Sound Investing

Christine Benz: Practical Retirement Planning from Morningstar's Top Expert

Wed, 22 Apr 2026 14:30:20 GMT

This special two-part session opens with Paul Merriman solo — paying tribute to Tim Ranzetta of Next Generation Personal Finance, sharing the latest numbers on state-mandated financial literacy, and walking through Daryl Bahls' quilt charts to show annual earnings invested in the S&P 500, large-cap value, small-cap blend, and small-cap value since 1928.

Then Paul sits down with Christine Benz — Morningstar's Director of Personal Finance and Retirement Planning, and author of How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement — for a wide-ranging conversation on how to actually make a retirement portfolio last.

Christine lays out her five-step plan for anyone retiring in 2030 or 2035: turbocharge savings, rethink household spending, build seven to ten years of "safer assets" for portfolio withdrawals, diversify globally, and use TIPS to protect purchasing power. She and Paul dig into how to structure fixed income (short, intermediate, TIPS), why she's cooler on REITs than she used to be, when a simple income annuity makes sense, and why alternatives rarely earn their keep.

They also cover performance-chasing the S&P 500, balanced funds vs. building your own portfolio (including Paul's Wellesley/Wellington pairing for hands-off investors), how AI is starting to change the financial advice landscape, and the honest answer to "have you planned out to the day you die?" — even from a Morningstar executive.

The audience Q&A covers bonds vs. T-bills, down-payment savings, the four-fund portfolio, Vanguard asset allocation for retirees, tax-efficient withdrawal sequencing, TIAA annuities, managed futures, and gold.

Part of the Spring Financial Education Series hosted by the Bainbridge Community Foundation in partnership with the Merriman Financial Education Foundation.

Coming up in this series: Mike Piper (April 21) and Bill Bernstein (April 28).

�� LINKS & RESOURCES:

�� How to Retire — Christine Benz

��️ The Long View Podcast

�� https://www.morningstar.com/people/christine-benz

�� https://www.ngpf.org

�� https://paulmerriman.com

TIMESTAMPS:

�� PART 1 — Paul Merriman Solo

0:00–Welcome from Matt Longmire

2:55–Paul Merriman intro

3:50–Tim Ranzetta & NGPF

7:00–Financial literacy stats

9:30–Why NGPF is free

10:30–Ben Carlson & oil shocks

13:50–Risk and Reward preview

14:40–Quilt charts explained

17:00–$100 since 1928

20:00–Quintile rankings

22:30–Four-fund consistency

24:00–Volatility discussion

25:30–Best/worst decades

��️ PART 2 — Christine Benz Interview

27:00–Christine joins

29:00–Retirement mindset

31:00–Planning for 2030/2035

32:30–Boosting savings

33:30–Lifestyle adjustments

35:00–7–10 years safer assets

38:00–Bond strategy

40:00–Risk tiers (cash → bonds)

42:00–Equity allocation

44:30–TIPS importance

48:00–Buy-and-hold vs timing

50:00–Handling macro fears

52:30–Top risks

54:00–Annuities overview

56:00–SPIAs & DIAs

58:30–Income psychology

1:02:00–More resources

1:04:00–Alternatives critique

1:07:30–401(k) concerns

1:10:00–Investor gap

1:12:00–Christine’s plan

Q&A:

1:15:00–Bonds vs T-bills

1:20:00–$95k down payment

1:22:00–Four-fund portfolios

1:25:00–FXAIX vs VOO

1:26:00–Model portfolios

1:29:00–Balanced funds

1:33:00–Tax-managed funds

1:34:00–Active vs passive

1:39:00–Bond ETFs

1:41:00–TIAA annuities

1:42:30–Withdrawal strategy

1:44:00–AI investing

1:46:00–Future of advice

1:50:00–Gold & alternatives

1:52:00–Closing thoughts

1:53:00–Next episode

Larry Swedroe: The Evidence-Based Rules Every Investor Needs to Know | Bainbridge Financial Literacy Series 2026

Wed, 15 Apr 2026 14:58:53 GMT

Paul Merriman sits down with Larry Swedroe — author of 22 books and one of the most respected voices in evidence-based investing — for a conversation that covers everything from the five factors that actually matter to why Bitcoin might go to zero.

Larry explains why judging your investment decisions by their outcomes is one of the most dangerous mistakes you can make, lays out the academic criteria he uses to separate real factor premiums from data mining, and reveals that he's made only three tactical moves in 30 years of investing. He and Paul use three eye-opening slides to show why chasing recent winners almost guarantees you'll underperform.

They also dig into why growth stocks don't deliver the returns most people expect (hint: the growth rate is already in the price), why traditional index funds are "dumb traders" bleeding money to hedge funds, and how AI will make markets harder to beat — not easier.

The audience Q&A covers emerging markets, the updated "Larry Portfolio," crypto, private equity, and which fund families Larry actually trusts with his own money.

Part of the Spring Financial Education Series hosted by the Bainbridge Community Foundation in partnership with the Merriman Financial Education Foundation.

LINKS & RESOURCES:

" ⁠Enrich Your Future⁠ " — Larry Swedroe

" ⁠Your Complete Guide to Factor-Based Investing"⁠ — Larry Swedroe & Andrew Berkin

" ⁠Your Complete Guide to a Successful and Secure Retirement⁠ " — Larry Swedroe Larry Swedroe on Substack: ⁠https://larryswedroe.substack.com⁠

⁠ The Hidden Flaw in Style Index Funds ⁠

⁠ The Hidden Costs of Index Replication: What Every Investor Needs to Know About ⁠

⁠ Adverse Effects of Index Replication ⁠

⁠Watch the video here.⁠

Coming up in this series: Christine Benz (Morningstar), Mike Piper, and Bill Bernstein.

A special thanks to Professor Bunnell who teaches a finance class at ⁠Bentley University⁠ . He recommended his students tune into the interview. I hope it motivated them to get a copy of Larry’s latest book. ⁠Enrich Your Future: The Keys to Successful Investing 1st Edition⁠ . I would place a very large bet that it will make a huge difference in their financial future. By the way, to the best of my knowledge Bentley is the only university I know that requires a Personal Finance class to graduate.

PlanVision: Low Cost Flat-Fee Financial Planning for Do-It-Yourself Investors

Wed, 08 Apr 2026 21:25:21 GMT

Paul Merriman sits down with Mark Zoril, founder of PlanVision, in the first episode of a new series spotlighting affordable financial planning options for do-it-yourself investors.

Mark built PlanVision in 2012 around a simple premise: investing isn't as complicated as the financial services industry makes it seem, and technology makes it possible to deliver thoughtful, unbiased financial advice at a price almost anyone can afford.

In this episode you'll learn:

What you get for $489 in the first year — including access to the eMoney financial planning platform and one-on-one advisor sessions
How the $8/month ongoing subscription works, and when it makes sense to stay on vs. cancel
Why PlanVision has no commissions, no affiliate links, no insurance sales, and no conflicts of interest
How the firm handles complex situations: Roth conversions, Social Security timing, 529s, pension vs. lump sum, and tax planning (with a CPA on staff)
What PlanVision will and won't do — no estate planning, no market timing, no gold hedging strategies
How they serve expats in over 180 countries
What happens when a client passes away and a surviving spouse needs guidance
Mark's own investing philosophy — and why he puts his own money in a Vanguard target date fund
How PlanVision works with clients who follow Paul Merriman’s, Rick Ferri's, Larry Swedroe's, or any other multi-equity asset class indexing philosophy

Links mentioned:

⁠Watch the full video on YouTube

Paul Merriman on Managing $1.6 Billion But Never His Own Money

Wed, 01 Apr 2026 19:25:36 GMT

At 82 years old, I still work. Not because I have to, but because I want to.

I joined Brian Herriot and Kirby Denison on “The Time Freedom Podcast” to talk about exactly that. But we ended up covering a lot more than I expected.

Here's something that might surprise you: I managed money for thousands of people over 30 years and built a firm to $1.6 billion under management. And I have never once managed my own money.

Why? Because I know myself too well. When the market drops, I would second-guess everything. I'd probably hesitate to put more money in, even though that's exactly what I teach people to do. So I let someone else handle it. I don't even check how I did last year.

We also got into my disagreement with John Bogle. I had the privilege of sitting with him for about 90 minutes earlier in my career. Bogle preached Enough and it's even the title of one of his books.

I respectfully disagree. I believe the goal should be more than enough. Because life gets in the way. Bad things happen. And they often happen during retirement, when you have the least ability to recover. If you stop working the moment you have just enough, you're one bad year away from trouble.

�� Brian's book Time Freedom is available for pre-order! Pre-order and get the audiobook free... instant access today, paper copy in September. Normally that takes three copies, but for my listeners, just one.

⁠ timefreedombook.com ⁠ | code: PAUL

Q & A Deep Dive

Wed, 25 Mar 2026 22:43:20 GMT

Q&A Highlights

How does a 4-fund portfolio compare to a 10-fund portfolio?
What is the best way to invest for a child’s future?
Is it too late to use a diversified strategy like the 10-fund portfolio at age 50?
Can I create and test my own custom portfolio using your tools?
How should I invest during periods of inflation or uncertainty?
What are some recommended fund options available at Schwab?
Is a portfolio combining large-cap value and small-cap blend a good approach?
Are there good alternatives to intermediate-term bonds?
Who are some trustworthy voices in personal finance and investing?
What is your opinion on separately managed accounts (SMAs)?

Key Takeaway

Long-term investment success is driven by asset allocation, discipline, and consistency—not complexity. A simple, well-structured portfolio that you can maintain through market cycles is often the most effective approach.

⁠Listen to the individual questions here. ⁠

DFA & Avantis ETFs: Building the Ultimate Lifetime Equity Strategy

Wed, 25 Mar 2026 16:38:13 GMT

Paul Merriman is dedicated to helping do-it-yourself investors build portfolios they can stick with for life. In this episode, he shares what he believes is the closest thing to a perfect long-term equity strategy he's ever seen.

Paul traces the evolution of index investing — from John Bogle's cap-weighted S&P 500 funds to the academic research of Fama and French, whose factor-based work showed that small cap value, large cap value, and other equity asset classes have historically outperformed the broad market over time.

For years, the best factor-based funds from Dimensional Fund Advisors (DFA) were only available through select advisors. That changed when Avantis launched its ETF lineup in 2019, followed by DFA's own ETFs — putting institutional-quality, factor-based investing within reach of every self-directed investor.

Paul introduces a recommended ETF list spanning 10 equity asset classes across both fund families, explains the key differences between DFA and Avantis, and makes the case for owning both. He also

covers where to buy them and why Fidelity's fractional shares make it easy to start with any dollar amount.

Key topics:

Factor-based vs. traditional index funds
Accessing DFA and Avantis ETFs
The case for owning both
Simplifying rebalancing with M1 Finance
The Q&A Paul references was recorded separately.

New DFA and Avantis Recommendations

Boot Camp #7 Flexible Distributions

Wed, 18 Mar 2026 16:12:22 GMT

In this episode, we explore how flexible (variable) withdrawal strategies can strengthen your retirement plan—and why fixed, inflation-adjusted withdrawals may increase risk over time.

Using detailed distribution tables—including ⁠ Table F1.3 ⁠ (flexible withdrawals) and comparisons to

⁠ Table D1.3 ⁠ (fixed withdrawals) —Paul walks through real historical outcomes across decades to show how adjusting withdrawals based on market performance can improve long-term results.

You’ll learn:

Fixed vs. flexible withdrawal strategies
Insights from Tables ⁠ F1.3 ⁠ , ⁠ F1.4 ⁠ vs. ⁠ D1.3 ⁠ , ⁠ D1.4 ⁠
How flexibility helps defend against bear markets
The role of diversification and low-cost investing
Why oversaving creates powerful financial freedom

If you’re planning for retirement or already taking withdrawals, this episode may offer a smarter, more adaptable approach to generating income.

⁠Watch Youtube⁠

⁠Boot Camp 7 page⁠

Boot Camp #6 Fixed Distributions

Wed, 11 Mar 2026 21:14:12 GMT

In Boot Camp #6, Paul Merriman walks through real historical data starting in 1970 to test what happens when retirees withdraw 3%, 4%, or 5% from a $1 million portfolio — adjusted for inflation — across some of the toughest market conditions in history.

This episode covers:

The difference between retiring with “enough” and “more than enough”
How inflation quietly turns $30,000 into $130,000+ over 30 years
What happens if you retire into a bear market
Why 1% more in withdrawals can cost millions
S&P 500 vs. a globally diversified four-fund strategy
How diversification impacts lifetime income and legacy outcomes
The real risk of sequence of returns in retirement
Why some portfolios ran out of money — and others didn’t

You’ll hear side-by-side comparisons of:

100% S&P 500 portfolios
40/60, 50/50, and 60/40 stock-bond mixes
A worldwide four-fund equity strategy
Fixed inflation-adjusted withdrawals over 30 years

The results may surprise you — especially when comparing 3%, 4%, and 5% withdrawal rates.

If you're approaching retirement, already retired, or helping someone make distribution decisions, this episode breaks down the numbers in plain English and shows how small choices can create million-dollar differences.

Next week: the strategy Paul considers the very best distribution method — for investors who retire with more than enough.

⁠Watch Video Here⁠

⁠Catch up on the previous Boot Camp 2026 here

Boot Camp #5 Fixed Contributions

Wed, 04 Mar 2026 17:08:19 GMT

In Boot Camp #5 of 10 , Paul delivers what he believes is the most important session in the series —especially for new and early investors (teens, 20s, 30s, and anyone just getting started).

Instead of treating investing like speculation, Paul reframes it as building—or buying—a business over decades.

Using clear, data-driven tables and “fine-tuning” comparisons, he walks through a simple, repeatable plan: start with $1,000 per year (about $83.33/month) , increase contributions by 3% annually , and stay invested for 40+ years . You’ll see how long-term outcomes change based on asset allocation (100% stocks vs. 60/40 stocks and bonds), and why diversification can matter when markets go sideways.

Paul also compares an S&P 500-only approach with a globally diversified “worldwide four-fund” strategy (mixing U.S. and international, large and small, value and growth). Along the way, he explains the real power source in early investing: your contributions , not short-term market performance—and why tax-advantaged accounts like a Roth IRA or Roth 401(k) can dramatically increase the impact of compounding over a lifetime.

If you want a practical framework for long-term, low-cost, diversified investing , plus a clear-eyed discussion of volatility, sequence of returns, and retirement withdrawals (including the concept of a 5% annual withdrawal strategy ), this episode lays the groundwork.

Why Paul believes this is the most important boot camp session
Investing as building a business (the “portfolio mortgage” analogy)
Starting with $83/month and increasing contributions by 3% annually
Understanding the fine-tuning tables and historical market returns
S&P 500 vs. 60/40 portfolio : balancing growth and volatility
The Worldwide Four-Fund Portfolio and the benefits of deeper diversification
How sequence of returns impacts accumulation and withdrawals
Why you rarely notice individual company failures inside diversified funds
The long-term advantage of Roth IRA / Roth 401(k) compounding
Staying disciplined through crashes, recessions, and sideways markets

⁠Watch Video

Bootcamp #4 |Fine-Tuning Your Asset Allocation for Retirement & Long-Term Growth

Wed, 25 Feb 2026 16:10:15 GMT

How much should you really have in stocks vs. bonds — and what happens when the market turns south with a vengence?

In Boot Camp #4, we break down the fine-tuning asset allocation tables that show exactly how different combinations of equities and bonds have performed from 1970 through 2025. This episode goes beyond average returns and dives into what investing actually feels like during the worst 3-month, 12-month, and 60-month market declines.

You’ll learn:

Why equities have historically dominated bonds for long-term retirement investing
How the S&P 500 compares to diversified strategies like the Four-Fund portfolio
The real impact of worst-case drawdowns (including 50%+ bear markets)
What happens to a 100% stock portfolio during retirement withdrawals
How 50/50, 60/40, and other stock-bond allocations reduce volatility
Why median returns matter — and why averages can mislead
How to control risk through asset allocation, low costs, tax efficiency, and index investing

We explore real historical data — including the 1973-74 bear market, the 2000-2002 tech crash, and the 2008 financial crisis — to help you understand both accumulation and retirement distribution phases.

Whether you're in your 20s building wealth, in your 50s preparing for retirement, or already retired and managing withdrawals, this episode helps you align your portfolio with your risk tolerance, return needs, and long-term financial goals.

If you want to be a confident do-it-yourself investor — without paying a 1% management fee — this episode gives you the framework to make informed decisions about stocks, bonds, diversification, and risk control.

⁠Watch Boot Camp #4 video

Sound Investing Bootcamp #3 | How to Choose the Right Portfolio (Returns, Risk & Diversification)

Wed, 18 Feb 2026 18:49:09 GMT

In this third Boot Camp session, Paul walks you through one of the most important questions a DIY investor will ever face: how to choose the right equity portfolio for your goals, risk tolerance, and stage of life.

This episode pulls back the curtain on decades of market data—going back to 1970—to compare real portfolios across good times, bad times, and everything in between. You’ll hear how different combinations of U.S. and international stocks, large and small companies, growth and value strategies, and diversified portfolios actually performed during market booms, crashes, and long recovery periods.

Paul explains:

Why diversification matters more than chasing the “best” asset class
How nine different portfolios stack up against the S&P 500 over time
What really happened in brutal periods like 1973–74, 2000–2002, and 2008
Why returns alone are meaningless without understanding risk
How small-cap value and global diversification changed long-term outcomes
What decades-long performance teaches us about staying invested

This session also introduces the Sound Investing Tables, showing how $10,000 invested in 1970 would have grown under different strategies—and what investors had to endure to earn those results.

If you want to move beyond headlines, fear, and guesswork—and make smarter, evidence-based investing decisions—this episode gives you the framework to do exactly that.

�� Best experienced alongside the ⁠ charts and tables ⁠

�� Questions? Paul invites listeners to submit them for future educational follow-ups - paul@paulmerriman.com

⁠ Watch the video.

Boot Camp 3 page

Boot Camp #2: The Ultimate Buy & Hold Portfolio

Wed, 11 Feb 2026 18:31:53 GMT

In this second session of our 10-part Boot Camp series, we dive into the piece that’s helped shape decades of investing decisions: The Ultimate Buy & Hold Portfolio.

For nearly 30 years, this research—co-created with the late Rich Buck—has explored a simple but powerful question: What happens when you go beyond the S&P 500 and build a lifetime portfolio across 10 equity asset classes?

Starting with data back to 1970, we walk through the math of compounding, diversification, and disciplined rebalancing. You’ll see how adding small amounts of large value, small cap, REITs, international equities, and emerging markets historically increased returns—without meaningfully increasing risk. The result? A dramatic difference over time, powered by patience and structure.

Whether you’re new to these concepts or have followed this work for years, this episode breaks down the numbers, the lessons, and the real-world implications for long-term investors.

This recording is also a tribute to Rich Buck—an extraordinary collaborator whose work on this topic has reached millions of investors.

Download the tables and ⁠watch the video⁠ , follow along, and join us as we revisit one of the most impactful investing frameworks we’ve ever created—and set the stage for next week’s deep dive into the Sound Investing portfolios.

Stocks vs Bonds: The Ten Million Decision | Stocks and Bonds

Wed, 04 Feb 2026 19:04:18 GMT

What if the most important investing decisions weren’t about predicting the market — but about understanding the math behind it?

Each year, we update our Boot Camp, built from nearly 100 years of academic research and hundreds of tables and charts designed to answer one question:

How do investors actually improve their long-term results?

This week, we tackle one of the biggest forks in the road: stock and bonds.

Here are just a few of the takeaways:

A small increase in return — even 0.5% — can mean millions more over a lifetime
Bonds offer safety, but very limited long-term growth
Stocks are volatile, but historically reward patient investors
Different equity asset classes take turns leading — unpredictably
Broad diversification reduces risk while improving expected returns

One of the most powerful lessons comes from seeing how random annual returns really are — and why trying to time markets or pick the “best” asset class almost always backfires.

Instead, the data consistently points to a simple truth:

Diversification works — across companies and across asset classes.

�� Highly recommended: Download the PDF of charts and tables watch the companion video . Seeing the numbers makes all the difference.

Next week, we’ll continue Boot Camp by exploring the ultimate buy-and-hold strategy and the equity asset classes academics believe belong in a long-term portfolio.

As always, this is education — not personal advice — but it’s designed to help you make smarter decisions with confidence.

Thanks for being here, and thank you for sharing this work with people you care about.

A Surprise, a Big Thank You, and What’s Coming Next

Wed, 28 Jan 2026 15:29:49 GMT

Sometimes the best moments are the unexpected ones. This week brought one of those moments when Daryl Bahls delivered an extraordinary surprise: access to every table used across our entire investing Boot Camp Series — months of work, ready ahead of schedule.

That gift makes it possible to move forward faster, including setting up pages for the upcoming Series and potentially releasing the tables before all the podcasts and articles are complete.

The White Coat Investor: 150+ Portfolios That Work

We revisit the White Coat Investor article ⁠ “150 Portfolios Better Than Yours” ⁠ (now over 200 portfolios), originally published in 2014.

The key lesson: There is no single “best” portfolio — most of the portfolios are legitimate and effective. What matters most is:

Choosing a sound portfolio
Understanding why it works
Staying the course over decades

Early success can be misleading, but the portfolio you choose in the beginning can mean millions of dollars more in the long-term.

Why Portfolio Design Matters So Much

Using historical data going back to 1970, we explore how different strategies produce dramatically different outcomes over time:

S&P 500 only vs. globally diversified portfolios
Multi–asset-class investing
Value-focused portfolios (U.S. and international)

Even small starting amounts can lead to large differences over a lifetime.

What We Do — and What We Don’t Do To Help Investors

We are:

Focused on education
Dedicated to do-it-yourself investors
Grounded in academic research and evidence-based investing

We are not:

Financial planners
Estate planners
Tax advisors

Our goal is to help investors build portfolios they can trust through good markets and bad — with the potential to land in the top 5–10% of long-term outcomes .

Preview: The 10-Part Boot Camp Series

Over the coming weeks, we’ll release a comprehensive boot camp covering:

Stocks vs. Bonds — why this decision alone can be a $10 million difference
Equity Asset Class Selection — based on academic research, not trends
Simple Sound Investing Portfolios — small, powerful, manageable
Adding Bonds Intelligently — controlling risk without killing returns
Long-Term Contributions — what steady investing really looks like
Fixed Withdrawal Strategies — taking distributions when you retire with only "enough"
Flexible Withdrawal Strategies — especially for those who’ve oversaved
Target-Date Funds & Glide Paths — with added diversification insights
ETF Selection — why DFA and Avantis may help investors stay the course
Investing for Children & Newborns — including new retirement account considerations

Each topic will eventually include:

A podcast episode
A written article
Supporting data tables

Daryl has now produced 247 educational tables , all designed to support smarter portfolio decisions. You will see all of them during the 10 week series.

Better Than VTSAX, Choosing Asset Allocation, Target Date Funds, Protecting Against Scams, and More

Wed, 21 Jan 2026 17:37:19 GMT

Upcoming Event + What’s New

Before jumping into today’s questions—there are some good ones—I want to share a quick note.

I’ll be at the Annual RetireMeet on March 7 in Bellevue at the Maidenbauer Building. I’ll be there all day at the booth and will be discussing the inside story on diversification , including new thinking on rebalancing that I believe you’ll find useful.

Christine Benz —HOW TO RETIRE

Don McDonald — RETIREMENT EVOLUTION: FROM NONE TO FUN

Tom Cock — RETIREMENT INCOME: THE 4% RULE & BEYOND

Kevin Peterson — GETTING THE MOST FROM MEDICARE

Joe Saul-Sehy — COMMON MISTAKES THAT MAKE RETIREMENT MISERABLE

The event is available in person and online . In-person attendees receive lunch. Online attendees pay a small fee that supports nonprofits focused on financial education.

I also spent time this week with Daryl Balls , working on updates to the quilt charts and new tables. We’re excited to share those soon, along with the next Boot Camp series , starting later this month.

1. How can I avoid getting scammed by a bad financial advisor? 04:03

Paul’s core advice is simple: never give an advisor direct access to your money, such as power of attorney or the ability to move funds. That’s where real risk begins.

Bad advice is another danger. Advisors who rely on high-cost, tax-inefficient, actively managed funds instead of low-cost index funds are a red flag. Even highly respected figures—Bernie Madoff included—have misled investors. The best protection is education and understanding how investing should work when it’s truly in your best interest.

2. How can my parents decide when to start Social Security? 07:08

Rather than relying on rules of thumb, Paul recommends using high-quality resources. One of the best is Social Security Made Simple by Mike Piper, a highly respected CPA and frequent Bogleheads speaker.

Paul also points listeners to Jim Dahle’s discussion of legitimate reasons to take Social Security early, which shows that the “delay at all costs” advice doesn’t always apply.

3. How do I identify my target asset allocation if I am 41 and plan to retire at 65, taking Social Security at 70 and with a pension? 08:47

As with most investing questions, the answer is it depends.

Risk tolerance matters, as does what the portfolio needs to accomplish. At age 41, with many working years ahead, it may be reasonable to remain heavily—or even entirely—in equities, depending on comfort with volatility.

Having Social Security at 70 and a pension may reduce future withdrawal needs, which could justify staying more equity-heavy longer. Reviewing glide paths used by different fund families can also be helpful.

4. Can you help me build a sample asset allocation? 11:46

The starting point is knowing whether you are a conservative, moderate, or aggressive investor, and understanding what those labels actually mean in terms of risk and return.

Paul reviews long-term results from Vanguard Total Market, Mid-Cap, Small-Cap, and DFA Small-Cap Value funds. Historically, taking slightly more risk—especially through small-cap value—has produced higher long-term returns. If certain asset classes aren’t available in a 401(k), an IRA can sometimes provide broader access.

5. What should I learn first to understand asset allocation? 14:10

The first lesson is understanding the long-term growth power of equities. After inflation, fixed income produces very little real growth over long periods.

Equities drive long-term growth, while bonds exist primarily to stabilize the portfolio during difficult markets. From there, investors can learn how diversification across size, value, geography, and asset class affects both risk and return.

6. How do target date funds fit into asset allocation? 17:42

Target date funds manage asset allocation for you. You select a retirement year, and the fund automatically adjusts the mix of stocks and bonds as you age.

For many investors, a single target date fund can be a lifelong solution. These funds bake in assumptions about risk and time horizon and gradually become more conservative over time.

7. How does VTSAX fit into this strategy?17:04

VTSAX, the Vanguard Total Stock Market Index Fund, holds about 3,500 U.S. companies and delivers market-level returns.

An investor can hold all equity exposure in VTSAX, but doing so requires taking responsibility for adjusting bond exposure over time. Target date funds automate that process, while VTSAX requires hands-on management of the glide path.

8. My 401(k) only offers Vanguard Total Market, Mid-Cap Index, and Small-Cap Index. Can I build a good portfolio? 20:40

Yes. Historically, all three funds have delivered strong long-term returns, with mid-cap and small-cap funds producing higher returns but with more volatility.

Paul explains that tilting slightly toward smaller companies can increase expected returns over time. If small-cap value funds aren’t available in a 401(k), investors may consider using an IRA to access additional asset classes.

9. If I’m contributing monthly, should I rebalance using contributions or make separate trades? 27:59

Using contributions is generally the most efficient approach, especially in taxable accounts. Even in IRAs and 401(k)s, directing new contributions and reinvested distributions toward underweighted asset classes is an effective rebalancing strategy.

10. I have a closed 401(k) with a target date 2050 fund. Is that a good core holding? 28:50

Yes. Target date funds make excellent core holdings because they automatically adjust as you age.

An investor may choose to be more aggressive than the fund’s glide path suggests, but as a foundation, a target date fund provides diversification, simplicity, and built-in risk management.

A Final Thought

I recently spoke with an investor who realized they didn’t need to draw from their investments at all, thanks to Social Security and a pension—even with nearly $2 million invested.

When you don’t need the money, you get to choose your medicine —aggressive or conservative.

We’re excited about the upcoming Boot Camp, new tables, and educational tools. If we can do a better job teaching, our hope is that you’ll do a better job investing—for yourselves and for those who count on you.

Links Mentioned in This Episode

Investor Education

⁠Get Smart or Get Screwed ⁠

Truth Tellers – Social Security

⁠Social Security Made Simple⁠ by Mike Piper ⁠Mike Piper⁠ – Oblivious Investor
When to Take Social Security: Pros & Cons – Jim Dahle (White Coat Investor)
⁠

Asset Allocation & Target Date Funds

⁠ Two Funds for Life ⁠ – Chris Pedersen
⁠ Sound Investing Portfolio Series ⁠ (Boot Camp – prior year)
⁠ Ultimate Buy & Hold Strategy ⁠
⁠ Fine-Tuning Your Asset Allocation
⁠

Event

⁠ Annual RetireMeet – Bellevue (March 7)
⁠

Research & Tools

⁠ Quilt Charts and Tables (Paul Merriman / Daryl Balls) ⁠

Sound Investing Q&A: ETFs, Portfolios, Risk, and Retirement

Wed, 14 Jan 2026 19:20:23 GMT

In this week’s Sound Investing podcast, Paul Merriman answers 14 listener questions that get right to the heart of smart investing — how to choose ETFs, how to build portfolios, how much risk to take, and how to think about withdrawals in retirement.

A consistent theme runs through every answer: there is no single “best” investment — only what’s appropriate for you.

1. What is the best ETF for long-term investors, and why does the answer depend on the asset class and the investor rather than a single “best” choice?

Timestamp: ~00:45

Paul explains that while the best S&P 500 ETF often comes down to lowest expense ratio , determining the best ETF across asset classes (especially small-cap value, international, and factor funds) is far more nuanced. This is why Sound Investing emphasizes portfolio construction over predictions .

Boot Camp (portfolio education): https://paulmerriman.com/bootcamp/

2. What is a good portfolio for a given year (such as 2026), and why doesn’t Sound Investing try to predict what will perform best in any particular year?

Timestamp: ~07:22–07:36
Paul emphasizes that neither he nor the Sound Investing team attempts to predict annual winners. Short-term outcomes are essentially coin flips (small vs. large, value vs. growth, U.S. vs. international).

Sound Investing Portfolios: https://paulmerriman.com/sound-investing-portfolios/

3. If someone has $1 million invested in stocks and bonds, how much can they withdraw each year for the portfolio to last 33 years?

Timestamp: ~11:06
Paul walks through historical examples showing how withdrawal rate, inflation, and sequence of returns dramatically affect outcomes—including cases where investors end with millions or run out of money entirely.

4. How would a portfolio focused on Canadian companies compare to one primarily invested in the S&P 500?

Timestamp: ~15:46–16:09
Paul discusses Canadian investors who are heavily concentrated outside the S&P 500 and explains why factor-based diversification may offer better long-term exposure.

Ben Felix (Canada-focused factor investing): https://www.optimizedportfolio.com/ben-felix-model-portfolio/

5. Where can I find the components of the classic 10-fund portfolio?

Timestamp: ~17:30
Paul directs listeners to the Ultimate Buy & Hold Portfolio, which explains why each asset class is included and what it contributes to long-term results.

Ultimate Buy & Hold Portfolio: https://paulmerriman.com/ultimate-buy-and-hold-portfolio/

6. Since ETFs and mutual funds are different, why doesn’t Sound Investing offer a best-in-class mutual fund list?

Timestamp: ~19:16
Paul explains the historical evolution of Sound Investing portfolios and why ETFs became the preferred vehicle once smaller, more flexible portfolios were developed.

7. How does AVUS (the Avantis U.S. Equity Fund) compare to Fidelity’s FNILX fund?

Timestamp: ~22:25
Paul explains how to compare funds using Morningstar’s style box , showing that AVUS, FNILX, and Vanguard Total Market funds hold very different asset mixes—leading to different returns.

Morningstar Fund Comparison Tools: https://www.morningstar.com/

8. Will you be publishing the 2026 tables and updated research?

Timestamp: ~26:00 Paul confirms that 200+ tables are being updated, including the Ultimate Buy & Hold Study and fine-tuning tables , with new data added.

Boot Camp (tables & studies): https://paulmerriman.com/bootcamp/

9. What is a good source for learning about REITs (real estate investment trusts)?

Timestamp: ~28:30
Paul recommends starting with fund providers like Vanguard and Avantis, but also highlights Wikipedia as a surprisingly thorough source for REIT history and tax structure .

REIT overview: https://en.wikipedia.org/wiki/Real_estate_investment_trust

10. What do I need to do to successfully self-manage my mutual fund or ETF portfolio?

Timestamp: ~30:00
Paul outlines the basics: commission-free platforms, disciplined allocation, rebalancing decisions, and understanding asset-class exposure.

Sound Investing Portfolios: https://paulmerriman.com/sound-investing-portfolios/

11. How should investors allocate funds when contributing weekly to the Ultimate Buy & Hold portfolio?

Timestamp: ~35:00–35:07
Paul explains a rotating contribution approach—funding one asset class at a time—which naturally spreads risk and reduces the need for early rebalancing.

12. Do you have best-in-class ETF recommendations for Canadian investors?

Timestamp: ~37:15

Paul reiterates that Canadian investors should follow Ben Felix, whose work is among the most current and evidence-based for that market.

Ben Felix: https://www.optimizedportfolio.com/ben-felix-model-portfolio/

13. If I am retired at 61 with a pension covering expenses and $900,000 invested, how should I invest my retirement portfolio?

Timestamp: ~38:01–38:29
Paul explains that when income needs are covered, portfolio decisions should be driven by risk tolerance , not return chasing. Fine-tuning tables help investors see potential drawdowns.

Fine-Tuning Tables (Boot Camp): https://www.paulmerriman.com/fine-tuning-your-asset-allocation-2025-update

14. What portfolio is recommended for someone in their 30s investing for long-term retirement?

Timestamp: ~43:00+
Paul strongly favors all-equity portfolios for investors in their 30s, emphasizing diversification across asset classes and delaying fixed income until later in life.

What 2025 Taught Us About Investing (And Why “Normal” Matters)

Wed, 07 Jan 2026 17:26:49 GMT

Pediheart Podcast #366: A Focus On Financial Health With Mr. Paul Merriman

Wed, 31 Dec 2025 15:11:13 GMT

The following are Dr. Pass’ note to his podcast:

This week we end 2025 with a Pediheart tradition - an episode on personal finance for medical professionals with noted authority on index investing and personal finance, Mr. Paul Merriman.

Paul is a retired investment advisor who now has a popular podcast "Sound Investing" and website in which he offers advice on investing for 'do it yourself' investors. In this week's episode, the 5th of his visits to ⁠ Pediheart ⁠ , Mr. Merriman discusses 'factor investing' via index-like ETF's and funds.

He also reviews who he believes might benefit from a financial advisor, what sort of advisor most should seek out and why he believes that many do not need one if they can 'stay the course'.

Resources mentioned in today's podcast are below. Wishing all a happy and healthy new year in 2026.

'Best In Class' ETF's ⁠

Sound Investing 'Quilt Charts'

DFA 'Turn Out The Noise'

As a reminder, all of the information provided in this week's episode should be considered entertainment and all financial decisions should be vetted with professionals or knowledgeable and trusted friends/family.

The Importance of Keeping Investing Simple

Wed, 24 Dec 2025 19:56:51 GMT

In the coming weeks, I’ll be starting what I believe may be one of the most important projects of my career—a project with one goal:

That every investor who follows our work will know how to invest for the rest of their life .

A few days ago, at our holiday party at home, I was given a coffee cup. Inside the rim it said, “Keep it simple.”
Fortunately, it didn’t say “Keep it simple, stupid.”
But the message was clear—and it’s a good one.

Simple is powerful.
Simple is what works.
But simple isn’t always easy when we’re making decisions that must last a lifetime.

When we invest in a broadly diversified portfolio of equities , we know two things.

Over long periods of time, returns of around 10% are possible.
And we also know there will be terrible periods .

But with hundreds or thousands of companies, we don’t have to worry about going broke.

Still, investing presents forks in the road.

One fork is whether to invest in individual companies , especially private ones. I’ve done that four times. Three ended in total losses. One worked—and turned into millions.

But that’s not a long term strategy that is likely to work.

And I could never recommend that anyone build their long-term future on one company—or even a few.

The alternative is owning entire asset classes .

U.S. and international.
Large and small.
Growth and value.

Four core equity asset classes—diversified across thousands of companies.

You don’t have to know which company will win.
You just have to own the market.

And here’s where simplicity really shines.

You could put 20% of your equity portfolio into small-cap value ,
and 80% into a total market index .

Leave it alone for 40 years.

Historically, that simple decision may have added about 1% per year —without forecasting, trading, or complexity.

You can automate it.
You don’t even have to rebalance if you don’t want to.

Could you speculate elsewhere? Sure.

Private companies.
IPOs.
Cryptocurrency.

But my responsibility is to tell you what the academic community believes.

And they do not consider cryptocurrency an investment.
They consider it speculation .

My role isn’t to entertain—it’s to help you control what you can control .

Your saving discipline.
Your asset allocation.
Your glide path.
And your ability to stay the course .

Remember—this is your money building your future.

I hope you’ve had a wonderful holiday season.

Next week, I’ll be reviewing what we learned in 2025—and what those lessons may mean for 2026 and beyond.

Thank you, and happy holidays to you and your family.

Paul Merriman on Long-Term Investing, Compounding, and Building Wealth

Wed, 17 Dec 2025 15:32:41 GMT

Compounding Project Podcast – Episode 36

In Episode 36 of The Compounding Project Podcast, legendary investing educator Paul Merriman shares timeless insights on long-term investing, the power of compounding, and how everyday investors can build lasting wealth.

Paul explains why starting early is one of the most important financial decisions you can make , how compound growth works quietly over decades, and why low-cost index funds remain the foundation of successful investing strategies.

This episode dives deep into portfolio diversification , the hidden impact of investment fees, and the role of small-cap value investing in improving long-term returns. Paul also offers practical, evidence-based guidance for young investors, parents, late starters, and anyone seeking financial independence through disciplined investing.

Whether you’re new to investing or refining an existing portfolio, this conversation delivers actionable lessons on building wealth the smart way .

Starting early and staying consistent matters more than market timing or stock picking.
Low-cost index funds and diversification are the most reliable tools for long-term wealth building.
Small-cap value investing and minimizing fees can significantly increase lifetime investment returns.

Your Money and Your Brain
The Psychology of Money
Thinking, Fast & Slow
Spending Your Way to Wealth

Watch the full episode for expert insights on investing, compounding, and financial freedom. Subscribe to The Compounding Project for more conversations with top investing minds.

Timestamps: ⁠

00:00⁠ Episode Trailer ⁠

02:00⁠ Intro to Wealth and Index Funds ⁠

03:20⁠ The Million Dollar Decision ⁠

07:04⁠ Investing Tips for Young Parents ⁠

12:47⁠ Saving When Money Feels Tight ⁠

15:35⁠ Stocks vs Bonds ⁠

19:58⁠ Rethinking Stock Market Risk

⁠24:36⁠ Why Investing Is Easier Today ⁠

27:06⁠ How Fees Hurt Returns ⁠

29:08⁠ When Bonds Make Sense

⁠32:56⁠ Investing Across Generations ⁠

34:58⁠ Portfolios by Age ⁠

35:52⁠ Starting Late in Investing ⁠

41:05⁠ Defensive Investing Basics ⁠

42:10⁠ Why Stocks Matter Most ⁠

43:04⁠ Beating the S&P 500 ⁠

48:09⁠ Market Returns Explained ⁠

51:22⁠ Why Diversification Matters ⁠

54:49⁠ Fees and Long-Term Returns

⁠58:28⁠ Small Cap Value vs Total Market

⁠01:03:25⁠ Equal-Weight S&P 500 ⁠

01:08:36⁠ Handling Market Volatility

⁠01:11:05⁠ Picking Small Cap Value Funds

⁠01:12:50⁠ Trust in Investing ⁠

01:16:42⁠ Hotseat Questions

AAII Q&A Series (Part 3 of 3)

Wed, 10 Dec 2025 23:50:11 GMT

Over the last couple of weeks, I’ve been recording a series of Q&As that came out of a presentation I gave in November for the American Association of Individual Investors — AAII.

At the end of that nearly two-hour talk, I promised that I’d do a podcast answering every single question that came in. Well… there were 36 questions. That’s a little too much for one episode, so we broke them into three parts.

This is Part 3 — the final 12 questions. If you haven’t heard Parts 1 and 2 yet, we’ll link those in the show notes so you can catch up.

Before we jump in, I just want to say: I’m a huge fan of AAII. I started teaching their local chapters way back in 1984, and over the years I think I’ve presented to just about every chapter in the country — sometimes in person, sometimes by Zoom — but always to people who are genuinely committed to learning how investing works.

If you’ve never checked out AAII, I’ll include a link in the notes for a low-cost trial membership. Take a look around and see if it’s a resource that fits your investing journey.

Alright — let’s get to the last 12.

Will you develop strategies using the equal-weighted S&P 500? 01:44
Can you recommend advisors who follow your strategy? 07:20
Should I move mutual funds to ETFs in taxable accounts despite taxes? 11:26
With markets at highs, should I keep dollar-cost averaging or rebalance? 16:17
What portfolio fits 10 years to retire and 20–30 years of decumulation? 24:08
Will the configurator shift to only Avantis/DFA funds in 2026? 30:37
What does “inflation-adjusted fixed withdrawals” mean? 33:56
How should I invest an inheritance for kids/grandkids ages 2–45? 38:21
Ultimate Buy-and-Hold vs. two- or four-fund strategies — which is better? 49:03
Should political conditions change retirement portfolio decisions? 59:12
How do I find a fee-based/hourly advisor (Rhode Island question)? 1:05:56
Should very conservative 91-year-olds move beyond bonds and cash? 1:13:28

Part 1 of the AAII Q&A Series

Part 2 of the AAII Q&A Series

⁠ ⁠ AAII trial membership offer (the ~$2 first month deal) ⁠

⁠ Boot Camp series hub ⁠ ⁠

Fine-Tuning Your Asset Allocation table / lesson ⁠

⁠ Sound Investing / portfolio decade return tables ⁠ ⁠

Fixed vs. Variable Withdrawal episode/article ⁠ ⁠

H-2A table referenced in Q9 ⁠ ⁠

Chris Pedersen Boot Camp presentation (Two-Fund for Life) ⁠ ⁠

Garrett Planning Network advisor directory ⁠ ⁠

HelloNectarine hourly advisor platform ⁠
⁠ PlanVision / Mark Zoril reference

AAII Q&A, Part 2 — 12 More Questions Answered

Wed, 03 Dec 2025 15:40:12 GMT

Paul continues his three-part series responding to questions from his November 8 AAII presentation. In this episode, he digs into risk-parity portfolios, the role of gold, how the 10-Fund Strategy compares to the S&P 500, growth vs. value, rebalancing discipline, and how to choose the right bond allocation in retirement. If you were at the AAII event, you’ll find the exact 12 questions listed below so you can jump straight to your topic.

12 AAII Questions Covered

Thoughts on risk-parity portfolios during retirement distributions? 2:12
Was the 10-Fund Strategy originally meant to mirror 60/40? 14:51
Should investors add gold (IAU) after its recent streak? 21:40
What is a double-rung bond ladder ? 24:03
Which of the nine portfolios has the best return per unit of risk ? 26:36
Analysis of growth funds outperforming over the last decade? 31:36
How to invest new money when the economic outlook looks uncertain? 36:40
Will the AAII slide deck be available? 38:54
How often do you rebalance ? 39:25
How do you tune out the noise and stay the course? 41:13
How to choose your bond allocation in the distribution phase? 45:25
Can you share ETFs for the bond portion of a retirement portfolio? 52:12

Resources Mentioned

⁠AAII presentation slides⁠

⁠10-Fund vs. S&P long-term comparison⁠

⁠Fine-Tuning Your Asset Allocation tables⁠

⁠ Sound Investing tables⁠

⁠Retirement withdrawal tables⁠

⁠ Lifetime Investment Strategy calculator⁠

⁠ Best-in-Class ETF recommendations

Thanksgiving, AAII Q&As. Retirement Portfolios, Value Tilts, International Diversification, and Investing a Lump Sum

Wed, 26 Nov 2025 18:50:14 GMT

Recorded from our new home on Bainbridge Island and released on Thanksgiving, this episode is equal parts gratitude and practical investing help. I open with my annual tradition of writing a fresh Thanksgiving list—people, communities, and institutions that have shaped my life and this work. I’m especially thankful for you, the DIY investors who keep showing up to learn, ask thoughtful questions, and hopefully staying the course.

I also share appreciation for the resources that support disciplined investing—Morningstar, the Bogleheads community, and the American Association of Individual Investors (AAII). After a recent AAII presentation (over 150 attendees), we ran out of time for a live Q&A. I promised to respond to every legitimate question, so this episode kicks off a multi-part series answering them in depth.

Here are the first 12 AAII questions covered in today’s episode:

(9:42) What alterations in portfolio construction do you recommend in transition from accumulation to distribution in order to maximize diversification of uncorrelated assets, safe withdrawal rates, and spending? ⁠ Table h2a
(21:21) I’m a huge fan of your U.S. two-fund portfolio. Why is diversification between large-cap growth and small-cap value so important, while diversification between VTSAX and AVUS (within the same asset class) is not? Should we diversify fund selection within the same asset class? Table K2b
(26:49) Have you considered creating a quilt chart for the Ultimate Buy-and-Hold portfolios with a 70/30 U.S./international split? Table K1a and H2a and H2b
(32:04) You appear to have avoided any mention of mid-cap. Should we be ignoring mid-cap funds?
(33:35) What do you think about adding alternative investments to the portfolio (for example, managed futures)?
(38:39) Are your recommendations for everyone, or does the game change when you have a pension for life?
(43:07) I was fighting with the Zoom link and arrived 25 minutes into the presentation. Will a video recording be available to participants?
(44:08) What would you expect the difference between the S&P 500 cap-weighted index (VFINX)and the S&P 500 equal-weighted index (VADAX) to be?
(49:53) The four-fund portfolios are equal-weighted across their asset classes, which results in a value tilt overall. Why weigh them equally?
(54:35) One might think that adding international large-cap growth and international small-cap value to the two-fund approach would improve results. Does international allocation mainly reduce volatility/drawdown length, or also increase returns? H2a and H2b
(56:26) Can you buy DFA and Avantis funds at Charles Schwab?
(58:40) What should you do if you have a lump sum to invest today, but current market highs make entry uncomfortable? https://awealthofcommonsense.com/2025/11/do-we-need-a-long-bear-market/

Supercharge Your Retirement with Paul Merriman

Wed, 19 Nov 2025 15:00:57 GMT

Paul Merriman shares what his 60+ years of investment experience says about fees, behavior, and building a plan you can actually stick to.

When I sit down with investors getting ready to retire, many of them assume success depends on what they invest in — the right fund, the right stock, the right market move.

But as my recent guest Paul Merriman shared on the Retire Today podcast, “The biggest threats to your money aren’t headlines—they’re costs and emotions. ”

Paul has spent more than 60 years in finance — from the days of 8½% mutual fund commissions to his current work as a full-time educator at PaulMerriman.com . What he’s learned along the way can transform how you think about your money in retirement.

The Real Cost of High Costs

When Paul started as a stockbroker in the 1960s, “almost everybody was paying 8.5% to buy a mutual fund.” That meant if you invested $10,000, only $9,150 went to work for you. The rest went straight to Wall Street.

He’s the first to admit it: “It was efficient for Wall Street—but not for investors.”

Thankfully, costs have dropped dramatically. But even today, Paul warns, a simple 1% difference in fund expenses “can cost you about $3.5 million over a lifetime.” That’s not a typo — that’s the power of compounding working against you.

Emotions: The Hidden Tax on Your Returns

John Bogle, founder of Vanguard, once said, “The two greatest enemies of the equity fund investor are expenses and emotions.” Paul agrees.

“Bad behavior actually can cost an investor more than 1% a year,” he explained. “When the market goes down, people panic. They think they’re going to lose everything—even if they’re in a diversified mutual fund.”

That fear leads to what he calls the ‘I just can’t take it anymore’ approach — selling low after a downturn, only to miss the recovery that follows.

If you’ve ever felt that same knot in your stomach during a market drop, Paul’s advice is simple: don’t try to time the market. Instead, build a plan you can live with — and stay committed to it.

The Power of Education

When I asked Paul what really makes the difference between someone who runs out of money and someone who thrives in retirement, his answer was instant:

“What could really change your life from having way more than you need to having less than you need? It’s the source of your education — what you learn about investing and who you learn it from.”

Education doesn’t just help you make better choices. It keeps you calm during volatility because you understand why your plan works.

That’s exactly what Paul’s nonprofit work focuses on today — teaching people how to build portfolios that balance diversification, simplicity, and risk tolerance. His free resources include guides like “Sound Investing Portfolios” and the book We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement.

The Case for Simplicity

Paul used to teach a 10-fund “Ultimate Buy-and-Hold” portfolio. But even John Bogle told him it might be too complex for most investors. So Paul challenged his team to simplify it — testing two-, four-, and six-fund versions. The result? “You got just as good a return, if not better, than all ten of them.”

You can see these simplified portfolios and the data behind them at https://www.paulmerriman.com/portfolios .

The lesson is timeless: a simple, diversified portfolio is easier to stick with — especially in the bad years. The easier your plan is to understand, the easier it is to trust it when the market tests your patience.

Flexible Withdrawals and the Meaning of “Enough”

We ended our conversation by talking about income in retirement — and how traditional “set-it-and-forget-it” withdrawals often backfire.

Paul explained, “If you have enough, you can afford to be flexible. When the market’s down, take a little less. When it’s up, you can take a little more or give more away.”

This flexible withdrawal strategy not only helps portfolios last longer — it can make retirement feel less stressful. You’re no longer reacting to markets; you’re adjusting intentionally.

He summed it up beautifully: “If you know how long you’re likely to live and how much you have, that base of knowledge gives you freedom — not fear.”

Education is Leverage

We also talked about a critical mindset shift: education is leverage . Knowing how markets work, how fees compound, and how behavior affects outcomes isn’t trivia—it’s the difference between enough and more than enough. With a clear understanding and a plan tailored to your risk tolerance, you’ll make steadier decisions when volatility hits.

If you’re 60–65 and staring at retirement, here’s the short list I give clients:

Own the right mix, not the “perfect” fund. Diversified, low-cost index funds across U.S. and international stocks plus the right amount of high-quality bonds can do the job.
Match risk to reality. Choose a stock/bond split you’ll hold through a full cycle—especially the ugly years.
Adopt a flexible withdrawal rule. Give yourself permission to adjust spending after down years.
Keep behavior boring. Automate rebalancing, ignore short-term predictions, and review once or twice a year.
Invest in education. The more you understand, the less likely emotions will run the show.

You worked hard to build your nest egg. Now it’s time to make it work hard for you—quietly, efficiently, and in a way you can live with. For a deeper dive, watch my full conversation with Paul Merriman on YouTube, where we break down fees, behavior, portfolio construction, and practical withdrawal rules you can use today.

AAII Presentation Follow-Up: ETF Tax Efficiency, Rebalancing, and Smarter Diversification

Wed, 12 Nov 2025 16:32:28 GMT

First, a big thank-you to everyone who joined me for the AAII presentation last Saturday . I appreciate your patience during my rocky Zoom start—and a special shout-out to Suzette Moskwa , who saved the day by running the slides!

As promised, I’m following up on your chat comments and questions from the session. This week’s focus is on your insights; in the next couple of weeks, I’ll share a full Q&A edition covering listener questions on portfolio construction, diversification, and long-term investing strategy.

Key Takeaways from This Week’s Discussion

ETFs vs. Mutual Funds — Tax Efficiency Matters Mutual funds often create higher annual taxes in taxable accounts. ETFs and index funds are more tax-efficient because of how they handle capital gains—saving investors up to 1% a year . Keep mutual funds inside IRAs to avoid unnecessary taxes.
Equal-Weighted vs. Cap-Weighted Portfolios The Invesco Equal Weighted S&P 500 (RSP) holds the same 500 companies as the standard index but gives each stock equal weight . This creates different exposure and more turnover, yet the ETF version reduces the tax drag —a key advantage for long-term investors.
Small-Cap Value Funds — Choosing the Right Fit VBR (Vanguard) performs best when large-cap growth leads, while AVUV and DFSV outperform when smaller value companies rise. The lesson: size and style matter in long-term returns.
The Power of Rebalancing & “Shannon’s Demon” Mentioned by Bill Yount from the Catching Up to FI podcast, ⁠Shannon’s Demon⁠ illustrates how periodic rebalancing can turn volatility into profit. By selling high and buying low, you can enhance long-term performance while keeping risk in check.
Morningstar Ratings — Don’t Chase the Stars Star ratings mostly reflect recent trends , not future potential. Focus instead on the underlying asset class and decades of evidence, not last year’s winners.
Small-Cap Value Slump — Patience Pays Off Small-cap value has struggled this year, but historically it offers one of the best long-term premiums. Remember: asset class selection drives up to 99% of overall portfolio performance.
Risk Parity Portfolios — Balancing Risk the Smart Way Paul compared traditional diversification to risk parity , which balances exposure across stocks, bonds, and commodities. He prefers government bonds over commodities since bonds generate income and often rise when stocks fall.
Diversifying Within an Asset Class Instead of going “all or nothing,” you can hold multiple ETFs—like AVUV and DFSV —for extra balance within a category. Just keep the lineup manageable for your brokerage or platform.
Factor Investing — What Really Drives Returns The strongest long-term drivers are size and value . Momentum and quality can help, but smaller, cheaper companies historically deliver the best rewards.
Growth Funds & Ten-Year Performance Ten-year snapshots can mislead. From 2000 to 2025, small-cap value funds far outperformed growth and the S&P 500, showing the value premium remains powerful across full market cycles.
S&P 500 vs. Total Market — Nearly Identical Over Time Since 1928, returns differ by only 0.1% . The S&P’s recent edge comes mainly from a handful of mega-cap tech stocks, not fundamental differences in the indexes.
Hiring an Advisor — When It’s Worth It A skilled fiduciary advisor can help manage emotions, discipline, and rebalancing. If you struggle to stay consistent, professional guidance may be worth far more than the fee .
The DIY Investor Myth — Overcoming Human Biases “No one cares more about your money than you” sounds good, but behavioral biases —recency, overconfidence, and loss aversion—can derail results. Automation or a trusted advisor can protect you. For more insight, see ⁠Paul Hayes’ free book Spending Your Way to Wealth⁠ , especially the appendix on 48 investor biases .

Thank you again for your time, attention, and thoughtful participation. Despite the technical hiccups, your engagement made this an incredibly rewarding session!

Staying the Course — Insights on Reasonable & Unreasonable Portfolios, Quilt Charts & 2025 Returns

Wed, 05 Nov 2025 15:43:11 GMT

In this episode, Paul dives into one of the most important themes in long-term investing: staying the course, even when individual asset classes deliver unexpected short-term results. Whether you’re a seasoned DIY investor or still building confidence, Paul shares timely lessons to help you make better decisions—and support others who rely on your guidance.

Paul also previews his ⁠upcoming presentation for the AAII Puget Sound Chapter⁠ , where he’ll take one of the deepest dives yet into Daryl Balls’ latest quilt charts, the Sound Investing portfolios, and the vital differences between traditional and non-traditional index funds.

You’ll hear Paul discuss insights from two of the industry’s leading “truth tellers”:

• Jim Dahle (The White Coat Investor) and his Bogleheads presentation on reasonable vs. unreasonable portfolios

• Dr. Bill Bernstein , and why staying disciplined may be investors’ greatest lifelong challenge

Along the way, Paul reviews 10-month, year-to-date performance for the Best-in-Class ETF portfolios—including the 10-fund, 4-fund, and 2-fund strategies—and explains why the surprising 2025 return patterns are completely normal.

Key topics include:

Why some equity asset classes “disappoint” this year—and why that’s expected
The resurgence of international value, small international, and emerging markets
How Chris Pedersen’s 4-Fund Worldwide strategy kept pace with the 10-Fund
The powerful role of non-traditional index funds (DFA & Avantis)
Why small-cap value’s recent struggles shouldn’t discourage long-term investors
How to access DFA-style factor premiums through today’s ETFs
The importance of keeping an investing approach simple, reasonable, and durable
Why staying the course—not forecasting—is the true key to long-term success

Paul also shares personal updates about moving back to Bainbridge Island and reflects on what it means to serve a community of dedicated DIY investors.

If you know someone who would benefit from this work, please share this episode. And don’t miss the links in the show notes—including Jim Dahle’s video, portfolio references, quilt charts, and upcoming AAII registration details.

Thank you for listening—and all the best to you and your family.

The Merriman Financial Education Foundation: Plans, Priorities & Lessons for 2026

Wed, 29 Oct 2025 16:27:05 GMT

Paul Merriman welcomes back Chris Patterson, Director of Research, and Daryl Balls, Director of Analytics, for another thoughtful roundtable discussion. These three “underpaid volunteers” reflect on how far the Merriman Financial Education Foundation has come — and where it’s headed next. Together, they cover everything from new educational tools to a data-driven look at one of the most common investor questions: Has small-cap value lost its punch?

The episode revisits this hot topic with evidence from decades of historical data, including several key Merriman Tables that illustrate why small-cap value (SCV) continues to deserve a place in long-term portfolios.

Featured Tables and Charts

�� Quilt Chart: Year-by-Year Performance of the Major Asset Classes
Created by Daryl Balls, this visual “quilt” shows how the four major U.S. equity asset classes — large-cap blend, large-cap value, small-cap blend, and small-cap value — have rotated in and out of favor since 1928. The randomness of short-term returns underscores the importance of diversification and patience. Despite long stretches of average performance, small-cap value’s cumulative results remain powerful.
➡️ View the Quilt Chart on PaulMerriman.com

�� Table G-1b: Fine-Tuning Table — S&P 500 vs U.S. SCV Equity Portfolio Outperformance
Prepared by Daryl Balls, this 54-year comparison (1970–2024) demonstrates how small-cap value has consistently outperformed the S&P 500 over time. The two rightmost columns — highlighting rolling 15-year and 20-year outperformance — are especially compelling, showing that even after periods of apparent weakness, SCV regains its strength.
➡️ Explore Table G-1b: Fine-Tuning S&P vs SCV

�� Tables B1, H2, H2A, and D1.4: Core Bootcamp Comparisons
From the Foundation’s Sound Investing Bootcamp series, these tables reveal how diversified equity portfolios have performed versus the S&P 500, both in accumulation and distribution phases. They help investors see that broad diversification — especially adding small-cap value — historically improves returns and risk-adjusted outcomes.

Table B1: All-Equity Portfolio Returns by Asset Class (1928–2024)
Table H2: 60/40 Portfolio Distribution Outcomes (1970–2024)
Table H2A: All-Equity Portfolio Distribution Outcomes (1970–2024)
Table D1.4: Historical Equity Premiums and Drawdowns

➡️ See all Bootcamp Tables

Why Small-Cap Value Still Packs a Punch

Paul, Chris, and Daryl explain that small-cap value premiums come in bursts — often following years of average performance. As Paul notes, SCV has had multiple 15- to 20-year stretches of breaking even with the S&P 500, followed by explosive 3- to 10-year “catch-up” periods that deliver outsized gains. The data in Table G-1b makes this clear: over 54 years, SCV continues to deliver a meaningful performance edge.

As Daryl reminds listeners, “those two columns on the right are powerful.” They show that long-term investors who remain patient — and maintain a disciplined exposure to small-cap value — have been well rewarded.

Educational Takeaways

Patience is the premium. Factor returns are unpredictable year to year, but history rewards persistence.
Diversification is defense. Combining S&P 500 with small-cap value reduces regret during both booms and busts.
Data over drama. The Foundation’s free tools, calculators, and tables are designed to help you make rational, informed choices for the long term.

�� Listen now on Spotify or YouTube to hear Paul, Chris, and Daryl discuss new tools like the Two Funds for Life Calculator , updates to the Best-in-Class ETF Recommendations , and their vision for the next generation of financial education.

The Biggest Mistakes Beginner Investors Make—and How to Avoid Them

Wed, 22 Oct 2025 17:00:40 GMT

In this practical and inspiring ETFatlas podcast episode, host Jack Lempart welcomes Paul Merriman for a return conversation focused on the biggest mistakes beginner investors make—and how to avoid them.

The discussion reveals why most investing errors are emotional, not technical. Paul emphasizes that successful investing is usually simple, though almost never easy.

Paul Merriman draws on decades of experience as an educator, advisor, and founder of the Merriman Financial Education Foundation to spotlight key pitfalls:

Trusting the wrong advice
Starting too late with investing
Letting emotions drive decisions
Chasing recent performance

Paul’s conversation goes further, sharing actionable tips:

How defensive investing and diversification protect you from major mistakes
Practical ways to automate good habits and avoid behavioral biases
Insights from both US and European market examples

You’ll also hear why academic research has shaped today’s best investment practices. Paul strongly advocates:

Automating decisions wherever possible
Broad diversification
Maintaining discipline during market turbulence

Listeners receive clear advice on keeping investing simple, avoiding high fees, and building portfolios designed to withstand uncertainty.

The episode closes with tips for further reading—including free educational resources and helpful links—to support every investor’s learning journey.

Agenda

Paul Merriman’s journey from stockbroker to financial educator and foundation founder
Introduction to the most costly mistakes for beginners and how they can affect lifetime wealth
Why trusting the wrong advice is potentially the biggest error investors make
The importance of choosing academically sound, evidence-based sources over industry “experts” or neighbors
Analysis of how starting too late in investing can dramatically reduce future wealth
The emotional traps beginners face and the impact of behavioral biases on decision-making
The problem of performance chasing and recency bias in investment choices
Automating investments and the value of regular, disciplined contributions
Why diversification is considered “the only free lunch” in investing by experts
Advantages of keeping portfolios simple with solutions like target-date funds and low-cost ETFs
Examples illustrating the massive impact of investment fees over decades
The difference between defensive and offensive strategies in long-term market success
Real-world lessons from market history, including US, Europe, and Japan
How to avoid paralysis from choice overwhelm in a landscape of thousands of ETFs

Chris & Paul October 2025 Q&A: Best-in-Class ETFs, Equal-Weight vs. Cap-Weight, and How Much Small-Cap Value?

Wed, 15 Oct 2025 16:02:53 GMT

Watch YouTube video here.

⁠

Paul Merriman and Chris Pedersen tackle your biggest questions—from simplifying portfolios and picking best-in-class ETFs to understanding equal-weighted funds, tax efficiency, and how much small-cap value to own. They dig into factor investing (size, value, quality, profitability, momentum), why reversion to the mean matters, and how to think like an owner—not a speculator. Plus: mentors, work-life balance, and the real risk investors face.

Chapters

00:00 – Intro & Mentors

05:07 – Portfolio Simplification

10:13 – Work-Life Balance

11:39 – Which ETFs will outperform?

20:15 – Importance of Quality

22:45 – Equal-Weighted Funds

26:14 – History: how long is enough?

29:58 – Cost of public indexing

33:30 – Equal-weight fund tax vs. ETF

35:21 – How much small-cap value?

39:47 – Why three EM ETFs?

42:28 – “All Avantis” risk?

49:45 – Technology sector history & mean reversion

53:00 – Be an owner, not a speculator

55:27 – Outro

Key Takeaways

“Best” ETF ≠ next year’s top performer—seek consistent factor exposure, low costs, broad holdings, and tax efficiency.
Equal-weighting boosts small/value exposure but can increase turnover and tax drag; pairing large-cap blend with small-cap value can be more efficient.
Decide small-cap value allocation by temperament (common range: 10–50% of equities when pairing with S&P 500/target date).
Index approach vs. index label : DFA/Avantis are systematic and rules-based without telegraphing rebalances.
Think like an owner : over decades, earnings—not sentiment—drive returns.

Resources • Best-in-Class ETF Recommendations (2025): ⁠https://www.paulmerriman.com/best-in-class-etf-recommendations-2025#gsc.tab=0⁠ • Sound Investing Portfolios, Returns & Risks: ⁠https://www.paulmerriman.com/sound-investing-portfolios#gsc.tab=0⁠ • “Tune Out the Noise” (DFA Documentary): ⁠https://youtu.be/T98825bzcKw?si=kFMugnSSCn2E76sI

Can You Trust the Market? Equal-Weighted S&P 500 vs. Four-Fund Strategy

Wed, 08 Oct 2025 14:30:30 GMT

After a week with family, friends, and his longtime writing partner Rich Buck, Paul sat down to record this reflective new episode of Sound Investing.

He opens with a story from his talk at Olympic College, where a student asked the question every new investor faces:

“How can I trust the market when I might lose everything?”

Paul’s answer is grounded in decades of data. He guarantees investors will lose money—sometimes—but never everything, if they’re diversified and disciplined.

Using 75 years of historical returns, Paul examines three 25-year periods:

1950–1974: S&P 500 compounded at 10.1%
1975–1999: S&P 500 compounded at 17.2%
2000–2025: S&P 500 compounded at 8.3%

He compares these with the Four-Fund Strategy, where equal allocations to large-cap value, small-cap blend, and small-cap value produced a 9.4% average annual return over the last 25 years—versus 8.3% for the S&P 500 alone.

Paul also highlights a striking finding:
The equal-weighted S&P 500 (VADDX / RSP) outperformed the traditional cap-weighted index, compounding at 9.9% versus 8.3% since 2000.

“Equal weighting rewards the underdogs—smaller companies that are temporarily out of favor,” Paul says. “It’s a built-in way to lean toward value and size premiums.”

Finally, he revisits the Small Cap Value Index, where DFA’s real-time fund (DFSVX) returned 11.1% versus 8.3% for the S&P 500—proving once again that diversification across size and value continues to pay off for long-term investors.

Paul concludes with this reminder:

“We can’t buy the past, but we can learn from it. Every extra percent of return—earned through disciplined diversification—can change a lifetime of outcomes.”

The Final Chapter: S&P 500 vs. 60/40 vs. Four-Fund Strategy

Wed, 01 Oct 2025 14:39:22 GMT

This episode concludes our four-part series on two “radical” portfolio choices—investing all-equity for life versus adopting a more balanced 60% equities / 40% bonds approach. In this final session, Paul goes beyond the S&P 500 to examine the U.S. Four-Fund strategy (large-cap blend, small-cap blend, large-cap value, small-cap value).

The goal? To see whether spreading risk across more equity asset classes can deliver higher returns with similar risk compared to relying solely on the S&P 500.

Key Tables to Review
Paul highlights four critical tables from the Bootcamp series. You can view them all on paulmerriman.com :

Table B1 - Fine Tuning Table: S&P 500 Equity Portfolio

Table B4 - Fine Tuning Table: US 4-Fund Equity Portfolio
T able C4 - Fixed Contributions ($1,000/yr): US 4-Fund Equity Portfolio
Table D4.4 - Fixed Distributions (Conservative-$40,000/yr): US 4-Fund Equity Portfolio
Table H2 – Sound Investing Portfolios (100% Equity)
Table H2A – Sound Investing Portfolios (60/40)
Table D1.4 – Fixed Distributions ($40k + inflation)

Lessons for Investors

Risk vs. Reward: Diversification improved long-term results with little added downside.
Distribution Matters: In retirement, portfolio structure determined whether investors ended with $6 million or nearly $20 million.
Numbers Over Stories: While investing stories capture attention, the tables show the long-term reality.

For deeper study, explore all the Bootcamp tables and supporting resources at paulmerriman.com .

Retirement Distributions: All S&P 500 vs. 60/40 Portfolio

Wed, 24 Sep 2025 15:38:01 GMT

Welcome to the third episode in our four-part series exploring radical investment strategies—going “all in” with an all-equity portfolio versus choosing a balanced approach of 60% equities and 40% bonds.

In our first two episodes, we focused on the accumulation years—how these portfolios grew wealth from the early stages of investing to the point of retirement. Today, we shift gears to ask the big question: What happens when it’s time to start taking money out?

Using 55 years of historical data from 1970–2024, Paul Merriman compares:

All S&P 500 Portfolio : The high-growth but high-risk approach
60/40 Portfolio : A balanced strategy blending stocks and bonds

This episode digs into the distribution phase, showing how these portfolios handled major market downturns and sustained income over decades.

What We Cover

Recap of Accumulation Findings : Performance leading up to retirement using:
Table B1 : Fine-Tuning Table for S&P 500 Equity Portfolio
Table H2 : 60/40 Balanced Portfolio Data
Table H2A : 100% Equity Portfolio Data
Retirement Withdrawals : Real numbers from Table D1.4 with fixed distributions of $40,000 per year, inflation-adjusted
Market Volatility : The impact of big crashes like 1973–74, 2000–2002, and 2008 on retirement income
Bond Protection : Why bonds served as a shock absorber when markets crashed
Lessons for Investors : Understanding risk, return, and the emotional side of staying the course

Key Takeaways

All-equity portfolios can build bigger balances—but they also expose retirees to deep, gut-wrenching losses when markets collapse.
A 60/40 approach often produces steadier, more predictable income, sometimes finishing with more wealth despite slower growth in good years.
Historical data offers valuable lessons, but it also reminds us that the future will bring its own surprises—making diversification critical.

Whether you’re decades from retirement or already in it, this episode will help you understand the trade-offs between growth and stability when you start living off your investments.

Next week, Paul will analyze the U.S. 4 Fund Strategy for retirement withdrawals.

Paul Merriman on Money Life with Chuck Jaffe at FinCon

Thu, 18 Sep 2025 18:51:49 GMT

At FinCon, Chuck Gaffe- ⁠ moneylifeshow.com ⁠ sat down with Paul for a wide-ranging conversation about investing and financial independence.

Paul shared insights on the rise of index funds, the FIRE movement’s “one-fund-for-life” approach, and how small portfolio adjustments can boost long-term returns. He also discussed timeless investing principles like staying the course, understanding risk, keeping costs low, and diversifying wisely.

At FinCon, Paul reflected on everything from the rise of index funds to the FIRE movement’s “one-fund-for-life” strategy. His message was clear: while simple investing solutions can work, small, thoughtful adjustments—like adding different asset classes—can meaningfully improve long-term returns.

Paul also emphasized timeless investing principles:

Stay the course. Don’t bail when markets turn volatile.
Understand your risk. Know how much you can afford to lose before the storm comes.
Avoid unnecessary costs. A fraction of a percent in fees can add up to millions over a lifetime.
Diversify wisely. A broad mix of assets offers protection and opportunity across market cycles.

Whether discussing crypto, ETFs vs. mutual funds, or portfolio allocation strategies, Paul’s advice always comes back to one goal: helping investors achieve financial independence with confidence and peace of mind.

Two Radical Investments – U.S. 4-Fund Portfolio vs. S&P 500

Wed, 17 Sep 2025 18:20:25 GMT

Paul Merriman continues his 4-part series exploring two “radical” investment strategies: Two Radical Investments: All equities all the time and 60% Equities 40% bonds for Life.

This segment focuses on the accumulation phase—comparing the performance of the U.S. 4-Fund Portfolio with the S&P 500 over a 55-year period.

Paul walks through historical returns, risk comparisons, and the role of diversification in building long-term wealth. He explains how the 4-Fund strategy (Large Cap Blend, Large Cap Value, Small Cap Blend, Small Cap Value) stacks up against the S&P 500, whether you stay 100% in equities or use a balanced 60/40 approach.

Key insights include:

How the 4-Fund strategy’s higher historical returns come with only slightly more volatility.
Why the 60/40 approach offers a powerful balance between risk and reward.
The role of good times vs. bad times in shaping long-term outcomes.
Decade-by-decade performance analysis, including periods of bull markets, bear markets, and major drawdowns.

Paul also highlights the tables you’ll want to download and follow along with as he explains the numbers:

Table B1: Fine-Tuning Table – S&P 500
Table B4: Fine-Tuning Table – U.S. 4-Fund Portfolio
Table H2a: Sound Investing Portfolios – 100% Equities
Table H2: Sound Investing Portfolios – 60/40 Portfolios
Table C1 & C4 : Fixed Contributions for Accumulation Analysis

Next Episode Preview:

Next week, Paul will continue the series by exploring the distribution phase —looking at what happens when you start withdrawing from your portfolio using the same all-equity vs. 60/40 strategies.

Listen & Learn:

Whether you’re an all-equity investor or lean toward a balanced portfolio, this episode will give you a clearer picture of how portfolio composition impacts long-term returns, volatility, and retirement readiness.

Saving for Retirement: 100% S&P 500 vs. 60/40 — A Lifetime Portfolio Comparison

Wed, 10 Sep 2025 13:30:48 GMT

Paul Merriman explores one of the most important decisions every long-term investor faces: Should your retirement savings be invested entirely in equities, or should you balance your portfolio with a mix of stocks and bonds?

Paul compares two “lifetime” investment strategies:

100% Equity Portfolio (S&P 500): Maximum growth potential, but maximum volatility.

60/40 Portfolio (60% Stocks / 40% Bonds): A classic “balanced” approach with reduced risk.

Using data from multiple decades and several key tables—

Table B1 Fine Tuning Table: S&P 500 Equity Portfolio⁠

⁠Table H2a Sound Investing Portfolios (these portfolios are all 100% equities)⁠

⁠Table H2 Sound Investing Portfolios (these portfolios are all 60% equities/40% fixed income) (NEW)⁠

⁠Table C1 Fixed Contributions ($1,000/yr: S&P 500 Equity Portfolio

—Paul reveals how each portfolio would have performed over 55 years of accumulation and retirement, comparing growth, risk, and long-term sustainability.

You’ll discover:

How often 60/40 actually outperformed 100% equities during downturns.
Why volatility, drawdowns, and risk matter as much as returns.
The “half the risk” advantage of the 60/40 strategy.
How consistent contributions—whether $1,000 or $6,000 per year—grow dramatically over time.

Finally, Paul previews the next podcast, where he’ll compare the same 100% vs. 60/40 strategies using the U.S. 4-Fund and Worldwide 4-Fund portfolios.

Key Takeaways:

100% equities historically delivered higher returns but with far greater volatility and deeper drawdowns.
The 60/40 portfolio captured most of the returns with roughly half the risk.
Consistency, time horizon, and investor temperament all matter when choosing your “lifetime” portfolio strategy.

The Last Step to Successful Investing

Wed, 03 Sep 2025 13:15:39 GMT

Paul starts this letter beginning with a ⁠ letter from a listener⁠ . The letter ends with the reason why our work has had more impact than John Bogle and Benjamin Felix (Both Truth Tellers).

The rest of the podcast is focused on a recent article- ⁠⁠The Evolution of Financial Advice⁠ , by Ben Carlson. The focus is on the math, history and psychology of investing.

Paul concludes that most steps to successful investoring are well documented. But two areas are still open for fine tuning: Portfolio construction and fund selection. To help in that Paul recommends three Boot Camp Presentations: ⁠ Fine Tuning Your Asset Allocation⁠ , ⁠Fixed Contributions⁠ and ⁠Fixed Distributions⁠ .

The biggest Mistake Investors Make

Wed, 27 Aug 2025 13:47:47 GMT

What’s the single biggest mistake investors make? It’s not starting too late, saving too little, or even chasing hot stocks—it’s trusting the wrong advice. Too often, investors are told there’s only one “right” path: stay 100% in equities for life. Nick Murray, for example, argues it’s an “atrocity” to shift into bonds in retirement because equities historically return 7% after inflation compared to 3% for bonds. Why would anyone add bonds, even in retirement?

History offers the answer. Stocks do outperform bonds long term, but they also suffer brutal declines. A retiree who entered the market in the mid-1960s, or one who bought technology stocks in 2000, endured losses of 50–80% and often waited decades to recover. That kind of drawdown can be devastating when you’re living off savings. This is why many investors embrace balance: the classic 60/40 portfolio has historically delivered about 85% of the S&P 500’s return with roughly one-third less risk.

So how is diversification working today? In 2025, the Ultimate Buy and Hold Portfolio—Paul Merriman’s all-equity mix of U.S. and international asset classes—has delivered an impressive 18% so far this year, with international value and small-cap stocks leading the way. But past returns are only part of the lesson. The real takeaway is that chasing recent winners isn’t a strategy—it’s recency bias. Diversification remains the most reliable tool for long-term investors.

That brings us to another timeless question: how much Small Cap Value should an investor add to VTSAX (Total Market Index)? Research shows that allocating 20–30% of equities to Small Cap Value has historically boosted returns by about 1% per year. Over decades, that extra percentage can mean retiring earlier, protecting against running out of money, or leaving a larger legacy. But it comes with higher volatility—small-cap value funds fall harder in downturns, even if they often recover stronger.

Ultimately, successful investing isn’t about finding one perfect asset class. It’s about balancing growth, risk, and peace of mind. Some investors can handle the rollercoaster of an all-equity portfolio. Many others need the stability that bonds, balanced funds, and broader diversification provide. The key is knowing yourself, your goals, and your tolerance for loss—because the biggest mistake isn’t owning the wrong fund. It’s building a portfolio that doesn’t let you sleep at night.

During the podcast Paul references ⁠ Table G-1b, Fine Tuning Table: S&P 500 vs. US SCV Equity Porfolio - Out-Performance ⁠ and ⁠Table H2a - Sound Investing Portfolios: Comparison Data ⁠, Quilt Chart K1a . He also points to Chris Pedersen’s Best In Class ETF Recommendation s and his 2 Funds for Life returns table . These resources provide valuable context for comparing U.S. vs. international returns, equity vs. bond allocations, and how small-cap value can enhance a long-term strategy.

100% stocks, Crypto, customizing 4 fund portfolio and Bogleheads & more

Wed, 20 Aug 2025 13:28:31 GMT

Paul Merriman shares his excitement about the upcoming 2025 Bogleheads Conference (October 17–19), one of the most important gatherings for long-term investors. This year’s lineup includes Vanguard CEO Salim Ramji , Christine Benz, Bill Bernstein, Alan Roth, Rick Ferri, Jim Dahle, and more. Paul will attend all three days, eager to meet listeners and discuss future projects. For those unable to attend, every presentation will be recorded and posted on the Bogleheads YouTube channel a few months later.

Looking ahead at the program, Paul highlights sessions he doesn’t want to miss—Christine Benz on retirement withdrawal strategies, Bill Bernstein’s fireside chats with financial historian Mark Higgins, and presentations on factor investing, tax efficiency, and the FIRE movement. He’s especially drawn to conversations about teaching students to invest, a cause close to his heart.

Paul also revisits some of his core lessons. He explains why small-cap value stocks have historically outperformed the S&P 500, showing that a $10,000 investment in small-cap value at the start of the 2000s would have more than doubled the returns of the same money in the S&P 500. He also reviews the Four-Fund Strategy , which balances simplicity with diversification, making it easier for investors to stay the course for life.

Tax efficiency is another major theme. Paul shares strategies for making the most of 401(k)s, IRAs, Roth accounts, and taxable portfolios—placing REITs and high-turnover funds in tax-sheltered accounts while using ETFs in taxable ones. He also encourages investors to check whether their employer plans offer self-directed options that open up more asset classes.

Paul devotes part of the episode to financial education for young people. He spotlights a free tool from NGPF.org called the Question of the Day . These short, real-world prompts—like “How much money did Americans lose last year to cryptocurrency scams?” ($5.6 billion) and “What percentage of Bitcoin has been lost forever?” (around 20%)—are designed to spark meaningful conversations at home or in classrooms. For Paul, it’s a practical way to help the next generation become confident investors.

Naturally, the subject of cryptocurrency comes up. Paul shares the story of Bitcoin Pizza Day , when 10,000 BTC were traded for two pizzas in 2010—a reminder of both the explosive upside and the volatility of speculative assets. He then shifts to a lighter moment, reading a poem he wrote with the help of Chatgpt in the playful style of The Music Man. The poem captures the hype, humor, and risk of crypto investing:

Either you're mining or memeing, or maybe it's doge you're redeeming,
but folks, let me tell you what's really steaming.
It's not stocks, bonds, or CDs. No, ma'am.
It's coins without fees. You heard me. Fees. Zero fees.
But sky high. Volatility.

You got crypto right here in River City with a capital C,
and that rhymes with B, and that stands for bubble.
Yes, you got crypto. That's right.
And it's risky, not subtle.
It's a get-rich dream wrapped up in a scheme
that would go down like rubble.

Now I know some folks think it's the future.
Decentralized, sleek and secure.
But when TikTok stars start giving advice,
you better grab your wallet and think twice.

NFTs and pump and dumps,
wallet keys lost in digital dumps,
fortunes made at the stroke of a tweet,
then vanished faster than meme stock heat.

You got trouble. Right here in River City,
that stands for "C" and that rhymes with "B" and that stands for "Bitcoin."
Yeah, got trouble. You better lock up your savings
before you stake your Roth on a blockchain dream that's driven by cravings.

Do you know what happens when you miss the password
to your cold storage wallet? You lose everything.
Do you know how many coins are lost forever?
About 20%, poof.

Do you think a JPEG of a rock is an investment?
Think again. I say we go back to what works, not what's flashy:
broad market funds, low cost, and classy.
A thousand companies in a single ETF—
now that's a bet that won't leave you bereft.

Long-term gains beat moonshot pain.
You don't need to YOLO into crypto terrain.

Yes you got crypto right here in River City with a capital C,
and that rhymes with B and that stands for beware.
We've got fear of missing out, hype without care.
But if you follow Bogle's way, you'll get there.

The episode wraps with a listener’s question about whether small-cap blend funds deserve a place in a portfolio. Paul stresses that the key is knowing yourself as an investor. Historical data favors value, but long-term success depends on building a portfolio you can live with through every market cycle.

Paul closes by reminding listeners that investing success isn’t about chasing the hottest trend—it’s about crafting a plan that fits your goals, tax situation, and temperament. Whether you’re heading to the Bogleheads Conference, teaching kids about money, or refining your own strategy, this episode blends practical insights, historical lessons, and even a bit of humor to help you stay the course.

4 Portfolio Levels for Wealth Building

Wed, 13 Aug 2025 13:55:43 GMT

I had never heard of Erin Moriarity before she contacted me about having a conversation with her on ⁠“Erin Talks Money.” ⁠ When I visited her Youtube channel I immediately realized what a powerhouse she is. She has over 200,000 subscribers to her Youtube channel and her videos are terrific. She has over 800 videos on topics most young investors or beginners at any age need to see. 36 videos on budgeting, 133 on retirement, and much more. Recently she started interviewing old experienced “experts." Her first two guest interviews were Ed Scott and Bill Bengen. I felt honored to be a part of a team who want to help teach her followers. Plus, if you read the comments on the YouTube video it’s obvious she has a large group of loyal followers. By the way, her followers made me feel very welcome.

"Erin, that was an absolute Masterclass in investing! Thanks for bring Paul to your channel. I enjoyed seeing how comfortable you and the guest were and how the conversation naturally flowed between topics. I’m going to make sure my kids view this. Advice and insights for LIFE!"

"Excellent video, Erin! How do we know Erin is a force in investing advice? Look at the people she's had on her channel! I'm thankful to Erin not only for the great advice, but she is someone I can show my daughters, ages 21 and 25, and go "Look at Erin. If she can invest and make good choices w her money, so can you!". This means the world to me for them to see someone they can relate to, who disseminates complicated ideas and concepts in an understandable way. And BTW, I confirmed I'm subscribed to her channel “

0:00 Introduction & Meet Paul Merriman

2:14 The Power of Starting Early (For You & Your Kids)

7:14 100% Equities for Young Investors & Avoiding Overexposure to the S&P 500

14:02 Predicting Future Returns, Compounding & Patience

22:27 Market Cycles, Psychology & Preparing for Bad Times

25:12 Choosing the Right Portfolio Complexity (Levels 1–3)

34:08 Traditional vs. Non-Traditional Index Funds & Vanguard Loyalty

41:34 Why We Own the Whole Market & The Case for 60/40

46:19 Staying the Course, Chasing Returns & Capturing Extra Gains

57:00 How Investing Has Changed & Automatic Enrollment Benefits

1:01:45 Knowing When You Have Enough & The Rise of Hourly Advisors

1:08:44 The 3 Things Every DIY Investor Should Do & Closing Thoughts

⁠Watch the video here

10 Myths, Lies & Mistakes That Cost Investors Millions (with Don McDonald & Tom Cock)

Wed, 06 Aug 2025 13:55:23 GMT

What’s holding investors back from building real wealth? ⁠ Talking Real Money ⁠, hosts Don McDonald and Tom Cock take aim at the 10 most damaging myths, lies, and mistakes that cost investors big—often millions.

You’ll learn:

Why "having a guy" isn’t a strategy—it's a setup
Why predicting the market is like calling a psychic
How starting too late can cost you over half a million
The hard truth about individual stocks, expensive advisors, and false promises of risk-free wealth
Why diversification, low costs, and understanding your real risk profile actually work

Don McDonald , a 34-year financial talk radio veteran , and Tom Cock , the former host of Serious Money on PBS , join forces to cut through financial jargon and expose what really works. In every episode, they solve real money problems, share smart long-term strategies, and bring clarity to the complex financial issues that affect all of us.

Talking Real Money is designed to give you the real help you need for a really great financial future —and yes, it’s actually fun to listen to.

Bonus shoutout: Don McDonald also generously donated his time to narrate the audiobook version of Paul Merriman’s bestselling book, “We’re Talking Millions!” His voice brings the content to life with clarity, energy, and heart. He’s not only a brilliant communicator—he’s also a phenomenal reader . Listen to the ⁠audiobook here.

Future of Financial Literacy & Smart Investing

Wed, 30 Jul 2025 14:22:46 GMT

On this special Q&A episode—recorded July 29 2025 —Paul Merriman gears up for his August 2 keynote at the Garrett Planning Network Retreat , where he will address more than 100 hourly financial advisors about the future of financial literacy. He invites listeners to email questions for the panel ( ⁠paul@paulmerriman.com⁠ ) and then dives into ten wide‑ranging listener questions that benefit investors of every age and stage.

What you’ll learn

Adding QQQ to the 10‑Fund “Ultimate Buy‑and‑Hold” portfolio: upside vs. hidden downside.
Toughest markets Paul has faced —from the 1966–1981 whipsaw to the 1987 crash—and the timeless lessons they teach.
Global diversification in 2025: 50/50 vs. 70/30 U.S./international and why volatility, not return, drives the decision. ⁠Table B4⁠ , ⁠Table B3a⁠ and ⁠Table B3b⁠
Small‑Cap Value vs. S&P 500 performance: 1975‑1999’s 5 % premium, 2000‑2025’s 2.6 % edge, and what it means going forward.
Avantis + DFA split for deeper diversification (cost, holdings, tracking error).
Risks of an all‑Small‑Cap‑Value portfolio and when a worldwide all‑value approach makes more sense.
Using DFA International Small‑Cap Value (DFISX) inside a 403(b) for a Two‑Fund strategy.
Vanguard STAR vs. Vanguard Wellington: balanced‑fund showdown and why Wellington’s 60/40 mix wins in the long run.
Rebalancing at age 62: tax‑smart moves, asset‑location tactics, and simplifying with target‑date or balanced funds.
Anatomy of the ⁠ Ultimate Buy‑and‑Hold strategy ⁠ : 10 equity asset classes, why it started in 1994‑95, and how four‑ and two‑fund variations stack up. ⁠ Sound Investing Portfolio Returns (1970-2024) 50/50 ⁠ and ⁠ Sound Investing Portfolio Returns (1970-2024) 70/30 ⁠

Paul backs every takeaway with real‑world data—from DFA, Avantis, Vanguard, and Russell indexes—illustrating how disciplined asset allocation can tame the brutal drawdowns that crush performance when investors chase recent winners. You’ll hear why trend‑following protected clients in 1987, how dividends rescued returns in the 1966–1981 “go‑nowhere” market, and why low‑cost indexing plus global value exposure remain his bedrock recommendations.

Got a question for Paul’s hourly‑advisor panel? Email it before July 31 and help shape the conversation on transparent, client‑first advice.

Listen now to sharpen your strategy—whether you’re building wealth, 20 years from retirement, or fine‑tuning a 50/50 portfolio in your 60s.

Small cap value still the best , bonds and 2 funds for life Q&A

Wed, 23 Jul 2025 15:51:14 GMT

In this episode, Paul Merriman shares insights into upcoming events, including his presentation at the Garrett Planning Network Retreat, as well as his reflections on asset allocation, government bond strategies, and the benefits of various portfolios for different life stages.

Tune in for a deep dive into how different funds and asset classes perform over the long term, and how to optimize your investment strategy, regardless of age or risk tolerance.

Key Topics Covered:

1. Long-Term Returns Comparison

Paul compares two small-cap value funds: the Vanguard Small Cap Value Fund (VSIAX) and the DFA Small Cap Value Fund (DFFVX). To find long-term returns for these funds, Paul uses Morningstar’s chart function , which allows users to view the maximum (MAX) historical data for any given fund, helping to compare the performance of these funds since their inception

2. Best Asset Allocation for Retirees

The best asset allocation for retirees typically depends on individual factors, such as risk tolerance and life expectancy. Generally, Paul suggests a moderate equity allocation of 40-60% in stocks, with the rest in fixed income, for retirees who have enough saved up to comfortably fund their retirement .

3. Asset Allocation for an 83-Year-Old Retiree

For an 83-year-old retiree, Paul discusses a more conservative portfolio with two-thirds in bonds and one-third in equities . This conservative approach, which mirrors the allocation in Vanguard’s target-date funds, aligns well with retirees who are less reliant on aggressive growth but still need some equity exposure to combat inflation .

4. Why Use Three Government Bond Funds?

Paul advocates for a diversified bond strategy that includes TIPS (Treasury Inflation-Protected Securities), short-term government bonds, and intermediate-term government bonds . This combination offers a balance of safety, growth potential, and reduced volatility compared to using just one bond fund, and provides a more stable return over time.

5. How the Worldwide 4 Fund Portfolio Works

The Worldwide 4 Fund Portfolio is structured with 25% in large-cap blend (U.S), 25% in large-cap value (INTL), 25% in small-cap blend (INTL), and 25% in small-cap value (U.S.) , giving you a diversified mix of U.S. and international equities. This approach optimizes for both size and value , ensuring a balanced exposure to market growth, volatility, and global investment opportunities.

6. Should a 26-Year-Old Use the 2 Funds for Life Portfolio

Yes, a 26-year-old could benefit from the 2 Funds for Life Portfolio , which typically includes the A TARGET DATE FUND and a small-cap value fund . This strategy allows young investors to focus on equity growth, benefiting from the long-term appreciation potential of small-cap value stocks while minimizing risks associated with bonds at an early stage

7. Managing the 2 Funds for Life Portfolio with S&P 500 & Small-Cap Value

For someone using only the S&P 500 and small-cap value fund , Paul suggests a flexible allocation approach. You might start with a 50/50 split , or adjust according to your risk tolerance. The small-cap value fund tends to be more volatile but offers higher returns over time, while the S&P 500 provides more stability with lower volatility .

8. Can There Be a 3 Funds for Life Portfolio?

Yes, a 3 Funds for Life portfolio could include the S&P 500 , large-cap value , and small-cap value . Paul suggests mixing these three equity asset classes to achieve a balanced portfolio that offers growth potential without overexposing yourself to risk. ⁠

Resources:

⁠1928-2024 Quilt Chart (K1a)⁠⁠

⁠⁠Sound Investing Table (H2a)⁠⁠

Chris Pedersen’s 2 Funds for Life table⁠⁠ . ⁠⁠

12 Million Dollar Decisions

Wed, 16 Jul 2025 14:35:51 GMT

In November 2020 The Merriman Financial Education Foundation released “We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement.” The purpose of the book was to focus on a series of very simple steps any investor might take to improve their financial future.

"Understanding how to invest wisely for your future can be daunting. Many people never get started for fear of making mistakes. Others make choices based on hearsay and hope, sold on hype or risk aversion. In "We're Talking Millions!" you will learn why and how to make a handful of smart choices that can turn modest regular savings into a secure future. You'll discover "12 Small Steps with Big Payoffs," each of which can add $1 million or more to your retirement nest egg if you start in your 20s or 30s. These steps are well known.”

The book has had a huge impact on an untold number of readers. The numbers are unknown because the Foundation offer the ⁠book free as a pdf⁠ , as well as a ⁠free link to the audio version⁠ that was read by Truth Teller Don McDonald.

While the book has had almost 400 online Amazon reviews (averaging 4 1/2 stars), the approximately 100 written reviews have over 95% 5 star ratings. Here is one from a young student (age 19 at the time) who is now in medical school!

⁠5.0 out of 5 stars Life-changing book for young people interested in investing⁠

Reviewed in the United States on December 17, 2020

Format: Paperback ⁠ Verified Purchase⁠

"We're Talking Millions" was a life-changing book. I am a 19 year-old college student who was directed toward Mr. Merriman's book as a great resource for first time investors. His book was the perfect resource for someone with little to no prior knowledge about investing.

It starts by outlining the twelve steps to boost a retirement fund, listing tips and tricks along the way. One of the most helpful parts for me was that all of the investment lingo was clearly defined and explained, and I could get a very clear sense as to how each of these small steps fits into the overall puzzle. The book then outlines how to get started: explaining the "Two Funds for Life" investment plan, what investment companies are best to use, and suggesting specific investment funds.

I cannot recommend this book enough!! I feel confident about my investment plan after reading this book, and I plan to share it with as many of my peers as possible. I have already given it to my sister and best friend. If you are looking for information about investing and don't have the energy to read a long, dense investing book, then " ⁠We're Talking Millions"⁠ is the book for you! It is interesting, short, and extremely informative, and I hope that it helps you as much as it helped me.

Now Paul has recorded this podcast and ⁠video⁠ to discuss the 12 steps. The video was produced as part of a special offering to introduce ⁠Western Washington University alumni to The Merriman Financial Literacy Program⁠ that is working to educate all WWU students on the personal finance topics that will be an important part of their future.

Our hope is you will pass along these links to others in your life who might benefit from this free educational information.

Is there someone in your life you think could benefit from the discussion of these 12 huge decisions? Here are several ways to access this information: The following link is to a free pdf of our book, "We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement.” A second and third link takes you to a 2 hour video and podcast on the 12 million dollar decisions. And finally a very short (12 minute) podcast or video review of the 12 decisions .

11 Q&A-Bonds, Rebalancing, All Value, Vanguard vs. Avantis & DFA

Wed, 09 Jul 2025 15:11:27 GMT

Many of you have been submitting thoughtful questions through our AI chat, particularly on fund selection, asset allocation, and broader investment strategy. It’s encouraging to see this level of engagement with the core principles that shape long-term financial success.

While the AI generally provides sound and efficient guidance, there are times when its responses lack the nuance or clarity that experience can bring. To provide deeper context and help you make more informed decisions, I’ve selected several recent questions to address—drawing from the AI’s suggestions where appropriate and adding insights based on decades of research and practice.

One brief correction from a recent update: I previously mentioned a resource for ETF investors in Canada, Europe, and the U.S., but misspoke on the name. The correct website is ETFAtlas.com . Jack, the developer behind it, is creating a valuable tool for globally minded investors. Your candid feedback—what’s working well and what could be improved—will be essential as he continues building out the platform. Look for additional features to roll out in the months ahead.

Your Top Questions Answered

Let's jump right into what's on your mind.

What Sound Investing Portfolio does Paul use and why? You know I love talking about this, and for those who aren't familiar, you can find all our "Sound Investing" portfolios on Table H2A on our website. You'll see how different portfolios compare in terms of risk and return over decades—it's pretty eye-opening! I'll be sharing what I personally do, and why I like massive diversification. It's not about hitting a home run for me; it's about being prepared for the long haul. 3:02
What funds should I use to set up a Roth IRA account for a 21-year-old? This is a fantastic question, and it really comes down to how involved this young person wants to be. We'll explore options from simple target-date funds to more aggressive two-fund strategies. I've got a great story about how I set up an account for my own grandchild to be a long-term learning lesson. 13:06
Do you think Vanguard funds will get lower returns than Avantis and DFA ETFs? Ah, the classic index versus "non-traditional" index debate! There's a lot to unpack here regarding how these funds are constructed and what their long-term performance has shown. We'll look at the differences and what that could mean for your returns. 21:46
Is there a table that represents using the S&P 500 and Aggregate U.S. Bond Index rather than your 3-fund bond portfolio? You're looking for specifics on bond allocations, and yes, we have a ton of tables that slice and dice this. While our three-fund bond strategy is great, we can certainly see the impact of using the Aggregate U.S. Bond Index instead and what that might mean for your risk and return. 26:51
I am 45, hoping to retire by 55-60. Is 25% in bonds too little? This is a question many people face as they get closer to retirement. The "right" answer depends on a lot of factors, like your overall portfolio size and spending needs. We'll talk about what to consider when deciding on your bond allocation for that critical decade leading up to retirement. 31:04
Does it make sense to have non-taxable bonds in an IRA? This one is usually a straightforward "no" for most do-it-yourself investors. 34:34
Your quilt chart (1928-2024) shows a 2-fund portfolio with 50% each small cap value and large cap value. Isn’t that too much in small cap value? It might seem like it, but when you dig into the historical data, this combination often shows surprisingly similar risk to more conservative portfolios, but with potentially much higher returns. You can actually see this graphically in our Quilt charts K6a and K7a . 35:39
How often should I rebalance? There are so many rebalancing strategies out there! We'll talk about what the research is showing regarding annual, biennial, or even less frequent rebalancing, especially for the equity portion of your portfolio when you're still accumulating wealth. You might be surprised by how little you need to "fool around" with it. 38:09
In your podcasts you talk a lot more about the 4-fund portfolios (WW and U.S.) than you do the all-value portfolios. The all-values have higher returns but you recommend them less often. Why? This gets right to the heart of human nature and sticking with your plan. While all-value portfolios have shown higher returns historically, they can be a real test of discipline during long periods of underperformance. You can see this interplay on our Quilt Chart of U.S. Only 4-Fund Portfolios : . We'll discuss why belief in your portfolio is paramount. 40:19
Are there conditions where the all-value portfolios will underperform the more balanced portfolios? Absolutely. History shows us that no single strategy wins all the time. We'll look at past periods where value has struggled relative to other asset classes and what that means for investors. 40:19. (Answer is integrated with previous question)
I’m 57. How much should I have in bonds? This is a common question, and while there are general rules of thumb like "your age in bonds," it really depends on your personal risk tolerance, your financial goals (including what you want to leave to others), and how much money you have relative to your living expenses. Sometimes, talking with an hourly advisor can be incredibly helpful here. 49:30

Thanks for tuning in and sending in your questions. It really helps me figure out what's on your mind. If you find this helpful, please share it with others, and consider leaving a comment or review wherever you get your podcasts. You can always reach me at Paul@PaulMerriman.com if something's on your mind. We're here to help you build a better financial future!

Avantis vs. DFA and the Winner Is?

Wed, 02 Jul 2025 19:21:31 GMT

On this week's podcast, we dive into my fascinating six-month journey with AI , exploring how tools like ChatGPT are revolutionizing access to information and informed guidance. Drawing inspiration from Seth Godin's insightful piece, "Education is Free, Learning is Expensive," we'll discuss why true learning demands commitment and effort , especially in today's information-rich world.

I've discovered AI's power extends far beyond simple fact-checking. It's a game-changer for understanding diverse perspectives, even helping me tailor advice to different generations. My goal is to help you leverage this incredible tool to build a better financial future.

We'll also gain some valuable perspective on investment returns , especially after the unique first half of the year. While six months isn't a long-term indicator, it's certainly given us plenty to discuss! Many are wondering if now's the time to jump into international equities, especially as they've shown unexpected strength.

Understanding Diversification and Long-Term Investing

I'll share my philosophy on successful long-term investing as a buy-and-holder : identifying equity asset classes that offer a premium for risk and grow faster than inflation. We'll examine the "ultimate buy and hold portfolio," which strategically blends U.S. and international equities, and analyze its performance over the past six months, comparing it to other popular strategies from Vanguard and DFA.

You'll be surprised to see how closely Avantis and DFA ETFs performed, despite some significant individual fund differences. We'll also delve into the fascinating relationship between the U.S. dollar's value and international equity performance . For a deeper dive, I highly recommend checking out this illuminating table from Brandes Investment Partners: https://www.brandes.com/insights/chart-of-the-week/us-dollar-and-international-equities-03312023 . It clearly illustrates how the dollar's strength and weakness correlate with international returns, offering historical examples of how these trends ebb and flow. Chasing returns isn't the answer, but a diversified, buy-and-hold approach can significantly reduce volatility and smooth out your equity returns—a major advantage, especially for retirees.

The Allure and Nuance of Long-Term Returns

We'll then shift our focus to long-term performance data , specifically looking at the last 15 years through June 2025. You might be surprised to learn how the S&P 500, growth stocks, and even Berkshire Hathaway have compounded over this period, and how these returns compare to historical averages and expectations. While U.S. growth has been a clear winner recently, we'll discuss why historical norms suggest a different long-term outcome for value and small-cap stocks.

I'll also address the popular Total Market Index and offer a candid take on whether it truly outperforms the S&P 500 for those not seeking broader diversification. We'll explore why, in some cases, a simpler approach might be just as effective, or even more so.

The Power of Information and Future Tools

Finally, I'll emphasize how today's access to free information from sources like Morningstar empowers you to conduct research that was unimaginable just decades ago. Plus, I'll give you a sneak peek at a new, exciting, and largely free tool coming soon from AtlasETF.com , which will allow you to easily test different portfolio strategies.

Join me as we explore these crucial topics and continue to empower you on your journey to becoming a more successful long-term investor.

What are your thoughts on using AI for financial planning? We'd love to hear from you!

The SPIVA Report- Proof You Can Buy

Wed, 25 Jun 2025 14:49:46 GMT

Today, we're diving into something super important for anyone interested in mutual funds: the ⁠SPIVA Report⁠ , it's a big deal, and we'll break down why.

But before we get to that, a quick note about August 4th . Chris, Daryl, and I are getting together that day to figure out how we can do even more to help you, not just now, but for the rest of your life as we all get closer to retirement. This is a huge goal, and we'd love your input! What can we do to improve our educational materials? Please email me your ideas at ⁠paul@paulmerriman.com⁠ . We're thinking about everything, from AI's role to helping you build a portfolio that truly lasts a lifetime, send your thoughts my way!

The SPIVA Report: Active vs. Passive Investing

Alright, let's talk ⁠SPIVA⁠ . This report has been around since 2002, tracking the performance of active versus passive mutual funds . They analyze virtually every actively managed fund, comparing them to appropriate market indexes. They go to great lengths to ensure fair, "apples-to-apples" comparisons.

A crucial aspect they address is survivorship bias . Many underperforming funds get merged or liquidated. If you were investing, these funds were part of your initial choices. SPIVA accounts for all funds, not just the ones that survived, giving a much more accurate picture. This is a key difference from other reports that only look at surviving funds, which can make active management look better than it is. They also track style consistency – ensuring funds stick to their stated investment approach, unlike some active managers who might "drift" in their investments.

What the Data Reveals: The Long-Term Advantage

While single years can show active managers doing okay, the real story unfolds over longer periods. Let's look at large-cap core funds (like those tracking the S&P 500):

1 year: ~76% underperform.
10 years: 96% underperform!
15 years: 97% underperform!
20 years: 93% underperform.

This is a powerful reason why I advocate for index funds . They're built on a formula, not on human managers trying to guess market winners. Across almost all equity asset classes, over 90% of actively managed funds underperform over 20 years.

Why? The first advantage for index funds is lower expenses . While active fund fees have come down, they're still a major factor. The biggest hidden risk, though, is manager's picks and timing . Active managers try to beat the market with individual stock selections, but the data shows it's incredibly risky. (By the way the report doesn’t address taxes on active funds and that can be another 1% drain annually.)

SPIVA's quartile data highlights this: for small-cap value over five years, the top 25% of active funds started at 10% or more. But the bottom 25% earned significantly less than 7.8%. This means you're taking on volatility and the risk of vastly underperforming your chosen asset class.

The report directly compares index returns to the average active fund in the same asset class. For small-cap value over 10 years, the index compounded at 8.2%, while the average active fund hit 7.3% – nearly a 1% difference! Over 20 years, for small-cap VALUE funds, the index returned 9% versus 7.4% for the average fund. These seemingly small differences translate into millions of dollars over a lifetime.

Survivorship & Patience

Another eye-opening stat: over 20 years, only 36% of all domestic funds are still in business. For large-cap growth, where the action has been recently, only 26% of funds from 20 years ago are still around. This suggests poor performance led to closures or mergers, hiding underperformance from investors.

In the end, you, the investor, are the hardest worker. Your discipline to stay the course during tough times is paramount.

The SPIVA report is a quality piece of research, factual and fair. While the future won't be identical to the past, it often "rhymes." The longer your investment horizon, the more likely choosing index funds

(traditional or non-traditional) will lead to success, avoiding performance that may be more luck than skill. Patience is key, and we want you to have patience in owning funds with a very high probability of success.

We are rooting for your investment success, not just for you, but for your children and grandchildren! So, good luck, and don't forget to send those suggestions for our August 4th meeting to ⁠paul@paulmerriman.com⁠ .

June Q&A with Paul, Chris and Daryl

Wed, 18 Jun 2025 14:52:43 GMT

Watch video here.

Join Paul Merriman, Chris Pedersen, and Daryl Bahls for a deep dive into questions facing today’s investors! In this episode, our team tackles a wide range of topics designed to help you make smarter financial decisions, whether you’re a seasoned DIY investor or just getting started.

Main Topics Covered:

1. Midcap Funds – Are They Necessary? 2:24

We break down why midcap funds often get left out of recommended portfolios, the impact of fund overlap, and whether including them really adds value or just complexity.

2. Listener Allocation Questions 12:49

Hear real-life portfolio allocation questions from our listeners—including how to balance S&P 500, value, and midcap funds. The team discusses the pros and cons of various strategies and how to avoid unnecessary overlap.

3. The Risks of Small Cap Growth 19:10

Discover why small cap growth funds can be risky, the historical performance data, and why value funds may be a better long-term bet for most investors.

4. Hourly Advisors & DIY Investing 22:41

Thinking about ditching your advisor and going DIY? We discuss the benefits and challenges of working with hourly advisors, how to find one that supports your strategy, and the importance of sticking with a plan you understand.

5. Capital Gains & Taxes 27:45

Got questions about selling investments and minimizing taxes? While we don’t provide personal tax advice, our experts outline the key considerations and why consulting a tax professional is essential for big moves.

6. Financial Freedom Mindset 30:05

It’s not just about retirement—it’s about saving for freedom! Learn how reframing your financial goals can keep you motivated and focused for the long haul.

7. Avantis vs. DFA Funds 31:15

Curious about the differences between Avantis and DFA ETFs? Chris and Daryl compare these two fund families, explaining how their philosophies align, where they differ, and how to choose the best fit for your portfolio.

8. AVGE for Granddaughter? 38:32

Paul shares his personal approach to investing for his granddaughter, comparing AVUS, AVUV, and AVGE, and why teaching young investors about asset class behavior can be more valuable than just chasing returns.

9. Should You Avoid Growth Funds? 45:53

They explain why “growth” funds aren’t always what they seem, the pitfalls of chasing expensive stocks, and why a tilt toward value and small cap may offer better long-term results.

10. The Rule of 72 – Power of Compounding 52:47

Learn how to use the Rule of 72 to teach young investors (and yourself!) the massive impact of compound returns over time. It’s a simple math trick that can change your financial future.

Daryl references this table- Sound Investing Portfolios 1970-2024

A Very Special Birthday and an investment choice forever

Wed, 11 Jun 2025 15:02:59 GMT

In this special episode, Paul Merriman reflects on six decades of financial evolution, sparked by his son's 60th birthday. He draws fascinating comparisons between life and investing in 1965 and today, offering invaluable insights for every investor.

What You'll Learn:

A Look Back at 1965: Paul revisits societal norms, income levels, and the investing landscape of 60 years ago, including startling facts about mutual fund loads and stock commissions.

The Evolution of Investing: Understand the monumental shift from individual stock picking to the dominance of mutual funds and the revolutionary impact of index funds since their inception.

Market Returns & Bear Markets: Gain perspective on historical S&P 500 returns, including adjustments for inflation, and a review of major bear markets over the past decades.

The Power of Low Costs: Discover how investment costs, from loads to commissions, have drastically reduced, making it easier and more affordable for today's investors.

Modern Investment Tools: Paul highlights the advent of crucial financial tools like IRAs, 401(k)s, and target-date funds that weren't available in 1965, empowering today's investors.

Academic-Driven Investing: Explore the rise of academic influence in investing, with a focus on firms like Vanguard, DFA, and Avantis, and why their approach offers a trustworthy path to your financial future.

The Role of AI in Your Financial Journey: Paul shares his perspective on how Artificial Intelligence can empower investors to make informed decisions and find reliable financial guidance.

Top Financial Education Resources: Learn about the highly recommended (and free!) ⁠"Rebel Finance School"⁠ by Alan and Katie Donoghan for new investors, and explore how to access financial literacy programs like iGrad.

The Importance of Financial Literacy: Paul emphasizes that financial literacy is often overlooked in traditional education and is essential for building a robust portfolio that will support you for a lifetime.

DIY Investing Philosophy: Paul reaffirms his core mission as a teacher, empowering listeners to "do it yourself" and build their financial future with confidence.

Truth Tellers: Paul asked our listeners for recommendations for ⁠Truth Tellers ⁠ as well as providing the list of our Truth Tellers in the show notes.

Our Truth Tellers

⁠William J. Bernstein⁠

⁠Ben Carlson, CFA ⁠

⁠Jonathan Clements, Financial Writer/Author⁠

⁠Larry Swedroe, Author, Speaker, Chief Research Officer ⁠

⁠Dr. James Dahle, MD and the founder of The White Coat Investor ⁠

⁠Morningstar – Christine Benz and John Rekenthaler, Financial Writers ⁠

⁠Stan The Annuity Man, Annuity Expert⁠

⁠George Sisti, Certified Financial Planner® ⁠

⁠Rob Berger, podcaster, writer and author ⁠

⁠Tim Ranzetta, ngpf.org⁠

⁠Two Cents⁠

⁠Tom Cock and Don McDonald Vestory⁠

⁠Ben Felix ⁠

Don't miss this insightful episode filled with historical context, practical advice, and forward-looking strategies for your wealth-building journey.

$100 a month to $37 million, Bear markets, Bogleheads and a free education

Wed, 04 Jun 2025 14:04:13 GMT

Today I’ve got a lot to share: my recent trip to Western, new educational tables from Daryl Bahls, a must-read article by Ben Carlson, a fantastic free resource called Rebel Finance, and some takeaways from the latest Bogleheads meeting.

00:48 Trip to Western: Teaching, Presenting, and Giving Back

It’s been a wonderful week. I spent two full days at Western, presenting to seniors about to graduate, to faculty and staff, and to a personal finance class. I also had a fantastic hour with the Financial Management Association Club. These students were fired up about their financial futures, and it was energizing to see their interest.

A big part of my visit was to help everyone—students, faculty, and staff—see how they can get involved in building financial literacy on campus. And to make things a little more exciting, I offered a $1,000 drawing for students. Whoever won could take the money with no strings attached, but I also offered to personally help them set up a Roth IRA and invest it wisely.

03:49 Daryl Bahls’ New Tables: The Power of Compound Growth

A huge thank you to Daryl Bahls, who put together some new tables for my presentations. These tables are more than just numbers—they’re a window into the power of long-term investing.

$1000 in Roth IRA on 22nd birthday
We looked at what happens if you invest $1,000 into a Roth IRA at age 22 and never add another dime. With assumed returns of 8%, 10%, and 12%, the results are astonishing. That $1,000 can grow to $30,000, $69,000, or even $156,000 over 45 years. But the story doesn’t stop there—after you start taking 5% withdrawals in retirement, and even after you pass it on to your heirs, the money keeps working, potentially multiplying your original investment by hundreds or even thousands of times.
$100/mo for 45 years in Roth IRA starting on 22nd birthday
Then we explored what happens if you save $100 a month for 45 years. The numbers explode: at 8%, you end up with nearly half a million dollars; at 10%, over $900,000; at 12%, $1.7 million. And after decades of withdrawals and inheritance, the cumulative benefit can reach into the tens of millions.

One of the key lessons here is that time and consistency are your best friends. Even small amounts, given enough years and the magic of compounding, can become life-changing sums.

16:29 Lessons on Sequence of Returns

A quick but crucial side note:

When you invest a lump sum and let it grow, the sequence of good and bad years doesn’t matter—over the long haul, but the sequence of returns is very important.
But when you’re adding money regularly (dollar-cost averaging), the sequence does matter. Buying more shares during downturns can actually boost your long-term results, especially in volatile asset classes like small-cap value stocks.

29:14 The Importance of Financial Education

I know a lot of people, especially young folks, feel like they can’t get started with investing—maybe they think they don’t have enough money, or it’s too complicated, or they’re afraid of losing it all. These are real concerns, but they can be overcome. Sometimes you just need the right teacher, or even a preacher, to help you take that first step and keep moving forward.

One of my biggest takeaways from this week is how many young people leave school without basic money skills. That’s why I’m so passionate about the Merriman Financial Literacy Program at Western and resources like iGrad, which are now available to all graduates at no cost.

32:00 Rebel Finance: Free, Practical Education

Speaking of great teachers, I want to give a big shoutout to Alan and Katie of Rebel Finance. Thanks to an email from ChooseFI, I discovered their f ree 10-week course . I’ve watched their introduction and first session, and I’m impressed by how they keep things simple, interactive, and fun—even with thousands of participants tuning in live.

They cover everything from budgeting to investing to negotiating a raise, and they archive all their content on YouTube . If you or someone you know needs a practical, supportive entry point to personal finance, I highly recommend checking them out. Links are in the notes.

38:48 Ben Carlson’s Article: “On the Inevitability of Bear Markets”

I also want to spotlight an article by Ben Carlson, “On the Inevitability of Bear Markets.” Carlson lays out the odds:

32% chance of a bear market in any given year,
77% over five years,
95% over ten years.

But here’s the encouraging part:
The longer you stay invested, the higher your odds of seeing positive returns—100% for 20-year periods in the S&P 500. Bear markets are a fact of life, but so is long-term growth if you stay the course.

44:00 Bogleheads Meeting: Community and Sharing

This week, I also attended a local Bogleheads chapter dinner—a gathering of people who believe in index investing and lifelong learning. We swapped ideas about financial planning tools, shared stories about helping our parents and kids, and just enjoyed a sense of community.

I met a bright high school junior who’s already reading “We’re Talking Millions” and learning about investing. The future is in good hands!

And don’t forget: I’ll be speaking at the Bogleheads Conference in San Antonio this October. Alan and Katie from Rebel Finance will be there too as guests, not speakers! Check the show notes for more info.

47:09 AI in Financial Education

A quick note on the future: Artificial intelligence is changing how we learn and teach about investing. I’m using AI more and more to organize my thoughts and create better educational content. If you’re experimenting with AI in your own financial journey, I’d love to hear about your experiences. We might even do a white paper or a special episode on AI and investing soon.

48:00 Final Thoughts and Gratitude

Let me close with this:

Start early, even if it’s just a small amount.
Stay consistent, and let time and compounding do the heavy lifting.
Use the resources and communities around you—whether it’s Rebel Finance, Bogleheads, or your own circle.
Don’t let fear or complexity hold you back. The math is powerful, but the mindset is even more important.
And if you find value in what we’re doing, please help us spread the word—like, subscribe, share, or leave a review. Every bit helps us reach more people and make a bigger impact.

Thank you for your support, your questions, and your commitment to learning. Good fortune, and happy investing!

Watch Paul's video What Every Young Investor Should Know

Vanguard vs. Mutual Shares, Who is the Long Term Champ

Wed, 28 May 2025 16:17:46 GMT

In this episode, Paul Merriman details his upcoming presentations at Western Washington University, where he will be connecting with students, professors, and staff about the critical importance of personal finance education. Paul also gives practical investing advice, including a hands-on guide to using Morningstar’s chart and comparison tools to analyze mutual funds and ETFs.

Special Feature: Free Online Financial Literacy Course
Paul spotlights a fantastic, free multi-week financial literacy course led by Alan and Katie Donoghan—nationally recognized educators from the UK. This course is perfect for first-time investors of any age, as well as anyone looking to build a solid foundation in personal finance.

Course Dates:

The next session starts 2 June 2025 at 8pm UK time . Sessions run weekly throughout the summer.
What’s included: Engaging lessons on investing basics, budgeting, mortgages, and money management—delivered in a fun, approachable style.
Format: Live online sessions (with replays on YouTube), each followed by an expert Q&A.
Who’s it for: Anyone—from college students to adults in their 40s or 50s—looking to take control of their financial future.
Previous students give rave reviews: Over 15,000 people have enrolled, with glowing testimonials from participants who now feel confident and empowered about their finances.
How to join: Register here for free and find the intro video and full schedule. All sessions are accessible worldwide.

Morningstar Tools & Tables Referenced:
Paul walks listeners through using Morningstar’s chart and comparison features, specifically referencing the following funds and time periods:

VFINX (Vanguard 500 Index Fund):

Time period: From August 31, 1976 to May 23, 2025
Used to illustrate long-term S&P 500 performance

TESIX (Franklin Mutual Shares Fund):

Time period: From August 31, 1976 to May 23, 2025
Compared side-by-side with VFINX to show how a value fund performed versus the S&P 500 over nearly 50 years
DFLVX (DFA US Large Cap Value Fund):
Time period: From 1993 to 2025
Compared with TESIX and VVIAX for large cap value performance

VVIAX (Vanguard Value Index Fund):

Time period: From 1993 to 2025
Used for comparison with DFLVX and TESIX

DFSVX (DFA US Small Cap Value Fund):

Time period: From 2000 to 2025
Compared with TESIX for small cap vs large cap value performance

AVUV (Avantis US Small Cap Value ETF):

Time period: From 2021 to present
Compared with DFLVX and VVIAX for recent small cap value performance

How Paul Uses Morningstar:

On Morningstar, Paul suggests:

Navigating to the “Chart” tab for each fund
Selecting “Max” to see the longest available performance history
Entering ticker symbols (like VFINX, TESIX, DFLVX, VVIAX, DFSVX, AVUV) in the “Compare” box to view multiple funds together- make sure any funds being compared to the primary fund have a track record from a date at least as long as the primary fund

Using Morningstar’s Chart and Compare tools:

Compare VFINX vs TESIX (1976–2025)
Compare DFLVX , VVIAX , and TESIX (1993–2025)
Compare DFSVX vs TESIX (2000–2025)
Compare AVUV vs DFLVX and VVIAX (2021–present)

PDF showing the above comparisons

Which 60/40 is Best?- May 21, 2025

Wed, 21 May 2025 16:19:36 GMT

Prior to discussing his topic of the day, Paul shares his thoughts on a ⁠recent podcast ⁠ featuring Truth Tellers Tom Cock and Don McDonald, joined by Weston Wellington from Dimensional Fund Advisors. Weston weighs in on some of the most critical issues facing investors right now.

Here are the topics on the podcast with Tom Cock and Don McDonald-

0:53 Weston Wellington on volatility and market uncertainty
2:47 Why volatility is the “price we pay to play”
3:32 The media’s role in investor anxiety
4:57 Should investors act on daily financial advice?
6:15 Portfolio changes should reflect personal changes, not headlines
7:24 Spam vs. Motorola: A lesson in stock picking
9:44 Dimensional’s stance on individual stock ownership
10:02 Diversification as “the closest thing to a free lunch”
11:07 Are alternative investments the new magic bullet?
12:43 Mutual funds vs. ETFs—what works best and when
15:27 Industry evolution: from 8% loads to indexing dominance
18:29 Where Dimensional fits in the modern fund landscape
21:01 AI vs. “aggregated intelligence” in managing portfolios
24:04 How regular people can find real financial advice
25:34 The key to success: Temperament, not timing
26:44 Weston’s side gig as a roving birthday singer
27:58 Why Weston hasn’t been invited lately (and he's lonely)

Next, Paul highlights a recent article by another Truth Teller, Ben Carlson. In ⁠“60/40 Portfolio Corrections, Bear Markets and Recoveries,” ⁠ Ben breaks down the differences in returns during bear markets and the bounce-back that follows. Inspired by this, Paul explores a question that doesn’t get much attention: What’s the impact on a portfolio when you apply a 4% fixed withdrawal rate to the nine Sound Investing equity portfolios, each with a 60/40 equity-to-fixed income split? The results may surprise you!

Paul notes there’s more to come on this topic, as these findings could have a real impact on how investors choose their retirement portfolios.

As promised, here are the links to the Sound Investing Portfolios:

⁠50% U.S. / 50% International⁠

⁠70% U.S. / 30% International⁠

Mastering Patience: Insights for Long-Term Success in DIY Investing

Wed, 14 May 2025 15:18:11 GMT

Being a do-it-yourself investor can be both rewarding and challenging. In this episode, we explore the essential mindset and strategies needed to succeed in the long term.

Drawing from academic research, historical data, and decades of experience, this episode covers:

Why short-term returns are often just noise and how to focus on the bigger picture.
The importance of a 20-30 year horizon for small-cap value investments.
How to avoid emotional decision-making and set realistic expectations.
Insights into the performance of small-cap value vs. the S&P 500 over 25+ years.
The role of faith, patience, and discipline in building a successful investment portfolio.

Paul also provides a step-by-step guide to help investors analyze the numbers referenced in this episode. Follow these steps to compare small-cap value funds and the S&P 500:

Steps to Analyze Performance on Morningstar:

One by one, enter the following ticker symbols into the Fund Chart Compare search box and hit return after each:

DFLVX
DFSTX
IWN
IWM
VBTLX

Open ⁠morningstar.com⁠ .
Enter DFFVX in the search box at the top of the page.
Open the Chart option located next to the Quote.
Select MAX next to the Start Date to view the full performance history.
One by one, enter the following ticker symbols into the Fund Chart Compare search box and hit return after each:

This process allows you to visualize and compare the performance of these funds over time and gain a deeper understanding of the data discussed in this podcast.

Whether you're 25 or 81, this episode is packed with actionable insights and encouragement to help you stay the course and achieve your financial goals.

Listen now for expert advice and a fresh perspective on long-term investing!

Links that Paul uses in this podcast-

⁠ Bootcamp #1 - Biggest Decision of All: Stocks vs. Bonds ⁠

⁠ Avantis Quilt Chart ⁠

Market Timing vs. Buy and Hold

Wed, 07 May 2025 14:12:22 GMT

"Buy and hold investors don’t just win on average returns— they win by avoiding the behavioral landmines that sabotage long-term success.” Paul Merriman

In this podcast Paul addresses one of the most important investment decisions a do it yourself investor will make.

Paul opens the discussion with comments from a ⁠Forbes article⁠ from 2008 that discusses Warren Buffett’s market timing decision he made to get totally out of the market in 1969 and back aboard in 1974.

The podcast (with the help of Chatgpt, includes a list of 10 common reasons market timing doesn’t work for amateur investors.

1. Missing the best days

2. Emotional decision-making

3. Perfect timing is impossible

4. Higher costs and taxes

5. Volatility is high during recovery

6. Recency Bias

7. Focus on noise, not timing signals

8. Overconfidence

9. Loss of Compound Growth

10. Data shows long-term investing wins

Paul challenges AI that there are many emotional disadvantages with timing.

The most important performance and non performance hurdles:

1. Decision-making: Timing requires lots of work and buy and hold almost none.

2. Mistakes: Market timing suffers lots of mistakes and buy & hold rarely wrong in the long term.

3. Emotional Toll: Timing has lots of emotional challenges and buy & hold is more peaceful.

4. Behavioral Risks: Timing has lots of behavioral risks and buy & hold is simple.

5. Time Commitment: Timing takes time and action and buy & hold is rarely touched.

6. Expenses: Costs and taxes are both lower with buy & hold.

7. Timers must be more resilient with many decisions being wrong.

8. Financial Results: A few timers may perform well but all buy & holders are likely to have “won”.

Financial Literacy and Mastering the Million Dollar Decisions

Wed, 30 Apr 2025 15:45:26 GMT

⁠Watch Video here⁠

April is Financial Literacy Month, and to help us celebrate we brought in a returning guest, Paul Merriman. Paul has been on the show before to discuss investment portfolios, but today he talks with us about some extraordinary strides he's making as a financial literacy advocate through his nonprofit, The Merriman Financial Education Foundation. We also share some of our favorite financial literacy resources.

RESOURCES MENTIONED ON THE SHOW �� Visit Catching Up to FI website

https://catchinguptofi.comPaul's Website

https://www.paulmerriman.comMerriman Financial Literacy Program at Western Washington University

https://financialliteracy.wwu.eduIGrad

https://www.igrad.com/Next Gen Personal Finance

https://www.ngpf.orgWhite Coat Investor

https://www.whitecoatinvestor.comThe John C. Bogle Center for Financial Literacyhttps://boglecenter.net

TIMESTAMPS / CHAPTERS

00:00 �� Introduction and Financial Literacy Impact

01:09 �� Welcome and Guest Introduction

01:35 �� Paul Merriman's Nonprofit and Financial Literacy Story

02:33 �� The Importance of Financial Literacy

06:59 �� Nonprofit Initiatives and University Programs

16:15 ��️‍♀️ Bootcamp and Investment Decisions

18:07 �� Other Financial Literacy Organizations

22:09 �� State-Level Financial Literacy Education

25:55 ✨ Final Thoughts and Encouragement

31:27 �� Conclusion and Farewell

WSCPA- The ultimate buy and hold portfolio

Wed, 23 Apr 2025 15:43:54 GMT

Watch video here⁠

This updated discussion of the Ultimate Buy and Hold Portfolio highlights the advantages of equity asset allocation and worldwide diversification. The presentation was presented to members of the Washington State Society of CPAs.

At the end of the presentation Paul adds his list of 15 million dollar decisions that all investors will make in their lifetime.

Here is feedback from one of the CPAs that attended this presentation. "I watched the video and found it very valuable. I am sending it to my adult children.” I hope you do that as well.

How to Bake a Cake: An Asset Allocation Mashup | Rick Ferri & Paul Merriman

Thu, 17 Apr 2025 13:20:14 GMT

Watch the video here⁠

Join me on Catching Up to Fi l with Rick Ferri to discuss key investing topics like asset allocation and the pros and cons of small-cap value vs. total market funds.

TIMESTAMPS / CHAPTERS

00:00 ⛓️ Understanding Bonds and Young Investors

02:31 �� Introduction to Financial Literacy Titans

03:12 �� Paul Merriman's Financial Education Foundation

04:18 �� Rick Ferri and the Bogle Center for Financial Literacy

12:09 ⚖️ The Importance of Asset Allocation

23:11 �� Debating International vs. US Stocks

35:12 ��️ Target Date Retirement Funds: Pros and Cons

45:55 �� Exploring Small Cap Value Investing

49:34 �� Understanding Non-Traditional Index Funds

50:28 �� Small Cap Value Performance Analysis

52:56 ��‍��‍��‍�� Generational Wealth and Portfolio Management

53:54 �� Diverse Value Factors in Investing

55:55 �� Challenges of Small Cap Value Investing

57:33 �� The Philosophy of Long-Term Investment Strategies

01:01:11 �� Debating the Evidence-Based Investing Approach

01:12:46 ��️ The Importance of Staying the Course

01:22:05 �� Final Thoughts and Recommendations

Small Cap Value Showdown Between Financial Legends — (This Could Add Millions To Your Retirement!)

Wed, 09 Apr 2025 13:50:44 GMT

Watch video here

In the left corner, we have Paul Merriman, the seasoned finance veteran weighing in at 183 pounds. In the right corner, Dr. Karsten Jeske, the scrappy newcomer at 208 pounds. The bell rings, and the small cap value debate begins.

This episode features a financial boxing match between two investment heavyweights with dramatically different perspectives. Paul Merriman champions diversification through the efficient frontier, which means adding small cap value to your portfolio. Dr. Karsten Jeska has “thrown cold water” on this approach, favoring simpler strategies like “VTSAX and chill.”

The stakes are high — we’re talking potentially millions of dollars in your retirement account over decades.

Merriman argues that history shows clear evidence for small cap value’s premium. From 2000 to 2009, small cap value outperformed the S&P 500 in all but one year, compounding at 10 percent while the S&P 500 returned negative 1 percent. He believes this pattern will continue, creating a powerful diversification effect when combined with broader market indexes.

Jeske counters that small cap value’s outperformance is mostly “front-loaded” in history, happening before anyone knew about it. Since 2006, small cap value has underperformed. He argues that once an advantage becomes widely known, it disappears in an efficient market. Adding small cap value might even be “di-worsification” — increasing complexity without improving returns.

The debate expands beyond small cap value to touch on:

Active vs. passive investing strategies
Market timing vs. buy-and-hold approaches
Simplicity vs. complexity in portfolio construction
The role of faith vs. evidence in investment decisions

While both experts disagree about small cap value’s future, they agree on fundamentals: invest early, stay invested for the long term, and understand that no one can predict markets with certainty.

What starts as a technical debate evolves into a philosophical discussion about evidence, probability, and the limits of our knowledge — all with millions of retirement dollars hanging in the balance.

Timestamps:

Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.

(0:00) Debate intro: small cap value vs index funds

(4:01) Merriman: small cap value offers premium returns

(9:40) Jeske: small cap value underperformed since 2006

(18:20) Historical performance data significance

(25:15) Stakes: difference of millions over time

(33:08) Diversification vs added volatility debate

(41:45) Risk-adjusted returns comparison

(49:08) Questioning true diversification benefits

(57:40) Value traps and actively managed funds

(1:05:08) Technology stocks vs value investments

(1:13:45) Data selection bias in studies

(1:19:40) Faith vs science in investment decisions

(1:29:20) Personal risk tolerance considerations

(1:36:08) Closing arguments on investment strategies

(1:42:08) Paula declares the debate a draw

Flexible Distributions 2025 Update

Wed, 02 Apr 2025 23:21:03 GMT

If a retired investor has the ability to use a flexible distribution strategy it will likely produce one of the best financial outcomes in retirement.

Before discussing flexible distributions Paul lists the reasons he believes that 99% of successful long term depends on defensive steps. After listing 18 defensive decisions he explains why flexible distributions are better than fixed distributions for those who have over said.

The presentation includes 16 distribution tables that can be found in this pdf for the presentation .

In each case Paul compares the difference in returns and risk between the fixed and flexible distribution strategies. The discussion compares returns and total distributions for two of the 9 sound investing portfolios: one using the S&P 500 and the other the U.S. 2 Fund Portfolio (50/50 S&P 500Small Cap Value).

Bootcamp #6 Fixed Distributions 2025 Update

Wed, 26 Mar 2025 13:44:26 GMT

The move from the accumulation to distribution period of an investors lifetime includes some very important decisions.

What asset allocation between equities and fixed income?
What combination of equity asset classes in the equity portion, as well as fixed income asset classes?
What amount of distribution will be made annually?
Will the payments be monthly, quarterly or annually?
Will payments be adjusted for inflation and how often?
Will the distributions be based on a fixed distribution with regular adjustments for inflation (the topic in this presentation) or on a flexible basis (the topic of the next segment)?

In this podcast Paul uses 15 slides to address the questions above. It is recommended the viewer print out the ⁠⁠⁠ ⁠PP presentation⁠ to make it easier to follow the numbers.

Many may find it is easier to follow the information on ⁠ Paul’s video⁠ ⁠ on the same topic.

If you have questions about the presentation please leave comment or question in the comment section of the video or email ⁠⁠paul@paulmerriman.com⁠⁠ . For those sending an email please let us know the topic of the Boot Camp presentation.

Bootcamp #5 Fixed Contributions Update 2025

Wed, 19 Mar 2025 17:14:08 GMT

Watch video here

Young and first time investors have to address a number of monumental decisions.

How much money to save for the future
How much they should invest in equities and bonds
How much of the equities should be in large, small, value, growth, U.S. and international asset classes
How much to increase the investment each year

This podcast/video helps the investor address those decisions. For those listening to the podcast here is a link to the pdf of all of the tables referenced in the presentation. He only focuses on a handful of tables but here is a ⁠ link for those who want to review the entire set of tables.⁠

Paul discusses the accumulation process from the viewpoint of an investor as well as a small business owner.

If you have questions please send them to ⁠paul@paulmerriman.com⁠ or leave them in the comment section below.

Bootcamp 4- Fine Tuning Your Asset Allocation 2025 Update

Wed, 12 Mar 2025 16:29:29 GMT

Here is the video.

This is the 4th in a series of 9 Boot Camp videos/podcasts.

The previous three segments covered :

In this presentation Paul focuses on the differences between the risks and returns of different percentages stocks and bonds. He also discusses one table that mixes different percentages of the S&P 500 and small cap value.Here are a couple of videos that focus on small cap value.

⁠ $13.83 Million? Yes Please! Paul Merriman’s Small Cap Value Strategy ⁠

⁠ The one asset class you must own

Bootcamp Episode #9 - Best-in-Class ETF Recommendations

Wed, 05 Mar 2025 16:30:31 GMT

⁠Watch Video here⁠

Chris Pedersen updates his recommendations and describes his selection process in an interactive presentation with Paul and Daryl along for the ride.

This "Best In Class ETFs Recommendations" presentation is the 9th in the Boot Camp Series. (We have not completed some of the earlier presentations due to the high interest in Chris' Best In Class Recommendations).

The focus of each the Boot Camp presentation is to help investors make the best of what we consider to be the biggest long term decisions they will make.

Of course we cannot know the ETFs that will produce the highest returns but we can measure the likely impact of the factors that Chris discusses during his presentation.

On behalf of all of the people who find this work helpful, as well as Daryl Bahls and myself, I want to thank Chris Pedersen for all he has done to help us understand the potential long term advantage of his analysis. It is our hope that his work will give investors the confidence and commitment to “stay the course" in the normal ups and downs of the market.

00:00:00 - Intro

00:07:15 - Changes

00:12:31 - Factor Basics

00:18:00 - Selection Criteria

00:20:21 -- Quantifying Differences

00:24:32 -- Comparing in an Asset Class

00:31:10 -- More than just numbers

00:32:12 -- BIC ETFs on Website

00:33:05 -- US Large Cap Blend

00:34:33 -- US Large Cap Value

00:37:40 -- US Small Cap Blend

00:42:30 -- Int'l Large Cap Value

00:43:30 -- Int'l Small Cap Blend

00:44:15 -- Em. Mkts Small Cap Blend

00:44:50 -- Portfolio Configurator

00:46:25 -- Roboadvisor ETFs

00:51:06 -- Versus Russell 2,000?

00:54:00 -- Avantis & DFA Advantage

01:03:36 -- Analysis Timeframes

01:04:44 -- Closing Remarks

Links:

⁠Best-in-Class ETF Recommendations Page⁠

⁠Portfolio Configurator⁠

⁠Sound Investing Portfolios Bootcamp Page⁠

The Biggest Decision of All: Stocks vs. Bonds

Wed, 26 Feb 2025 16:46:16 GMT

The 2024 numbers are finally in and we have produced the #1 investment decision in the Bootcamp series. There is no question that the biggest lifetime decision an investor makes is the choice between the safety of bonds and the potential long term growth of stocks. Here is a ⁠⁠ link⁠⁠ to the pdf of the set of slides Paul uses in the presentation. The presentation includes the ⁠⁠updated 1, 15 and 40 year returns tables ⁠⁠ along with the ⁠⁠quilt charts for the 1928 to 2024 period⁠⁠ .

Our thanks to Daryl Bahls who has put together most of the tables in the Bootcamp series.

If you have questions please send them to ⁠⁠paul@paulmerriman.com⁠⁠ . Please put Bootcamp #1 in the subject line.

⁠Watch video here.⁠

The Good, Bad, Ugly and Average Risk and Returns of Small Cap Value, S&P 500 and 2 and 4 Fund Portfolios

Wed, 19 Feb 2025 17:10:55 GMT

The purpose of this podcast/video is to help investors understand the likely risk and return parameters of small cap value, S&P 500, 2 Fund Portfolio (50% each SCV/S&P) and 4 Fund Portfolio (25% each SCV/S&P/SCB/LCV). In each case the best, worst, and average 1, 2, 3, 5, 10. 15, 20, 25, 30, 35, 40 year returns are listed. The following tables are discussed:

⁠S&P 500 Historical Risk and Return⁠

⁠US SCV Index Portfolio Historical Risk and Return⁠

⁠US 2 Fund Index Portfolio Historical Risk and Return⁠

⁠US 4 Fund Index Portfolio Historical Risk and Return⁠

Also the risk and return page from the ⁠Sound Portfolios ⁠ is referenced.

Bootcamp 2 -The Ultimate Buy and Hold Portfolio 2025 Update

margie@geekwebsites.com (Margie Baxley) — Wed, 12 Feb 2025 12:38:58 GMT

This is the second presentation in the Boot Camp Series. Click for video .

The first presentation (Stocks Vs. Bonds) will be available in the next two weeks.

This presentation makes the case for diversifying a portfolio using multiple equity asset classes.

Paul uses 4 set of tables to make his case:

A1a: Ultimate Buy & Hold Equity Portfolio (50% US/50% Int'l)

A2a: Alternative Equity Portfolio Tables (50% US/50% Int'l)

A1b: Ultimate Buy & Hold Equity Portfolio (70% US/30% Int'l)

A-2b: Alternative Equity Portfolio Tables (70% US/30% Int'l)

Paul also mentions the recent video/podcast that addresses the Sound Investing Portfolios. https://www.youtube.com/watch?v=XGv0ZdZ8adk

https://www.paulmerriman.com/2025-bootcamp-3-sound-investing-portfolios

2025 Bootcamp #3 Sound Investing Portfolios

Wed, 05 Feb 2025 22:49:48 GMT

In this Podcast, Paul, Chris, and Daryl describe the Sound Investing Portfolios and their background, rationale, construction, and performance.

Click for video link

00:00 - Intro

02:00 - DFA Background

05:47 - Portfolio Rationale

11:45 - Allocations

14:11 - Backtesting & Comparisons

19:32 - Rewards of Diversification

28:42 - Differing Good Times

32:40 - 70/30 US/Int'l Portfolios

35:05 - Which Funds?

39:08 - Close

During the Podcast the following tables were referenced:

✅ ⁠ Table H1a - Sound Investing Portfolios: Asset Allocations (50% U.S. / 50% Int’l)⁠

✅ ⁠Table H2a - Sound Investing Portfolios: Comparative Data (50% U.S. / 50% Int’l)⁠

✅ ⁠ Table H3a - Sound Investing Portfolios: Annual Returns (50% U.S. / 50% Int’l)⁠

✅ Table H4a - Sound Investing Portfolios: Quilt Chart (50% US / 50% Int'l)

✅ ⁠ Table H1b - Sound Investing Portfolios: Asset Allocations (70% U.S. / 30% Int’l)⁠

✅ ⁠Table H2b - Sound Investing Portfolios: Comparative Data (70% U.S. / 30% Int’l)⁠

✅ ⁠Table H3b - Sound Investing Portfolios: Annual Returns (70% U.S. / 30% Int’l)

✅ Table H4b - Sound Investing Portfolios: Quilt Chart (70% US / 30% Int'l)

The Index Edge: Paul Merriman’s Investment Insights

Wed, 29 Jan 2025 11:27:33 GMT

In this insightful conversation, renowned financial expert Paul Merriman shares his wealth of knowledge and experience in investing. He discusses his journey from stockbroker to founding his own investment advisory firm, and eventually establishing the Merriman Financial Education Foundation. Paul delves into various topics, including:

✅ The importance of data-driven investing and understanding the math behind it
✅ His meeting with John Bogle and their differing philosophies on investing
✅ The case for small cap value investing and its historical performance
✅ The challenges of market timing and the benefits of portfolio diversification
✅ The emergence of ETFs and trend following strategies

PaulMerriman.com

Tables, Graphs and Charts
Boot C a mp
S&P 500 vs Small Cap Value
Quilt Charts
Equity Index Returns
Free Copy- We’re Talking Millions
Free Copy- 2 Funds for Life
Best in Class ETF Update 2024

ETFAtlas.com – A new portal offering a comprehensive catalog of ETFs from the United

00:00:00 Introduction and ETFAtlas.com
00:03:30 Paul's early career and transition to investing
00:08:50 Founding an investment advisory company
00:13:05 Transition to financial education
00:19:20 The importance of data-driven investing
00:23:05 Meeting with John Bogle and differing philosophies
00:29:20 The importance of having more than enough for retirement
00:32:50 Teaching young people about investing as a business
00:36:20 The magic of compound interest in investing
00:45:50 The case for small cap value investing
00:54:40 Trend following strategies and ETFs

Introduction to Boot Camp

Wed, 22 Jan 2025 15:15:42 GMT

The podcast starts with a brief history of the growth of the Merriman Financial Literacy Foundation. From it’s small beginning in December 2012, it has produced over 1000 videos, articles and podcasts, published 6 books, spoken at many national conferences, underwritten a university class on investing for non finance majors at Western Washington University, produced portfolios for do it yourself investors, produced recommended mutual funds and ETFs to build the portfolios. Most recently there is a new effort to give every Western student a meaningful exposure to personal finance. This is being done under the Merriman Financial Literacy Program at Western.

Two years ago we introduced the Merriman Boot Camp. The purpose of the project is to help investors make the best financial decisions. In the podcast Paul discusses 14 of those decisions and how we are enlarging our educational efforts. He also notes that the Boot Camp pages will also contain a new Q&A section on each topic as well as additional information from our list of Truth Tellers.

Why should small cap value make higher returns?

Wed, 15 Jan 2025 16:19:15 GMT

In this first Q&A podcast of 2025, Paul, Daryl, and Chris discuss several listener questions and expand on Paul's rebuttal of Big ERN's recent criticisms of diversifying with small-cap value.

Watch video here.

0:00 – Introduction

0:29 – Responding to Big ERN's critique

2:11 – Small-cap value lumpsum vs. dollar-cost averaging

6:38 – Daryl's take on SCV's premium persistence

8:46 – Chris' take on SCV's premium persistence

15:50 – Paul highlights the random timing of SCV vs. S&P500 returns

19:50 -- Are there good alternatives to Vanguard's Wellesley fund?

26:18 -- Does 2 Funds for Life mean no SCV in retirement?

29:35 -- Why not let Buffet manage our money in BRK.B?

33:52 -- What portfolio to get a 3.6% safe withdrawal rate in retirement?

38:53 -- Which accounts do we tap for our annual spending needs?

49:39 -- Why doesn't the Portfolio Configurator include REITs and emerging markets?

54:52 -- When will the Best-in-Class ETF recommendations be updated?

These tables were referenced-

⁠Table G-1b - Fine Tuning Table: S&P 500 vs US SCV Equity Portfolio - Out-Performance ⁠

⁠Tell-Tale_Charts⁠

⁠2 Funds for Life PDF⁠

⁠2 Funds for Life on Amazon⁠

The True Story About Small Cap Value

Wed, 08 Jan 2025 14:28:14 GMT

There has been a lot of anti small cap value articles and podcasts over the last several years. I have been asked many times whether I think the small cap value premium is a thing of the past.In this podcast I have addressed the most commonly discussed criticisms of small cap value. During the presentation I reference a blog entitled," Small-Cap Value Stocks: Diversification or Di-WORSE-fication?⁠ "

The Early Retirement Now newsletter is written by Karsten Jeske, PhD, CFA. Here is a ⁠video⁠ of a friendly debate that Karsten and I had on the “Forget About Money” podcast. Listeners will learn that Karsten and I have very different beliefs about what returns best represent the small cap value premium. I reference the real time Morningstar performance results of DFFVX (2000 to present), DFSVX (1993 to present) and AVUV (2019 to present).

During my discussion I reference ⁠Table G-1b, Fine Tuning Table: S&P 500 vs. US SCV Equity Porfolio - Out-Performance⁠ and ⁠Table H2a - Sound Investing Portfolios: Comparison Data ⁠

I also referenced a Q&A response on Truth Teller Rob Berger regarding his ⁠personal take on small cap value in his own portfolio⁠ .

I also mention the interview with Jim Dahle at the 2024 Bogleheads Conference. https://www.youtube.com/watch?v=8C3KhRJCwCQ⁠

Paul Merriman speaks with Robert Pass on his Pediheart: Pediatric Cardiology Today Podcast - "When it comes to retirement, how much is enough?"

Wed, 01 Jan 2025 15:00:12 GMT

The following are Dr. Pass’ note to his podcast: "This week to conclude 2024 we speak with noted investment expert Mr. Paul Merriman to discuss a few topics related to personal finance and investing. First we tackle the notion of having 'enough' to retire. Is there a magic value and how would one think about this? Why is an S&P 500 Index or Total US Stock Market Index a fine 'core' investment and how might one possibly improve upon its performance? What are some of the psychological hurdles we have as investors and potential retirees? Mr. Merriman reviews these and other topics on our end of year episode.”

Paul Merriman's Website

Paul's "Quilt" Chart

Paul's "Bootcamp" page

Last Year's episode of Pediheart was replayed on Mr. Merriman's site

Paul's book "We're Talking Millions"

Could this be #1 Reason to Invest in Index Funds? Part 2

Wed, 25 Dec 2024 15:14:26 GMT

On December 26, 2019 Paul recorded a podcast entitled, “Could This Be the #1 Reason to Invest in Index Funds?” We were shocked to learn that over 1,000,000 investors opened the podcast. In this podcast he addresses the topic again in “Could This Be the #1 Reason to Invest in Index Funds? Part 2”

The podcast reviews the well established index advantages and adds one that may be the biggest reason an investor is able to find comfort staying the course in an index fund for the rest of their life. This might be a good podcast to share with your young adult children.

Risk with Paul, Daryl, and Chris

Wed, 18 Dec 2024 16:53:50 GMT

Paul, Daryl, and Chris discuss the risks of investing and life.

Paul starts with an introduction and admission of his challenges managing risks related to diet and health. He then gets Chris and Daryl to chime in with their definitions and perspectives on risk.

Daryl then shares a framework for evaluating risk from his days as a systems engineer. The framework looks at risks in two dimensions: likelihood and impact (or severity). He describes how the framework can help prioritize which risks to mitigate and gives examples of how some financial risks might be reduced in both dimensions. Chris is reminded of the book "Die with Zero," and mentions how risks extend beyond finances to experiences.

Paul, Chris, and Daryl then discuss some of their challenges in managing the risks of their own portfolio allocations and how their behaviors differ from what might be considered ideal. This leads to discussing the dangers of learning the wrong lessons with examples from inside and outside the personal finance world.

Paul reads from the Jonathan Clemens article that inspired this podcast: "The Risks We Miss." https://humbledollar.com/2024/07/the-risks-we-miss/

Paul then closes out the podcast.

Outtakes include Paul and Chris discussing how the Best-in-Class ETFs can help mitigate risk, and what Daryl wants for Christmas.lmerriman.com, for hundreds of free podcasts, articles, recommendations for ETFs, mutual funds, 401k plans and free eBooks and more.

Questions from Paula Pant Interview

Wed, 11 Dec 2024 15:34:03 GMT

While I was at the Bogleheads conference in Minneapolis earlier this year, I had a lengthy interview with Paula Pant.

I enjoyed the interview and found lots of questions and comments under the YouTube presentation that I wanted to answer.

While I wrote short comments on the site, I decided many of the questions were worthy of more discussion.Here is a link to the ⁠YouTube ⁠ interview and ⁠podcast⁠ :

#1. “Most of my holdings are in cash as I cashed out last time the market went down. How do I stay invested and think long-term to help me ride out the ups and downs of the market?” 02:17

#2. “I’m just beginning my investment journey and planning to put 85K into dividend stocks so that I will be making up to 30% per year in dividend returns.” ⁠https://rethinking65.com/the-preference-for-dividend-paying-stocks-is-irrational/⁠ 10:41

#3. "What Fidelity Funds do you recommend to build your ⁠4 Fund Portfolio⁠ ?" 15:00

#4. "How often do you recommend rebalancing the 4 Fund Portfolio?" 17:02

#5 "Nobody knows what’s going to happen next so we should practice some humility and CHOOSE a strategy with a long-term edge." What is the edge and what else do you need to know dividend stocks k? 21:02

#6. "I”m not looking to beat the S&P 500…I’m more than happy with the returns I get from it.” Does that mean it’s right for you? 24:36

#7. In response to Paul's recommendation of the 4 Fund Portfolio this is what one viewer said, “For what it's worth, backtesting shows his proposed fund portfolio does not do better than VTI or VOO.” Paul responds. 28:32

#8. "The only small cap value available in my 401k is DFSVX which has an expense ratio of .30%. Is this expense ratio too high? 32:32

#9. "Can you give ETF recommendations for all of the equity asset classes?" ⁠ Here are the Best In Class recommendations⁠ . 35:23

#10. Please recommend more information on how I might adjust my 401k. ⁠We're talking millions⁠ and ⁠2 funds for life⁠ . 36:37

#11 "Would you accomplish similar performance results by setting up a strategy using sector diversification instead of asset class diversification?" 40:01

#12 "I’m helping my 17 year old daughter with her Roth IRA. What do you think about shooting for an all equity 40/30/30 portfolio of US small cap value/S&P 500/Total International market?” 42:23

#13. “This guy has been pushing small cap value and underperforming for years. Sorry, no thanks." 44:25

Investing at market high, market timing and best distribution strategy

Wed, 04 Dec 2024 17:48:57 GMT

The podcast is dedicated to answering questions about:

Target date funds: “Do you think someone that simply maxes out their retirement accounts with target date funds and total market funds will be “fine”?

Selecting a distribution strategy: What advice can you give to a DIY investor who is trying to decide what to do about how they access their money to live on and how much to take out?

Buy and Hold vs. market timing: I believe in buy and holding index funds, with low expenses. I don’t think I need to pay an investment advisor to help me do that. I see the Merriman Wealth Management firm offers buy and hold and market timing services and charges AUM fees. This is very different from what you suggest on your Foundation website. What is your relationship with the Merriman firm and what are your beliefs about market timing?

All small cap value portfolio: Do you know investors who are investing 100% of their portfolios in small cap value? It seems like it might be a smart thing to do with very long term investments for a very young person.

Time to start market timing: I am thinking about using timing with a large amount of new money. Who do you use for the market timing aspect of your portfolio management?

Flexible vs. fixed distribution strategies: "I believe you expect that a flexible withdrawal strategy will pay out more money to live on, as well as leave more money to heirs. Bill Bengen seems to believe that this strategy is not sustainable over the long term even if a person had enough money to accept lower annual withdrawal amounts in market draw downs. Flexible withdrawal strategies make sense to me but there isn’t much writt en about them. What am I missing?”

The answer to this question includes 4 distribution tables:

⁠Table D1.4 - Fixed Distributions: S&P 500 Equity Portfolio - Conservative ($40,000/yr)⁠

⁠Table F1.4 - Flexible Distributions (Conservative-4.0%/yr): S&P 500 Equity Portfolio⁠

⁠Table D4.4 - Fixed Distributions (Conservative-$40,000/yr): US 4-Fund Equity Portfolio ⁠

⁠Table F4.4 - Flexible Distributions (Conservative-4.0%/yr): US 4-Fund Equity Portfolio ⁠

Finally Paul reads four Ben Carlson quotes about the nature of bull and bear markets. Paul makes reference to a ⁠table of annual Price to Earning (P/E)ratios starting in 1871⁠ and another comparing the ⁠S&P 500 Price to Book Value from 2000 to 2024.⁠

The Magic of Goal Setting

margie@geekwebsites.com (Margie Baxley) — Wed, 27 Nov 2024 19:07:15 GMT

As this podcast is being released on Thanksgiving Day Paul begins by thanking those people who choose to follow the Foundation’s work, those who forward our articles, podcasts and videos to others, and those who donate time and money to the Foundation.

He also addresses the challenges of living at three different homes (Bainbridge Island, Portland and Rancho Mirage) in 2024. We know some donations have been lost in the mail.

Our concern is people will declare a charitable deduction that did not actually happen.

By the way, the permanent address of the Foundation is now -

2445 NW Westover Road #311,

Portland, Oregon 97210

Paul comments on his challenges in recommending cryptocurrency.

Finally he discusses the life changing impact of goal setting.

The following are articles and videos on goal setting from some of the Truth Tellers Paul recommends.

⁠Jim Dahle⁠ writes to young doctors but the information is usually good for all people who are putting together a financial plan. ⁠The Power of Focus in Your Financial Life⁠

Jonathan Clements is struggling with cancer and for anyone facing death sooner than expected, and the goal setting that might be considered, I think you will find his journey worth reading. ⁠The C Word.⁠

William Bernstein has recently updated his best selling , ⁠“The Four Pillars of Investing.” ⁠ In this short introduction you will hopefully decided it’s worth reading the rest of the book.

Here is a podcast that you won’t want to miss. Larry Swedroe is interviewed by another Truth Teller, Ben Felix and Cameron Passmore. The book they discuss has been updated since the interview. ⁠"Your Complete Guide to a Successful and Secure Retirement"⁠ is one of the best books I know for those trying to address the many important retirement goals.

While Christine Benz is the Director of Personal Finance at Morningstar I thought it might be interesting to get her take on the non-financial plans we should consider. Her new book has become a best seller. ⁠How to Retire: 20 lessons for a happy, successful, and wealthy retirement.

Interview with Brian Barnes- Founder and CEO of M1 Finance

Wed, 20 Nov 2024 17:20:12 GMT

Paul and Chris interview M1 Finance's CEO, Brian Barnes, and ask several listener questions.

This is the follow-up to their previous M1 Finance 2024 update podcast and YouTube video .

They start by asking Brian how and why he created the company. That's followed by a wide-ranging conversation that includes some interesting surprises, like Chris's realization that using M1's target-date pies instead of traditional target-date funds can result in some real tax efficiency.

Here's the topic list with time codes.

00:00:00 Intro

00:08:12 M1 Genesis

00:12:51 Partial-Share ETF Trading

00:15:59 Who is M1 for?

00:19:42 What's next?

00:22:44 Is M1 a robo-advisor?

00:25:36 M1 Pies

00:29:38 Pies vs. TDFs

00:34:32 Tax Efficiency

00:35:46 How safe is M1?

00:41:13 Fixed trade windows

00:48:07 Crossing orders

00:49:22 Competitive rates

00:51:29 Which ETFs?

00:53:19 Fees?

00:57:07 Multi-account rebalancing?

00:58:31 Entrepreneur's experience

Disclaimers:

Content is not intended to provide personal tax or financial advice.

This information is intended to be used and must be used for information purposes only.

M1 is a technology company offering a range of financial products and services. “M1” refers to M1 Holdings Inc., and its wholly-owned, separate affiliates M1 Finance LLC, M1 Spend LLC, and M1 Digital LLC.

Related to M1 Spend:
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The cash balance in your Cash Account is only eligible for FDIC Insurance once it is swept to our partner
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M1 is not a bank. M1 Spend is a wholly-owned operating subsidiary of M1 Holdings Inc. M1 High –Yield Savings Accounts are furnished by B2 Bank, NA, Member FDIC. The M1 High-Yield Savings Account is a separate offering from, and not linked to, the M1 High-Yield Cash Account offered by M1 Finance, LLC.

Also regarding M1 High-Yield Savings,

²National average is 0.45% APY as of September 2023. Obtained from the FDIC.

Also regarding M1 High-Yield Savings,
M1 High-Yield Savings Accounts are furnished by B2 Bank, NA, Member FDIC (“B2”). M1 is not a bank. B2
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All M1 clients have access to a single trading window each morning or afternoon. To participate in both trade windows, you must have $25,000 or more in equity to comply with pattern-day trading regulations.

Also regarding M1 Invest,
If you choose to transfer your account to another broker-dealer, only the full shares are guaranteed to
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Margin trading entails greater risk, including, but not limited to, risk of loss and incurrence of margin interest debt, and is not suitable for all investors. Please assess your financial circumstances and risk tolerance before trading on margin. If the market value of the securities in your margin account declines, you may be required to deposit more money or securities in order to maintain your line of credit. If you are unable to do so, M1 may be required to sell all or a portion of your pledged assets. Brokerage accounts on the M1 platform are either fully disclosed to APEX Clearing or cleared through M1Finance LLC. Users utilizing APEX cleared margin accounts should review the APEX margin account risk disclosure before borrowing. Users utilizing M1 cleared margin accounts should review the M1 margin account risk disclosure before borrowing. M1 Margin Loans are available on margin accounts with at least $2,000
invested per account. Not available for Retirement or Custodial accounts. Margin rates may vary. Brokerage products and services are offered by M1 Finance LLC, Member FINRA / SIPC, and a wholly owned subsidiary of M1 Holdings, Inc..

Also regarding M1 Invest:
M1 does not provide investment advice, and this is not an offer or solicitation of an offer, or advice to buy or sell any security, and you are encouraged to consult your personal investment, legal, and tax advisors. M1 is not recommending or endorsing this investment by making it available to its customers.

M1 and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared
for informational purposes only. It is not intended to provide, and should not be relied on for, tax, legal or
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Testimonials may not be representative of the experience of other customers and is not indicative of future success..

Information is accurate as of October 23, 2024. Refer to m1.com for the most up-to-date information

If you create an account at M-1 Finance via our affiliate link — which offers direct access to our recommended portfolios — The Merriman Financial Education Foundation may receive a small fee (for accounts over $1,000.) This fee will cost you nothing extra and helps support our financial education work. Thank you!

Can we count on AVUV high performance in the future?

Wed, 13 Nov 2024 16:38:36 GMT

Paul mentions his upcoming presentation to the ⁠⁠⁠L.A. Chapter of AAII⁠⁠⁠ on November 16, 2024 10:30 to noon.

Chris Pedersen and Daryl Bahls join Paul to answer your questions. Paul opens the podcast with a brief introduction of the team and notes how thankful he is for their commitment to helping others.

Paul mentions the huge moves small cap value funds made on November 6. He follows that with a comparison of the 5 year returns of AVUV and 3 Vanguard small cap value funds (VBR, VIOV and VTWV). AVUV compound rate of returns were 3 plus percent higher than the Vanguard funds. Paul’s questions: What caused the higher returns and are they likely to be similar in the future?

Chris responds with a lengthy discussion of the systematic approach that AVUV uses and Paul reads what AVUV says about their systematic approach.

Chris compares the DFA small cap value fund (DFSV) with AVUV. Chris also talks about a relative ranking he wants add to his Best In Class recommendations next year.

Chris discusses the quality factor of AVUV vs. funds that build their small cap value portfolio using the Russell 2000 Small Cap Value Index. He introduced a new term: rich minus weak ratio.Paul and Chris discuss the question: Is AVUV and actively managed fund?

Question: JL Collins recommends VTI (Total Market Index) and Warren Buffett recommends VOO (S&P 500). Which do we recommend? Chris notes the important differences between VTI and AVUS and suggests a likely extra .5% return from AVUS.

For those who want to own only total market funds, the group discusses the possibilities of replacing both VIT(U.S. Total Market) and VXUS (International Total Market) with total market indexes that favor slightly smaller companies with a slightly more value tilt.

Paul references Ben Carlson’s article about, ⁠⁠ ⁠“Some Things I Don’t Believe About Investing.”⁠⁠ ⁠

Chris, Daryl and Paul weigh in on things they don’t believe about investing.Chris ends with some important comments about how we are likely helping investors.

⁠Watch video here.

Selecting the best small cap value, gold and the challenges of buy and hold

Wed, 06 Nov 2024 14:39:37 GMT

On November 16, 2024 Paul will speak to the L.A. Chapter of AAII via a Zoom presentation. Here is the link: 2 Funds to Own Forever, and How to Invest in Small Caps⁠

In this podcast Paul addresses 4 major considerations when selecting a small cap value ETF. His discussion compares the returns, along with 4 major factors, for AVUV, VBR, VB,, VIOV, DFSVX and DFSV. Is gold worthy of a place in our portfolios? Probably not but Paul talks about his gold position and why bonds are likely a lot better. He also discusses the important decision to choose buy and hold over market timing. He references the following article from Truth Teller Ben Carlson:

⁠Don’t Take Financial Advice From Hedge Fund Managers⁠

The 4-Fund Strategy That Beats the S&P 500

Wed, 30 Oct 2024 15:36:53 GMT

Watch the video here.⁠

Paul Merriman, a former wealth manager turned financial educator, joins us to share investing wisdom that could reshape how you think about your money. We kick things off talking about portfolio diversification. Paul suggests a simple four-fund strategy that includes large cap, small cap, and value stocks. He says this mix has historically beaten the S&P 500 with lower risk.

We then dive into international investing. Paul explains that while adding international stocks doesn't necessarily boost returns, it can help smooth out the ride. He keeps half his equity portfolio in international stocks, even at age 81.

Got kids? Paul's got some advice for you too. He tells us about putting money aside for his new granddaughter, aiming to fund her Roth IRA as soon as she can earn income. He breaks down how investing just a dollar a day from birth to age 21 could turn into millions by retirement age. It's a powerful lesson in starting early and the magic of compound interest.

We also chat about some common investing mistakes. Paul stresses that young investors often underestimate the power of stocks over bonds for long-term growth. He shares some eye-opening numbers: $100 invested in bonds since 1928 would have grown to about $12,000, while the same amount in small cap value stocks would be worth nearly $15 million.

Paul wants you to think of investing as a partnership with businesses. When you buy a mutual fund, you're becoming a senior partner in thousands of companies. At first, your contributions drive most of the growth. But over time, market returns take over, and you become the junior partner to a much larger fortune.

We wrap up with Paul sharing his excitement about a 40-hour financial education program he helped create at Western Washington University. It's designed to teach students essential money skills throughout their college years, from budgeting as freshmen to understanding 401(k)s as seniors.

Throughout our chat, Paul's message is clear: start early, stay diversified, and think long-term. He believes that with the right education and mindset, anyone can build a solid financial future.

⁠4 Fund Combo Guide⁠ ⁠

Table Numbers⁠ ⁠

Quilt Charts⁠

⁠Historical Risk and Return Tables⁠ ⁠

Portfolio Configurator⁠

Timestamps:

Note: Timestamps will vary on individual listening devices based on dynamic advertising run times.

0:00 Intro to Paul Merriman and podcast topic

0:57 Two-fund portfolio strategy

3:55 Four-fund portfolio strategy explained

5:31 Large cap performance concerns

7:06 S&P 500 vs Total Market Index

10:59 AI impact on large companies

14:43 Market trends and historical performance

20:41 International equity in portfolios

25:26 ETFs vs index funds

29:41 Non-US investor asset allocation

38:41 Setting up kids financially

43:57 Early investing importance

48:37 Common investor mistakes

50:25 Investing as business partnership

52:51 Evolving financial education landscape

For more information visit the show notes- https://affordanything.com/550-paul-merriman-the-4-fund-strategy-that-beats-the-sp-500/

Paul Merriman: Millionaire Index Fund Investing Portfolios

Wed, 23 Oct 2024 14:15:28 GMT

The Marriage Kids and Money Podcast is dedicated to helping you do just that. Each week, Andy Hill interviews personal finance experts, millionaire parents and financially independent couples to find out how they achieved their success. He then takes that information and breaks it down into digestible takeaways that will help you win with money.

With over 400 episodes and counting, Marriage Kids and Money has been awarded “Best Family Finance Content” by Plutus two years in a row and "Content Creator of the Year". We review everything from how to achieve family financial independence to how to help your kids become future millionaires (who are generous).

Paul Merriman shares how DIY investors could become millionaires through a 2 Fund Portfolio and/or 4 Fund Portfolio! GUEST BIO - Paul Merriman When I sold my investment advisory practice, I founded a financial education foundation designed to help do-it-yourself investors of all ages improve their investment returns, at less risk and with greater peace of mind. I am the author of 8 books including "We're Talking Millions! 12 Simple Ways to Supercharge Your Retirement."

⁠⁠Watch the video here.⁠

Morningstar How-To With Paul and Chris

Wed, 16 Oct 2024 17:37:56 GMT

Investors need to get past marketing and sales pitches to know what they're getting when they invest. Morningstar is a great place to get that depth.

Paul and Chris describe how they each use the free Morningstar tools to evaluate mutual fund and ETF characteristics, such as:

* Expense ratios

* Liquidity and bid/ask spreads

* Geographic focus

* Value and size tilts

* Financial characteristics

* Factor exposures

* Number of holdings

* Tax efficiency and* Charted historical performance with side-by-side comparisons.

Chris also briefly describes how he uses the premium X-Ray feature to compare portfolios with different fund families, including the Best-in-Class ETFs, which he plans to update early next year.

For those interested in a more quantitative approach, please take a look at the Bootcamp video Chris created for the Best-in-Class ETF selection process, where he describes how he uses Portfolio Visualizer to quantify fund factor exposures and factor statistics to estimate expected returns. Here's a link to that video at the time where the Portfolio Visualizer discussion begins: ⁠⁠https://youtu.be/UaEC-JZYYJA?t=852⁠⁠

Here is the video link for this podcast.

https://www.youtube.com/watch?v=rDN3LyEFk3E

The Magic of Indexing

Wed, 09 Oct 2024 14:32:32 GMT

Paul updates his list of reasons to use index funds plus comparing the handful of Vanguard Small Cap Value ETFs (VTWV, SLYV, VBR AND VIOV) with the newer Avantis and DFA small cap value ETFs. He also makes the case that AVUS and DFAU total market funds are likely to produce better returns than VTSAX, VTI, VOO AND VFINX.

He also discusses the ⁠ 15 year returns of 6 ⁠ each large cap growth, large cap value, small cap blend, small cap growth and small cap value indexes. The lessons from these tables should be enough to encourage investors to take a closer look at the holdings in their holdings in these asset classes.

In his discussion of indexing he mentions a podcast " ⁠#1 reason to own index funds⁠ " that has had more than 1,067,000 opens and his MarketWatch article entitled ⁠“30 Reasons I Love Index Funds.”⁠ He also committed to producing a video, on how to use Morningstar to compare your mutual fund and ETF investments, before the end of the year.

M1 Finance Updated 2024

Wed, 02 Oct 2024 14:40:40 GMT

Chris & Paul walk through the changes to The Merriman Financial Education Foundation’s relationship with ⁠M1 Finance⁠ , including affiliate commissions, a new emphasis on accurate messaging, and improved pre-made portfolio shortcuts (M1 calls them Pies).

The new Pies now include all of our Sound Investing equity portfolios, taxable and tax-deferred fixed-income portfolios, and 5-year increments of the Merriman Aggressive Target-Date Glide Path allocations. Chris shows how easy it is to mix them to get the equity and fixed income ratio you want. He also shows how to approximate intermediate years along the target-date glide path. Finally, Paul challenges him to create a mix of several different equity strategies, which he demonstrates.

Following the demonstrations, they briefly discuss how M1 compares to Fidelity’s offering.

They close with a request for listener questions to be used in an upcoming interview with M1 Finance’s founder and CEO, Brian Barnes. If you have any, please email them to chriskpedersen@gmail.com .

M1-Related Disclosures

This podcast and ⁠video⁠ were recorded on September 12, 2024. All information is subject to change. The opinions expressed are solely those of the authors and do not reflect the views of M1. They are for informational purposes only and are not a recommendation of an investment strategy or to buy or sell any security in any account. They are also not research reports and are not intended to serve as the basis for any investment decision. Prior to making any investment decision, you are encouraged to consult your personal investment, legal, and tax advisors.

M1 is a technology company offering a range of financial products and services. “M1” refers to M1 Holdings Inc., and its wholly-owned, separate affiliates M1 Finance LLC, M1 Spend LLC, and M1 Digital LLC.

If you choose to transfer your account to another broker-dealer, only the full shares are guaranteed to transfer. Fractional shares may need to be liquidated and transferred as cash.

All examples above are hypothetical, do not reflect any specific investments, are for informational purposes only, and should not be considered an offer to buy or sell any products.

All investing involves risk, including the risk of losing the money you invest. Brokerage products and services are offered by ⁠M1 Finance LLC⁠ , Member FINRA / SIPC, and a wholly owned subsidiary of M1 Holdings, Inc.

M1 does not provide investment advice, and this is not an offer or solicitation of an offer, or advice to buy or sell any security, and you are encouraged to consult your personal investment, legal, and tax advisors. M1 is not recommending or endorsing this investment by making it available to its customers.

Lessons for Bogleheads

Wed, 25 Sep 2024 13:55:10 GMT

In preparation for his presentation at the Bogleheads Conference Paul reread John Bogle’s “ ⁠The Little Book of Common Sense Investing”⁠ He has been recommending the book since 2007 but in 2017 Wiley published the updated and revised edition. There is some terrific new material in the revised edition. Paul focuses on several topics from the book including Bogel’s statement that index funds are the only “honest” funds. Paul discusses the reasons actively managed funds can’t afford to tell the truth.

Paul also discusses Chapter 2 on Rational Exuberance. In this chapter Bogle discusses the very important topic of investment returns vs. speculative returns. This topic is essential for do it yourself investors to understand as it prepares them for a reality of investing that could help them stay the course during difficult times.

Paul ends by reading Bogle's list of 8 common sense realities that every investor should know. It would probably be smart to reread this short list at least once a year.

At the ⁠Bogleheads conference⁠ Paul will speak twice: once in an interview with Jim Dahle (The White Coat Investor). The topic is factor investing. We have developed a page of links to all of the tables that are focused on the use of factor funds to build a portfolio. ⁠Here is a link⁠ to that list of tables, charts and graphs.

In his second opportunity to share he is part of a panel on investing. That will be a free for all and should be fun.

All of the conference presentations are being taped so they will be available in the coming months.

Paul Merriman’s 12 Million Dollar Ideas for Investing Success

Wed, 18 Sep 2024 18:02:35 GMT

I had an amazing conversation with David Baughier on the Forget About Money podcast!

We discussed my 12 One-Million Dollar Ideas for building wealth, the power of starting early, and why index funds are a game-changer for long-term investing.

We also covered the importance of diversification, the benefits of small-cap value stocks, and why sticking with a buy-and-hold strategy beats trying to time the market.

Whether you're new to investing or looking to refine your retirement plan, this episode has actionable tips to help you secure your financial future. Give it a listen—you won’t want to miss it!

⁠Watch the video here.⁠

⁠Download the transcript here

New Table, SCV Returns, Hourly Advisor Recommendation

Wed, 11 Sep 2024 15:58:01 GMT

Paul starts the podcast with a discussion of his ⁠special presentation⁠ to the graduating nurses from the College of Nursing at Texas A&M. This presentation was part of a Life Transitions Series. He discusses how he might be able to do a similar presentation for other groups of graduating college students, as well as groups of investors who are trying to get the most from their company 401k.

The second topic is regarding a new set of tables that should help investors figure out potential future returns for the S&P 500, ⁠Small Cap Value, U.S. 2 Fund Index Portfolio and U.S. 4 Fund Index Portfolio⁠ .

The third topic was motivated by Ben Carlson’s articles on “ ⁠Why Housing is Everyone’s Favorite Investment⁠ ” and “ ⁠What is the Historical Rate of Return on Housing?⁠ ” Paul recently sold his home and discusses the challenges of figuring out how the profits compared to the S&P 500., As promised Paul had his meeting with David Sterman, an hourly CFP, who has followed our recommendations. Paul discusses his services and costs.

Here is his contact information:

⁠https://huguenotfinancialplanning.com⁠

1358 Old Ford Rd. New Paltz, NY 12561

Phone: (917) 553-0675 ⁠

david@huguenotfinancialplanning.com⁠

For those interested in the Boglehead Conference: ⁠https://boglecenter.net/2024conference/⁠

DCA vs. Lump Sum, Not Trusting SCV, Maximizing Roth, Moving From Ultimate B/H to Smaller Portfolio and More

Wed, 04 Sep 2024 15:29:28 GMT

Paul starts the podcast talking about the upcoming Boglehead Conference (Sept.27-29) in Minneapolis. The following link lists the speakers and topics. ⁠https://boglecenter.net/2024conference/⁠

Q1: Should I invest $300,000 inheritance all at once or dollar cost average? 02:23

Q2: If SCV is such a great asset class why do the companies all have such low P/E ratios? 8:06

Q3: Given that our Roth IRAs have unlimited investment options how should we approach investing in our Roth accounts to best complement the life cycle funds in our 401k? 21:54

Q4: Should we invest our IRA contributions the first of the year or dollar cost average over the year? 24:56

Q5: I’m 70 and am considering a combination of the 2040 target date fund and small cap value. How much should be in each? 26:34

Q6: Been in Ultimate Buy and Hold since 2013. I’m thinking about simplifying by using 2 or 4 fund portfolios. What are the pros and cons of change? ⁠ Recommended reviewing. ⁠ 29:37

Q7: Can I still rollover regular IRAs into Roth now that I am retired? ⁠ Recommended reading.⁠ 35:50

Q8: As a risk reducer to equities can I use T-Bills and money market funds rather than any kind of bonds. 37:35

Dave Ramsey, Crypto Currency, Trusting Past Performance and More

Wed, 28 Aug 2024 19:31:08 GMT

Paul starts with a general discussion of the decision to trust recent returns or make investment based on longer term returns. He uses AVUV and ARKK as two investments you could have made in September 2019. In the discussion he ⁠references a video⁠ where arkk creator and fund manager predicts future arkk returns.

Q: #1: Why should future results look like the past? 16:15

Q: #2 We are in mid 50s and we think we have more money than we will need in retirement. Is there a rule of thumb for how much money one needs? Should one just figure out their cost of living and back into the amount needed for retirement? 26:50

Q#3 Have you done a comparison of your returns compared to Dave Ramsey’s recommended portfolios? 32:55

Q #4 How can we teach young investors about the advantage of starting investing ASAP? See the following set of PowerPoints for the ⁠⁠⁠Orange County AAII⁠⁠⁠ . 40:02

Q #5 What is your take on Crypto Currency? Here is what people I trust say about CC. 44:35

Warren Buffett: “In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending,” Buffett said in 2018. And his stance hasn’t wavered since. According to Benzinga, Buffett believes that cryptocurrencies aren’t a viable or valuable investment. “Now if you told me you own all of the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it because what would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything,” Buffett said at the Berkshire Hathaway annual shareholder meeting in 2022.

Ben Carlson: I have no idea what will happen with bitcoin or cryptocurrencies in general in the years ahead. Anyone who thinks they know with certainty how this all plays out is delusional. But I can say that my stance on crypto has evolved over the years to the point where I think the best-case scenario just might be the new digital gold.

Larry Swedroe: Swedroe took a more skeptical view of Bitcoin. He pointed out that Bitcoin’s value proposition is questionable. ⁠⁠Bitcoin⁠⁠ has a theoretical limited supply, capped at 21 million coins. However, the existence of an unlimited number of substitute cryptocurrencies means Bitcoin faces a daunting challenge. An asset with an unlimited supply typically sees its value approach zero. Swedroe categorized Bitcoin as a Ponzi scheme, though he acknowledged that it could achieve high trading values based on what people are willing to pay.

Wonderful Morgan House Interview

Wed, 21 Aug 2024 11:00:06 GMT

I just finished watching Morgan Housel’s interview on “What You Need to Master (And Avoid) to Get Rich, Stay Rich, and Build Wealth." I believe you will get more out of this interview than what I recorded for my weekly podcast.

As I watched I realized he was answering questions you ask, or should be asking, about the nature of successful investing.

I hope you will use this time to listen or watch Morgan. I’m glad I did! I hope the list of topics below will motivate you to listen. I’ll be back with you next week.

00:00 - Intro
01:20 - Risk and income
04:14 - On luck and skill
06:44 - Buffett's secret strategy
09:02 - The one trait you need to build wealth
12:54 - Housel's capital allocation strategy
13:22 - Index funds, explained
17:33 - Expectations and moving goalposts
18:51 - Your house: asset or liability?
24:13 - Money lies we believe
28:46 - How to avoid status games
31:38 - Money rules from parents
36:49 - Rich vs. wealthy
38:20 - Housel's influential role models
39:22 - Why are rich people miserable?
42:33 - How success sows the seeds of average performance
46:24 - On risk
47:33 - Making money, spending money, saving money
49:24 - How the Vanderbilt's squandered their wealth
1:00:45 - How to manage your expectations
01:03:00 - How to talk to kids about money
01:06:26 - The biggest risk to capitalism
01:10:30 - The magic of compounding
01:12:52 - How Morgan reads
01:19:16 - How to tell the best story
01:21:16 - How Morgan writes
01:32:16 - Parting wisdom and thoughts on success

Leveraging ETFs, Moving from Cash to Equities, a Track Record You Can't Trust and more Q&A

Wed, 14 Aug 2024 15:15:35 GMT

1. My husband and I are moving to Fidelity to set up your Ultimate Buy and Hold Portfolio. How do we make the change from our holdings to your portfolio? Do I have to sell all of my holdings? Plus we want to find an hourly advisor to help. Can you make a recommendation? 1:45

2. I have $1million in a money market fund. Do you think it is time to start reducing the cash position and moving to short term bonds or equity ETFS? 8:45

3. Are target date funds the same as all in one funds? 17:15

4. I would like your guidance on the decision to put together a S&P 500 and Small Cap portfolio using 3 to 1 leveraged fu?nds. Does the extra return justify the higher risk? 20:00

5. How should I protect my portfolio against inflation from the loss of the petrodollar? 35:00

6. From what I can see you have not addressed investment needs of older people in their 80s and 90s. How should I invest? I just can’t afford to lose money at my age. 39:17

7. Would I be dumb to have 10% of my retirement funds in gold? 46:20

8. With the fed getting ready to lower interest rates should I move my money market funds into 10 year Treasuries? 52:40

9. In the small cap blend and small cap value indexes it seems investors don’t get the advantage of owning small companies that grow to be the giants of corporate America. How do you get the premium when you have to sell the companies when they move beyond their index? 59:15

10. What is the difference between your 2 Funds for Life strategy and the two fund strategy that holds the S&P 500 and small cap value? 1:01

Gold, REITs, CDs, Glide Paths, Quilt Charts and More

Wed, 07 Aug 2024 20:44:27 GMT

1. What is the best glide path (asset allocation) for a 58 year old pre-retiree and then in retirement? This is the link for Chris Pedersen’s 2 Funds for Life glide path . 2:50

2. I don’t need all of my RMD (required minimum distribution). How should I invest the excess? Here is the link to the video on " My 12 Favorite Vanguard Funds for Retirees ” and the link to all of the Fine Tuning Tables. 11:19

3. My wife has easily onset demential. It’s costs $200,000 a year. How should a family invest in a situation like ours? Here is the link to the Vanguard Brokerage CDs ( ⁠https://investor.vanguard.com/investment-products/cds⁠ ) and ⁠stantheannuityman.com⁠ for MYGA rates. 17:18

4. What are your thoughts regarding precious metal investing? And if there is a place, what is the best way to do it? 22:52

5. Will the massive increase in passive investing, which has benefited the large cap growth indices, reduce the long term returns of small cap value? Here is the link to the long term returns Paul mentions . 28:50

6. How would the long term returns change if we overweight the U.S. 4 Fund Portfolio with slightly more small and large cap value? Here is the link to the Equity Asset Classes (1928-2023 ) 32:01

7. I’m 72 and my wife is 63. How different should our glide paths be? Here is the link to the Vanguard and Blackrock TDFs . 44:10

8. Are REITTs more like stocks or bonds? 46:41

Puget Sound Q&A

Wed, 31 Jul 2024 16:40:41 GMT

On July 25, 2024 Paul and Chris made a presentation to the Puget Sound AAII. Paul spoke to the latest research on small cap value and Chris spoke to the latest research on his 2 Funds for Life Portfolio. Following the presentation they answered questions from the guests.

Q: What advice do you give on conversion of regular IRAs to Roth IRAs? Q: What investments do you recommend to offset large losses in the equity markets? Q: Why do you recommend AVUS over VOO, or other S&P 500 funds? In Chris’ answer he recommends listeners read his ⁠ AAII article⁠ on ETF Selection.

Q: Why don’t you recommend Long Term Treasury Bond fund? Vanguard Long Term Treasury VGLT Q: Do you recommend a pension and/or Social Security be considered the equivalent of a bond fund? Q: Can you compare RSP (an equal weighted S&P 500 Fund) vs. SPY?

⁠Watch the full video here.

Truth Tellers on History of Returns & P.E. Ratios

Wed, 24 Jul 2024 15:36:32 GMT

In this podcast Paul discusses an article by Truth Teller Ben Carlson ( ⁠The Biggest Winners in the Stock Market)⁠ , regarding a study by Dr. Hendrik Bessenbinder ( ⁠Which U.S. Stocks Generated the Highest Long-Term Returns ⁠ )

⁠This study⁠ is an update from an earlier study from Bessenbinder that Paul has recommended many times. Paul also discusses an article by Truth Teller John Rekanthaler, ⁠"When Rebalancing Creates Higher Returns—and When It Doesn’t”⁠

This article adds to THE discussion of the impact of rebalancing on the latest video/podcast.

The Best 3 Charts We Recommend

Wed, 24 Jul 2024 15:35:20 GMT

Paul, Daryl, and Chris are together again to discuss what they each think are the best single charts or graphs to help people understand investing and make good decisions.

Paul starts by asking Chris and Daryl how much we can rely on the past to predict the future.

Paul follows that with a deep dive into his choice for the most important chart -- the quilt chart.

Daryl follows up with his choice -- a discussion of the tell-tale chart.Chris finishes with his choice: a discussion of the 2 Funds for Life Fine Tuning Table.

Table J1b- Equity Index Returns: 1-yr Periods (1928-2023)

⁠ Table K1a⁠ - 4 US Asset Class Indexes & 4 Fund Combo Relative Return Ranking (1928-2023)

⁠ Table K2a⁠ Asset Classes & 4 Fund Combo (1928-2023) - Return Rank Frequency

⁠ Table K1b⁠ S&P 500 & US SCV Relative Return Rank Comparison (1928-2023)

⁠Table K8a⁠ Sound Investing Port. Returns: 10 Yr Periods (1928-2023)

⁠Table K6a⁠ Sound Investing Portfolios, S&P 500 & US SCV Relative Return Ranking (1928-2023)

⁠Table K7a ⁠ Sound Investing Portfolios, S&P 500 & US SCV (1928-2023) - Return Rank Frequency

⁠Watch video here.⁠

How to Stay the Course in Scary Times

Wed, 17 Jul 2024 15:54:10 GMT

One of the most challenging aspects of being a 100% do-it-yourself investor (DYI) is dealing with the emotions of wanting to make major changes in a portfolio due to what may easily be seen as catastrophic news. The DYI doesn’t have a professional to help them think through the difficult times like the 2008 meltdown, the October 19, 1987 22% one day decline or currently, the upcoming election results.

Paul believes one of the best sources of professional support a DYI could have is George Sisti’s, "On Course Financial Planning Vectors" newsletter. On this podcast Paul reads Sisti’s ⁠July issue⁠ focused on “The Election!” as well as the misleading “noise” that investors get from the typical predictions that Wall Street produces this time of year.

Paul recommends investors read ⁠George's letters ⁠ anytime they are feeling uncomfortable with the market. He even suggests that investors download his ⁠archived letters ⁠ for future reading.

#1 Teaching Tool for DIY Investors

Wed, 10 Jul 2024 13:56:24 GMT

Paul starts the podcast discussing the upcoming (July 13, 2024) presentation for AAII Puget Sound Chapter (9-10:30). Chris Pedersen and Paul will present, “2 Investment Decisions Guaranteed to Change Your Financial Future. ”Here is a link for more information and to sign up for this presentation. Here is the link to sign up .

Today’s podcast is a discussion of the latest research from Daryl Bahls, Director of Analytics for The Merriman Financial Education Foundation. Paul believes these new tables are likely the best teaching tool he has found to give investors a realistic idea of the future sequence of returns.

While Paul focuses on several of the 20 slides in the attachment , more of these will be discussed next week with Daryl and Chris.

Paul starts his discussion with his latest update of the Equity Asset Classes (1928-2023) table .

He then explains why Daryl’s Quilt Charts are a better way for investors to understand the sequence of returns they are likely to experience.

Paul asks listeners to send him questions from the slide deck so they can be addressed in next week's podcast with Daryl and Chris.

Leaving Money to Your Children and Grandchildren

Wed, 03 Jul 2024 14:22:40 GMT

Join Paul as he is interviewed by Ed Fulbright, CPA and host of Mastering Your Money on WNCU 90.7 FM in Durham, N.C.

How do Grandparents decide to help with education or retirement or legacy building of their grandchildren?
You often recommend small cap value as the primary investment vehicle for creating legacy for your grand children. Why did you select this investment?
You recommend a low cost strategy for $365 per year. Can you tell our listeners about how this works?
You also have different options for people who may have older children or grandchildren. Can we discuss those options?
You suggest writing a letter to a child or grandchild . Can we discuss the power of the letter to the child or grandchild?
What is the best advice you have ever received?

AAII Q& A and New Graphs

Wed, 26 Jun 2024 15:57:27 GMT

The following questions were generated during a presentation Paul made to the Orange County and New York City AAII Chapters.

1. How do we go about finding someone (money manager) who follows your portfolio recommendations? Plus what is a reasonable fee to pay for advisory services? In the answer I do mention David Sterman. link: ⁠https://huguenotfinancialplanning.com/⁠ and two videos by Rob Berger: ⁠5 Hidden Costs of Fee-Only Advisors⁠ and ⁠ 5 Key Questions to Ask Your Investment Advisor⁠

2. How can I decide whether to go from 50/50 stocks and bonds to 70/30? I suggest looking at table B1 and B9 .

3. What bond durations do you recommend?

4. What are the ETFs that you recommend for each of the equity asset classes you list?

5. Can I share your presentation with my children? ⁠ Here is a presentation that might be good for a young person⁠.

6. How do I find a good money manager and what questions should I ask? Here is a link to our free book, “Get Smart or Get Screwed: How to Select the Best and Get the Most Out of Your Financial Advisor.”

7. How do I get access to all of your charts and tables? Here is the link to our bootcamp page ⁠

⁠ where you can have access to all the tables.

8. What is your view of small cap value returns over the coming decades? In my answer I mention Ben Carlson’s ⁠ article on randomness of historical returns⁠- When is the Mean Reversion Coming in the Stock Market? and his article Long-Term Recency Bias .

And here is the new ⁠graph⁠ that Daryl Bahls proceeded to see the returns of a couple of portfolios over the same periods as Ben addressed.

ChooseFi Q&A

Wed, 19 Jun 2024 16:12:58 GMT

On June 8, 2024 Paul gave a 2 hour presentation to the Seattle Chapter of Choose FI. The topics covered the 8 biggest investment decisions, plus a new piece on putting aside money for a newborn to 21 year old.

⁠Here is the video link.⁠

This podcast covers 10 unanswered questions from the presentation, plus 5 additional topics that guests listed as most important topics of the meeting.

Q&A:

1. How to find the best 3 year fixed annuity. ⁠https://www.stantheannuityman.com/⁠

2. How to select the best target date fund.

3. Why small cap value stocks make higher returns.

4. When do Roth conversions make sense? Link: ⁠https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/⁠

5. What is your bottom line best portfolio without having to go through all the tables?

6. Will Western Washington University offer financial literacy classes on their satellite campuses?

7. What additional advice would you give to a 45 year old who wants to live on a 4% distribution for the rest of their life?

8. What distribution advice would you have for a single person who is planning to retire before age 45?

9. In creating your tables, how often do you rebalance the portfolios?

10. Please explain the most important differences between an ETF and a regular mutual fund. ⁠https://www.thebalancemoney.com/differences-between-mutual-funds-and-etfs-2466791⁠ ⁠https://www.investopedia.com/ask/answers/09/mutual-fund-etf.asp#:~:text=Both%20mutual%20funds%20and%20ETFs%20offer%20investors%20pooled,offer%20a%20wide%20selection%20of%20actively%20managed%20funds⁠ .

More topics from the June 8 presentation:

11. What changes should I make in my portfolio when I retire?

12. Are low expenses the biggest decision when investing in index funds?

13. What are the most important steps I can take to get better returns?

14. What are the biggest (most costly) mistakes investors make?

15. Is investing in the Total Market Index or S&P 500 all you need to reach FI?

Balancing Hope and Reason: The Lifetime Path to Successful Investing

Wed, 12 Jun 2024 17:10:30 GMT

Mavis Tsai is a friend I have known for decades. Our paths crossed as I was teaching one of my free 3 or 6 hours workshop.

In January she asked me to participate in her 5-day online event entitled, "Confluence of Hearts: A Global Summit on True Self, Brave Connections, and a Love-Led World” In the description of the event she noted: "Together, we will explore cutting-edge insights on reconnecting with our true selves and our fellow humans, dismantling antiquated societal structures, harnessing our passions and gifts, and co-creating a thriving future for generations to come by contributing our highest selves to the world.”

We have one thing in common. We are both trying to help people get better—but in very different ways.

When she asked me to participate I begged off.

Here is a paragraph from my attempt to graciously say no.

"I am trying to help people have a better financial future, and I’m willing to do it for free, but I’m not sure I fit the mold of the kind of speakers you are bringing together. I’m an expert on investing by the numbers. I want do-it-yourself investors to take the steps that will give them the highest probabilities of long term investment success. Normally that means squeezing every ounce of emotion out of the process.”

Mavis knows I like lists so she gave me a list I couldn’t resist.

1. Your expertise in investment not only aligns with our summit's focus on creating a love-led world but is a crucial piece of it. Financial stability and wisdom empower individuals to live their true selves and make brave connections. By teaching attendees how to secure their financial future, you're offering them the freedom to pursue their passions and contribute meaningfully to society.

2. Our summit thrives on the diversity of thoughts and approaches. Your unique perspective on investing by the numbers adds an invaluable dimension to our discussions. It’s about balancing the heart and mind—your approach provides the stability and clarity needed to pursue one's true passions with less financial fear.

3. Contrary to taking the passion out of investing, your method encourages a highly disciplined form of passion. It's about being passionate about our goals and the systematic pursuit of those goals. This disciplined approach is a form of emotional intelligence that is highly relevant to our attendees' journey towards a love-led life.

4. Your willingness to contribute your highest self by educating others for free is the epitome of what this summit stands for. (Your interview will be for less than an hour :)). It’s about contributing to a thriving future by sharing our gifts. Your insights can help our audience make informed decisions that align with their values and long-term success.

5. Your concern about confusing your followers is understandable. Participating in this summit, however, is an opportunity to show the depth and versatility of your expertise. It’s a platform to demonstrate how financial wisdom is foundational to living a fulfilled, passion-driven life, bridging your work with broader life goals. I said yes and the conversation is entitled,

"Balancing Hope and Reason: The Lifetime Path to Successful Investing.”

I hope you enjoy it.

⁠Watch the video here.⁠

Chris Pedersen Q&As

Wed, 05 Jun 2024 13:57:47 GMT

On May 18, 2024 Chris Pedersen made a presentation to the Houston Chapter of AAII . At the end of the presentation Chris answered over 20 questions. Those questions are on this podcast. Here are the question topics:

1. Portfolio expectations compared to S&P 500? 2. How would adding small cap value (SCV) help a retiree?

3. How important is asset class location using 2 Funds for Life?

4. Would a do it yourself target date portfolio be better than buying a target date fund? 5. How do you expect interest rates to impact equity? 6. How different are the Total Market Fund expected returns from the S&P 500? 7. What are drawbacks by investing in SCV? 8. What steps should we take to manage emotional risk? 9. What is your opinion about combining TIPs with equities? 10. Should you increase your equity holdings as the get older? 11. Please comment of Christine Benz’s Bucket Portfolio? 12.. What SCV funds do you recommend? 13. Are there other target date funds you recommend besides Vanguard? 14. At age 60 what kind of return should I expect over the rest of my life? 15. Do you recommend nudge withdrawals over withdrawals from the whole portfolio? 16. Why would more profitable small cap value funds do better than portfolios of less profitable companies?17. Do you recommend VT, the Vanguard Worldwide equity fund?

Inside the Investment Mind of Chris Pedersen with host Charles Rotblut. Charles is the editor of the AAII Journal, and a vice president and Chartered Financial Analyst at AAII

Q1: What is the best way to get big positions in cash invested? All at once or dollar cost average over time?

Q2: How should target date fund investors choose the best date for their situation?

Q3:What are the pros and cons of backtesting historical performance?

Q4: Why did you choose the drawings in your book “ ⁠2 Funds for Life?⁠ ”

Demystifying Diversification

Wed, 29 May 2024 17:58:26 GMT

Chris explains investing diversification with some analogous side trips to the worlds of food and nature. He starts by illustrating the importance of perspective, emphasizing the need for many decades of data in backtesting. Next, he covers the ingredients, or asset classes and styles, most investors will use to diversify.

With the ingredients in hand, he explains what happens when we mix them, and how mixing ingredients that are substantially different can improve the return we get for any given level of risk.

He then covers the real-world implications for accumulators and retirees and finishes off with some fine tuning tables and thoughts on the discipline needed to be a meaningfully-diversified investor.

⁠Here is Chris' pdf from his presentation⁠

Get a free copy of We're Talking Millions

Pediheart Podcast #279: Asset Allocation in Your Retirement Accounts

Wed, 22 May 2024 15:34:22 GMT

Eleven months a year ⁠Dr. Robert Pass produces a podcast ⁠ dedicated to a review of the latest literature and thought leaders in pediatric cardiovascular care. For the last 3 years Rob has finished his podcast series with a focus on personal finance.

It has been an honor to work with Rob on these special podcasts for the last 3 years. This is his podcast from December 2023.

To conclude 2023 we end with noted national authority on personal finance and investing, Mr. Paul Merriman.

Mr. Merriman reviews some basic ideas about asset allocation within a retirement plan such as a 403b, 401k or IRA with the goal of achieving the highest degree of return for level of risk.

He reviews the importance of diversification and also shares with us both a '2 fund' and '4 fund' approach to creating a low cost, efficient and diversified portfolio that has, historically, been associated with good long term returns. Mr. Merriman's work can be seen at: ⁠paulmerriman.com⁠

For those interested learn more about his '2 Fund' solution: ⁠https://www.paulmerriman.com/2-funds-for-life-update-2023⁠

For those interested to learn more about his '4 Fund' solution: ⁠https://www.paulmerriman.com/4-fund-combo⁠

For those interested in target date funds: ⁠https://www.paulmerriman.com/target-date-funds⁠

Finally, for those who did not previously take advantage of Paul's free book, the following is a link to a free PDF of the book: ⁠https://irp.cdn-website.com/6b78c197/files/uploaded/Were-Talking-Millions.pdf⁠

Please note: This episode is not intended to provide specific personal finance advice and is for entertainment purposes only. Please consider speaking with a trusted advisor before making any significant changes to your retirement assets.

Best in class ETF Q&A

Wed, 15 May 2024 15:47:01 GMT

Paul and Chris cover several questions about the Best-in-Class ETF recommendations and selection process.

What's the overarching objective of the Best-in-Class ETF recommendations?* What's the 6-step process described in your ⁠AAII Best-in-Class ETF Article⁠ ?
Why is it sometimes worth paying another tenth of a percent or more for funds with more exposure to small or value?
Is AVUV's recent 6%/year return advantage over VBR expected and/or likely to continue?* What did Avantis say are the market conditions that favor or disadvantage their approach?* How should investors think of the risks of tilting away from the cap-weighted market indexes towards small and value?
Retail investors have a potential superpower versus institutional fund managers -- patience!
How many hours does it take Chris to update the Best-in-Class ETF recommendations?
JL Collins is a big proponent of the total market index. How much is our Best-in-Class ETF recommendation for large-cap blend (AVUS) likely to outperform a total-market index fund such as VTI?
What happens when small-cap value becomes super popular?

Links: Best-in-Class ETF Bootcamp ⁠video⁠ and ⁠podcast⁠

AAII article on ⁠Choosing Best-in-Class ETFs⁠ ⁠Portfolio configurator⁠

Portfolio visualizer ⁠factor statistics⁠ , ⁠factor regression tool⁠ , and ⁠fund factor regressions⁠ .

⁠Watch video here

2 Funds for Life Q and A

Wed, 08 May 2024 16:33:20 GMT

Join Paul and Chris to follow up on Chris’ video on ⁠"2 Funds for Life Update 2024"⁠ .

In this discussion Chris covers the history of the development of this popular portfolio, as well as his ⁠new table⁠ that covers the expected returns for all of the periods from ages 20 to over 90.

The discussion included comments on:

The advantages of Blackrock over Vanguard target date funds and why it should make over .5% a year more over their lifetimes.
The reasons paying more for a small cap value fund may pay big rewards over the long term.
The advantages and disadvantages of the more aggressive 2 Funds for Life Portfolios.
How to build the Portfolio by using several different accounts
The impact of rebalancing vs. letting the 2 funds grow independently

⁠Watch video here

Your top retirement questions answered with Christine Benz

Wed, 01 May 2024 18:47:10 GMT

Join Christine Benz, Director of Personal Finance and Retirement Planning at Morningstar, for answers to seven of the biggest questions facing those entering or in retirement.

Financial literacy is empowering—yet good, practical education about financial management is too often out of reach for people, especially those with limited incomes. Former BCF Board member Paul Merriman—founder of The Merriman Financial Education Foundation—has dedicated his retirement to providing free education for all ages about how to secure a more stable financial future.

On behalf of BCF, every year Paul organizes ⁠⁠free virtual events⁠⁠ with speakers who are nationally renowned experts in their fields in order to help educate our community on how to better plan for our futures. These events target all ages and levels of financial literacy, including youth, first-time investors who are still in the workforce, and those who have just entered retirement.

⁠Watch video here

Understanding the Pros and Cons of Annuities with Stan Haithcock

Wed, 01 May 2024 18:42:27 GMT

I interviewed Stan Haithcock, the expert I depend on when I have questions about annuities. We will dig into single premium life annuities (SPIA), multiple-year guaranteed annuities (MYGA) and other insurance products that are often over sold and over priced. What is the truth and how can you get what you need at the right price? Join me and Stan as he answers my questions and yours.

Stan Haithcock, also known as "Stan the Annuity Man" is recognized as one of the top independent annuity agents in the United States. Stan has authored seven books on annuities — all free on his website— and has produced over 1,000 educational videos on YouTube. His goal is to help do-it-yourself investors understand how annuities work and to protect them from costly mistakes.

⁠Click to watch video

Financial Gurus Collide: JL Collins and Paul Merriman Debate Wealth Strategies

Wed, 24 Apr 2024 16:33:31 GMT

Today, we bring you an exclusive conversation between two investment gurus, JL Collins and Paul Merriman. They debate the secrets of building wealth, focusing on investment strategies, index funds, and the potential power of small-cap companies.

If you're looking to sharpen your investment acumen, this episode is full of knowledge and insights!

Join us as we navigate through the crucial aspects of long-term investing, risk management, and the dynamics of the S&P 500 and Total Stock Market Index Fund.

Paul and JL dissect the importance of diversification, disciplined strategies, and the psychology behind successful investing. Whether you're a seasoned investor or just starting out, this episode is packed with valuable tips and strategies for a robust financial future.

⁠Watch the video here

Best in Class ETF 2024 Updates

Wed, 17 Apr 2024 16:01:04 GMT

So, you've chosen to be a buy-and-hold investor following one of Paul's Sound Investing portfolios. Now, the question is, what to buy? It's time to become a knowledgeable shopper.

Chris Pedersen describes the attributes that make an ETF or mutual fund more or less suited to implementing the portfolios we've discussed.

He then shows how to use Morningstar and Portfolio Visualizer to evaluate funds and points to the Best-in-Class recommended funds he's chosen.

Finally, he demonstrates how the Portfolio Configurator can compare different fund family implementations and calculate the needed percentages of different funds for your personal portfolio choices.

Along the way, we learn that, like Warren Buffet, he has a thing for Diet Coke.

Resources:

⁠AAII Article describing his Best-in-Class ETF selection process⁠ -

⁠Video link ⁠ to section of prior video showing more detail of the factor analysis he uses- Time mark- 46:00

⁠Best-in-Class ETF's article ⁠

⁠Best-in-Class ETFs⁠

Portfolio Configurator

Watch the Video here

2 Funds for Life 2024 Update

Wed, 10 Apr 2024 14:18:36 GMT

Chris Pedersen shows how to automate investing with simple 2-fund portfolios. He discusses how target-date funds work and how to combine them with small-cap value funds to achieve results similar to more complicated portfolios. He highlights the 2 Funds for Life fine-tuning table in the Portfolio Configurator and shows how it can be used to set expectations based on different allocations.

He also shows how 2 Funds for Life approaches can be compared to Sound Investing portfolios using the Configurator. Finally, he takes advantage of Paul's absence to praise Paul's example and highlight the importance of non-financial investments.

Resources mentioned: ⁠https://lookerstudio.google.com/u/0/reporting/a941a5d4-0929-45ea-b22e-3bb82dc334ff/page/p_zy32acuhdd?s=hqmha3-AK5k⁠

⁠Watch the video here.

Flexible Distributions 2024 Update

Wed, 03 Apr 2024 11:11:54 GMT

In this podcast Paul addresses the advantage of using a Flexible Distribution strategy. He starts by mentioning the earlier podcasts that focused on the ⁠ Sound Investing Portfolios ,⁠ ⁠ Fine Tuning Your Asset Allocation Tables⁠ and ⁠Fixed Distribution Tables ⁠ ⁠ D1.4 ⁠, ⁠D1.5 ,⁠ ⁠D9.4⁠ and ⁠D9.5 ⁠.

He then focuses on Flexible Distribution Tables ⁠F1.4⁠, ⁠ F1.5 ⁠, ⁠F1.6 ⁠, ⁠ F9.5 ⁠and ⁠F9.6⁠ . The following are links for listeners who want to review all the Fine Tuning Tables, all the Fixed Distribution Tables and all the Flexible Distribution Tables.

⁠⁠9 Fine Tuning Your Asset Allocation Tables⁠

S&P 500 ( ⁠⁠Table B1⁠⁠ )

U.S. 2-Fund (50/50 S&P and Small Cap Value) ( ⁠⁠Table B9⁠⁠ )

⁠Fixed Distribution Tables⁠

⁠Flexible Distribution Tables⁠

For questions on Flexible Distributions please send to ⁠paul@paulmerriman.com⁠ or post the questions in the comments section of the Flexible Distribution video .

Fixed Distributions 2024 Update

Wed, 27 Mar 2024 15:23:12 GMT

The move from the accumulation to distribution period of an investors lifetime includes some very important decisions.

What asset allocation between equities and fixed income?
What combination of equity asset classes in the equity portion, as well as fixed income asset classes?
What amount of distribution will be made annually?
Will the payments be monthly, quarterly or annually?
Will payments be adjusted for inflation and how often?
Will the distributions be based on a fixed distribution with regular adjustments for inflation (the topic in this presentation) or on a flexible basis (the topic of the next segment)?

In this podcast Paul uses 11 tables to address the questions above. It is recommended the viewer print out the ⁠PDF of the tables⁠ to make it easier to follow the numbers.

Many may find it is easier to follow the information on ⁠Paul’s video⁠ on the same topic.

If you have questions about the presentation please leave comment or question in the comment section below or email ⁠paul@paulmerriman.com⁠ .

Fixed Contributions 2024 Update

Wed, 20 Mar 2024 16:42:56 GMT

In segment #5 of the 2024 Book Camp Series Paul applies all of the first 4 segments lessons to putting the portfolios to work by making a regular monthly investment into several of the Sound Investing Portfolios. For those coming to the series for the first time Paul suggests listening to the first 4 segments.

#1 Stocks vs. Bonds: The $10 Million Decision

#2 The Ultimate Buy and Hold Portfolio 2024 Update

#3 Sound Investing Portfolios: 2024 Update

#4 Fine Tuning Asset Allocation 2024 Update

In his presentation Paul references Tables J1a , A1a , H2a , B1 , B9 , C1 and C9 .

The purpose of the podcast is to familiarize investors with how to use and compare the rest of the Fixed Contribution Tables. This link takes investors to the rest of the C tables .

Fine Tuning Asset Allocation 2024 Update

Wed, 13 Mar 2024 12:17:01 GMT

In the previous three podcasts we have addressed the long term decision between investing in ⁠stocks vs. bonds⁠ , what equity asset classes you might use in building your ⁠equity portfolio⁠ and how to combine the different equity asset classes to build the ⁠ best portfolio⁠ for your different investments.

The purpose of each of the ⁠Boot Camp Series⁠ is to address some of the most important investment decisions. In this podcast I discuss the question of how much fixed income an investor should hold in their portfolio.

There are ⁠9 Fine Tuning Your Asset Allocation Tables⁠ . Each one assumes the use of one of the nine Sound Investment equity portfolios. Paul focuses on two of them and expects that those who are interested will be able to view the rest of the tables on their own.

The two tables use the S&P 500 ( ⁠Table B1⁠ ) and the U.S. 2-Fund (50/50 S&P and Small Cap Value) ( ⁠Table B9⁠ ). Each of these tables represents the annual returns of 11 combinations of equities and bonds. The goal is for investors to find the combination of equities and bonds for their risk limits and and return expectations.

Paul will be monitoring the ⁠YouTube video ⁠ and will respond to questions there or you can email Paul@paulmerriman.com

Disclosures

Data Disclosure Notice - Funds (1970-Present)

Data Disclosure Notice - Indexes (1928-Present)

Sound Investing Portfolios: 2024 Update

Wed, 06 Mar 2024 18:45:06 GMT

In this podcast Paul addresses the construction, returns and risks of the Sound Investing Portfolios.

Table ⁠H1a ⁠ lists the 9 Sound Investing Portfolios and includes percentages of each of the asset classes included in each portfolio.Table

⁠ H2a ⁠ lists the risk and return data for each portfolio. The table compares profitable years, unprofitable years, decade returns and total return of a $10,000 investment.

Table ⁠H3a ⁠lists the portfolios annual return for each year for the period 1970-2023.

Paul encourages listeners to pose questions regarding the Sound Investing Portfolios. Send questions to ⁠paul@paulmerriman.com ⁠.

The Ultimate Buy and Hold Portfolio 2024 Update

Wed, 28 Feb 2024 16:47:59 GMT

Paul recommends new listeners listen to the previous podcast on ⁠⁠Equities vs. Bonds⁠⁠ prior to this podcast.

The purpose of this annual update is to remind investors of the power of equity asset class diversification. Paul makes the case for the 10 equity asset class portfolio that he introduced over 25 years ago. During the presentation he uses Tables ⁠A1a⁠ and ⁠A2a⁠ . ⁠A1a⁠ shows the series of portfolios, starting with the S&P 500 on its own, and then the results of adding 9 other asset classes one at a time.

In ⁠A2a⁠ Paul reviews the Ultimate Buy and Hold results to 7 other portfolios that investors may select for better returns with fewer funds and similar volatility.

In both cases he shows the results with both annual and monthly rebalancing.

On the next podcast Paul will dig into the important differences of the risk and return for all 9 portfolios, including the S&P 500 as the single holding.

Stocks vs. Bonds: The $10 Million Decision

Wed, 21 Feb 2024 16:13:58 GMT

This podcast is the first in the series of 8 to 10 podcasts, videos and articles that will be found under ⁠Bootcamp⁠ and ⁠Best advice⁠ .

In this podcast Paul discusses the biggest investment decision of an investor's lifetime: Invest in stocks or bonds. He reviews the long term risk and return for both important asset classes. In each case there is a set of 3 tables that reflect the returns from 1928 to 2023. In Tables ⁠J1a⁠ and ⁠J2a⁠ he compares the annualized return for the entire period as well as for all the 15 and 40 year periods. His discussion includes the impact of inflation as well as rebalancing. He also encourages those who have not read "We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement” to ⁠download the free pdf⁠ .

Chris Pedersen answers your questions: Best in Class, 2 Funds for Life and more!

Wed, 14 Feb 2024 19:06:39 GMT

Join Paul and Chris for this podcast/ ⁠video⁠ they recorded. During the conversation Paul mentions Chris’ free copy of “ ⁠2 Funds for Life⁠ ” and a fascinating interview with Professor Scott Cederburg on ⁠Rational Reminder⁠ . Cederburg is an advocate for a lifetime portfolio of all equities.

The following are the topics and questions they discussed:

What does an investor do if a small cap value fund is not available in their 401(K)? Does a small cap blend fund, that is available, have the same impact as small cap value?
How do you choose between investing in a higher expense ratio ETF (say Avantis) compared to investing in a low expense ratio small cap value index fund? Would the decision be as simple as going with the lower expense ratio fund?
How do taxes impact your recommendations whether the asset class is held in taxable or tax advantaged accounts? Specifically, the S&P 500 fund that has little to no annual taxes vs small cap value which is less tax efficient.
Are you tempted to invest in individual stocks or actively managed funds?
Since small cap value funds can have long periods of underperformance, does that suggest those approaching retirement should avoid small cap value funds?
How did you react to the March 2020 Market Meltdown and other past major market declines? Did you try to take advantage of the declines as a buying opportunity?
What about combining 25% each small cap value and S&P 500 fund with 50% target date fund?
What’s the best way to move from your present holdings to a 2 Funds for Life Portfolio?
Where do I find information on how you make your selection of Best In Class ETFs? ⁠Here is the page that has links to the articles, podcasts and video. ⁠ Plus here is a link to ⁠Chris’ AAII article⁠ on the topic.
I’m setting up a 50/50 small cap value/target date fund. Would it help to add international small cap value?
How about using two small cap value ETFs? DFA and Avantis each have similar ETFs but different portfolios.
What is the status of Chris’ new white paper on 2 Funds for Life?

10 Investment Decisions “Guaranteed” to Improve Your Financial Future

Wed, 07 Feb 2024 16:12:47 GMT

Paul looks at the guaranteed advantages of 10 different investment decisions. He also challenges one of the oldest claims about our expectations for returns.

During the presentation he discusses the important differences between investment success and investor success. He encourages all listeners to get the free pdf of Paul Heys book, “ ⁠Spending Your Way to Wealth(s).”⁠

11 Q&A- Finding an advisor, educating kids, robo-advising, changing asset allocation and more

Wed, 31 Jan 2024 17:28:22 GMT

In the process of looking for a document I came across a group of questions that had been hidden away in my saved documents.

The good news is the list included some great questions. The bad news is I'm not sure which presentation generated the questions.

What are the best investments to make and what milestones should an investor reach?
Do you recommend a solo 401k or SEP IRA for a single employee LLC that will never have employees? Recommended reading from Truth-Teller Jim Dahle- ⁠https://www.whitecoatinvestor.com/sep-ira-vs-solo-401k/⁠
How much more do you think Avantis Small Cap Value (AVUV), which has higher fees, will make than Fidelity Small Cap Value Index (FISVX)?
I have $1.5 million in cash and a total portfolio value of $5.8 million. My asset allocation is 43% equities and 57% bonds. I have Social Security and other income of $90,000. Should I change my balance to 60% equities and 40% bonds?
If you only need a 2% withdrawal rate, what would be the right asset allocation for a someone really investing for my survivors? How about 90% equities and 10% bonds?
s there a time or value of investments that someone should get a trusted advisor? If so, how do you find them? Several sources mentioned: ⁠https://www.garrettplanningnetwork.com/about/contact/⁠ and ⁠https://adviceonlynetwork.com/⁠
What changes can a 50-something make to boost their 401k returns?
What are your thoughts on robo advisors/investing?
What is your advice for a parent who wants to persuade their adult children to educate themselves about investing? After you listen to the answer please send me an email to ⁠paul@paulmerriman.com⁠ about what steps you would take? Please include your phone number.
Will the program be recorded? Of course I don’t know as I don’t know where the list came from. If you know, please let me know.
What should I do with penny stocks that are down 89 to 90 percent?

The #1 Reason Most Investors Fail

Wed, 24 Jan 2024 17:47:43 GMT

In this podcast Paul discusses ten million dollar mistakes investors make, along with the mistake that is the biggest biggest reason he believes most investors fail to achieve the return they deserve. As part of his presentation he references the following two tables.

⁠Table 1⁠ and ⁠Table 2⁠ .

⁠D1.3⁠

⁠D1.4⁠

Paul reminds listeners to forward copies of our ⁠3 free books⁠ .

Configurators, Returns and Risks, and 2 Thumbs Up Movie Review

Wed, 17 Jan 2024 18:12:57 GMT

Paul, Chris, and Daryl are back together for the first time in 2024. The podcast starts with Chris demonstrating a new and improved ⁠Portfolio Configurator⁠ , which adds the 2 Funds for Life portfolios. Now, investors can see how the equity portion of ⁠Sound Investing Portfolios⁠ , like the ⁠Ultimate Buy and Hold⁠ or ⁠Four Fund Combos⁠ , compare to various 2 Funds for Life approaches.

Next, they discuss the question "Which backtested portfolio has the highest return per unit of risk, and shouldn't we all be using that one?" Daryl uses ⁠Table H2⁠ , and Chris uses the 2 Funds for Life Fine Tuning Table to point out various ways investors might define risk and try to find the portfolio with the best return per unit of risk.

The podcast closes with some thoughts on 2024, and requests for feedback on the new ⁠ Portfolio Configurator.⁠ Chris, Daryl and Paul also comment on the new documentary, ⁠“Turn Off the Noise.” ⁠ This ⁠documentary⁠ is available free through the end of the month.

⁠Watch the video here⁠ .

The most important advice I know

Wed, 10 Jan 2024 17:03:51 GMT

Trust is the key for most investors to stay the course for the long term. I formed a lasting trust in the academic work of Drs. Fama and French when I attended a 2 or 3 day workshop at Dimensional Fund Advisors in 1994.

That trust led our firm to use the DFA funds since the mid 90s. While I believe there are a lot of people who find our long term studies helpful, I’m not sure that all of those people understand that almost all of our studies that go back to 1928 are based on the work of the academics who are associated with DFA.

If you don’t immediately feel better about the source of our data, I think you will feel better if you watch the new documentary, “Tune Out the Noise” I sent it to Daryl and he responded, “Spectacular!” I sent it to Chris and his response was, “We stand on tall shoulders.”

You can watch the documentary at no cost by going here . You will be asked to fill in a few pieces of information and use the Access Code: RATIONAL This offer only extends through January 31, 2024

Then I would like you to watch a wonderful interview of Errol Morris , an Academy Award-winning film director and author. The following are the notes from interviewers Ben Felix and Cameron Passmore.

In today’s episode, Errol Morris, Academy Award-winning film director and author, joins us to talk about his recently released documentary called Tune Out the Noise. The documentary focuses on the revolution that's happened in the financial system, how the markets work, and why the advancements made are so vital. Errol is an acclaimed figure in film and literature, boasting an impressive array of accolades, notably securing an Oscar for his renowned documentary The Fog of War.

His work spans various arenas, encompassing short films for prestigious events and many charitable and political organizations. In our conversation, we delve into the significance of storytelling in communicating complex subjects, the power of serendipity, the evolution of finance, and the enigmatic nature of truth. We discuss the necessity of storytelling, the unexpected occurrences that influenced finance, the importance of empirical data in understanding truth, the central story of Tune Out the Noise, and much more. He also provides insights into the amazing economists, many of whom are past guests, who helped shape the financial landscape. Discover how chance, humility, and the pursuit of truth intertwine in this captivating episode, where the intriguing art of storytelling converges with the complexities of the financial world. Tune in now!

Review of 2023 returns and a prediction for 2024

Wed, 03 Jan 2024 16:07:49 GMT

In this podcast Paul starts by recommending, “Episode 285: A Year In Review" a ⁠podcast⁠ / ⁠video⁠ .

In Paul’s review of 2023 returns he compares Chris’ ⁠Best In Class ETF recommendations⁠ with similar ⁠Vanguard ETFs⁠ and the average return in each equity asset class.

He also gives returns for the most popular portfolios including, ⁠Ultimate Buy and Hold⁠ , ⁠2 Fund U.S⁠ ., ⁠4 Fund U.S. and 4 Fund WW.⁠

Using an ⁠article from Ben Carlson⁠ Paul is able to find even more reasons 2024 should be a very profitable year for investors.Paul discusses his nominee for the #1 Fund Family in America.

He closes with a portion of a letter from Subah Randhawa, President of Western Washington University.

Why not all equities all the time?

Wed, 27 Dec 2023 16:41:50 GMT

In the last podcast of the year Paul discusses the many important projects Chris Pedersen, Daryl Bahls and he will explore in 2024.

He then addresses a question from a listener: Why not all equities forever? The question is the focus of a wonderful interview with Scott Cederburg, Associate Professor of Finance at the University of Arizona. Scott is the guest of Truth-Teller Ben Felix and Cameron Passmore on their podcast, Rational Reminder.

In this podcast entitled " Challenging the Status Quo on Lifecycle Asset Allocation ” Scott discusses his groundbreaking research on the implications of retirees using all equities during their entire retirement vs. the traditional stock/bond allocation most experts recommend.

Paul uses Tables ⁠D1.4 Fixed Distributions S&P 500⁠ and ⁠D9.4 Fixed Distributions U.S. 4 Fund⁠ to demonstrate how much better returns than all equity large cap blend can be earned with a combination of small, large, growth and value and up to 50% in fixed income.

Another listener asks where one can find the tables referenced in the podcast entitled, "The best gift of all? A financial legacy for a child"

Here is the ⁠link to the pdf⁠ that includes the tables mentioned in the article. He also recommends he review these ⁠tables⁠ that Daryl put together to show the impact of two investors starting at age 18 and 23.

2 Funds for Life Fine Tuning Table

Wed, 20 Dec 2023 15:06:10 GMT

Paul Merriman and Chris Pedersen introduce the 2 Funds for Life Fine Tuning table and describe how it can be used by investors of all ages to evaluate various combinations of target-date and small-cap value funds.

Historically, these combinations have produced higher returns and higher safe withdrawal rates with only modest increases in risk compared to the target-date fund alone. The table provides investors a way to see what these differences have been in the past for target-date funds across their lifetimes when combined with 0% to 50% small-cap value in 10% increments.

Paul and Chris also discuss rebalancing approaches and the methodologies used in the backtests. Whether you're a young investor, mid-career, or well into retirement, we think this information will be relevant and hope that it will be life-changing.

Watch the video here.

A new way to look at risk and return

Mon, 11 Dec 2023 21:03:19 GMT

Paul wishes to warn podcast listeners that this podcast contains a lot of important numbers from the following 4 tables. The torrent of numbers can be irritating but these are some of the most important aspects of risk and return we should know. Paul asks that investors email him with questions about the tables. ⁠paul@paulmerriman.com⁠

In this podcast Paul introduces a new way to understand and compare the likely risk and return of equity asset classes. The biggest challenge for first time investors is not understanding the likely losing periods they will experience as part of the normal progression of successful investments.

⁠These 4 tables⁠ compare the historical risk and return of the ⁠S&P 500⁠ , ⁠Small Cap Value⁠ , a ⁠2 fund portfolio⁠ that’s 50/50 S&P and SCV and ⁠4 fund portfolio⁠ with 25% each in S&P, Small Cap Value, Large Cap Value, and Small Cap Blend.

Factor Investing & Investor Behavior

Wed, 06 Dec 2023 18:27:02 GMT

The biggest challenge of educating first time investors is reaching them with our educational materials. One of the best ways to reach young investors is through young podcasters who have loyal audiences of these first time investors. Jose and his podcast, ⁠Slow Brew Finance⁠ is a great example. It is available both as an audio and ⁠video⁠ podcast.

During the presentation Paul mentions a table of returns for the S&P, U.S. large cap value, small cap blend and small cap value. ⁠Here is the link.⁠

To sign up to Slow and Steady, a bi-monthly email newsletter with bite-sized practical personal finance thoughts and tips ⁠https://slowbrewfinance.com/subscribe⁠

The topics in this interview include: ⁠00:00⁠ - Intro

⁠03:04⁠ - Your Own Small Value Portfolio

⁠07:23⁠ - Value and Quality

⁠10:12⁠ - What if Value Doesn't Work Anymore?

⁠14:47⁠ - International Diversification

⁠19:51⁠ - Momentum

⁠23:14⁠ - Size

⁠27:55⁠ - Market Timing via Trend Following

⁠39:13⁠ - The Key to Becoming a Good Investor

⁠46:42⁠ - Investor Psychology

⁠55:59⁠ - Outro

New Study: S&P 500 vs 4 Fund Portfolio

Wed, 29 Nov 2023 18:11:39 GMT

Paul begins the podcast by noting a recent interview he had with Andrew Giancola of Master Money and the Personal Finance Podcast. The topic is “ ⁠Simple Financial Steps With Massive Payoffs⁠ .” In this podcast Paul discusses a new study that compares long term returns of the S&P 500 and the 4 Fund Portfolio. The study was motivated by an ⁠article written by Ben Carlson⁠ .

Paul discusses the same 20 year periods starting in 1930 and compares the results of The 4 Fund Portfolio to that of the S&P 500. He also makes the case, using one of ⁠his favorite quilt charts⁠ , that the 4 Fund Portfolio is not only more profitable but is less risky on an annual basis.

Beyond Numbers: Unveiling the Generosity of Personal Finance

Wed, 22 Nov 2023 16:52:17 GMT

Doc G interviews Paul.

"Join me in an eye-opening conversation with renowned investing advisor and philanthropist Paul Merriman as we delve into the question: Is personal finance inherently selfish? In this episode, we explore the broader impact of financial decisions and discuss Paul's recent $3.6 million gift to empower students at Western Washington University through investing education."

Listen to more of ⁠Doc G on Earn and Invest-⁠

⁠https://www.earnandinvest.com/episodes-7/youre-not-spending-enough⁠ ⁠https://www.earnandinvest.com/episodes-7/test⁠ ⁠https://www.earnandinvest.com/episodes-7/spreading-the-financial-independence-gospel-are-we-preaching-to-the-choir

Yes, Virginia you can take 8% distributions in retirement!

Wed, 15 Nov 2023 17:22:17 GMT

Topic 1: The industry has responded loudly to an announcement by Dave Ramsey that he would be comfortable about taking 8% a year from a retirement account. ⁠Here is what Rob Berger has to say⁠ In a recent video answering a caller's question, Dave Ramsey described those promoting the 4% Rule as "stupid," "goobers," and "morons. He described the 4% Rule as stupid and said he's "perfectly comfortable" with an 8% withdrawal rate.

In this video, I'll describe his rationale and why I'm "perfectly comfortable" telling him he's wrong.

⁠New Retirement⁠ ⁠FICalc⁠ ⁠Dave Ramsey Video⁠ ⁠

Here is the latest from Morningstar on withdrawal rates⁠ ⁠

And another good article from Amy Arnott from Morningstar

In my discussion I try my best to explain the real thinking by Dave Ramsey.

Topic 2: “ iShares just came out with target date funds as ETFs. What are your thoughts on their returns and their tax efficiency?

Topic 3: Today I listened to my 1st Youtube Paul Merriman video --- your ⁠Ultimate Buy & Hold Update 2023⁠ . Very intrigued by your strategy as I'm also a DIY investor. Since I'm retired & 62 years old with a wife that will be working for another 3 years, can you direct me towards your more specific information that would be more relevant to my situation?

Topic 4: ⁠New study on market timing vs. buy and hold from Vanguard

The Lifelong Process of Financial Education

Tue, 14 Nov 2023 16:48:48 GMT

How Can Mindfulness Help You Reach Financial Independence?

Do you want to reduce money anxiety, but don’t know who to trust?

Would you like to learn how to set up and manage your own retirement plan?

Do you want to know how we create a passive income stream you can’t outlive?

If yes, join us and learn how to answer the 4 critical financial independence questions:

Am I on track for financial independence?
What do I need to do to get on track?
How do I design a mindful investing portfolio?
How do I manage that portfolio and my income over time through changing markets?

Learn more: ⁠https://courses.mindful.money/financial-independence-bootcamp⁠

Paul Merriman is a nationally recognized authority on mutual funds, index investing, and asset allocation. He founded Merriman Wealth Management in 1983, retired from the firm in 2012, and created the Merriman Financial Education Foundation. Everything he does is dedicated to providing investors of all ages with information and tools to make informed decisions for their own best interests.

Today, Paul joins the show to reflect on early financial lessons he learned, discuss the current state of financial education, and share the top three decisions everyone must make in their financial lives.

12 more Small Cap Value Q&A's from AAII NYC

Wed, 08 Nov 2023 17:36:38 GMT

The following questions were sent from the October 11, 2023 presentation to the NYC AAII Chapter.

You can watch the video here- https://www.youtube.com/watch?v=QjFlcDAlH1k

Chris Pedersen's section starts at 59:00. Paul and Chris conclude with a Q&A session.

If I have a pension and social security that cover my cost of living, is it inappropriate to have 100% of my long term portfolio in stocks?
How should I create a do it yourself target date fund using one of your Sound Investing portfolios?
What are the tax implications of the portfolios you recommend? Are some better for taxable accounts?
Paul, do you invest in any individual stocks? If not, why not?
I have relied on professional managers for most of my life but would like to quit paying the fees to have someone else do it. How can one feel confident in taking over the management of an account?
What about 50% half small cap value and S&P, AND 50% in a target date fund?
If I am dollar cost averaging is there a point (size of market decline) at which it would make sense to go ahead and invest it all?
Does it make THAT big of a difference if someone lump sums vs dollar cost averaging? which is better/worse?
Is there a small cap value emerging markets ETF you recommend for best in class?
No investment advisor I know recommends a 100% allocation to small value. More common is a tilt toward the favored factor, say, 80% in the market and 20% in small value. What do you recommend?
Do you recommend tax loss harvesting in a taxable account?

⁠https://www.whitecoatinvestor.com/tax-loss-harvesting /⁠

⁠https://www.whitecoatinvestor.com/how-to-tax-loss-harvest-a-large-taxable-account/⁠

12. Does a large cap blend fund that’s equal-weighted compare well with a cap-weighted fund?

12 Small Cap Value Q&A's

Wed, 01 Nov 2023 20:27:23 GMT

Paul answers 12 questions from the AAII New York City Chapter October 2023 Meeting

The video can be watched here- ⁠https://www.youtube.com/watch?v=QjFlcDAlH1k⁠

Paul's section begins at 08:40.

The following links are used in this presentation: Table ⁠B14B⁠, ⁠ETF portfolios⁠, and ⁠SPIVA Report ⁠

1. Do you recommend using index funds for international funds?

2. Since small cap value underperforms the S&P 500 for long periods of time, should SCV be avoided by those who are nearing retirement?

3. I don’t have small cap value available in my 401(k). Will a small cap blend fund have the same impact?

4. How can there be such radical return differences between the small cap value indexes?

5. Are you going to show risk-adjusted returns for the index funds? Treynor ratios? Sharpe ratios? Sortino ratios?

6. How does one juggle the choice between investing in a higher expense ratio ETF (example AVUV) compared to investing in a lower cost index fund? Would the decision be as simple as going with the lower cost fund?

7. If everyone invests in small cap value funds will that reduce the premium in the future?

8. Some say the SCV premium is declining because private equity companies are taking SCV companies private. Any truth to the comment?

9. How do I rebalance a target date fund and a small cap value fund? What gets rebalanced?

10. Please recap what the good, bad and ugly of small cap value funds and ETFs.

11. How long have you been aware of the small cap value premium? Did you know about it before they became popular?

12. Fidelity Freedom TDF 2035 has an expense ratio of .7%. When the expenses are that high does it change your recommendation of adding a small cap value fund?

How to create a financial legacy for a child

Wed, 01 Nov 2023 15:12:30 GMT

Do you want to create a financial legacy for a young person, especially a newborn? This podcast and video explains Paul’s plan for his new granddaughter, which is adaptable by any investor. [Podcast listeners are encouraged to watch the video and/or view the Slides and Tables below]. Paul is joined by Daryl Bahls, Director of Analytics for The Merriman Financial Education Foundation, and Chris Pedersen, Director of Research. Daryl uses “the numbers” to explain possible outcomes and help you assess the variables of a long-term investment plan for the life of a child or grandchild.

You will learn:

How to create a fund for your grandchild, child, or other youngster you want to help, which can build a lasting legacy.
How to put some money aside that can compound tax free or tax deferred for the rest of their life and cause them to likely remain true to your original goals.
How this process works, which theoretically is pretty simple.
How to consider the personal and variable outcomes of this method.
How to use the Tables that simulate for variables.

Paul turns over presentation to Daryl around :15
Chris Pedersen joins in around :45

Daryl Bahls—Tables:
Slides: Fund For A Grandchild—How to create a lasting legacy for your grandchild
Return Tables: Fund For A Grandchild

Read: How $10,000 Will Help My Newborn Granddaughter Have a Better Retirement:

My Worst Investment Ever! What You Do When You Are Young, Is Golden

Wed, 25 Oct 2023 23:21:29 GMT

Paul is interviewed by Andrew Stotz and the ⁠My Worst Investment Ever podcast⁠

BIO: Paul Merriman is a nationally recognized authority on mutual funds, index investing, and asset allocation. After retiring in 2012 from Merriman Wealth Management, which he founded in 1983, Paul created The Merriman Financial Education Foundation, dedicated to providing investors of all ages with free information and tools to make better investment decisions.

STORY: Paul has had a series of bad investments, and they were all driven by emotions. It wasn’t until Paul got the emotion out of that process that his money started to grow.

LEARNING: The first five years of the money you put away can, theoretically, represent 40% of the value of your portfolio over the long term. Start investing early so that you can benefit from the compounding effect.

How I failed the Bogleheads

Wed, 18 Oct 2023 15:15:16 GMT

I went to the Bogleheads Conference with high hopes I would convince guests that small cap value should be at least a small part of every equity portfolio. Many respond that they have all the small cap value they need in a total market index like VTI.

Why I failed: I only had 20 minutes, as compared to 45 a couple of days earlier for the NYC AAII Chapter. I took a dozen slides out of the shorter presentation but still had at least another dozen tables and graphs to address in the 20 minutes. What I should have done is spend the 20 minutes on one table. ⁠That table is B14B.⁠ In this podcast I make the presentation I wish I made at the conference.

If you have a friend you think could use the information, please pass it on.

The best advice this year

Wed, 11 Oct 2023 15:22:53 GMT

In this week’s podcast I focus on two topics: The first is the culmination of a 10 year project that just took a giant leap forward. As you know the mission of our Foundation is to help do it yourself investors make better investment decisions. The bottom line is we want to help them improve their financial future.

While it is not addressed in our written mission, it is our desire to have the work continue beyond what the present group of volunteers can provide. That means finding a stable institution or organization to carry on our work.

The following release from the Western Washington University introduces a new program that will soon establish a ⁠ financial literacy program⁠ that will impact every student who attends WWU. Over the next 100 years this endowment should help millions of students and their families make better financial decisions.

The second topic is about someone I think everyone of our readers should become familiar. On October 11 I will be speaking to the New York City AAII Chapter and on October 13 the Bogleheads Conference in Rockville, MD. In both cases I will be speaking on The Good, the Bad and the Ugly aspects of investing in small cap value. My hope is my presentation will motivate investors to give serious consideration to adding SCV to their portfolio.

While I am excited about the opportunity to present our findings, I must admit the work that Ben Felix, one of our Truth Tellers, has done is about the best I have found on the topic. If you want to see one of the best cases for SCV ⁠please watch Ben do his magic⁠ .

The simple story about 2 Funds for Life

Wed, 10 May 2023 16:15:58 GMT

Paul discusses ways a parent or grandparent might explain 2 Funds for Life to a young adult. In the discussion Paul suggests using the following tables to make a handful of important decisions. Tables 1-4 from his Follow the Math comments-

⁠Equity Index Returns (1928-2022)⁠ to compare the returns of major equity asset classes ⁠Table B13⁠ to show what happens when you combine a small amount of small cap value with a mostly bond portfolio ⁠Table B14A⁠ to show the impact of combining a small amount small cap value with a large cap blend fund

The first objective is to help a young investor understand how a target date fund works and why it is likely to provide a reliable source of income for the balance of their life.

The second objective is to show a young investor how a small amount of a small cap value fund, along with a target date fund, will likely help build an investment portfolio that will allow them to retire with substantially more income and leave more to their heirs.

For the parent or grandparent it will be helpful to watch the videos on ⁠Fixed⁠ and ⁠Flexible Distributions⁠ .

Flexible Distributions Update 2023

Wed, 03 May 2023 23:31:07 GMT

If a retired investor has the ability to use a flexible distribution strategy it will likely produce one of the best financial outcomes in retirement. In this presentation Paul compares the difference in returns and risk between the fixed and flexible distribution strategies.

The discussion compares returns and total distributions for two of the 9 sound investing portfolios.

In the presentation he makes use of the following tables:

⁠Table D1.3 Fixed Distribution S&P 500 Equity Portfolio ($30,000/yr)⁠ ⁠

Table D1.5 Fixed Distribution S&P 500 Equity Portfolio ($50,000/yr)⁠ ⁠

Table E1.3 Flexible Distribution U.S. 4-Fund Equity Portfolio (3%/yr)⁠ ⁠

Table E1.4 Flexible Distribution U.S. 4-Fund Equity Portfolio (4%/yr)⁠ ⁠

Table E1.5 Flexible Distribution U.S. 4-Fund Equity Portfolio (5%/yr)⁠ ⁠

Table E1.6 Flexible Distribution U.S. 4-Fund Equity Portfolio (6%/yr)⁠

For those interested in the historical returns of the 9 portfolios, as well as the complete list of flexible distribution tables:

⁠50/50 Sound Investing Portfolio⁠

⁠Flexible distribution tables (50/50 U.S./Intl)⁠

⁠Flexible distribution tables (70/30 U.S./Intl)

Best-in-Class ETF Recommendations Update

Wed, 15 Feb 2023 23:40:44 GMT

Paul leads off with the news that Chris Pedersen's book 2 Funds for Life is now available as a free PDF to people who sign up for our free newsletter at https://paulmerriman.com/signup/ .

Watch the video here.

Chris Pedersen joins Paul to discuss the 2023 update to his Best-in-Class ETF recommendations. Chris explains the selection process and why the DFA International Value ETF (DFIV) is replacing the iShares EFV fund for the international large-cap blend asset class. They cover the recommended portfolios, the philosophy they are built on, the asset classes they use, and the specific funds they recommend for each asset. Chris and Paul then cover several questions that listeners may have about their next steps or alternatives not covered.

Through the discussion, Chris refers to the following tools and website content that are now updated to reflect the new recommendations:

The Best-in-Class ETF Recommendations page.
The Best-in-Class ETF Portfolios.
The Portfolio Configurator .
The M1 Pies .
The Merriman Aggressive Target-Date Glidepath calculator (copy to your Google Drive Account to edit it).
The Sound Investing Portfolios Chart .

The best investment we will ever make! and Q&A

Tue, 15 Nov 2022 16:36:30 GMT

The first part of this broadcast describes the investment strategy Paul and his wife are giving to their latest grandchild. After Paul describes the strategy, Daryl Bahls, Director of Analytics for The Merriman Financial Education Foundation, shares tables that represent the 95-year potential financial implications of this investment. Then, Chris Pedersen, our Director of Research, Daryl and Paul address the following questions:

· What’s the best way to compare the risk and return of different combinations of equity asset classes?
· How should someone move a major part of their portfolio from bonds to equities? Dollar cost average or make a lump sum investment?
· Which is better: the 10-fund portfolio or Chris’ 2 Funds for Life?
· What kind of problems are investors having at M1 Finance?
· What ETFs is Chris considering when he reviews his picks next year?
· What kind of returns should we expect from small-cap-value funds in the future?
· How should future returns of a globally diversified total market fund, like Vanguard Total World ETF (VT), be compared to the Worldwide 4 Fund Portfolio?
· Why do you recommend different ETFs for taxable and tax-deferred accounts?
· What do you plan to do to help investors make the best of their 401k investment choices?

See: New Tables by Daryl Bahls:

Fund for a Granddaughter

No-Nonsense Portfolios ‘Quilt Chart’ (1970 to 2021)

7-Sound Investing Portfolios (50-50) – 2022 (color)

(Paul makes reference to Table H1 )

Get your copy of: 2 Funds for Life—A quest for simple & effective investing strategies by Chris Pedersen at Amazon ( https://amzn.to/3BxTFoM ) or other online book sellers.

Watch the video here.

7 Things You Should Be Doing With Your Retirement Portfolio

Tue, 19 Jul 2022 18:01:25 GMT

In this engaging interview, Paul talks with Stan The Annuity Man on his “Fun with Annuities” podcast. ( https://www.stantheannuityman.com/ ). They discuss:

The seven big things you need to know about investment
Putting children on a glide path
Avoiding market-timing
Investing is simple

Key Takeaways:

Figure out a way to identify what equity asset classes you should have and figure out how to put them together.
Everyone needs a glide path, and in theory, it starts when a child is born. Parents and grandparents must immediately take steps to put their children on a glide path – all equities while they’re young and more fixed income as they get older.
Don’t panic. If you want to be a successful long-term investor, you have to stay the course. Don’t market time; you might be able to avoid losses short-term, but you will pay the price in the long term.
Investing is simple, but it takes faith in the system. It is easy to set it and forget it if you can keep your hands off the trigger. Winning in investing means thinking defensively, not aggressively.

Here are Stan’s notes:

Paul Merriman’s 60-year legacy of helping people with their money is unmatched. His “tell the truth” passionate approach should be the benchmark for all financial advisors and is the obvious foundation for the current march to all things fiduciary.

Talking to Paul is always a joy to me and a gift to my listeners and viewers. Whether he talks about a specific portfolio or his passion for helping young people be better investors, it’s inspiring, motivating, educational, and uplifting.

This podcast was absolute gold and should be replayed repeatedly if you are serious about your money. Paul went over the seven things you need to do right now with your portfolio. Some are no-brainers, and some are new. The good news is that they all are free. Everything on Paul’s site is free. The detailed portfolio recommendations are free. The weekly newsletter and PDF download of his latest book are free. Paul Merriman is a true “financial advice philanthropist.” He truly wants to help you be a better investor.

We discussed that young people believe crypto-currency is safer than the S&P 500. How much damage will damage to young people’s financial future? Paul weighs in with his take and possible solution to this crisis.

According to Paul, investing has never been easier. Investing has never been more efficient. Paul covers the unfortunate bad news. We also discussed that there are “many very good people who are doing bad things to the people who trust the good people. In other words, some bad advisors are giving bad advice. Paul and I weigh in heavily on this tragic topic.

Paul Merriman is a “national treasure.” I am having a ball and celebrating every extra day. Enjoy the podcast.

“You don’t have to be Warren Buffet to get exceptional returns; you just need to be in the types of asset classes that have historically paid the premium—it’s not about the price you pay, it’s about the value you get.” — Paul Merriman.

* * * * *

Stan The Annuity Man is one of The Merriman Financial Education Foundation’s Truth Tellers, soon to be featured in our free twice-a-month newsletter. Subscribe now: https://paulmerriman.com/signup and get your free copy of our latest book We’re Talking Millions — 12 Simple Ways To Supercharge Your Retirement.

“Fun With Annuities® Podcast” is part of the wealth of resources available from The Annuity Man® who brings his “brutally factual blend of education and entertainment to the world of annuities.” Learn everything about the annuity category on your terms and time frame, with no sales pitches. Author of 7 books on annuities, The Annuity Man® will explain all annuity types in detail and dive deep into unique contractually guaranteed transfer of risk strategies that can be applied to your specific situation.

How To build the best comeback portfolio

Wed, 18 Mar 2020 15:20:59 GMT

When the market finally turns around and heads back up, what kind of portfolios are likely to perform better than the market in general? In this podcast Paul shares what he calls the Comeback Portfolio. During the discussion he uses some existing tables plus a couple of new tables to make his case. For those who want to download the tables here are the links in order of use:

⁠Summary of 1, 15 and 40 years of Equity Returns (1928-2019)⁠

⁠Table 1⁠ and ⁠Table 3⁠ from Annualized Asset Class Returns by Decade: 1930-2019

⁠Ultimate Buy and Hold Worldwide Equity Portfolio Tables (50% US / 50% Int'l)⁠

⁠4-Fund Combo Equity Portfolio Tables (100% US / 00% Int’l)⁠

⁠Fine-Tuning Table 4-Fund Combo Equity Portfolio⁠

On April 11, Silicon Valley AAII is hosting an online workshop with Paul and Chris Pedersen. For those interested in attending please find the details at ⁠https://www.eventbrite.com/e/sv-aaii-april-main-event-the-ultimate-buy-and-hold-strategy-tickets-100032899094⁠

Check out hundreds of free articles, videos, books and mutual fund/ETF recommendations at ⁠PaulMerriman.com⁠ and sign up for Paul’s free weekly newsletter ! ⁠

Could this be the #1 reason to use index funds?

Thu, 26 Dec 2019 13:17:50 GMT

Paul was planning a traditional “Happy Holidays!” podcast but woke up to information that set his hair on fire. While he has been writing articles about index funds for decades, the most read is “ 30 reasons to fall in love with index funds ”. While the most common advantages are low expenses, low turnover, massive diversification, Paul suggests the #1 reason may be staying as far away as you possibly can from commission-based sales people, con artists and other conflicts of interest typically not associated with index fund providers.

Many do-it-yourself investors rely of services that have a large presence on the internet. A wonderful aspect of the internet is the ability to do meaningful due diligence on the reputations of those offering their “special ways” to perform better than index funds. But can you depend on the information you find on the internet?

Paul discusses the services of “search engine suppression consultants.” These very clever people are wizards at making bad information disappear. In fact, in many cases their fees are not earned until all the damaging information is totally eliminated. He reads an example of one such article that claims to address the pros and cons of a well-known investment manager. The pros are strong convincing points, while the cons are almost the mistakes that we would expect would be found in any firm.

Paul also addresses the outrageous life-changing fees teachers are being charged and the work of an unscrupulous sales person who holds himself out as a friend of his community.

The bottom line: None of these bad investments would be available through those who supply very low-cost index funds. The low costs eliminate almost any chance to misuse the investor.

20 things you should know about diversification

Thu, 11 Jul 2019 14:22:54 GMT

In this podcast I offer 20 ways diversification impacts investors who use the portfolios we recommend.

The topics include diversification to manage risk: stock risk, market risk, asset class risk, mutual fund risk, investment advisor risk, portfolio risk, time diversification, tax risk, social responsibility risk, bond risk and the risk of losing trust in your portfolio.

Before discussing diversification, which is always about risk management, I present the returns of the Best-In Class ETF portfolio The goal of that portfolio was to recreate the DFA portfolio I hold in my own account. For the first half of 2019, the advantage goes to the B-I-C ETFs. Way to go Chris Pedersen !