Ask The Compound – Ep. "What’s the Worst Asset Class for the Next 5 Years?"

Date: March 18, 2026
Hosts: Ben Carlson, Duncan Hill
Guest: Nick Maggiulli

Episode Overview

This episode dives into several key money questions from listeners with a special focus on the returns outlook for two major asset classes—private markets and residential real estate—for the next five years. Ben and Duncan are joined by financial writer and data analyst Nick Maggiulli to debate which of these might underperform, discuss how “buy, borrow, die” works in practice, weigh a compelling guaranteed-return pension option, compare brokerage accounts vs. retirement accounts, and consider the fate of 529 plans in an AI-driven future.

1. Private Markets vs. Residential Real Estate: The Worst Five-Year Bet?

[02:24 – 10:55]

Synopsis:
Nick Maggiulli joins to discuss the much-debated tweet: Which is likely to have worse returns over the next five years, private assets or US residential real estate? Both asset classes look bleak, but for different reasons.

Key Discussion Points:

• Private Markets in Trouble:

  • Illiquidity is biting investors. Redemptions are being limited; private equity and venture capital marks are likely overstated due to a lack of exits.
  • "Mark to market like down 40 cents on the dollar. I think US housing also has its problems...incomes and prices haven't kept up." – Nick [04:03]
  • Ben adds that private assets resemble public equities with added leverage, so returns correlate somewhat—if public does poorly, privates likely will too.

• Residential Housing Outlook:

  • Long-term data shows incomes have not kept up with home prices, but prices have stabilized recently, and 2023 was the first time in years prices underperformed inflation.
  • The tight housing market is underpinned by entrenched political forces; price stagnation (rather than a crash) seems more likely.

• Demographics:

  • The largest US demographic cohort is reaching peak home-buying age (33-37), but many are sitting on the sidelines waiting for mortgage rates to fall.
  • Ben wonders: "How long young people can continue to wait...How long do you think people can hold out?" [06:53]

• Renting vs. Buying:

  • In major cities, the cost disconnect is vast—renting is far cheaper than buying. Many priced-out millennials may buy second homes elsewhere but continue renting in their primary city.
  • "There's this kind of tension going on...people are not going to just mark their houses to market" – Nick [08:00]

Notable Quotes:

• "Privates are probably going to have more negative returns and maybe, you know, US home returns will just be like flat to maybe slightly negative in real terms." – Nick [04:03]
• "The gap between buying and renting in big cities...is probably about as wide as it's been." – Ben [09:08]
• "We're also going to see a trend of millennials...buying a vacation place...but own a place that's just not their primary residence." – Duncan [09:25]

2. Listener Q&A: Buy Borrow Die – Strategy for the Wealthy

[10:57 – 15:53]

Synopsis:
A listener inquires about the "buy, borrow, die" playbook for deferring taxes.

Key Points:

• Strategy Explained:

  • Wealthy investors buy a diverse portfolio, borrow against it for spending (rather than selling), and then, upon death, heirs inherit assets with a step-up in basis—avoiding taxes on prior appreciation.
  • "If you can borrow at 3% or something, and expect your portfolio to return over that, it makes sense" – Nick [12:16]
  • Not widely accessible: mostly for top 1-3% due to large asset requirements.

• Debating the Step-Up:

  • The step-up in basis is a major driver of intergenerational wealth transfer and inequality.
  • "If you really want to tax the wealthy, then you make borrowing against a portfolio a taxable event." – Ben [13:40]

• Risks:

  • Main risks include getting margin-called and the fact you can’t use this tactic with retirement accounts like IRAs.

Notable Quotes:

• "The biggest problem is most people can't use it, because they probably don't have enough assets to do it." – Nick [12:16]
• "It's not even a top 10% strategy. This is maybe like a top 3%, or 1% strategy." – Ben [14:05]

3. Should You Take a Guaranteed 7.25% Return for 30 Years?

[15:54 – 20:59]

Synopsis:
A listener is considering switching a 401A balance into a plan offering a guaranteed 7.25% annual return for nearly three decades.

Key Points:

• Too Good to Be True?

  • Ben and Nick are surprised at the high guaranteed rate, seeing this as “unheard of” in today’s environment.
  • Biggest concern: counterparty risk and long-term plan solvency.
  • "My biggest question would be...Is it going to last 27 years?...What's the funded status?" – Ben [17:22]

• Would They Take It?

  • “Assuming it's real...I think you'd have to take it,” says Nick, but would not put all assets there.
  • Main risk is if inflation soars or the plan fails.

• Practical Advice:

  • Diversify—do not go “all in.” Have a lawyer review the offer and plan documents.

Notable Quotes:

• "If you don't know where the yield's coming from, don't invest in it." – Nick [18:13]
• "It almost sounds stupid to turn it down. That's an amazing guarantee." – Ben [20:46]

4. Brokerage Account vs. Solo 401k for Business Owners

[21:26 – 25:56]

Synopsis:
A listener juggling a solo business, traditional IRA, and growing savings wonders if she should contribute more to a solo 401k or a taxable brokerage account.

Key Points:

• Tax-Deferred vs. Flexibility:
  • While solo 401ks allow significantly higher tax-advantaged saving, many in their 30s and 40s are beginning to value brokerage account flexibility.
  • Ben: “You can slowly but surely build that brokerage account up...If you don't need the money soon.”
  • No harm in opening a solo 401k for the option; any additional disposable income can be split between retirement and brokerage depending on specific needs.

Notable Quotes:

• “For me, any excess income now goes into the brokerage account instead of topping off the retirement accounts because I want to have that flexibility.” – Ben [25:41]
• “It doesn't have to be an all or nothing.” – Ben [25:35]

5. The Fate of 529 Plans in an AI World

[26:10 – 30:35]

Synopsis:
A parent asks if saving for college in 529 plans still makes sense, given the possibility that AI will radically change education.

Key Points:

• Role of AI:

  • Ben envisions every child having a personalized AI tutor, but does not believe this will eliminate demand for traditional college experiences.
  • The pandemic showed that online-only learning cannot fully replace the social and experiential aspects of college.

• Enduring Value of College:

  • Live, in-person experiences (networking, independence, social growth) may become even more valuable as the world digitizes further.
  • "If I could bottle up the feeling I had, I felt like I was walking on clouds that...I'm on my own, I'm away from my parents, I have new friends. If I could bottle that feeling, I'd be a trillionaire." – Ben [28:32]
  • Duncan predicts a resurgence of liberal arts and broad-based education, enabled and enhanced by AI.

Notable Quotes:

• "I do feel that the college experience for young people...is going to be maybe more important than ever again in this AI world." – Ben [29:22]
• "Instead of kids being so focused on just the bare minimum to pass a test...more people are going to have a favorite impressionist painter and maybe know how to build things with their hands." – Duncan [29:52]

6. Lightning Bonus: Cutting Your Losses or Doubling Down?

[31:48 – 32:52]

A quick-fire bonus: What to do with a stock that’s lost 40%? Ben’s rule: If you wouldn’t buy more now, why keep it waiting for a break-even exit?

• "If you're not willing to rebalance into the pain and buy more, if you don't have the confidence to do that, why do you have confidence to wait for it to come back?" – Ben [32:21]

Memorable Moments & Highlights

• Twitter Trolling: Ben and Duncan praise Nick Maggiulli for being “one of the highest quality trolls on Twitter.” [02:23]
• Real Talk on Parenting & Life: Ben shares his “deep thought” on nature vs. nurture after having twins, with Duncan joking about hats and hair. [23:18]
• Personal AI Tutors Prediction: Ben predicts every US child will soon have a personal AI tutor, changing the way we learn. [26:38]

Takeaways

• Both private markets and US residential real estate have headwinds, but private assets may fare worse in the near term.
• “Buy, borrow, die” is a tax strategy for the ultra-wealthy, not the average investor; it's contingent on rarefied asset levels and comes with unique risks.
• Guaranteed high fixed returns sound tempting but should always be vetted for funding risks—especially if something appears “too good to be true.”
• The trade-off between tax-advantaged retirement accounts and the flexibility of brokerage accounts is increasingly recognized among younger savers.
• The disruptive impact of AI on education is real, but college’s social and experiential value—networking, independence, personal growth—remains strong.

For listener questions or to join the conversation:
Email askthecompoundshowmail.com or join live chats and on Twitter.

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