehouse Portfolio remains popular among investors seeking a middle path between extreme simplicity and complex factor investing. While some critics argue that its benefits don't meaningfully exceed simpler three-fund approaches, supporters appreciate the enhanced diversification and the psychological comfort of factor tilting.

Schultheis himself continues advocating for the principles that matter most: low costs, diversification, and the discipline to stay the course. His message that "you're not living for money" but using "money as the servant" for life's true priorities resonates as strongly today as it did when he first left Wall Street to pursue a more meaningful approach to helping people build wealth.

Government Money Market Funds (7-Day Yields)

Brokered CD Rates (6-Month Rate)

ETFs (30-Day Yields)

US Bank has relaunched their checking account bonus promotion with improved eligibility terms and revised bonus tiers. This offer provides cash incentives for new account holders who complete direct deposit requirements within 90 days, representing one of the more accessible bank bonuses currently available nationwide.

This promotion offers solid value for those who can legitimately redirect substantial direct deposits, with the reduced 12-month eligibility window making it accessible to more previous customers. The $450 maximum bonus provides competitive returns compared to current bank bonus market rates, while the $2,000 minimum threshold creates an achievable entry point. The 90-day timeframe allows flexibility for timing direct deposit changes, though the requirement for legitimate direct deposits (not ACH transfers) limits accessibility for some bonus churners. The relatively low account maintenance requirements make this suitable for both short-term bonus capture and longer-term banking relationships, particularly for those already in US Bank's geographic footprint.