Sound Investing

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

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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 .

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.

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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 !