In this episode, Paul Merriman shares insights into upcoming events, including his presentation at the Garrett Planning Network Retreat, as well as his reflections on asset allocation, government bond strategies, and the benefits of various portfolios for different life stages. Tune in for a deep dive into how different funds and asset classes perform over the long term, and how to optimize your investment strategy, regardless of age or risk tolerance. Key Topics Covered: 1. Long-Term Returns Comparison Paul compares two small-cap value funds: the Vanguard Small Cap Value Fund (VSIAX) and the DFA Small Cap Value Fund (DFFVX). To find long-term returns for these funds, Paul uses Morningstar’s chart function , which allows users to view the maximum (MAX) historical data for any given fund, helping to compare the performance of these funds since their inception  2. Best Asset Allocation for Retirees The best asset allocation for retirees typically depends on individual factors, such as risk tolerance and life expectancy. Generally, Paul suggests a moderate equity allocation of 40-60% in stocks, with the rest in fixed income, for retirees who have enough saved up to comfortably fund their retirement . 3. Asset Allocation for an 83-Year-Old Retiree For an 83-year-old retiree, Paul discusses a more conservative portfolio with two-thirds in bonds and one-third in equities . This conservative approach, which mirrors the allocation in Vanguard’s target-date funds, aligns well with retirees who are less reliant on aggressive growth but still need some equity exposure to combat inflation . 4. Why Use Three Government Bond Funds? Paul advocates for a diversified bond strategy that includes TIPS (Treasury Inflation-Protected Securities), short-term government bonds, and intermediate-term government bonds . This combination offers a balance of safety, growth potential, and reduced volatility compared to using just one bond fund, and provides a more stable return over time. 5. How the Worldwide 4 Fund Portfolio Works The Worldwide 4 Fund Portfolio is structured with 25% in large-cap blend (U.S), 25% in large-cap value (INTL), 25% in small-cap blend (INTL), and 25% in small-cap value (U.S.) , giving you a diversified mix of U.S. and international equities. This approach optimizes for both size and value , ensuring a balanced exposure to market growth, volatility, and global investment opportunities. 6. Should a 26-Year-Old Use the 2 Funds for Life Portfolio Yes, a 26-year-old could benefit from the 2 Funds for Life Portfolio , which typically includes the A TARGET DATE FUND and a small-cap value fund . This strategy allows young investors to focus on equity growth, benefiting from the long-term appreciation potential of small-cap value stocks while minimizing risks associated with bonds at an early stage 7. Managing the 2 Funds for Life Portfolio with S&P 500 & Small-Cap Value For someone using only the S&P 500 and small-cap value fund , Paul suggests a flexible allocation approach. You might start with a 50/50 split , or adjust according to your risk tolerance. The small-cap value fund tends to be more volatile but offers higher returns over time, while the S&P 500 provides more stability with lower volatility . 8. Can There Be a 3 Funds for Life Portfolio? Yes, a 3 Funds for Life portfolio could include the S&P 500 , large-cap value , and small-cap value . Paul suggests mixing these three equity asset classes to achieve a balanced portfolio that offers growth potential without overexposing yourself to risk. ⁠ Resources: ⁠1928-2024 Quilt Chart (K1a)⁠⁠ ⁠⁠Sound Investing Table (H2a)⁠⁠ Chris Pedersen’s 2 Funds for Life table⁠⁠ . ⁠⁠

In November 2020 The Merriman Financial Education Foundation released “We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement.” The purpose of the book was to focus on a series of very simple steps any investor might take to improve their financial future. "Understanding how to invest wisely for your future can be daunting. Many people never get started for fear of making mistakes. Others make choices based on hearsay and hope, sold on hype or risk aversion. In "We're Talking Millions!" you will learn why and how to make a handful of smart choices that can turn modest regular savings into a secure future. You'll discover "12 Small Steps with Big Payoffs," each of which can add $1 million or more to your retirement nest egg if you start in your 20s or 30s. These steps are well known.” The book has had a huge impact on an untold number of readers. The numbers are unknown because the Foundation offer the ⁠book free as a pdf⁠ , as well as a ⁠free link to the audio version⁠ that was read by Truth Teller Don McDonald. While the book has had almost 400 online Amazon reviews (averaging 4 1/2 stars), the approximately 100 written reviews have over 95% 5 star ratings. Here is one from a young student (age 19 at the time) who is now in medical school! ⁠5.0 out of 5 stars Life-changing book for young people interested in investing⁠ Reviewed in the United States on December 17, 2020 Format: Paperback ⁠ Verified Purchase⁠ "We're Talking Millions" was a life-changing book. I am a 19 year-old college student who was directed toward Mr. Merriman's book as a great resource for first time investors. His book was the perfect resource for someone with little to no prior knowledge about investing. It starts by outlining the twelve steps to boost a retirement fund, listing tips and tricks along the way. One of the most helpful parts for me was that all of the investment lingo was clearly defined and explained, and I could get a very clear sense as to how each of these small steps fits into the overall puzzle. The book then outlines how to get started: explaining the "Two Funds for Life" investment plan, what investment companies are best to use, and suggesting specific investment funds. I cannot recommend this book enough!! I feel confident about my investment plan after reading this book, and I plan to share it with as many of my peers as possible. I have already given it to my sister and best friend. If you are looking for information about investing and don't have the energy to read a long, dense investing book, then " ⁠We're Talking Millions"⁠ is the book for you! It is interesting, short, and extremely informative, and I hope that it helps you as much as it helped me. Now Paul has recorded this podcast and ⁠video⁠ to discuss the 12 steps. The video was produced as part of a special offering to introduce ⁠Western Washington University alumni to The Merriman Financial Literacy Program⁠ that is working to educate all WWU students on the personal finance topics that will be an important part of their future. Our hope is you will pass along these links to others in your life who might benefit from this free educational information. Is there someone in your life you think could benefit from the discussion of these 12 huge decisions? Here are several ways to access this information: The following link is to a free pdf of our book, "We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement.” A second and third link takes you to a 2 hour video and podcast on the 12 million dollar decisions. And finally a very short (12 minute) podcast or video review of the 12 decisions .

Many of you have been submitting thoughtful questions through our AI chat, particularly on fund selection, asset allocation, and broader investment strategy. It’s encouraging to see this level of engagement with the core principles that shape long-term financial success. While the AI generally provides sound and efficient guidance, there are times when its responses lack the nuance or clarity that experience can bring. To provide deeper context and help you make more informed decisions, I’ve selected several recent questions to address—drawing from the AI’s suggestions where appropriate and adding insights based on decades of research and practice. One brief correction from a recent update: I previously mentioned a resource for ETF investors in Canada, Europe, and the U.S., but misspoke on the name. The correct website is ETFAtlas.com . Jack, the developer behind it, is creating a valuable tool for globally minded investors. Your candid feedback—what’s working well and what could be improved—will be essential as he continues building out the platform. Look for additional features to roll out in the months ahead. Your Top Questions Answered Let's jump right into what's on your mind. What Sound Investing Portfolio does Paul use and why? You know I love talking about this, and for those who aren't familiar, you can find all our "Sound Investing" portfolios on Table H2A on our website. You'll see how different portfolios compare in terms of risk and return over decades—it's pretty eye-opening! I'll be sharing what I personally do, and why I like massive diversification. It's not about hitting a home run for me; it's about being prepared for the long haul. 3:02 What funds should I use to set up a Roth IRA account for a 21-year-old? This is a fantastic question, and it really comes down to how involved this young person wants to be. We'll explore options from simple target-date funds to more aggressive two-fund strategies. I've got a great story about how I set up an account for my own grandchild to be a long-term learning lesson. 13:06 Do you think Vanguard funds will get lower returns than Avantis and DFA ETFs? Ah, the classic index versus "non-traditional" index debate! There's a lot to unpack here regarding how these funds are constructed and what their long-term performance has shown. We'll look at the differences and what that could mean for your returns. 21:46 Is there a table that represents using the S&P 500 and Aggregate U.S. Bond Index rather than your 3-fund bond portfolio? You're looking for specifics on bond allocations, and yes, we have a ton of tables that slice and dice this. While our three-fund bond strategy is great, we can certainly see the impact of using the Aggregate U.S. Bond Index instead and what that might mean for your risk and return. 26:51 I am 45, hoping to retire by 55-60. Is 25% in bonds too little? This is a question many people face as they get closer to retirement. The "right" answer depends on a lot of factors, like your overall portfolio size and spending needs. We'll talk about what to consider when deciding on your bond allocation for that critical decade leading up to retirement. 31:04 Does it make sense to have non-taxable bonds in an IRA? This one is usually a straightforward "no" for most do-it-yourself investors. 34:34 Your quilt chart (1928-2024) shows a 2-fund portfolio with 50% each small cap value and large cap value. Isn’t that too much in small cap value? It might seem like it, but when you dig into the historical data, this combination often shows surprisingly similar risk to more conservative portfolios, but with potentially much higher returns. You can actually see this graphically in our Quilt charts K6a and K7a . 35:39 How often should I rebalance? There are so many rebalancing strategies out there! We'll talk about what the research is showing regarding annual, biennial, or even less frequent rebalancing, especially for the equity portion of your portfolio when you're still accumulating wealth. You might be surprised by how little you need to "fool around" with it. 38:09 In your podcasts you talk a lot more about the 4-fund portfolios (WW and U.S.) than you do the all-value portfolios. The all-values have higher returns but you recommend them less often. Why? This gets right to the heart of human nature and sticking with your plan. While all-value portfolios have shown higher returns historically, they can be a real test of discipline during long periods of underperformance. You can see this interplay on our Quilt Chart of U.S. Only 4-Fund Portfolios : . We'll discuss why belief in your portfolio is paramount. 40:19 Are there conditions where the all-value portfolios will underperform the more balanced portfolios? Absolutely. History shows us that no single strategy wins all the time. We'll look at past periods where value has struggled relative to other asset classes and what that means for investors. 40:19. (Answer is integrated with previous question) I’m 57. How much should I have in bonds? This is a common question, and while there are general rules of thumb like "your age in bonds," it really depends on your personal risk tolerance, your financial goals (including what you want to leave to others), and how much money you have relative to your living expenses. Sometimes, talking with an hourly advisor can be incredibly helpful here. 49:30 Thanks for tuning in and sending in your questions. It really helps me figure out what's on your mind. If you find this helpful, please share it with others, and consider leaving a comment or review wherever you get your podcasts. You can always reach me at Paul@PaulMerriman.com if something's on your mind. We're here to help you build a better financial future!

On this week's podcast, we dive into my fascinating six-month journey with AI , exploring how tools like ChatGPT are revolutionizing access to information and informed guidance. Drawing inspiration from Seth Godin's insightful piece, "Education is Free, Learning is Expensive," we'll discuss why true learning demands commitment and effort , especially in today's information-rich world. I've discovered AI's power extends far beyond simple fact-checking. It's a game-changer for understanding diverse perspectives, even helping me tailor advice to different generations. My goal is to help you leverage this incredible tool to build a better financial future. We'll also gain some valuable perspective on investment returns , especially after the unique first half of the year. While six months isn't a long-term indicator, it's certainly given us plenty to discuss! Many are wondering if now's the time to jump into international equities, especially as they've shown unexpected strength. Understanding Diversification and Long-Term Investing I'll share my philosophy on successful long-term investing as a buy-and-holder : identifying equity asset classes that offer a premium for risk and grow faster than inflation. We'll examine the "ultimate buy and hold portfolio," which strategically blends U.S. and international equities, and analyze its performance over the past six months, comparing it to other popular strategies from Vanguard and DFA. You'll be surprised to see how closely Avantis and DFA ETFs performed, despite some significant individual fund differences. We'll also delve into the fascinating relationship between the U.S. dollar's value and international equity performance . For a deeper dive, I highly recommend checking out this illuminating table from Brandes Investment Partners: https://www.brandes.com/insights/chart-of-the-week/us-dollar-and-international-equities-03312023 . It clearly illustrates how the dollar's strength and weakness correlate with international returns, offering historical examples of how these trends ebb and flow. Chasing returns isn't the answer, but a diversified, buy-and-hold approach can significantly reduce volatility and smooth out your equity returns—a major advantage, especially for retirees. The Allure and Nuance of Long-Term Returns We'll then shift our focus to long-term performance data , specifically looking at the last 15 years through June 2025. You might be surprised to learn how the S&P 500, growth stocks, and even Berkshire Hathaway have compounded over this period, and how these returns compare to historical averages and expectations. While U.S. growth has been a clear winner recently, we'll discuss why historical norms suggest a different long-term outcome for value and small-cap stocks. I'll also address the popular Total Market Index and offer a candid take on whether it truly outperforms the S&P 500 for those not seeking broader diversification. We'll explore why, in some cases, a simpler approach might be just as effective, or even more so. The Power of Information and Future Tools Finally, I'll emphasize how today's access to free information from sources like Morningstar empowers you to conduct research that was unimaginable just decades ago. Plus, I'll give you a sneak peek at a new, exciting, and largely free tool coming soon from AtlasETF.com , which will allow you to easily test different portfolio strategies. Join me as we explore these crucial topics and continue to empower you on your journey to becoming a more successful long-term investor.  What are your thoughts on using AI for financial planning? We'd love to hear from you!

Today, we're diving into something super important for anyone interested in mutual funds: the ⁠SPIVA Report⁠ , it's a big deal, and we'll break down why. But before we get to that, a quick note about August 4th . Chris, Daryl, and I are getting together that day to figure out how we can do even more to help you, not just now, but for the rest of your life as we all get closer to retirement. This is a huge goal, and we'd love your input! What can we do to improve our educational materials? Please email me your ideas at ⁠paul@paulmerriman.com⁠ . We're thinking about everything, from AI's role to helping you build a portfolio that truly lasts a lifetime, send your thoughts my way! The SPIVA Report: Active vs. Passive Investing Alright, let's talk ⁠SPIVA⁠ . This report has been around since 2002, tracking the performance of active versus passive mutual funds . They analyze virtually every actively managed fund, comparing them to appropriate market indexes. They go to great lengths to ensure fair, "apples-to-apples" comparisons. A crucial aspect they address is survivorship bias . Many underperforming funds get merged or liquidated. If you were investing, these funds were part of your initial choices. SPIVA accounts for all funds, not just the ones that survived, giving a much more accurate picture. This is a key difference from other reports that only look at surviving funds, which can make active management look better than it is. They also track style consistency – ensuring funds stick to their stated investment approach, unlike some active managers who might "drift" in their investments. What the Data Reveals: The Long-Term Advantage While single years can show active managers doing okay, the real story unfolds over longer periods. Let's look at large-cap core funds (like those tracking the S&P 500): 1 year: ~76% underperform. 10 years: 96% underperform! 15 years: 97% underperform! 20 years: 93% underperform. This is a powerful reason why I advocate for index funds . They're built on a formula, not on human managers trying to guess market winners. Across almost all equity asset classes, over 90% of actively managed funds underperform over 20 years. Why? The first advantage for index funds is lower expenses . While active fund fees have come down, they're still a major factor. The biggest hidden risk, though, is manager's picks and timing . Active managers try to beat the market with individual stock selections, but the data shows it's incredibly risky. (By the way the report doesn’t address taxes on active funds and that can be another 1% drain annually.) SPIVA's quartile data highlights this: for small-cap value over five years, the top 25% of active funds started at 10% or more. But the bottom 25% earned significantly less than 7.8%. This means you're taking on volatility and the risk of vastly underperforming your chosen asset class. The report directly compares index returns to the average active fund in the same asset class. For small-cap value over 10 years, the index compounded at 8.2%, while the average active fund hit 7.3% – nearly a 1% difference! Over 20 years, for small-cap VALUE funds, the index returned 9% versus 7.4% for the average fund. These seemingly small differences translate into millions of dollars over a lifetime. Survivorship & Patience Another eye-opening stat: over 20 years, only 36% of all domestic funds are still in business. For large-cap growth, where the action has been recently, only 26% of funds from 20 years ago are still around. This suggests poor performance led to closures or mergers, hiding underperformance from investors. In the end, you, the investor, are the hardest worker. Your discipline to stay the course during tough times is paramount. The SPIVA report is a quality piece of research, factual and fair. While the future won't be identical to the past, it often "rhymes." The longer your investment horizon, the more likely choosing index funds (traditional or non-traditional) will lead to success, avoiding performance that may be more luck than skill. Patience is key, and we want you to have patience in owning funds with a very high probability of success. We are rooting for your investment success, not just for you, but for your children and grandchildren! So, good luck, and don't forget to send those suggestions for our August 4th meeting to ⁠paul@paulmerriman.com⁠ .

Watch video here. Join Paul Merriman, Chris Pedersen, and Daryl Bahls for a deep dive into questions facing today’s investors! In this episode, our team tackles a wide range of topics designed to help you make smarter financial decisions, whether you’re a seasoned DIY investor or just getting started. Main Topics Covered: 1. Midcap Funds – Are They Necessary? 2:24 We break down why midcap funds often get left out of recommended portfolios, the impact of fund overlap, and whether including them really adds value or just complexity. 2. Listener Allocation Questions 12:49 Hear real-life portfolio allocation questions from our listeners—including how to balance S&P 500, value, and midcap funds. The team discusses the pros and cons of various strategies and how to avoid unnecessary overlap. 3. The Risks of Small Cap Growth 19:10 Discover why small cap growth funds can be risky, the historical performance data, and why value funds may be a better long-term bet for most investors. 4. Hourly Advisors & DIY Investing 22:41 Thinking about ditching your advisor and going DIY? We discuss the benefits and challenges of working with hourly advisors, how to find one that supports your strategy, and the importance of sticking with a plan you understand. 5. Capital Gains & Taxes 27:45 Got questions about selling investments and minimizing taxes? While we don’t provide personal tax advice, our experts outline the key considerations and why consulting a tax professional is essential for big moves. 6. Financial Freedom Mindset 30:05 It’s not just about retirement—it’s about saving for freedom! Learn how reframing your financial goals can keep you motivated and focused for the long haul. 7. Avantis vs. DFA Funds 31:15 Curious about the differences between Avantis and DFA ETFs? Chris and Daryl compare these two fund families, explaining how their philosophies align, where they differ, and how to choose the best fit for your portfolio. 8. AVGE for Granddaughter? 38:32 Paul shares his personal approach to investing for his granddaughter, comparing AVUS, AVUV, and AVGE, and why teaching young investors about asset class behavior can be more valuable than just chasing returns. 9. Should You Avoid Growth Funds? 45:53 They explain why “growth” funds aren’t always what they seem, the pitfalls of chasing expensive stocks, and why a tilt toward value and small cap may offer better long-term results. 10. The Rule of 72 – Power of Compounding 52:47 Learn how to use the Rule of 72 to teach young investors (and yourself!) the massive impact of compound returns over time. It’s a simple math trick that can change your financial future. Daryl references this table- Sound Investing Portfolios 1970-2024

In this special episode, Paul Merriman reflects on six decades of financial evolution, sparked by his son's 60th birthday. He draws fascinating comparisons between life and investing in 1965 and today, offering invaluable insights for every investor. What You'll Learn: A Look Back at 1965: Paul revisits societal norms, income levels, and the investing landscape of 60 years ago, including startling facts about mutual fund loads and stock commissions. The Evolution of Investing: Understand the monumental shift from individual stock picking to the dominance of mutual funds and the revolutionary impact of index funds since their inception. Market Returns & Bear Markets: Gain perspective on historical S&P 500 returns, including adjustments for inflation, and a review of major bear markets over the past decades. The Power of Low Costs: Discover how investment costs, from loads to commissions, have drastically reduced, making it easier and more affordable for today's investors. Modern Investment Tools: Paul highlights the advent of crucial financial tools like IRAs, 401(k)s, and target-date funds that weren't available in 1965, empowering today's investors. Academic-Driven Investing: Explore the rise of academic influence in investing, with a focus on firms like Vanguard, DFA, and Avantis, and why their approach offers a trustworthy path to your financial future. The Role of AI in Your Financial Journey: Paul shares his perspective on how Artificial Intelligence can empower investors to make informed decisions and find reliable financial guidance. Top Financial Education Resources: Learn about the highly recommended (and free!) ⁠"Rebel Finance School"⁠ by Alan and Katie Donoghan for new investors, and explore how to access financial literacy programs like iGrad. The Importance of Financial Literacy: Paul emphasizes that financial literacy is often overlooked in traditional education and is essential for building a robust portfolio that will support you for a lifetime. DIY Investing Philosophy: Paul reaffirms his core mission as a teacher, empowering listeners to "do it yourself" and build their financial future with confidence. Truth Tellers: Paul asked our listeners for recommendations for ⁠Truth Tellers ⁠ as well as providing the list of our Truth Tellers in the show notes. Our Truth Tellers ⁠William J. Bernstein⁠ ⁠Ben Carlson, CFA ⁠ ⁠Jonathan Clements, Financial Writer/Author⁠ ⁠Larry Swedroe, Author, Speaker, Chief Research Officer ⁠ ⁠Dr. James Dahle, MD and the founder of The White Coat Investor ⁠ ⁠Morningstar – Christine Benz and John Rekenthaler, Financial Writers ⁠ ⁠Stan The Annuity Man, Annuity Expert⁠ ⁠George Sisti, Certified Financial Planner® ⁠ ⁠Rob Berger, podcaster, writer and author ⁠ ⁠Tim Ranzetta, ngpf.org⁠ ⁠Two Cents⁠ ⁠Tom Cock and Don McDonald Vestory⁠ ⁠Ben Felix ⁠ Don't miss this insightful episode filled with historical context, practical advice, and forward-looking strategies for your wealth-building journey.

Today I’ve got a lot to share: my recent trip to Western, new educational tables from Daryl Bahls, a must-read article by Ben Carlson, a fantastic free resource called Rebel Finance, and some takeaways from the latest Bogleheads meeting. 00:48 Trip to Western: Teaching, Presenting, and Giving Back It’s been a wonderful week. I spent two full days at Western, presenting to seniors about to graduate, to faculty and staff, and to a personal finance class. I also had a fantastic hour with the Financial Management Association Club. These students were fired up about their financial futures, and it was energizing to see their interest. A big part of my visit was to help everyone—students, faculty, and staff—see how they can get involved in building financial literacy on campus. And to make things a little more exciting, I offered a $1,000 drawing for students. Whoever won could take the money with no strings attached, but I also offered to personally help them set up a Roth IRA and invest it wisely. 03:49 Daryl Bahls’ New Tables: The Power of Compound Growth A huge thank you to Daryl Bahls, who put together some new tables for my presentations. These tables are more than just numbers—they’re a window into the power of long-term investing. $1000 in Roth IRA on 22nd birthday We looked at what happens if you invest $1,000 into a Roth IRA at age 22 and never add another dime. With assumed returns of 8%, 10%, and 12%, the results are astonishing. That $1,000 can grow to $30,000, $69,000, or even $156,000 over 45 years. But the story doesn’t stop there—after you start taking 5% withdrawals in retirement, and even after you pass it on to your heirs, the money keeps working, potentially multiplying your original investment by hundreds or even thousands of times. $100/mo for 45 years in Roth IRA starting on 22nd birthday Then we explored what happens if you save $100 a month for 45 years. The numbers explode: at 8%, you end up with nearly half a million dollars; at 10%, over $900,000; at 12%, $1.7 million. And after decades of withdrawals and inheritance, the cumulative benefit can reach into the tens of millions. One of the key lessons here is that time and consistency are your best friends. Even small amounts, given enough years and the magic of compounding, can become life-changing sums. 16:29 Lessons on Sequence of Returns A quick but crucial side note: When you invest a lump sum and let it grow, the sequence of good and bad years doesn’t matter—over the long haul, but the sequence of returns is very important. But when you’re adding money regularly (dollar-cost averaging), the sequence does matter. Buying more shares during downturns can actually boost your long-term results, especially in volatile asset classes like small-cap value stocks. 29:14 The Importance of Financial Education I know a lot of people, especially young folks, feel like they can’t get started with investing—maybe they think they don’t have enough money, or it’s too complicated, or they’re afraid of losing it all. These are real concerns, but they can be overcome. Sometimes you just need the right teacher, or even a preacher, to help you take that first step and keep moving forward. One of my biggest takeaways from this week is how many young people leave school without basic money skills. That’s why I’m so passionate about the Merriman Financial Literacy Program at Western and resources like iGrad, which are now available to all graduates at no cost. 32:00 Rebel Finance: Free, Practical Education Speaking of great teachers, I want to give a big shoutout to Alan and Katie of Rebel Finance. Thanks to an email from ChooseFI, I discovered their f ree 10-week course . I’ve watched their introduction and first session, and I’m impressed by how they keep things simple, interactive, and fun—even with thousands of participants tuning in live. They cover everything from budgeting to investing to negotiating a raise, and they archive all their content on YouTube . If you or someone you know needs a practical, supportive entry point to personal finance, I highly recommend checking them out. Links are in the notes. 38:48 Ben Carlson’s Article: “On the Inevitability of Bear Markets” I also want to spotlight an article by Ben Carlson, “On the Inevitability of Bear Markets.” Carlson lays out the odds: 32% chance of a bear market in any given year, 77% over five years, 95% over ten years. But here’s the encouraging part: The longer you stay invested, the higher your odds of seeing positive returns—100% for 20-year periods in the S&P 500. Bear markets are a fact of life, but so is long-term growth if you stay the course. 44:00 Bogleheads Meeting: Community and Sharing This week, I also attended a local Bogleheads chapter dinner—a gathering of people who believe in index investing and lifelong learning. We swapped ideas about financial planning tools, shared stories about helping our parents and kids, and just enjoyed a sense of community. I met a bright high school junior who’s already reading “We’re Talking Millions” and learning about investing. The future is in good hands! And don’t forget: I’ll be speaking at the Bogleheads Conference in San Antonio this October. Alan and Katie from Rebel Finance will be there too as guests, not speakers! Check the show notes for more info. 47:09 AI in Financial Education A quick note on the future: Artificial intelligence is changing how we learn and teach about investing. I’m using AI more and more to organize my thoughts and create better educational content. If you’re experimenting with AI in your own financial journey, I’d love to hear about your experiences. We might even do a white paper or a special episode on AI and investing soon. 48:00 Final Thoughts and Gratitude Let me close with this: Start early, even if it’s just a small amount. Stay consistent, and let time and compounding do the heavy lifting. Use the resources and communities around you—whether it’s Rebel Finance, Bogleheads, or your own circle. Don’t let fear or complexity hold you back. The math is powerful, but the mindset is even more important. And if you find value in what we’re doing, please help us spread the word—like, subscribe, share, or leave a review. Every bit helps us reach more people and make a bigger impact. Thank you for your support, your questions, and your commitment to learning. Good fortune, and happy investing! Watch Paul's video What Every Young Investor Should Know

In this episode, Paul Merriman details his upcoming presentations at Western Washington University, where he will be connecting with students, professors, and staff about the critical importance of personal finance education. Paul also gives practical investing advice, including a hands-on guide to using Morningstar’s chart and comparison tools to analyze mutual funds and ETFs. Special Feature: Free Online Financial Literacy Course Paul spotlights a fantastic, free multi-week financial literacy course led by Alan and Katie Donoghan—nationally recognized educators from the UK. This course is perfect for first-time investors of any age, as well as anyone looking to build a solid foundation in personal finance. Course Dates: The next session starts 2 June 2025 at 8pm UK time . Sessions run weekly throughout the summer. What’s included: Engaging lessons on investing basics, budgeting, mortgages, and money management—delivered in a fun, approachable style. Format: Live online sessions (with replays on YouTube), each followed by an expert Q&A. Who’s it for: Anyone—from college students to adults in their 40s or 50s—looking to take control of their financial future. Previous students give rave reviews: Over 15,000 people have enrolled, with glowing testimonials from participants who now feel confident and empowered about their finances. How to join: Register here for free and find the intro video and full schedule. All sessions are accessible worldwide. Morningstar Tools & Tables Referenced: Paul walks listeners through using Morningstar’s chart and comparison features, specifically referencing the following funds and time periods: VFINX (Vanguard 500 Index Fund): Time period: From August 31, 1976 to May 23, 2025 Used to illustrate long-term S&P 500 performance TESIX (Franklin Mutual Shares Fund): Time period: From August 31, 1976 to May 23, 2025 Compared side-by-side with VFINX to show how a value fund performed versus the S&P 500 over nearly 50 years DFLVX (DFA US Large Cap Value Fund): Time period: From 1993 to 2025 Compared with TESIX and VVIAX for large cap value performance VVIAX (Vanguard Value Index Fund): Time period: From 1993 to 2025 Used for comparison with DFLVX and TESIX DFSVX (DFA US Small Cap Value Fund): Time period: From 2000 to 2025 Compared with TESIX for small cap vs large cap value performance AVUV (Avantis US Small Cap Value ETF): Time period: From 2021 to present Compared with DFLVX and VVIAX for recent small cap value performance How Paul Uses Morningstar: On Morningstar, Paul suggests: Navigating to the “Chart” tab for each fund Selecting “Max” to see the longest available performance history Entering ticker symbols (like VFINX, TESIX, DFLVX, VVIAX, DFSVX, AVUV) in the “Compare” box to view multiple funds together- make sure any funds being compared to the primary fund have a track record from a date at least as long as the primary fund Using Morningstar’s Chart and Compare tools: Compare VFINX vs TESIX (1976–2025) Compare DFLVX , VVIAX , and TESIX (1993–2025) Compare DFSVX vs TESIX (2000–2025) Compare AVUV vs DFLVX and VVIAX (2021–present) PDF showing the above comparisons

Prior to discussing his topic of the day, Paul shares his thoughts on a ⁠recent podcast ⁠ featuring Truth Tellers Tom Cock and Don McDonald, joined by Weston Wellington from Dimensional Fund Advisors. Weston weighs in on some of the most critical issues facing investors right now. Here are the topics on the podcast with Tom Cock and Don McDonald- 0:53 Weston Wellington on volatility and market uncertainty 2:47 Why volatility is the “price we pay to play” 3:32 The media’s role in investor anxiety 4:57 Should investors act on daily financial advice? 6:15 Portfolio changes should reflect personal changes, not headlines 7:24 Spam vs. Motorola: A lesson in stock picking 9:44 Dimensional’s stance on individual stock ownership 10:02 Diversification as “the closest thing to a free lunch” 11:07 Are alternative investments the new magic bullet? 12:43 Mutual funds vs. ETFs—what works best and when 15:27 Industry evolution: from 8% loads to indexing dominance 18:29 Where Dimensional fits in the modern fund landscape 21:01 AI vs. “aggregated intelligence” in managing portfolios 24:04 How regular people can find real financial advice 25:34 The key to success: Temperament, not timing 26:44 Weston’s side gig as a roving birthday singer 27:58 Why Weston hasn’t been invited lately (and he's lonely) Next, Paul highlights a recent article by another Truth Teller, Ben Carlson. In ⁠“60/40 Portfolio Corrections, Bear Markets and Recoveries,” ⁠ Ben breaks down the differences in returns during bear markets and the bounce-back that follows. Inspired by this, Paul explores a question that doesn’t get much attention: What’s the impact on a portfolio when you apply a 4% fixed withdrawal rate to the nine Sound Investing equity portfolios, each with a 60/40 equity-to-fixed income split? The results may surprise you! Paul notes there’s more to come on this topic, as these findings could have a real impact on how investors choose their retirement portfolios. As promised, here are the links to the Sound Investing Portfolios: ⁠50% U.S. / 50% International⁠ ⁠70% U.S. / 30% International⁠

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

"Buy and hold investors don’t just win on average returns— they win by avoiding the behavioral landmines that sabotage long-term success.” Paul Merriman In this podcast Paul addresses one of the most important investment decisions a do it yourself investor will make. Paul opens the discussion with comments from a ⁠Forbes article⁠ from 2008 that discusses Warren Buffett’s market timing decision he made to get totally out of the market in 1969 and back aboard in 1974. The podcast (with the help of Chatgpt, includes a list of 10 common reasons market timing doesn’t work for amateur investors. 1. Missing the best days 2. Emotional decision-making 3. Perfect timing is impossible 4. Higher costs and taxes 5. Volatility is high during recovery 6. Recency Bias 7. Focus on noise, not timing signals 8. Overconfidence 9. Loss of Compound Growth 10. Data shows long-term investing wins Paul challenges AI that there are many emotional disadvantages with timing. The most important performance and non performance hurdles: 1. Decision-making: Timing requires lots of work and buy and hold almost none. 2. Mistakes: Market timing suffers lots of mistakes and buy & hold rarely wrong in the long term. 3. Emotional Toll: Timing has lots of emotional challenges and buy & hold is more peaceful. 4. Behavioral Risks: Timing has lots of behavioral risks and buy & hold is simple. 5. Time Commitment: Timing takes time and action and buy & hold is rarely touched. 6. Expenses: Costs and taxes are both lower with buy & hold. 7. Timers must be more resilient with many decisions being wrong. 8. Financial Results: A few timers may perform well but all buy & holders are likely to have “won”.

⁠Watch Video here⁠  April is Financial Literacy Month, and to help us celebrate we brought in a returning guest, Paul Merriman. Paul has been on the show before to discuss investment portfolios, but today he talks with us about some extraordinary strides he's making as a financial literacy advocate through his nonprofit, The Merriman Financial Education Foundation. We also share some of our favorite financial literacy resources. RESOURCES MENTIONED ON THE SHOW 🌐 Visit Catching Up to FI website https://catchinguptofi.comPaul's Website https://www.paulmerriman.comMerriman Financial Literacy Program at Western Washington University https://financialliteracy.wwu.eduIGrad https://www.igrad.com/Next Gen Personal Finance https://www.ngpf.orgWhite Coat Investor https://www.whitecoatinvestor.comThe John C. Bogle Center for Financial Literacyhttps://boglecenter.net TIMESTAMPS / CHAPTERS 00:00 📣 Introduction and Financial Literacy Impact 01:09 👋 Welcome and Guest Introduction 01:35 🤝 Paul Merriman's Nonprofit and Financial Literacy Story 02:33 💡 The Importance of Financial Literacy 06:59 🏫 Nonprofit Initiatives and University Programs 16:15 🏋️‍♀️ Bootcamp and Investment Decisions 18:07 🌐 Other Financial Literacy Organizations 22:09 🏛 State-Level Financial Literacy Education 25:55 ✨ Final Thoughts and Encouragement 31:27 🙏 Conclusion and Farewell

Watch video here⁠ This updated discussion of the Ultimate Buy and Hold Portfolio highlights the advantages of equity asset allocation and worldwide diversification. The presentation was presented to members of the Washington State Society of CPAs. At the end of the presentation Paul adds his list of 15 million dollar decisions that all investors will make in their lifetime. Here is feedback from one of the CPAs that attended this presentation. "I watched the video and found it very valuable. I am sending it to my adult children.” I hope you do that as well.

Watch the video here⁠ Join me on Catching Up to Fi l with Rick Ferri to discuss key investing topics like asset allocation and the pros and cons of small-cap value vs. total market funds. TIMESTAMPS / CHAPTERS 00:00 ⛓️ Understanding Bonds and Young Investors 02:31 🌟 Introduction to Financial Literacy Titans 03:12 🎓 Paul Merriman's Financial Education Foundation 04:18 🧠 Rick Ferri and the Bogle Center for Financial Literacy 12:09 ⚖️ The Importance of Asset Allocation 23:11 🌍 Debating International vs. US Stocks 35:12 🗓️ Target Date Retirement Funds: Pros and Cons 45:55 📈 Exploring Small Cap Value Investing 49:34 🧩 Understanding Non-Traditional Index Funds 50:28 🔍 Small Cap Value Performance Analysis 52:56 👨‍👩‍👧‍👦 Generational Wealth and Portfolio Management 53:54 🧬 Diverse Value Factors in Investing 55:55 🚧 Challenges of Small Cap Value Investing 57:33 🧭 The Philosophy of Long-Term Investment Strategies 01:01:11 🧪 Debating the Evidence-Based Investing Approach 01:12:46 🛡️ The Importance of Staying the Course 01:22:05 🎤 Final Thoughts and Recommendations

Watch video here In the left corner, we have Paul Merriman, the seasoned finance veteran weighing in at 183 pounds. In the right corner, Dr. Karsten Jeske, the scrappy newcomer at 208 pounds. The bell rings, and the small cap value debate begins. This episode features a financial boxing match between two investment heavyweights with dramatically different perspectives. Paul Merriman champions diversification through the efficient frontier, which means adding small cap value to your portfolio. Dr. Karsten Jeska has “thrown cold water” on this approach, favoring simpler strategies like “VTSAX and chill.” The stakes are high — we’re talking potentially millions of dollars in your retirement account over decades. Merriman argues that history shows clear evidence for small cap value’s premium. From 2000 to 2009, small cap value outperformed the S&P 500 in all but one year, compounding at 10 percent while the S&P 500 returned negative 1 percent. He believes this pattern will continue, creating a powerful diversification effect when combined with broader market indexes. Jeske counters that small cap value’s outperformance is mostly “front-loaded” in history, happening before anyone knew about it. Since 2006, small cap value has underperformed. He argues that once an advantage becomes widely known, it disappears in an efficient market. Adding small cap value might even be “di-worsification” — increasing complexity without improving returns. The debate expands beyond small cap value to touch on: Active vs. passive investing strategies Market timing vs. buy-and-hold approaches Simplicity vs. complexity in portfolio construction The role of faith vs. evidence in investment decisions While both experts disagree about small cap value’s future, they agree on fundamentals: invest early, stay invested for the long term, and understand that no one can predict markets with certainty. What starts as a technical debate evolves into a philosophical discussion about evidence, probability, and the limits of our knowledge — all with millions of retirement dollars hanging in the balance. Timestamps: Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths. (0:00) Debate intro: small cap value vs index funds (4:01) Merriman: small cap value offers premium returns (9:40) Jeske: small cap value underperformed since 2006 (18:20) Historical performance data significance (25:15) Stakes: difference of millions over time (33:08) Diversification vs added volatility debate (41:45) Risk-adjusted returns comparison (49:08) Questioning true diversification benefits (57:40) Value traps and actively managed funds (1:05:08) Technology stocks vs value investments (1:13:45) Data selection bias in studies (1:19:40) Faith vs science in investment decisions (1:29:20) Personal risk tolerance considerations (1:36:08) Closing arguments on investment strategies (1:42:08) Paula declares the debate a draw

If a retired investor has the ability to use a flexible distribution strategy it will likely produce one of the best financial outcomes in retirement. Before discussing flexible distributions Paul lists the reasons he believes that 99% of successful long term depends on defensive steps. After listing 18 defensive decisions he explains why flexible distributions are better than fixed distributions for those who have over said. The presentation includes 16 distribution tables that can be found in this pdf for the presentation . In each case Paul compares the difference in returns and risk between the fixed and flexible distribution strategies. The discussion compares returns and total distributions for two of the 9 sound investing portfolios: one using the S&P 500 and the other the U.S. 2 Fund Portfolio (50/50 S&P 500Small Cap Value). Other links noted in the presentation: Sound Investing Portfolios

The move from the accumulation to distribution period of an investors lifetime includes some very important decisions. What asset allocation between equities and fixed income? What combination of equity asset classes in the equity portion, as well as fixed income asset classes? What amount of distribution will be made annually? Will the payments be monthly, quarterly or annually? Will payments be adjusted for inflation and how often? Will the distributions be based on a fixed distribution with regular adjustments for inflation (the topic in this presentation) or on a flexible basis (the topic of the next segment)? In this podcast Paul uses 15 slides to address the questions above. It is recommended the viewer print out the ⁠⁠⁠ ⁠PP presentation⁠ to make it easier to follow the numbers. Many may find it is easier to follow the information on ⁠ Paul’s video⁠ ⁠ on the same topic. If you have questions about the presentation please leave comment or question in the comment section of the video or email ⁠⁠paul@paulmerriman.com⁠⁠ . For those sending an email please let us know the topic of the Boot Camp presentation.

Watch video here  Young and first time investors have to address a number of monumental decisions. How much money to save for the future How much they should invest in equities and bonds How much of the equities should be in large, small, value, growth, U.S. and international asset classes How much to increase the investment each year This podcast/video helps the investor address those decisions. For those listening to the podcast here is a link to the pdf of all of the tables referenced in the presentation. He only focuses on a handful of tables but here is a ⁠ link for those who want to review the entire set of tables.⁠ Paul discusses the accumulation process from the viewpoint of an investor as well as a small business owner. If you have questions please send them to ⁠paul@paulmerriman.com⁠ or leave them in the comment section below.