Welcome to Bootcamp 3: Sound Investing Portfolios – 2025 Update


In this third installment of Paul Merriman’s 9-part Bootcamp series, we dive into the Sound Investing Portfolios, a suite of strategies designed to simplify investing while maintaining strong diversification. Whether you’re new to investing or refining your portfolio, this session focuses on providing practical, evidence-based options to help you achieve better returns with less complexity.

What Are the Sound Investing Portfolios?

The Sound Investing Portfolios are built on decades of research and real-world application, offering investors a range of diversified strategies tailored to different preferences and goals. These portfolios emphasize:

  • Simplicity: Options range from 2-fund to 10-fund portfolios, making them accessible to all investors.
  • Diversification: Exposure to U.S. and international markets, small-cap and large-cap stocks, and value and blend sectors.
  • Risk-Adjusted Returns: Designed to maximize returns without taking on unnecessary risk.

What’s New in the 2025 Update?

Paul Merriman and his team have refined the Sound Investing Portfolios for 2025, incorporating updated data and new insights to ensure they remain effective and relevant.


Key Updates Include

Simplified Portfolio Options:

  • 2-Fund Strategy: Combines the S&P 500 and U.S. small-cap value for strong returns with minimal complexity.
  • 4-Fund Strategies: Includes both U.S. and worldwide options for balanced diversification.


Enhanced Performance Data:

Decade-by-decade analysis of returns, standard deviation, and risk metrics, helping investors make informed decisions.

Adjusted U.S. vs. International Allocations:

New comparisons between 50/50 and 70/30 U.S.-to-international allocations, offering flexibility based on investor preferences.

Best-in-Class ETF Recommendations:

Updated ETF picks to help investors build these portfolios easily and cost-effectively.


Portfolio Highlights

1. The 10-Fund Portfolio:

  • Diversifies across 10 equity asset classes, including U.S. large-cap blend, small-cap value, international large-cap value, REITs, and emerging markets.
  • Historically delivers strong returns while reducing risk through broad diversification.

2. The 4-Fund Strategies:

  • Worldwide 4-Fund Portfolio: Allocates 25% each to U.S. large-cap blend, U.S. small-cap value, international large-cap value, and international small-cap blend.
  • U.S. 4-Fund Portfolio: Focuses exclusively on U.S. stocks with a similar mix of large and small, value and blend.

3. The 2-Fund Strategy:

  • Combines 50% S&P 500 and 50% U.S. small-cap value for simplicity and high returns.
  • Ideal for investors who want a straightforward approach with strong historical performance.

Why Diversification Matters

Paul and his team emphasize the importance of diversification in reducing risk and enhancing returns. By including a mix of large-cap, small-cap, value, and blend stocks, these portfolios provide exposure to different economic conditions and market cycles.

For example:

  • Small-Cap Value Stocks: Offer higher returns over the long term but come with increased volatility.
  • International Equities: Add global exposure, reducing reliance on U.S. markets.
  • REITs and Emerging Markets: Provide unique diversification benefits, often performing differently from traditional stock indexes.


Performance Insights

The 2025 update includes detailed performance data to help investors compare portfolios:

  • S&P 500 vs. 2-Fund Strategy: Over a 55-year period, $10,000 invested in the S&P 500 grew to nearly $3 million, while the 2-Fund Strategy grew to over $6.5 million.
  • 4-Fund vs. 10-Fund Portfolios: The 4-Fund strategies deliver returns nearly identical to the 10-Fund Portfolio, offering a simpler yet effective alternative.
  • U.S. vs. International Allocations: A 70/30 U.S.-to-international allocation slightly outperformed a 50/50 split in certain decades, particularly in value-focused portfolios.


Choosing the Right Portfolio for You

Paul and his team provide a range of options to suit different investor needs:

  • New Investors: Start with the 2-Fund Strategy for simplicity and strong returns.
  • Diversification Seekers: Opt for the 4-Fund or 10-Fund Portfolios for broader exposure.
  • U.S.-Focused Investors: The U.S. 4-Fund Portfolio offers a domestic alternative with similar performance.


Next Steps: Build Your Sound Investing Portfolio

Ready to take the next step? Visit paulmerriman.com for detailed tables, performance data, and ETF recommendations to help you build your portfolio.


What’s Next in the Bootcamp Series?

Stay tuned for Bootcamp 4, where Paul will explore fine-tuning your asset allocation, including the role of bonds in your portfolio.


Join the Conversation

Have questions or want to learn more about the Sound Investing Portfolios? Contact Paul Merriman at paul@paulmerriman.com or explore additional resources on his website. Don’t forget to share this series with friends and family who want to make smarter investment decisions!