Paul Merriman: Recent Episodes
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Watch the video here. Chris Pedersen and Daryl Bahls join Paul to answer questions from investors of all ages. 1: I hold a REIT fund in my tax deferred account but have found other funds include REITS. Am I overweighted in REITS and what should I do about it? 2: Are all total market index […]
The post Expected future returns, difference in total market returns, lessons from 1928 to 2023 risk and return and more first appeared on Paul Merriman.
The post Expected future returns, difference in total market returns, lessons from 1928 to 2023 risk and return and more appeared first on Paul Merriman.
Financial Feast Pod is a new podcast focused on simplifying personal finance, with each segment dedicated to understanding and implementing the most important financial decisions. In this podcast Zach and Kevin interview Chris Pedersen about “2 Funds for Life”.
Not only will you learn about Chris’ book but the hosts ask a lot of questions about the Foundation and Chris’ favorite food.
Topics:
- 2 Funds for Life explained
- Risk and return of 2FFL
- How to use 2FFL in a 401k
- To rebalance or not to rebalance
- Conservative, moderate and aggressive portfolios
- Why not put all in small cap value
- What about international small cap value
- Advantages and disadvantages of hiring an investment manager
If you haven’t signed up for our weekly Sound Investing newsletter, click here to sign upand for a copy of 2 Funds for Life and We’re Talking Millions
Orange County AAI video- (Chris’ presentation starts at the 5:20 mark)
On July 22, 2023 Chris Petersen made a 2 hour presentation to over 650 AAII members and our Foundation members. The following is the AAII announcement of Chris’ topics:
As investors, we all want to get the best return we can with the least possible risk. We often think of this as an asset allocation problem. Although there is some truth in that, it can only go so far. We still have to take some risk to get a reasonable return, and select specific funds in which to invest. And then, we’re still left with the risk of our emotions and behavior. In this presentation, Mr. Pedersen will discuss how portfolio asset allocation, fund selection, and investor behavior impact the returns we get for the risks we take. He’ll also show some practical approaches to help us all come closer to being best-in-class in all three of these areas.
Attend Mr. Pedersen’s discussion and you will learn:
- How various types of equities and bonds interact to impact risk and reward
- An objective approach to choosing best-in-class funds for equity asset types
- The impact investor behavior has on risk and reward, and ways to mitigate or improve it.
Chris Pedersen is Director of Research at The Merriman Financial Education Foundation and creator of the 2 Funds for Life investing approach to augmenting target-date funds. He is an engineer by training, and a new opportunity finder by nature. In his work for the Foundation, he develops and maintains a set of best-in-class exchange-traded fund (ETF) recommendations, the customizable Merriman Aggressive Target Date glidepath calculator and regularly contributes to articles and podcasts. Like the rest of the Merriman Foundation staff, his work is motivated by a genuine desire to learn and help, free of any financial incentives or conflicts of interest.
I hope you will forward this presentation to friends and family that are looking for better ways to invest.
The post Chris Pedersen podcast and video first appeared on Paul Merriman.
The post Chris Pedersen podcast and video appeared first on Paul Merriman.
Financial Feast Pod is a new podcast focused on simplifying personal finance, with each segment dedicated to understanding and implementing the most important financial decisions. In this podcast Zach and Kevin interview Chris Pedersen about “2 Funds for Life”.
Not only will you learn about Chris’ book but the hosts ask a lot of questions about the Foundation and Chris’ favorite food.
Topics:
- 2 Funds for Life explained
- Risk and return of 2FFL
- How to use 2FFL in a 401k
- To rebalance or not to rebalance
- Conservative, moderate and aggressive portfolios
- Why not put all in small cap value
- What about international small cap value
- Advantages and disadvantages of hiring an investment manager
If you haven’t signed up for our weekly Sound Investing newsletter, click here to sign upand for a copy of 2 Funds for Life and We’re Talking Millions
Orange County AAI video- (Chris’ presentation starts at the 5:20 mark)
On July 22, 2023 Chris Petersen made a 2 hour presentation to over 650 AAII members and our Foundation members. The following is the AAII announcement of Chris’ topics:
As investors, we all want to get the best return we can with the least possible risk. We often think of this as an asset allocation problem. Although there is some truth in that, it can only go so far. We still have to take some risk to get a reasonable return, and select specific funds in which to invest. And then, we’re still left with the risk of our emotions and behavior. In this presentation, Mr. Pedersen will discuss how portfolio asset allocation, fund selection, and investor behavior impact the returns we get for the risks we take. He’ll also show some practical approaches to help us all come closer to being best-in-class in all three of these areas.
Attend Mr. Pedersen’s discussion and you will learn:
- How various types of equities and bonds interact to impact risk and reward
- An objective approach to choosing best-in-class funds for equity asset types
- The impact investor behavior has on risk and reward, and ways to mitigate or improve it.
Chris Pedersen is Director of Research at The Merriman Financial Education Foundation and creator of the 2 Funds for Life investing approach to augmenting target-date funds. He is an engineer by training, and a new opportunity finder by nature. In his work for the Foundation, he develops and maintains a set of best-in-class exchange-traded fund (ETF) recommendations, the customizable Merriman Aggressive Target Date glidepath calculator and regularly contributes to articles and podcasts. Like the rest of the Merriman Foundation staff, his work is motivated by a genuine desire to learn and help, free of any financial incentives or conflicts of interest.
I hope you will forward this presentation to friends and family that are looking for better ways to invest.
The post Chris Pedersen podcast and video first appeared on Paul Merriman.
The post Chris Pedersen podcast and video appeared first on Paul Merriman.
The podcast opens with a heads up on an exciting AAII presentation on October 11 at 6:30 EST. Paul will make a one hour presentation on “The Case for Small Cap Value: The Good, the Bad and the Ugly.” This presentation will include some interesting new tables that give a new perspective to this productive equity asset […]
The post SPIVA REPORT: One of the most important studies on fund returns first appeared on Paul Merriman.
The post SPIVA REPORT: One of the most important studies on fund returns appeared first on Paul Merriman.
The podcast opens with Paul reading and discussing Ben Carlson’s recent article on the collapse of bonds, “Everything & Everyone Underperforms Eventually.” Paul references a table of returns that compares Short, Intermediate and Long Term Treasures. Paul also references a table of Fixed Income Returns during years with S&P 500 […]
The post Everything & Everyone Underperforms Eventually first appeared on Paul Merriman.
The post Everything & Everyone Underperforms Eventually appeared first on Paul Merriman.
On July 22 Chris Pedersen spoke to the Orange County AAII Chapter. This podcast, as well as one on 8/9/23 (20 Q&As) and another on 8/2/23 (16 Q&As) address questions that arose from the presentation. This podcast covers a few more AAII questions plus other recent questions. Topic 1: What is the difference between investing […]
The post How will investing be different in the future and 7 AAII Q&As first appeared on Paul Merriman.
The post How will investing be different in the future and 7 AAII Q&As appeared first on Paul Merriman.
On July 22, 2023 Chris Pedersen addressed the Orange County Chapter of the American Association of Individual Investors. At the end of his 2 hour presentation there were many unanswered questions. Our last podcast and video addressed 16 of those questions. In this podcast Paul responds to 20 more of the AAII questions. 1. How do you feel about […]
The post Better than Wellesley and Wellington? and 19 other questions first appeared on Paul Merriman.
The post Better than Wellesley and Wellington? and 19 other questions appeared first on Paul Merriman.
On July 22, 2023 Chris Pedersen gave a 2 hour online presentation to the Orange County Chapter of the American Association of Individual Investors (AAII). The title was “Best In Class Fund Selection and Behavior.” Over 650 people attended the presentation, a record turnout for our presentations. The video will be available in the coming […]
The post AAII Orange County Chapter Q&A first appeared on Paul Merriman.
The post AAII Orange County Chapter Q&A appeared first on Paul Merriman.
Some of the worst investment advice I know happens to millions of investors each year. Between paying commissions, paying higher expenses, paying more taxes, being less diversified, and sitting on too much cash, so-called experts encourage investors to hold investments that are built to make as much as 2 to 4 percent less PER YEAR.Paul uses […]
The post The Worst Investment Advice I Know first appeared on Paul Merriman.
The post The Worst Investment Advice I Know appeared first on Paul Merriman.
Paul announces Chris Pedersen’s upcoming AAII presentation on Saturday, July 22. The 2 hour Zoom presentation will begin at 8:45 a.m. Chris will discuss how portfolio asset allocation, fund selection and investor behavior impact the returns we get for the risk we take. He’ll also show some practical approaches to help us all come closer […]
The post New Avantis ETF, free curriculum, good news or bad first appeared on Paul Merriman.
The post New Avantis ETF, free curriculum, good news or bad appeared first on Paul Merriman.
On this week’s podcast Paul addressed a couple of very important questions: 1. Is there really such a thing as a buy and hold investor? 2. What can an investor do to improve their chances of staying the course through all market cycles? 3. Many of your portfolios don’t include international equities. Should investors […]
The post Does anyone really buy & hold and more Q&A first appeared on Paul Merriman.
The post Does anyone really buy & hold and more Q&A appeared first on Paul Merriman.
While the industry generally agrees the most important investment decision is your choice of asset allocation, Paul makes the case that the choice between being a do it yourself investor vs. hiring a professional advisor is much more impactful over a lifetime. Paul discusses the many challenges of both decisions and finishes by showing DIY […]
The post The most important investment decision you will ever make first appeared on Paul Merriman.
The post The most important investment decision you will ever make appeared first on Paul Merriman.
Paul starts the podcast with an update on the Bogleheads Conference. For those who want to see a sample of last years presentations here is a link to all of the 2022 presentations. https://boglecenter.net/bogleheads-university/ For those interested in 2023 Conference, including list of speakers: https://boglecenter.net/conferences/ For this interested in exploring John Bogles archives: https://boglecenter.net/bogle-archive/ Our […]
The post Ben Felix- New Truth Teller and Q&A first appeared on Paul Merriman.
The post Ben Felix- New Truth Teller and Q&A appeared first on Paul Merriman.
Paul starts the podcast encouraging listeners to check out the latest video where Chris, Daryl and Paul answer questions from readers, listeners and viewers regarding the article, podcast and video about the Sound Investing Portfolios 2023 Update. The following are the links that were used in the video: Asset Class Index CAGR Comparison (1927-2023) Table […]
The post Dave Ramsey, small cap value and a “new” 4 fund portfolio first appeared on Paul Merriman.
The post Dave Ramsey, small cap value and a “new” 4 fund portfolio appeared first on Paul Merriman.
Paul starts the podcast encouraging listeners to check out the latest video where Chris, Daryl and Paul answer questions from readers, listeners and viewers regarding the article, podcast and video about the Sound Investing Portfolios 2023 Update. The following are the links that were used in the video: Asset Class Index CAGR Comparison (1927-2023) Table H2 […]
The post Dave Ramsey, small cap value and a “new” 4 fund portfolio first appeared on Paul Merriman.
The post Dave Ramsey, small cap value and a “new” 4 fund portfolio appeared first on Paul Merriman.
Dear Friends, The recent unexpected passing of our director of marketing, Aysha Griffin, made me take a second and third look at what we are doing as a non profit foundation and what the people who are working with us are doing to help us deliver on our mission. The Merriman Financial Education Foundation believes […]
The post Finding a trustworthy source of financial advice first appeared on Paul Merriman.
The post Finding a trustworthy source of financial advice appeared first on Paul Merriman.
Paul starts the podcast with a brief discussion about the new “financial Literacy for All Students” project at Western Washington University (WWU). The Merriman Financial Education Foundation, WWU, and Paul personally, are working together to make this project a reality in the next two to three years. The main topic of the podcast […]
The post What rate of return can I count on in the future? first appeared on Paul Merriman.
The post What rate of return can I count on in the future? appeared first on Paul Merriman.
“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.” Warren Buffett There are easy choices in the investment process. Much of the advice we offer is very simple and without much disagreement. On the other hand there are choices that must come after a thoughtful understanding of long term historical results along with an understanding of your need for return and personal risk tolerance. Jerzy Gregorek says it simply (not about investing). “Hard choices, easy life. Easy choices, hard life.” I would make a change in that quote to represent what I know about investment choices. Easy choices, good life. Hard choices, great life. This podcast is a quick review of the series of articles, podcasts and videos that address 8 investment decisions that Paul feels require deeper consideration and more statistical information than the simple choices that most people understand intuitively. Here are links to 8 pages that offer the article, podcast, video and tables about the important investment decision each addresses.
Ultimate Buy and Hold Strategy
Sound Investing Portfolios Risk and Return History
Fine-Tuning Your Asset Allocation
Fixed Contributions
Fixed Distributions
Flexible Distributions
The Simple Story About 2 Funds for Life
Selecting the Best in Class ETFs
The post 8 Steps to a “Great Financial Future” first appeared on Paul Merriman.
The post 8 Steps to a “Great Financial Future” appeared first on Paul Merriman.
I have a number of things on my bucket list. One is to get “We’re Talking Millions!” in the hands of a million young people. It would seem an impossible challenge but I know it can be done. One of the reasons I know it is possible is because one of our podcasts has been opened by 977,088 listeners. Let’s see if we can take it to a million!
Paul 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 keeping investors as far away as possible 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 don’t leave any room to take advantage of the investor.
The post Going for a million! first appeared on Paul Merriman.
The post Going for a million! appeared first on Paul Merriman.
Over the last 8 weeks Paul, Chris and Daryl have produced a series of podcasts and videos on 8 of the most important investment decisions investors make. Along with these podcasts and videos Paul and Rich have written Marketwatch articles on the same topics.
As a part of the discussion of these important decisions Daryl has updated over 200 tables of hypothetical returns that are used to support the recommended conclusions.
This week, Ben Carlson, one of our Truth Tellers, has written an article on the inherent weaknesses of backtesting. While we have taken steps to minimize the potential problems with backtesting, Paul thinks Ben’s comments are worthy of consideration. Along with his recent article, “10 Things You Can’t Learn From a Backtest,” we have included links to two of Ben’s past articles on the same topic.
Backtests are Unemotional. Humans are not.
Roughly Right or Precisely Wrong
- Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
- Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
- Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
- Follow us on Facebook, Twitter and LinkedIn
- Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.
Thank you!
The post 10 Things You Can’t Learn From a Backtest first appeared on Paul Merriman.
The post 10 Things You Can’t Learn From a Backtest appeared first on Paul Merriman.
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-
Table 1
Table 2
Table 3
Table 4
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.
- Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
- Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
- Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
- Follow us on Facebook, Twitter and LinkedIn
- Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post The Simple Story About 2 Funds for Life first appeared on Paul Merriman.
The post The Simple Story About 2 Funds for Life appeared first on Paul Merriman.
If a retired investor has the ability to use a flexible distribution strategy it will likely produce one of the best financial outcomes in retirement. In this presentation Paul compares the difference in returns and risk between the fixed and flexible distribution strategies.
The discussion compares returns and total distributions for two of the 9 sound investing portfolios.
In the presentation he makes use of the following tables:
Table D1.3 Fixed Distribution S&P 500 Equity Portfolio ($30,000/yr)
Table D1.5 Fixed Distribution S&P 500 Equity Portfolio ($50,000/yr)
Table E1.3 Flexible Distribution U.S. 4-Fund Equity Portfolio (3%/yr)
Table E1.4 Flexible Distribution U.S. 4-Fund Equity Portfolio (4%/yr)
Table E1.5 Flexible Distribution U.S. 4-Fund Equity Portfolio (5%/yr)
Table E1.6 Flexible Distribution U.S. 4-Fund Equity Portfolio (6%/yr)
For those interested in the historical returns of the 9 portfolios, as well as the complete list of flexible distribution tables:
50/50 Sound Investing Portfolio
Flexible distribution tables (50/50 U.S./Intl)
Flexible distribution tables (70/30 U.S./Intl)
- Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
- Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
- Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
- Follow us on Facebook, Twitter and LinkedIn
- Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Flexible Distributions 2023 Update first appeared on Paul Merriman.
The post Flexible Distributions 2023 Update appeared first on Paul Merriman.
This podcast is Part 5 OF AN 8 PART series ON THE MoST IMPORTANT INVESTMEST DECISIoNS. The discussion addresses the distribution tables that use a Fixed Distribution Strategy of 3, 4, 5 and 6 percent plus annual increases for inflation.
One set of distributions uses the S&P 500 as the equity position while the other uses the U.S. 4-Fund Portfolio (25% each of S&P 500, Large Cap Value, Small Cap Blend and Small Cap Value).
The podcast references information on 8 different distributions tables:
Table D1.3 Fixed Distributions: S&P Equity Portfolio-initial distribution $30,000
Table D1.4 Fixed Distributions: The same but initial distribution $40,000
Table D1.5 Fixed Distributions: The same but initial distribution $50,000
Table D1.6 Fixed Distributions: The same but initial distribution $60,000
Table D9.3 Fixed Distributions: U.S. 4-Fund Portfolio-initial distribution $30,000
Table D9.4 Fixed Distributions: The same but Initial distribution $40,000
Table D9.5 Fixed Distributions: The same but initial distribution $50,000
Table D9.6 Fixed Distributions: The same but initial distribution $60,000
Also mentioned: Sound Investing Portfolios
ACCESS ALL FIXED Distributions strategies for both 50/50 and 70/30 U.S AND INTERNATIONAL Sound Investing Portfolios
- Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
- Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
- Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
- Follow us on Facebook, Twitter and LinkedIn
- Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Fixed Distributions 2023 Update first appeared on Paul Merriman.
The post Fixed Distributions 2023 Update appeared first on Paul Merriman.
This podcast/video is the 4th in a series of our series to help do it yourself investors build a lifetime investment strategy. The following are links to the previous three videos. In each case Paul is joined by Chris Pedersen and Daryl Bahls (Director of Research and Director of Analytics with Merriman Financial Education).
The Ultimate Buy and Hold Portfolio: This presentation addresses 10 equity asset classes that investors can use to build the growth portion of their portfolio.
The presentation uses the following tables:
Table C1 – Fixed Contributions: S&P 500 Equity Portfolio
Table C14 – Fixed Contributions: US 2-Fund Equity Portfolio
Table C11 – Fixed Contributions: US All Value Equity Portfolio
Table C8 – Fixed Contributions: WW 4-Fund Equity Portfolio (50% US/50% Int’l)
The Merriman Lifetime Investment Calculator
2 Funds for Life free pdf We’re Talking Millions free pdf
Topics of discussion How the Fixed Contribution Tables are constructed How to use the tables to select the best equity portfolio How the addition of fixed income will impact the accumulation period The importance of using a combination of more than one equity asset class The long term impact of every additional 10% equity The importance of young investors maintaining good behavior Why declining markets helps during early years of investing How 2 Funds for Life portfolio differs from these Fine Tuning Tables 2 ways to evaluate other sequences of returns The difference between the last 53 and 95 years of returns
- Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
- Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
- Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
- Follow us on Facebook, Twitter and LinkedIn
- Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Fixed Contributions 2023 Update first appeared on Paul Merriman.
The post Fixed Contributions 2023 Update appeared first on Paul Merriman.
This podcast is the third in a series of seven podcasts that are designed to help do it yourself investors learn how to maximize their return, minimize their risk and increase their peace of mind. It will be beneficial to listen to The Ultimate Buy and Hold and Sound Investing Portfolios: The History of Risk and Return (link) podcasts before listening to this podcast. In this podcast Paul discusses why the Fine Tuning Your Asset Allocation Tables were built and how they can be used to build a portfolio that combines the appropriate equity portfolio for growth with the appropriate amount of bonds to stabilize the portfolio during severe market declines. While the following link includes Fine Tuning Tables for all 9 portfolios his discussion focuses on tables B1, B11 and B14. The discussion guides the listener through several very important lessons on each table:
- The increase of return with additional percentages of equities
- The higher short and longer term losses likely with adding more equities
- The much higher returns and slightly higher risks of portfolios adding value and small cap asset classes.
In the discussion Paul references Table H2 for the returns of a $10,000 investment for all 9 portfolios. In the coming podcasts the returns of the 9 Fine Tuning Tables will be used to discover the impact of dollar cost averaging into the portfolios, as well as taking out money to live on in retirement.
- Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
- Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
- Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
- Follow us on Facebook, Twitter and LinkedIn
- Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Fine Tuning Your Asset Allocations first appeared on Paul Merriman.
The post Fine Tuning Your Asset Allocations appeared first on Paul Merriman.
In this presentation Paul explores the risk and returns of 8 Sound Investing Portfolios and the S&P 500 for the period 1970 to 2022. He references 2 sets of tables for portfolios built with all U.S. equity asset classes as well as worldwide portfolios that are 50% each U.S. and international and 70% U.S. and 30% international. The goal is to help DIY investors understand the likely returns of these portfolios in the good times as well as what to expect when they are out of favor. For those who did not listen to the Ultimate Buy & Hold 2023 Update podcast or view the video it is suggested they do that before listening to this podcast. For those who have the ability to watch the video it should be easier to follow the numbers. Plus on the video Chris Pedersen and Daryl Bahls join Paul in the discussion.
The tables referenced in the podcast can be found at the following links:
https://paulmerriman.com/wp-content/uploads/2022/12/Tell-Tale-Charts-US-SCV-Sep-2021-upd.pdf
https://paulmerriman.com/wp-content/uploads/2023/04/7-Sound-Investing-Portfolios-50-50-2023.pdf
https://paulmerriman.com/wp-content/uploads/2023/04/17-Sound-Investing-Portfolios-70-30-2022.pdf
- Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
- Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
- Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
- Follow us on Facebook, Twitter and LinkedIn
- Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Sound Investing Portfolios Risk and Return History first appeared on Paul Merriman.
The post Sound Investing Portfolios Risk and Return History appeared first on Paul Merriman.
Each year Paul (with the many hours of dedicated work from Director of Analytics Daryl Bahls ) updates and reviews the latest returns and important lessons from the Ultimate Buy and Hold Portfolio. In this review he references a series of tables including:
Table A1-Ultimate Buy & Hold Equity Portfolio (50% US/50% Int’l)
Table A2 – Alternative Equity Portfolio Tables (50% US/50% Int’l)
Table A101 – Ultimate Buy & Hold Equity Portfolio (70% US/30% Int’l)
Table A102 – Alternative Equity Portfolio Tables (70% US/30% Int’l)
Table B14A – Fine Tuning Table S&P 500 vs. US SCV Portfolio
For those listening to this podcast it will likely be useful to review the tables before hearing Paul’s comments.Topics include:
-
- Why these tables are important to do it yourself investors.
- The random returns of the S&P 500.
- The huge impact of small changes in returns.
- The unexpected low risk of adding risky asset classes.
- The impact of rebalancing annually vs. monthly.
- How several low risk 2 fund portfolios outperform the 10 fund Ultimate Buy & Hold Portfolio.
- How likely the future will be like the past.
The 2023 Ultimate Buy and Hold video will be coming out later today on YouTube, you can find it here- https://paulmerriman.com/youtube
- Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
- Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
- Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
- Follow us on Facebook, Twitter and LinkedIn
- Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post The Ultimate Buy and Hold 2023 Update first appeared on Paul Merriman.
The post The Ultimate Buy and Hold 2023 Update appeared first on Paul Merriman.
“Three Keys to Long Term Investment Success” was my presentation at the 9th Annual Retiremeet America Conference.For those who wish to watch other presenters here is a link to the entire almost 6 hour video.0:00 Welcome from Tom Cock and Don McDonald13:17 “Financial Fysics” with Don McDonald46:16 “Paying for Retirement” with Tom Cock1:15:00 “The Value of a Financial Plan” with Jason Gentile1:46:00 “Getting Medicare Right” with Kevin Peterson2:15:00 “Planning for Long-Term Care” with Barbara Devereaux2:41:48 “Saving on Taxes in Retirement” with Diana Bacon3:17:00 “Critical Investing in Retirement” with Paul Merriman3:49:00 Investing Q&A with Tom Cock and Paul Merriman4:22:00 “Charitable Giving” with Tayor Cock and Stacie Nemetz4:30:42 “Navigating Turbulent Markets” with Apollo Lupescu5:23:00 “What’s Next?” with Rebecca ChrichtonI would like to encourage our subscribers to also view the presentation by Apollo Lupescu, Vice President at Dimensional Fund Advisors, on “Navigating Turbulent Markets.”1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Three Keys to Long Term Investment Success first appeared on Paul Merriman.
The post Three Keys to Long Term Investment Success appeared first on Paul Merriman.
In the coming weeks we will be posting the updated history of equity and fixed income returns for the last 53 and 95 years. These returns will be used to study the impact of investing in combinations of equity asset classes as well as assuming they are being used in the accumulation and distribution periods of an investor’s life. We must ask the question: How meaningful are these historical returns? Ben Carlson, one of our Truth Tellers, has written several articles on the topic. https://awealthofcommonsense.com/2023/03/backtests-are-unemotional-humans-are-not/ https://awealthofcommonsense.com/2017/01/10-things-you-cant-learn-from-a-backtest/1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Can you count on backtested results? first appeared on Paul Merriman.
The post Can you count on backtested results? appeared first on Paul Merriman.
Dear Friends,
As we try to address the issues of interest to investors at all stages of life, we offer this newsletter with what we hope is something for everyone. We always appreciate your comments and questions at info@PROTECTED and do our best to respond to each one.
In this week’s video and podcast, “How can you trust the market?,” I again have the pleasure of being joined by Chris Pedersen, our Director of Research, and Daryl Bahls, our director of Analytics, to answer a few big questions, like, “What can a Do-It-Yourself investor do to prepare his/her spouse/partner for managing retirement investments should the DIY investor die first?” Join us on YouTube or podcast.
Last week, we ran two different pieces—a podcast interview I did with Dr. Robert H. Pass, pediatric cardiologist and host of Pediheart podcast, on “Funding a child’sretirement”and a video conversation with Skye Michiels, host of the east coast 6AMERS group, titled, “How to become a better investor (and your kids benefit too!).”
Online Gambling for Kids
You may know about kids legally gambling online, but I was made aware only recently. I find it disconcerting from the standpoint of parental influence and control, the waste of money that could be wisely used to invest in a child’s future, and wishful thinking supplanting the cultivation of good habits, such as saving, planning and patience. To learn more about this subject, we’ve gathered a few resources for you.
In this article, NextGen Personal Finance tackles the issue of “Teenagers Making Wagers”. Ngpf.org is one of our Truth Tellers and a great source of basic information on a full range of financial and investment topics.
According to ngpf.org, “A 2018 Supreme Court decision to remove the federal ban on sports betting led to over 36 states making this a legal practice which means more and more young people are being exposed to gambling apps. We’re not talking about games and apps that have gambling-like features mimicking the casino, such as spinning roulette wheels and slot machines – Nope! We’re talking about teens placing real bets via apps like Draft Kings and Fan Duel. Learn more about how serious this issue is and which state chose to do something about it right inside of public schools: https://www.ngpf.org/blog/fincap-friday/fincap-friday-teenagers-making-wagers/
In this video on “Seeker,” teenager Luci examines “Why The Lottery Is So Seductive.” See more links in the video notes.
This NPR edpuzzle.com video considers, “Should I play the lottery?”
ABC News addresses gambling addiction in a video and transcript, “Online gambling among youth worries experts, one teen says sports betting was an ‘escape’”
From the Wall Street Journal’s archives (Dec. 18, 2022), we find, “Problem Gambling Is on the Rise Among Young Men”.
Truth Teller: The Balance
The internet is awash in unverified information and personal opinions presented as facts, so it’s our goal to offer you the most trustworthy resources we know. We call them our Truth Tellers. When I need to look up an investment-related definition or topic, I trust The Balance.
Why? It’s the only website I know where every article is fact checked and peer reviewed by professionals with wide-ranging expertise in the financial industry, from professors to certified financial planners. Their Financial Review Board works with their editorial team to make sure they’re giving the best possible information.
Their broad range of topics includes budgeting (with a useful calculator), investing, mortgages, economics, banking, small business and career planning. So, next time you want some reliable information on a wide range of financial topics, check out The Balance.
Update: 2 Funds for Life and More!
This time of year, I start getting questions about when the more than 160 tables will be updated. Please understand all of the research, which we update each year, requires many hours of our volunteers. We are aiming to complete this process by the end of the first quarter.
During this time, Chris Pedersen, the brains behind 2 Funds for Life and author of 2 Funds for Life—A quest for simple & effective investing strategies, will be updating his Best-in-Class ETFs recommendations, as well as an update on 2 Funds for Life and M1 Finance.
If you haven’t watched this excellent video, “Invest Successfully with Just Two Funds,” in which Chris succinctly explains 2 Funds for Life, on Katie Gatti’s “Money With Katie” show, I highly recommend you do.
Additionally, we will update 2022 data and produce a series of podcasts (and/or videos) on The Ultimate Buy and Hold portfolio, Table H1 update of returns with our Best-in-Class portfolios, Fine Tuning Tables, Accumulation Tables, Fixed Distribution tables, Flexible Distribution Tables, 2 Funds for Life and M1 updates, plus “Follow the Math of Successful Investing.”
Please stay tuned, and we’ll bring you the updates ASAP!
Meanwhile, we want to remind you that the purpose of our information is to help you, who follow our work, maintain a healthy long-term perspective.
Last year was not a good year for investors in general, and especially difficult for those focused on growth equity asset classes. On the other hand, broadly diversified portfolios suffered much smaller losses. For more insights on “Why Markets Were Down in 2022,” you may enjoy the work of Ben Carlson, one of our Truth Tellers.
Welcome Our New Team Member
We welcome Jess Hartter, our latest volunteer team member. Jeff retired from a career in engineering and project management in 2022 at the age of 35. He began his investing career at the age of 10 in 1996, and was an active stock trader for 17 years before discovering the “Shockingly Simple Math Behind Early Retirement.”
In 2014, at the age of 27, he joined the FIRE movement and set a goal of retiring in 10 years. At that point, upon discovery of The Merriman Financial Education Foundation’s work, he pivoted to an index investing strategy that evolved from a Total US Stock Market strategy to a more diverse strategy.
Jess taught financial literacy classes for five years before joining the Foundation in early 2023, where he currently leads our university outreach and education program. With a general curiosity in living a mindful and fulfilling life, Jess enjoys traveling with his young family.
If you are involved with a college or university and would like to contact Jess directly, please email him at: jess@PROTECTED
Q&A with Chris Pedersen
Q: I hadn’t heard any podcasts since 2017 regarding the Merriman Aggressive Target Date Fund strategy. Do you still recommend this strategy and, if so, how do you rank it against the UB&H and 2 Funds for Life portfolios?
A: We still support investors who use the Merriman Aggressive Target-Date Glidepath. It’s customizable using a Google Sheet (available here). It starts out with 100% equities in small-cap value plus some emerging markets, then adds fixed income and the other asset classes, so it’s a 50% fixed income and 50% Worldwide Ultimate Buy & Hold at retirement.
In chapter 12 of my book, 2 Funds for Life, I point out that the aggressive 2-Funds-for-Life approach has performed very similarly to the Merriman Aggressive Glidepath, especially if you split the small-cap value investment into US and international funds. That doesn’t mean the 2, or 3-fund solution is better. Some people may prefer to hold a wider range of asset classes, so they always own a piece of what’s doing best at the time.
Q: I have always invested in the small-cap-value stock funds, however, based on your logic, holding a small cap “fund” would defeat any intent to hold the next 10-bagger, for as soon as a particular stock grew to mid-cap, the fund manager would give it the boot. But for all your other data points, I continue to hold VBR. What do you think?
A: VBR and AVUV are both given 4 stars by Morningstar. The reasons we prefer AVUV for the long run is AVUV companies are much smaller on average ($2.4 vs. $5.3 billion), have lower Price to Book Ratio (1.26 vs. 1.72) and much higher quality companies. The last 3 years, a good period for SCV, AVUV made about 6% more per year (13.2% vs. 7.3%). In years that large does better than small, VBR should outperform. In years that growth does better than value, VBR should outperform. In other words about 54% of the time AVUV should be the better performer.
I suspect the advantage to AVUV will be at least 1% a year. Not a life changer for me but for my newly-born granddaughter (who has 50% of her retirement account in SCV and 50% in the S&P 500) it should make a difference of about .5% or more per year.
Your point is well made regarding the 10-bagger but the small cap value index is expected to add about 2 to 5 percent a year over the S&P. Over 40-year periods, since 1928, small-cap value has added 2.7 to 7 percent over the S&P 500. I would be thrilled with a 2% advantage in the future as SCV was not a commonly known asset class for the first 60 years. I have drunk the academic “cool aid” that there is an expected premium for the SCV asset class and that it is smarter to hold many rather than a few of these companies, as so many fail to pay the premium.
Q: I have decided to implement the 2 Funds for Life in my 401K but, unfortunately, I do not have a good SCV in it. I decided to buy the SCV in my brokerage-link account associated with my 401K, where I have more freedom to choose a wide range of funds including AVUV (expense ratio of 0.25) and FISVX (Fidelity’s small-cap-value index fund with expense ratio of 0.05). According to the following Best in Class ETF, you recommend AVUV. I am tempted to choose FISVX given its extremely low expense ratio. Would you still recommend I select AVUV over FISVX even though the expense ratio is high? If so, can you please provide some reasons behind your choice?
A: The reason I recommend AVUV over FISVX is that it has historically provided more exposure to the market, size, value, and profitability factors or parts of the market. The additional exposure increases the expected return more than enough to cover the 0.2% additional annual expenses. Since October 2019, AVUV has had about a 7% higher CAGR which probably has as much to do with market cycles as it does with the greater factor exposures, but it’s consistent with the recommendation. If you’re interested in exploring the factor exposures yourself, you can see them at Portfolio Visualizer.
Personal Story: Send Us Your Video!
Paul Hays is a long-time friend, colleague, a member of our Foundation’s Board of Directors and author of Spending Your Way to Wealth. He kindly recorded this unsolicited 2-minute video about me and our work. We hope you’ll watch and enjoy. Feel free to share with your friends and on social media.
If you’d like to record a short video about how our financial education efforts benefit you, we’d love to receive it! Please send a ready-to-play mp4 via Dropbox or Google Drive or WeTransfer (and include your name, email address and phone number) to our webmaster: margiebaxley@PROTECTED
Helping you build a better financial future,
Paul
The post A note of thanks to a great teacher first appeared on Paul Merriman.
The post A note of thanks to a great teacher appeared first on Paul Merriman.
March 1 through March 4, I attended the White Coat Investor Conference (WCICON 2023). On the 2nd, I made a 2 hour presentation focused on “How to Create and Executing a Lifetime Investment Strategy”. I was thrilled with the turnout and positive feedback. I also received many questions in the following days. The following are some of the many questions. More to come in the future. It was a wonderful conference. I want to thank Katie and Jim Dahle for putting on one of the best conferences I have ever attended. Here are the questions addressed on this podcast:3:40 1. Why do value companies make more money than growth companies? The answer includes comments from a 1997 article by Eugene Fama and Kenneth French. Rethinking Stock Returns https://www.chicagobooth.edu/review/rethinking-stock-returns14:55 2. How much small cap value should I add to my target date fund?19:30 3. How much small cap value should I combine with my Vanguard Total Market Fund? In this article Table B14A is referenced. https://paulmerriman.com/wp-content/uploads/2022/04/SCV-vs-SP500-Fine-Tuning-Table-2022-v0.2.pdf22:19 4. What is the difference between the long term returns of the S&P 500 (VOO) and the Total Stock Market (VTI)?25:40 5. There are a lot of different small cap value funds. Which one do you recommend at Vanguard?28:45 6. Should I put small cap value in my taxable, Roth IRA or 401k? Larry Swednderoe’s, “Your Complete Guide to a Successful & Secure Retirement” is recommended as a great source of important investment advice.33:25 7. What do you think of being all equity all the time? I mean for the rest of my life.38:54 8. I’m 38 and a fairly aggressive investor. I want to build a do it yourself custom target date fund. While I did not mention our custom ETF Allocation Calculator listeners should check it out. https://paulmerriman.com/custom-etf-allocation-calculator/45:55 9. You have portfolios that are all small cap value and another that is a combination of small and large cap value. The returns for all small cap value are almost one percent higher. Why not just use an all small cap value portfolio? Sound Investing Quilt Charts49:30 10. What strategy would you recommend with 5 to 7 years until retirement? More of the WCI questions will be answered in the coming weeks.1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Q&A for White Coat Investors Conference first appeared on Paul Merriman.
The post Q&A for White Coat Investors Conference appeared first on Paul Merriman.
In this episode, Paddy has a great chat with Paul Merriman from The Merriman Financial Education Foundation in the USA.The foundation is dedicated to providing financial education to those of all ages.Paul shares his wealth of knowledge from decades of experience from starting his own Merriman Wealth Management after retiring to setting up his foundation.Key topics covered:* Investing successfully * Equity asset classes * Emotions of Investing * Hardest thing about investing * Maths of investing * Follow the history The post Paul Merriman on “Informed Decisions” with Paddy Delaney appeared first on Paul Merriman.
The following questions were sent to Paul during the 90 minute video presented to Western Washington University alumni on February 10, 2023.
2:38 1. How much more do you get with AVUV which has higher fees than FISVX, which is super low cost?
Check out: BOGLEHEADS.ORG/REBALANCING
Check out: whitecoatinvestor.com/portfolio-rebalancing-spreadsheet/
11:20 2. What are your thoughts on robo advisors and investing?
Check out: whitecoatinvestor.com/top-robo-advisors///
17:57 3. I have over $5 million and need very little to live on. I am 43% equities and 57% bonds. Is now the time to add more equities to a 60/40 asset allocation. Check out: https://paulmerriman.com/fine-tuning-your-asset-allocation/ You will find article, podcast and tables on the page
22:25 4. I only need to take out 2% a year to meet my cash needs. Most of my investments will eventually go to children and charities. Is an 80% or 90% equities position appropriate? Check Out: https://paulmerriman.com/2021-fixed-distributions/ For article, tables and podcast
27:00 5. What are the conditions (time/wealth) that suggest hiring an advisor? How do you find one?
Check out: https://paulmerriman.com/wp-content/uploads/2013/03/get-smart-or-get-screwed-how-to-select-the-best-and-get-the-most-from-your-financial-advisor1.pdf
31:57 6. What changes should a 50-something make to boost the returns of a 401k?
35:20 7. What is your advice for a parent to persuade their adult children to educate themselves about investing?
42:22 8. What do you mean by rebalancing and what are the tools and strategies you can use to do the rebalancing?
49:36 9. What do I do with penny stocks that are down 80% to 90%?
51:10 10 What are the relative tax implications of the Total Market Index and small cap value, REITS and large cap value?
56:00 11. What are the returns of combining U.S. large cap value, U.S. small cap blend, international large cap blend and international small cap value? Check out: https://paulmerriman.com/wp-content/uploads/2022/06/Sound-Investing-Portfolios.pdf
58:30 12. The Fidelity Target Date Funds have very high expenses. Should I still use them even though the expenses are higher?
1:01 13. Do you recommend a solo 401k or SEP IRA for a single employer who will never have any employees? Check out: solo401k.com
The post Rebalancing, parental advice, AVUV vs. FISVX and 10 more Q&A appeared first on Paul Merriman.
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. 1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Best-in-Class ETF Recommendations Update appeared first on Paul Merriman.
The following are the Paul’s responses to questions and comments from listeners.
- How do active mutual fund managers invest their own money? Article referenced in podcast:
How Do Active Managers Invest Their Own Money?
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Why not use market timing to protect investments from declining markets?
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How should I put money into an account when facing important news like the possibility of a government shutdown over the debt ceiling?
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Investor has tried unsuccessfully to manage their own money in the past but is tired of paying 1% fee to managers. What do they need to know or do to take control of the process successfully?
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Investor wants to know where he can read the Wharton/Vanguard study regarding investor returns of target date fund investors vs. non target date fund investors. Paul discusses the Howard Gold Marketwatch article: https://www.marketwatch.com/story/millions-of-americans-it-turns-out-are-making-the-right-investing-moves-according-to-studies-11607458791
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What’s wrong with speculating with part of a portfolio.
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My wife and I have had a hard time saving. What steps should we take to be sure we are able to save for the future?
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What one fund should I invest my childs first IRA? Paul mentions table B14A to help make the determination. https://paulmerriman.com/wp-content/uploads/2022/04/SCV-vs-SP500-Fine-Tuning-Table-2022-v0.2.pdf This table is the most viewed of all Foundation tables over the last year.
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Financial advisor claims that the superior long term results from small cap value is due to a very few years of great performance. The listener wants Pauls response.
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Parent wants to know how much of child’s IRA should go into S&P 500 and small cap value fund. Paul once again refers to B14A.
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Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
- Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
- Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
- Follow us on Facebook, Twitter and LinkedIn
- Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Small cap value, timing and more Q&A appeared first on Paul Merriman.
If you’re looking to get started investing wisely for retirement, or want a refresher course in what’s important, watch this broadcast in which Paul Merriman addresses the Washington Society of Certified Public Accountants. He speaks to issues of trust, pointing out that investing following the math is simple. He illustrates the compelling differences small savings in expenses can make over a lifetime and discusses the major decisions every investor needs to consider. While it’s easy to be an investor today, there are many pitfalls to be aware of and Paul explains how you can avoid them.Podcast listeners may want to view the video to follow referenced slides.1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Should You Manage Your Investments Yourself or Hire a Professional? appeared first on Paul Merriman.
How will you thrive in a bear market? Paul Merriman joins Tom Cock, co-host of “Talking Real Money,” for this 90-minute live workshop on “How to Manage a Portfolio in a Bear Market,” jointly sponsored by The Merriman Financial Education Foundation and Apella Capital/Wealth. Includes Q&A from the audience. We suggest podcast listeners watch the video for accompanying slides. You will learn: • Why you need true diversification •How to avoid decade-long S&P 500 market crashes • How to create & manage a long-term bond strategy • How to create retirement income without expensive and confusing annuities • The biggest risk to the investor Links: Table B1– Fine Tuning Table: S&P 500 Equity Portfolio- https://paulmerriman.com/wp-content/uploads/2022/02/Fine-Tuning-Tables-50-50-2022-1.pdf Table D1.4 – Fixed Distributions: S&P 500 Equity Portfolio (Conservative) https://paulmerriman.com/wp-content/uploads/2022/12/d1.4.pdfTable D1.3 – Fixed Distributions: S&P 500 Equity Portfolio (Very Conservative) https://paulmerriman.com/wp-content/uploads/2023/01/Fixed-Distribution-Tables-50-50-2022.pdf Get your free PDF and/or audio of We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement at: https://paulmerriman.com/signup– Tom is regional director of Apella Capital: https://apellawealth.com/– Talking Real Money: https://www.talkingrealmoney.com/– The Merriman Financial Education Foundation: https://paulmerriman.com/the-merriman-financial-education-foundation/– Paul’s website: https://paulmerriman.com/1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Battling the Bear: Thriving in a Bear Market appeared first on Paul Merriman.
Join Paul Merriman, Chris Pedersen and Darryl Bahls as they respond to these questions from investors:
What can a Do-It-Yourself investor do to prepare his/her spouse/partner for managing retirement investments should the DIY investor die first? Learn how Paul, Chris and Daryl are each personally preparing for their generally disinterested spouses to take over the investments.
How can buy-and-hold investors best face information that challenges them to not trust the market? Each of the three discuss how they digest daily news.
A listener notes his concern that he hasn’t seen enough data to justify using more than the S&P 500 and asks, Where can I access the data for the earlier period? He says that from 2014 through 2022, the S&P 500 has performed better than the Ultimate Buy and Hold Portfolio. He has been able to track performance into the 1990s for the UBH Portfolio but wants to do his own testing on the period prior to 1990.
For investors struggling to trust market returns, Paul suggests investors take a close look at Table B14A. Investors must expect big differences in asset class short-term returns. Note that the S&P 500 outperforms small-cap value 46% of the time with an average 11% better return in those years. On the other hand, the other 54% of the time, the SCV advantage produced over 16% average outperformance. It should come as no surprise that in 2022, SCV beat the S&P 500 by 8% to 14% depending on the average company size and value discount of the small-cap-value asset class.
Does Paul still uses the Vanguard Short-Term Corporate Bond Fund (VSCSX) for short-term cash needs?
Watch the video of this podcast on youtube- https://youtu.be/nCtEykUXcA0
Here are a few simple ways to support the financial education work of The Merriman Financial Education Foundation, a registered 501(c)3. In so doing you help better the lives of individuals, families and communities, creating more opportunities for all.1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post How can you trust the market? appeared first on Paul Merriman.
Paul speaks with Dr. Robert H. Pass, host of Pediheart podcast and a pediatric cardiologist at Mount Sinai Hospital, about how to go about funding a newborn child’s retirement (in 65 years!) through the magic of index investing, low costs and compounding interest. Learn how you can do this for a child in your life. There are many lessons for all types of investing in this episode. Article LinksHow $10,000 will help my newborn granddaughter have a better retirement The best gift of all: a financial legacy for a childSee also: ‘Best in Class ETF’s’ at: https://paulmerriman.com/best-in-class-etf-recommendations/ Paul’s previous interviews on Pediheart Podcast: Retirement Investing:https://podcasts.apple.com/us/podcast/pediheart-podcast-191-retirement-investing-with/id1341472214?i=1000546560805 Tips for Funding Your Retirement: https://podcasts.apple.com/us/podcast/pediheart-podcast-146-tips-for-funding-your-retirement/id1341472214?i=1000504041514Call To Action!Here are a few simple ways to support the financial education work of The Merriman Financial Education Foundation, a registered 501(c)3. In so doing you help better the lives of individuals, families and communities, creating more opportunities for all.1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Funding a child’s retirement appeared first on Paul Merriman.
This podcast reviews the 2022 returns of the Best-In-Class and Vanguard ETF portfolios as compared to the average shareholder in the recommended equity asset classes. The discussion focuses on what worked, what didn’t work, and what was the impact of the broader diversification of owning only the S&P 500. Paul also considers short, intermediate and long-term government bonds, the Quilt Chart of equity asset classes, the Sound Investing U.S Equity Portfolio (1928-2021), and provides an update on the minimums, free commissions, and ability to trade partial shares of ETFs through both Vanguard and Fidelity.LINKS:B14A Fine Tuning Table for the combination of the S&P 500 and Small Cap ValueThe latest Table H1Ordinal Rank SummaryCall To Action!Here are a few simple ways to support the financial education work of The Merriman Financial Education Foundation, a registered 501(c)3. In so doing you help better the lives of individuals, families and communities, creating more opportunities for all.1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post How’d we do in 2022? appeared first on Paul Merriman.
Paul answers some of the most-pressing investment questions posed by Rutgers University engineering students after his recent keynote presentation to 154 of them. View the Keynote Presentation video at: https://youtu.be/8_7ee1Nft7c
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How do you increase the rate of return on your investments? (1:58)
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What do you think of using “Robo Advisors” like Schwab Intelligent Portfolios? (6:33)
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What portion of my investments should be in mutual funds? (11:16)
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Is there a ‘rule of thumb’ for how much of my income should go into saving and how much I should keep and enjoy now? (13:53)
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What resources do you recommend to learn about investing? (15:42)
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What made you go into the industry that focuses on saving and investing? (20:28)
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What is the biggest investment mistake young adults make? (23:13)
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What is the best outlet/place to find up-to-date advice on how to invest? (28:55)
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Is there a mutual fund that doesn’t pay any interest? (34:38)
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What are the steps to start investing a small amount of money now? (35:20)
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Do you have advice on how to invest in real estate and how much of your portfolio should be in real estate? (39:04)
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Do you have suggestions on diversifying a portfolio including real estate hedge funds, private equity, etc.? (42:06)
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How important is learning about macro-economic cycles in making investment decisions? (43:15)
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What is the single-most important decision investors make? (46:58)
Call To Action!Here are a few simple ways to support the financial education work of The Merriman Financial Education Foundation, a registered 501(c)3. In so doing you help better the lives of individuals, families and communities, creating more opportunities for all.1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post 14 commonly-asked investor questions appeared first on Paul Merriman.
The purpose of our podcasts is to help investors make some of the biggest investment decisions of their life. This podcast focuses on the many reasons small-cap value should be in every investor’s portfolio, even if it is a very small part.Paul addresses these questions:1. What is the lifetime impact of adding 10% to 20% small cap value (SCV) to a portfolio for first time investors as well as retirees? 2. What is the additional risk of adding a small amount of SCV to a portfolio?3. How can a 2% bigger short-term loss lead to millions more for retirees?4. How could a very small investment in SCV help you retire 2 years sooner?5. How will a small investment in SCV change your cash flow in retirement?6. How does SCV perform during periods of high inflation?7. How often should you expect SCV be the best and worst investment?8. How does SCV perform after major market losses?9. How much more or less are you likely make if you don’t rebalance your portfolio?10. What is the likely premium SCV is likely to make over the S&P 500 in the future?Links to relevant tables or download pdf of all tables here.* Table B1 Fine Tuning Table for S&P 500 * Table 14A Fine Tuning Table for S&P 500 and Small Cap Value * Table H1 Sound Investing Portfolio results * Table C1 Fixed Contribution Table for S&P 500 Portfolio * Table C14 Fixed Contribution S&P+US SCV Equity Portfolio * Table D1.4 – Fixed Distributions: S&P 500 Equity Portfolio ($40,000/year) * Table D14.4 – Fixed Distributions: S&P+US SCV Equity Portfolio ($40,000/year) * Sound Investing Portfolios * H1 Sound Investing Portfolio results * Sound Investing U.S. Portfolio (1928-2021)-Ordinal Rank Summary * Tell Tale Chart
Call To Action!Here are a few simple ways to support the financial education work of The Merriman Financial Education Foundation, a registered 501(c)3. In so doing you help better the lives of individuals, families and communities, creating more opportunities for all.1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post 10 reasons small-cap value can make you richer appeared first on Paul Merriman.
How to live the best life you can is the main focus of this conversation between Paul Merriman, Chris Pedersen, Daryl Bahls and Craig Appl, volunteer creator of The Merriman Financial Education Lifetime Calculator. Craig discusses the FIRE movement community and his experience at a Chautauqua Conference about financial independence outside Bogotá Colombia earlier this year. Craig addresses the differences between traditional investors and those focused on earlier retirement (high savings, low cost of living, simple investment portfolios) and how to create more happiness in your life.
For more about Craig’s Chautauqua experience, read “How To Prepare for Post-Work Life” by Aysha Griffin
Links referenced in the recording:The Chautauqua conference website: https://www.fichautauqua.com/Financial Independence Resources:– https://choosefi.com/– JL Collins Stock Series which inspired the book A Simple Path to Wealth https://jlcollinsnh.com/stock-series/ (check your local library for availability)– Millennial Revolution: https://www.millennial-revolution.com/ Quit Like a Millionaire– Alan Donegan’s Free Extraordinary Life course:– https://www.alandonegan.com/extraordinary.html– https://www.caniretireyet.com/– https://thehumblepenny.com/Books– A Simple Path to Wealth by JL Collins– Your Money or Your Life by Vicki Robin– Your Complete Guide to a Successful and Secure Retirement by Larry Swedroe– Why Does The Stock Market Go Up? By Brian Feroldi – Quit Like a Millionaire by Kristi ShenCall To Action!Here are a few simple ways to support the financial education work of The Merriman Financial Education Foundation, a registered 501(c)3. In so doing you help better the lives of individuals, families and communities, creating more opportunities for all.1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Insights into Financial Independence appeared first on Paul Merriman.
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: https://paulmerriman.com/how-10000-will-help-my-newborn-granddaughter-have-a-better-retirement/
Call To Action!Here are a few simple ways to support the financial education work of The Merriman Financial Education Foundation, a registered 501(c)3. In so doing you help better the lives of individuals, families and communities, creating more opportunities for all.1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post How to create a financial legacy for a child appeared first on Paul Merriman.
Dear Friends,
I have great news on this “Giving Tuesday,” an international day of generosity meant to empower people and organizations to transform their communities and the world.
Although not known for my brevity, I’ll get right to the point and elaborate further on. I’m excited to inform you that we’ve been given a $10,000 Giving Tuesday match challenge, valid until midnight Dec. 1 Pacific Time.
Our generous donor, who asked to remain anonymous, wrote in a note, “I know you receive many emails of thanks about how your work has improved the financial well-being and future of individuals and their families. It certainly has for me and my family! Because of that, my wife, our two grown children and I decided to offer this incentive to your other “sound investing” followers. Please accept this matching donation with our deepest thanks and appreciation.”
For a decade, since my retirement as founder and president of Merriman Wealth Management, your feedback about the positive impact we’re having is what gets me up at 4 a.m. Every day I am excited to teach and motivate individuals, at all stages of life, to “make more money with less risk and more peace of mind.”
It’s said that when you do what you love, time flies. This is true as 2022 marks the 10-year anniversary of our not-for-profit financial education foundation. We’re a small 501(c)(3) organization—three part-time staff to create and maintain our website, social media, communications and outreach, and a dedicated volunteer team.
Almost everything we create is offered free and, when there are book sales through Amazon, the profits all go to the Foundation. The goal of all our work is our partnership with you. Just two years ago we started to ask for help from those who benefit from our work. Your donations go a long way to helping us continue and constantly expand our mission.
If you want to know what we’ve accomplished and our plans for 2023, please see “10th Anniversary” on our revised website, https://paulmerriman.com/
Some of our exciting plans for the new year include:
- Choosing a glide path
- Accumulations and distributions
- Building intergenerational wealth
- Helping you find reliable, ethical hourly advisors
- And continuing our outreach to new and young investors, with the goal of getting free copies of our book, We’re Talking Millions, into the hands of a million readers.
Through your financial contributions, social media engagement, and sharing our work with others, you play a key role in helping us develop the tools we offer free for DIY investors and our financial education outreach!
We thank you in advance for helping us meet and exceed this $10,000 match in the next two days, and for being part of our “sound investing” community. Please click here to donate now.
Helping you building a better financial future,
With gratitude,
Paul Merriman and Team: Chris Pedersen, Daryl Bahls, Rich Buck, Aysha Griffin, Margie Baxley, Renee’ Ashley and Craig Appl
P.S. Please tune-in to my recording for this Giving Tuesday.
Your questions and comments are always welcome at info@paulmerriman.com
Call To Action!
Here are a few simple ways to support the financial education work of The Merriman Financial Education Foundation, a registered 501(c)3. In so doing you help better the lives of individuals, families and communities, creating more opportunities for all.
- Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
- Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
- Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
- Follow us on Facebook, Twitter and LinkedIn
- Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirementand2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
- Support our mission by making a tax-deductible donation to the Foundation. The post Great news that benefits us all appeared first on Paul Merriman.
Ever wonder how the “Sound Investing” podcast is funded? Along with all the prolific work produced, over the past decade, by the mostly-volunteer Merriman Financial Education? Paul lays it out in this podcast, including his plans for 2023. Learn how you play a huge part in the how Paul’s retirement plans evolved into the myriad of financial education tools for DIY investors and outreach to university students and professional organizations. He invites your participation, questions and feedback. If you are not already a subscriber to his free twice-a-month newsletter, or have not downloaded your free pdf and/or audio copy of We’re Talking Millions—12 Simple Steps to Supercharge Your Retirement, visit https://paulmerriman.com/signup/
Call To Action!Here are a few simple ways to support the financial education work of The Merriman Financial Education Foundation, a registered 501(c)3. In so doing you help better the lives of individuals, families and communities, creating more opportunities for all.1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think! 2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends. 3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects. 4. Follow us on Facebook, Twitter and LinkedIn 5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and 2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
Support our mission by making a tax-deductible donation to the Foundation.Thank you!The post Your part in financial education appeared first on Paul Merriman.
Paul Merriman is a compulsive list maker and his Thanksgiving list is his favorite of the year. In this podcast, he covers a range of subjects for investors related to real wealth and giving thanks. He describes getting up very early on Thanksgiving Day to spend a few hours listing names of people for whom […]
The post How do you measure real wealth? appeared first on Paul Merriman.
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 […]
The post The best investment we will ever make! and Q&A appeared first on Paul Merriman.
Paul provides a crash course in beginning investing in this presentation (with slideshow) to professional members of the Youth Business Alliance so they can use these principles and tools to educate and empower their students in financial literacy. This is the video (or podcast) to share with your teenage and older children, family, friends […]
The post Back to Basics: 12 simple ways to supercharge your retirement appeared first on Paul Merriman.
Paul provides a crash course in beginning investing in this presentation (with slideshow) to professional members of the Youth Business Alliance so they can use these principles and tools to educate and empower their students in financial literacy. This is the video (or podcast) to share with your teenage and older children, family, friends […]
The post Back to Basics: 12 simple ways to supercharge your retirement appeared first on Paul Merriman.
Paul provides a crash course in beginning investing in this presentation (with slideshow) to professional members of the Youth Business Alliance so they can use these principles and tools to educate and empower their students in financial literacy. This is the video (or podcast) to share with your teenage and older children, family, friends […]
The post Back to Basics: 12 simple ways to supercharge your retirement appeared first on Paul Merriman.
Chris Pedersen, Director of Research for The Merriman Financial Education Foundation, joins Paul Merriman to explain and elaborate on his ideas and tables published as the cover story in the AAII Journal(October 2022), titled, “Double Your Lifetime Purchasing Power in 20 Minutes.” As Chris states in this broadcast, the article particularly pertains to people […]
The post 20 minutes to double your spending power appeared first on Paul Merriman.
Chris Pedersen, Director of Research for The Merriman Financial Education Foundation, joins Paul Merriman to explain and elaborate on his ideas and tables published as the cover story in the AAII Journal(October 2022), titled, “Double Your Lifetime Purchasing Power in 20 Minutes.” As Chris states in this broadcast, the article particularly pertains to people […]
The post 20 minutes to double your spending power appeared first on Paul Merriman.
The focus of most of the work we do at The Merriman Financial Education Foundation is to help investors put together portfolios that we believe will produce higher rates of return per unit of risk. In this podcast we look at the math of making more money, as well as specific decisions that are likely to lead […]
The post 30 Ways to make another million—Really appeared first on Paul Merriman.
The focus of most of the work we do at The Merriman Financial Education Foundation is to help investors put together portfolios that we believe will produce higher rates of return per unit of risk. In this podcast we look at the math of making more money, as well as specific decisions that are likely to lead […]
The post 30 Ways to make another million—Really appeared first on Paul Merriman.
Paul Merriman, Chris Pedersen and Daryl Bahls each share his studies and comments about rebalancing a portfolio—how often, how much change before rebalancing, and when does it make sense not to rebalance? They also answer listener/viewer questions and Paul makes a special offer for a free chapter from Larry Swedroe’s book, Your Complete Guide to a Successful & […]
The post How To Rebalance Your Portfolio appeared first on Paul Merriman.
“Thank you for all that you’ve done throughout your career. I appreciate your integrity and have made countless referrals. Best to you and the great team you’ve assembled.” – Pete S. In This Edition Double Your Lifetime Purchasing Power in 20 Minutes How To Prepare for Post-Work Life 10 Life Changing Lessons Getting Long-Term Bullish […]
The post Increase Your Spending Power appeared first on Paul Merriman.
In this presentation to the Boston Bogleheads® Chapter (Sept. 12, 2022), Paul presents the “10 most important new lessons learned by The Merriman Financial Education Foundation.” The foundation is celebrating its 10-year anniversary of helping the DIY investor make sound investment decisions for a lifetime and become the best advisor to the most important investor […]
The post 10 Life-Changing Lessons from The Merriman Financial Education Foundation appeared first on Paul Merriman.
Inspired by a conversation with George Sisti, Paul’s good friend and trusted Truth Teller, Paul makes the case that successful investing is 99.9% defense. (See article referenced below). The good news is: almost every one of these defensive steps are easily applied to managing a portfolio. And once you set the process in motion, it should be […]
The post The biggest challenge to successful investing appeared first on Paul Merriman.
In this interview with Ken Roberts, host of Ken’s Bulls and Bears Report, a weekly radio show in Reno, NV, Paul addresses questions and more: Should investors believe the “experts” predictions of catastrophic future returns for the stock market? What are the most important investment decisions that people have to make? What are the […]
The post Is This The Worst Bear Market Ever? appeared first on Paul Merriman.
Paul is interviewed by Jordon Grumet, MD., aka “Doc G,” personal finance expert, hospice doctor and host of the “Earn and Invest” podcast. They discuss Paul’s “7 Biggest Investment Decisions” and more, as Paul addresses these questions: Do investment strategies change over time? Is there a place for stock picking? How important is dividend investing? […]
The post The 7 Biggest Investment Decisions or Are You Leaving on the Table? appeared first on Paul Merriman.
“I am retired now and living through turbulent markets without losing sleep at night. You’ve taught me the importance of having a plan and sticking to it through bad times. It helps that we can live off our savings rather than having to sell when markets are down. Patience is key!” — Jim M. In This […]
The post What will help you be a better investor? appeared first on Paul Merriman.
Tune in Sept. 17 at noon (eastern time) for a Zoom presentation and Q&A on “The 10 most important new lessons of the past 10 years,” as Paul Merriman addresses the Boston Bogleheads Chapter. See info below. In this broadcast, Paul, founder of The Merriman Financial Education Foundation, Chris Pedersen, Director of Research, and Daryl Bahls, Director of Analytics, answer […]
The post How do you manage investments during major declines? appeared first on Paul Merriman.
“Thank you for your incredible work, which has largely shaped my investing philosophy. You guys are the best. I hope to continue our “association” for a long, long time! Thanks for your never-ending efforts and the desire to educate others. You are an inspiration.” — Russell S. In This Edition More Than EnoughTruth Teller Rob […]
The post Can you have more than enough? appeared first on Paul Merriman.
In this podcast Paul invites listeners to an upcoming free event and addresses the following topics: • Jeremy Grantham and Harry Dent have made bold predictions about catastrophic future returns. Should we take them seriously? • How have the Vanguard and Best In Class ETF recommendations performed this year? • Would investing in VTI give the same returns as […]
The post Should you believe predictions of catastrophic future returns? appeared first on Paul Merriman.
Enjoy this wide-ranging conversation between Rob Berger and Paul Merriman on Rob’s “Financial Freedom Show” (YouTube video channel) as they discuss these important investor topics: Timestamps 0:00 – Welcome to the Financial Freedom Show! 01:01 – Small Cap Value 20:44 – Other consistent funds 22:59 – Equity portfolio 27:00 – Deciding/4 fund strategy 30:13 – Links […]
The post The most important investment decisions appeared first on Paul Merriman.
Paul talks to retirees about the handful of decisions you can make that can either benefit you and your heirs or cost you millions. He covers: · Ways to make or lose .5% · The best combination of equity asset classes · Fixed and flexible distribution strategies · How to best analyze recommended strategies · […]
The post The Biggest Financial Mistakes Retirees Make appeared first on Paul Merriman.
““Thank you for all of your hard work and reassurance. Your teachings have helped me a great deal in my financial journey and I find the sound of your voice comforting.” —Ann S. In This Edition Introducing a New Investor ToolWhat Our Lifetime Calculator Can Do For YouSummer Musings About InvestingThe Problems with Reverse MortgagesWhat To Do […]
The post What to invest in specific funds appeared first on Paul Merriman.
This video and podcast introduces the “Sound Investing Portfolio Fixed Allocation Configurator.” This new tool helps investors figure out how to implement the portfolios we analyze using different fund families. Chris Pedersen, Director of Research joins Paul Merriman to discuss Chris’ latest investor education project. The process is simple, involving four choices: portfolio strategy (e.g., […]
The post This new tool helps you invest in specific funds appeared first on Paul Merriman.
Paul presents, “The #1 Reason I Want Small Cap Value in Your Portfolio” with compelling evidence as to why SCV should be the one asset class you must own. This is further illuminated by the tables and charts shown in the video presentation and available in the slide show and handout. (links below). This presentation […]
The post The one asset class you must own appeared first on Paul Merriman.
“I’m a huge fan of Paul and the gang and have gotten so much out of your podcasts and articles. It’s motivated me greatly to get some basic advisor credentials so I can volunteer at my local Navy Marine Corps Relief Society to help junior servicemembers budget and plan for their futures.” – Aaron W. In This […]
The post Invest easily, simply and effectively appeared first on Paul Merriman.
Are you seeking a simple but effective lifetime investment strategy? In this podcast and video, Katie Gatti, host of “Money With Katie,” interviews Chris Pedersen, Director of Research for The Merriman Financial Education Foundation and author of Two Funds For Life – A quest for simple & effective investing strategies. Chris explains: • The […]
The post Invest Successfully with Just Two Funds appeared first on Paul Merriman.
Paul addressed the AAII Los Angeles Chapter with “The Inside Story on the ‘150 Portfolios Better Than Yours’,” on June 18, 2022. In 2014, Dr. James Dahle, of White Coat Investor, wrote a column titled, “150 Portfolios Better Than Yours.” The article included a link to a list of almost every popular model portfolio, including […]
The post 150 Portfolios Better Than Yours appeared first on Paul Merriman.
“Absolutely love your research, writings and content. I can say it has completely changed my investing philosophy and I am the grown son of a Financial Advisor! Thanks for your sharing your passion.” — Lance F. In This EditionSummertime ThoughtsTruth Teller Stan The Annuity ManIt’s Not Lattes That Can Blow Your Financial FutureChris discusses DFA and […]
The post Are money and happiness related? appeared first on Paul Merriman.
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 […]
The post 7 Things You Should Be Doing With Your Retirement Portfolio appeared first on Paul Merriman.
Paul Merriman and Chris Pedersen, Director of Research for The Merriman Financial Education Foundation, address a number of topics and questions: Is the combination of the S&P 500 and Small Cap Value really more risky than the S&P by itself? Why the exceptional performance of Chris’ Best In Class (BIC) during the first 6 […]
The post How can the combo of S&P 500 and Small Cap Value be less risky than the S&P 500 by itself? (and other topics) appeared first on Paul Merriman.
“I absolutely love and follow all of your podcasts, books and articles. As a military nurse, I view your service as very noble with generational positive effects.” — Ben B. Dear Friends, This newsletter is a deviation from our usual blend of topics because I want to focus on just one thing, and that is your peace […]
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While the headlines have focused on the first 6 months of 2022 as “The Worst First 6 Months of the Last 50 Years!”, the reality is that well-diversified investors have suffered modest losses. In this podcast, Paul reviews the major losses of growth stocks, cryptocurrencies, and barely bear market losses in the major indices, as […]
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Paul begins this Q&A session with the true story of helping a young relative open an investment account. The good news is a young investor got started but, with the misguided “help” of a Fidelity rep, he made a $250,000 mistake. Learn what happened. Questions: Where can I find an advisor who will work […]
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“I absolutely love and follow all of your podcasts, books and articles. As a military nurse, I view your service as very noble with generational positive effects.” — Ben B. In This Edition Graduates: Now’s the Time To Start Planning Your Future!Truth Tellers at MorningstarUpcoming EventHow To Be A DIY InvestorQuestions, Answers & Comments Dear Friends, Every […]
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Many investors are worried about their future and what’s happening in the markets. In this podcast, Paul focuses on a series of new tables. He believes these tables represent one of the best pieces of historical information for understanding the likely path that your investments will take in the future. They were created by Daryl Bahls, Director […]
The post What path are your investments on? appeared first on Paul Merriman.
To help answer the many recent emails asking, “What should I do next?” Paul offers his “sound investing” ideas. He begins with a reference to a a recording by JL Collins in 2019, titled “A Guided Meditation for When the Stock Market Is Dropping,” (https://www.youtube.com/watch?v=OOGU94eL07E), and then walks you through the importance of examining and understanding the historical […]
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Dear Friends, In striving to provide you with smart, accessible analyses of historical financial data, we are excited to keep finding new ways of presenting information to simplify investment strategies which make and keep more money in your pocket. Recently, thanks to our Director of Research, Chris Pedersen, and Daryl Bahls, our Director of Analytics, […]
The post Graduates: Start Planning Your Future! appeared first on Paul Merriman.
What are the challenges facing university graduates, and all young people, entering the work force? Paul addresses students at Western Washington University with clear information on how to become well-informed and successful investors over a lifetime. He warns about the role of emotions and importance of creating an informed investment plan to have more than […]
The post Strategies for Financial Success—The Roadmap After Graduation appeared first on Paul Merriman.
Dear Friends, In striving to provide you with smart, accessible analyses of historical financial data, we are excited to keep finding new ways of presenting information to simplify investment strategies which make and keep more money in your pocket. Recently, thanks to our Director of Research, Chris Pedersen, and Daryl Bahls, our Director of Analytics, […]
The post Save like mad for 5 years – Become a multi-millionaire appeared first on Paul Merriman.
In this new presentation, Paul addresses seven of the biggest investment decisions, provides a brief history of investing and makes predictions for the future. Through the evolution of Wall Street, he shows what savvy investors believe today in terms of saving on fees, diversification and asset class investments, and he elaborates on recommended portfolios and […]
The post The Future of Investing: The Good, the Bad and the Ugly appeared first on Paul Merriman.
Young investors can build a retirement worth up to $50 million from an investment of just $6,000 per year for the first 5 years of contributions to a Roth IRA or Roth 401(k). Paul Merriman, Chris Pedersen and Daryl Bahls show you how — with or without the help of parents or grandparents. Paul discusses […]
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Dear Friends, After 26 months of exercising extreme caution in protecting my wife and myself from contracting Covid-19, we felt confident to take a group trip to New York. We ended up spending five days in a hotel room having tested positive and feeling “under the weather.” Fortunately, it was not serious and we recovered, […]
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This is MUST Listen presentation for everyone yet to claim Social Security and/or survivor benefits, and otherwise learn how to maximize your benefits. MaryBeth Franklin, author of Maximizing Social Security Retirement Benefits, shares her expertise in this interview with Paul Merriman and answers a number of viewer questions. This presentation is part of Financial Literacy […]
The post What’s New for Social Security 2022 appeared first on Paul Merriman.
Times are changing and many investors are asking, “What changes should I make in my portfolio?” To answer, Paul discusses how to be a successful do-it yourself-investor. He also mentions free upcoming presentations, along with recommended recent articles and an interview on defining characteristics of a successful do-it-yourself investor. Join Paul online with the AAII New […]
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Looking to achieve massive diversification across industries, geographies, stocks, bonds, and various equity premium factors? Chris Pedersen, Director of Research at The Merriman Financial Education Foundation and author of 2 Funds for Life: A quest for simple & effective investing strategies, shows several simple portfolios that do that. He also discusses 2 Funds for Life […]
The post Simple & Effective Balanced Lifetime Portfolios, 2022 Update appeared first on Paul Merriman.
Paul Merriman talks with Larry Swedroe and Sam Adams about their new book, Your Essential Guide to Sustainable Investing: How to live your values and achieve your financial goals with ESG, SRI, and Impact Investing https://amzn.to/3KiV1Vh, and they address a broad range of audience questions. Larry is a prolific and respected academic-based writer committed to […]
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Dear friends, I hope the advent of spring is as invigorating for you as I am finding it. But before I tell you about my recent past and future activities, I want to encourage you to join me Today, April 14 at 4:30 p.m. PT (that’s 7:30 p.m. ET) as I interview Larry Swedroe and Sam Adams on […]
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In this insightful interview by Morris Taletovic of Moki Finance, Paul shares, for the first time, stories and lessons from his journey in the financial arena as a former advisor, and as an educator and founder of The Merriman Financial Education Foundation. They discuss Paul’s free books, his mentors, cultivating a long-term-investment mindset, and his advice about […]
The post How to have more than enough in retirement appeared first on Paul Merriman.
How can you best combine equity asset classes to build portfolios for the long term? This is one of the seven most important topics we focus on at The Merriman Financial Education Foundation. Paul Merriman is joined by Daryl Bahls, Director of Analytics and Chris Pedersen, Director of Research to discuss their personal favorite […]
The post How to build a great long-term portfolio appeared first on Paul Merriman.
Paul begins this podcast by reviewing long-term returns of the 4 major equity asset classes for the 94 years ending 2021, before moving on to the focus of the podcast: our quilt charts. The most useful single table, of all the tables created by Daryl Bahls, Director of Analytics for The Merriman Financial Education Foundation, is […]
The post How long can the unexpected continue? appeared first on Paul Merriman.
What are the best practices for building retirement savings and ensuring those savings last throughout retirement? Christine Benz, director of personal finance at Morningstar, Roger Young, CFP with T. Rowe Price, and Paul Merriman, president of The Merriman Financial Education Foundation, introduce you to the latest research and strategies to increase your odds of enjoying […]
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Flexible Distributions in retirement — which Paul considers one of the greatest financial luxuries for a retiree — are discussed in this podcast updated for 2022. He helps investors see the relationship between how much is taken out for distributions, the balance of equity and fixed income asset classes, and whether distributions are adjusted for […]
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Dear Friends, We continue our annual updates of “Best Advice” with our latest offering, Fixed Distributions 2022, which examines a major financial decision: How much should you take out of your portfolio in retirement? In this week’s podcast, I discuss the use of the Fixed Distribution Tables, updated for 2021 data, using Fine Tuning Tables B1 (S&P 500) and B9 (U.S. 4 Fund Portfolio) […]
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How much should you take out of your portfolio in retirement? This is one of the biggest financial decisions you will make. In this presentation, Paul discusses the use of the Fixed Distribution Tables, updated for 2021 data. He uses Fine Tuning Tables B1 (S&P 500) and B9 (U.S. 4 Fund Portfolio) as the return series he will use for the discussion. He looks at 4 tables in each series. The tables reflect the outcome of taking a 3, 4, 5 and 6 percent original distribution, with annual inflation adjustments. The comparisons are based on the use of 40/60, 50/50 and 60/40 equity/fixed income portfolios. Paul focuses on the 20, 30 and 52 year periods of returns. When considering these portfolios, Paul suggests looking at the risk/return studies in No-Nonsense Portfolios and “150 Portfolios Better Than Yours.”
This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3. If you found value in this podcast, here are five ways to support the podcast and our foundation:
1) Leave a podcast review on your player of choice.
2) Sign up for our bimonthly newsletter at PaulMerriman.com and join 30,000 savvy investors who value free financial education. You can download a free pdf copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement at https://paulmerriman.com/wp-content/uploads/2021/01/Were-Talking-Millions.pdfWe ask that you share it with family and friends!
3) Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee — at no cost to you — which helps support our financial education projects.
4) Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirementand 2 Funds for Life: A quest for simple & effective investing strategies, the profits from which help support our work.
5) Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors at all stages of life. Thank you!
The post Fixed Distributions 2022 Update appeared first on Paul Merriman.
Paul discusses the latest Equity and Fixed Income Tables (1928-2021). Also, see updates of The Ultimate Buy & Hold Fine Tuning Your Asset Allocation, Fixed Contributions and No-Nonsense Tables. Plus, he answers the following questions:
- How can I determine expected risk and return of a portfolio that combines investments from several of your portfolios?
- Is there any benefit adding international large-cap fund to the U.S. 4 Fund Portfolio?
- Is the 60/40 portfolio dead?
- Should I add alternative investments to my portfolio?
- How do I track my results if I start my investment mid-year?
- Does it make sense to substitute your Vanguard Monthly Income Fund for your Government Bond fund recommendations?
- What are your rebalancing recommendations?
Paul ends with a wonderful comment from a young investor about dealing with the temptation to check his results daily.
This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3. If you found value in this podcast, here are five ways to support the podcast and our foundation:
1) Leave a podcast review on your player of choice.
2) Sign up for our bimonthly newsletter at PaulMerriman.com and join 30,000 savvy investors who value free financial education. You can download a free pdf copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement at https://paulmerriman.com/wp-content/uploads/2021/01/Were-Talking-Millions.pdfWe ask that you share it with family and friends!
3) Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee — at no cost to you — which helps support our financial education projects.
4) Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirementand 2 Funds for Life: A quest for simple & effective investing strategies, the profits from which help support our work.
5) Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors at all stages of life. Thank you!
The post How can I test results if I want to make changes to my portfolios? And other great questions appeared first on Paul Merriman.
Dear Friends,
We often talk about how the past is knowable while the future is not. Until last week, I could not imagine that we would be witnessing a war in Europe, and on the heels of a global pandemic. Growing up and living in post-WWII US, Canada and Western Europe, most of us have enjoyed an unprecedented time of opportunities, innovations, prosperity and peace; much to be grateful for.
But when circumstances beyond our control change quickly, and not as we’d like, I’ve found a useful response is to stay calm, not act on emotion, and focus on what’s important to me. First, I want to focus on you, as a sound investor. Second, I want to celebrate a great friend who is an integral part of our financial education work.
When you are a “buy-and-holder,” you are positioned and ready for a war at all times. If you’ve followed our academic-based research, you understand that there have always been wars, recessions, depressions, crises, bear markets, rebounds and bull markets. Often the event that causes the damage — or a surprising run up — could not be anticipated. This is why we encourage you to understand risk and return, set up smartly diversified portfolios, and exercise the discipline to stay the course no matter what. History proves there are always good times and bad, in endless cycles.
Is now the time to reevaluate your investments for the future? If your comfort level with loss has changed due to a major shift in personal circumstances, then perhaps so. But it is another matter to change in response to global events in the moment. One could say, “Hey Paul, you’re 78 and your portfolio should be at 60/40 bonds to equities.” But my chosen glide path is 50/50 forever, and I’m sticking to it.
For more insights on this subject, I recommend this article, “The Relationship Between War & The Stock Market” by Ben Carlson.
In this week’s podcast, “You can retire with millions more,” I discuss the long-term impact of using regular Fixed Contributions, and our updated Tables for 2022. Before listening to this podcast, I suggest you review the YouTube 2022 updates on The Ultimate Buy and Hold, Fine Tuning Your Asset Allocation, and No-Nonsense Portfolios.
I reference 9 tables that investors can use to compare the long-term results of using each of these different equity combinations, with the addition of bonds for more conservative investors. The purpose of the tables and this podcast is to help young investors understand the long-term impact of a small monthly investment along with 3% annual increases. The corresponding Fine Tuning Tables are used for return calculations.
I present the case that even simple diversification, as compared to one asset class, can double the value of your portfolio over a 10 year period. I also show how the sequence of return can mean a $1.5 million difference, and suggest using The Merriman Lifetime Investment Calculator to test different beginning dates to see the impact of different sequences of return. The point is to help you consider building different portfolio combinations with unique parts of your long-term investments so you are sure to stay the course.
30 Years of Collaboration
I want to celebrate with you the collaboration and wonderful friendship I’ve enjoyed with Richard Buck, working together for 30 years to help investors make sound investing choices. It began at Merriman Wealth Management with Rich, a financial writer for a Seattle newspaper, writing website articles to attract clients to our investment philosophies and to keep our clients informed. In those days, we offered free live workshops for 3 and 6 hours.
I presented to between 10 and 100 people each time, and with any luck they might have mentioned our work to friends and family. Today, I might speak to a dozen people via Zoom, and then put the recording on YouTube where more than 100,000 people have seen it, as is the case with “My Favorite 12 Vanguard Funds for Retirees”, presented to the Bainbridge Senior Center.
It is the same for the articles Rich and I write together, in which I generally suggest the article focus and outline while Rich comes up with an interesting way to present the topic. He writes the article and I do a final edit. In the early days, all that work ended up in the hands of 500 to 1000 readers (and articles were sometimes much longer than our Marketwatch.com articles). Today, an article might get 5,000 readers or, as is the case of “How to buy 10 years of retirement for $3650,” more than 325,000 readers.
Over the past 2 years, here are the views of the 7 most popular articles at “MarketWatch”:
Today we don’t write for clients. Since starting our financial education foundation in 2012, we’ve focused entirely on helping do-it-yourself investors. We have two major goals:
- Attract DIY investors of all ages to our educational material
- Continue to educate them on the steps to building and maintaining a portfolio of equity and fixed-income funds, which meet their need for return and risk tolerance.
Every year about this time, Rich and I update the historical returns of the many portfolios we recommend, with invaluable help from Daryl Bahls. That history rolls out of the annual updates of the Ultimate Buy and Hold Portfolio, Fine Tuning Your Asset Allocation, Fixed Contributions, Fixed Distributions, and Variable Distributions Portfolio recommendations at Schwab, Vanguard, Fidelity and T. Rowe Price, including traditional mutual funds and Best In Class ETFs.
Rich has been an integral part of all of this over the last 30 years: writing our books, articles, white papers and, at one time, interoffice memos to employees at our old firm. I am grateful for such a capable and faithful colleague and friend. Happy Anniversary, Rich!
And, as some of you know, Rich has an unusual hobby. Under the pseudonym of Sam Waldron, he hosts a weekly old-style online “radio-style” show, “45 RPM, Music of the 40s and 50s.” Described as “a musical journey back to the days when he was young. Each one-hour show combines stories and recordings centered on a theme.”
I hope you’ll join me in congratulating Rich on having passed his 200th weekly show, a tribute to Rosemary Clooney. Tune in to https://samwaldron.com/ and you just might find yourself singing along or dancing up a storm… which, by the way, is another great antidote to worrying about the problems of the world.
I have asked “Sam” to share a collection of songs from the period he loves so much that remind him of the 30 years of our work together. I look forward to see what he comes up with. I hope it doesn’t start with “My Friend The Witch Doctor.”
Q&A with Chris Pedersen
SPY or RSP?
Q: When you guys talk about the S&P 500, are you referencing more SPY or RSP? Intuitively, it seems like RSP would give more exposure to “up and comers,” whereas SPY is dominated by 5 or so companies, all essentially tech.
A: The S&P 500 is a capitalization-weighted large-cap blend index. SPY is a capitalization-weighted index fund that tracks the S&P 500 index, so yes, when we talk about investing in the S&P 500 or large-cap blend, the SPY fund would be a representative choice. You’re right that it’s heavily tilted toward a handful of technology companies, but that’s because those are the companies that have done well lately. Over time, the industry-sector tilts will vary as different businesses thrive and investor tastes change. The RSP fund includes companies from the same index, but instead of holding them in proportion to their capitalization-weighting, it holds an equal dollar value of each stock. On the plus side, this means you get a little bit of a tilt towards the smaller, out-of-favor (cheap or value) companies, but it also triggers a lot of trading. As stock prices fluctuate, the fund must buy and sell shares when it rebalances quarterly. It also has an expense ratio that’s higher at 0.20% vs. 0.095%. Since 2003, it has outperformed SPY by about 1% per year after expenses, but it’s also had more volatility (2.5% higher standard deviation) and deeper drawdowns (~55% vs. ~50%). I agree that it’s an interesting option for someone willing to put up with the higher volatility & expenses, provided they’re comfortable not following the crowd.
Alternatives to Vanguard’s Taxable Dividends
Q: My husband and I began managing our investments last fall. We just reviewed our Vanguard statement and saw that we have over $26,000 in dividends in that time frame in our taxable brokerage account, in addition to the already substantial taxable event we created and planned for when we broke away from our advisor, cashed out, and reinvested the brokerage account. We had used your 2 fund strategy when setting up our new account. Is there a better way to invest in this kind of account rather than using target date funds and small-cap value in a taxable account so that it grows without getting hit with big, taxable dividends? Since our investment is now almost back to the value it was in September, we thought now might be a good time to make the change.
A: Yes, Vanguard target-retirement funds shocked us all when they managed their funds in such a way that it triggered such an uncharacteristic capital gains distribution for retail investors. Until this event, their capital gains and dividend distributions had been low enough that holding them in a taxable account, though not ideal, was okay. We can all hope that this doesn’t happen again, but where possible, I’ll be recommending that target-date mutual funds be held in tax-deferred or tax-free accounts moving forward. ETFs would fix this, but I’m unaware of major providers offering target-date ETFs at this time.
There is a potential benefit from your capital gains distribution. If you reinvest it in the fund, you will increase the cost basis of your investment which reduces the future capital gain when you eventually sell it. You still have to pay taxes on the distribution, but even if you only invest the remainder after paying today’s taxes, you’ll get a reduction in future taxes. Whether you end up better off or not over the long haul depends on many things, but especially the tax rates today vs. those when the fund is sold in the future.
There’s one other bit of positive news, and that’s that Vanguard has lowered the expense ratio on their target retirement funds to 0.08%. I realize it’s another small consolation, but the gyrations which led to the capital gains distributions may have been instrumental in getting to this lower expense ratio.
Am I doing the right thing with my 2-Fund for Life Portfolio?
Q: I’m a big fan of your work and you’ve completely sold me on small-cap value. I’ve figured out that I have a high risk tolerance (within index funds) and, after listening to some of your talks, I put together a simple 2-fund portfolio but wanted any input you’re willing to give on the portfolio. I am 28 years old, expect to retire at 60 and my current retirement savings is $80k.`
The portfolio I’ve started to craft is 50% total market (VTI) 50% small-cap value (SLYV). My question/concern is: am I missing any potential returns by eliminating the SCB/SCG components or am I enhancing potential returns by doing so? This has certainly been volatile through the month of January, but I have had no issues holding through this and adding to it this week.
A: Congratulations on getting off to a great start at an early age! The portfolio you’ve decided on is similar to the 50% S&P 500, 50% US SCV portfolio Paul’s been talking about. The backtesting says you’re not giving up much by skipping the small-cap blend and large-cap growth parts of the portfolio, but there is a potential behavioral cost. When small-cap blend or large-cap growth is the best-performing asset, you won’t be holding a fund focused on them. If you can ignore that, you won’t care. If you can’t, you might be better off with a more complex portfolio. One way to deal with it is to remember that the VTI fund holds almost everything. No one can tell you which approach will do best in the future, but the backtesting says the 50% total US market plus 50% US small-cap value is well-diversified and has delivered better returns per unit of risk than the S&P 500 alone over the long term.
Does M1 update automatically?
Q: If I have already have an M1 Finance account with the Ultimate Buy and Hold strategy, is that automatically updated on M1 with 2022 suggestions or would I have to do that manually?
A: Unfortunately, M1 requires you to do it manually. When we update our best-in-class recommendations, we will create new Pies on our website that you can load into your account and use to make the change. Please consider taxes and trading costs before blindly adopting the changes.
Why are Avantis ETFs on your “Best in Class” list?
Q: I recently became aware of The Merriman Financial Education Foundation and I very much like what you offer. I’m curious though how Avantis ETFs, which have only been around for about a year, made it to the “Best in Class” list, but Dimensional Fund ETFs, with their longer track records, did not.
A: When the Best-in-Class ETFs were last updated, the relevant and interesting DFA ETFs were not available. I will be updating our recommendations this year and will consider the new DFA ETFs as part of that process. At this point, I don’t expect major changes because many of the other funds, including Avantis, have proven to be excellent choices.
Rebalancing year-by-year
Q: My daughter started her first job last year and opened a 401(K). I advised her to follow your Two Funds for Life strategy and to rebalance annually on her birthday. Her 26th birthday is coming up this month and I have a question. This past year she was investing 37% in a TDF and 63% in a small-cap blend (No ACV available in her 401(K)). When she turns 26, should she rebalance back to 37-63, then change future contributions to 39-61? Or do you rebalance forward to the 39-61? Do you rebalance back or forward?
A: The good news is that there’s no need to be overly precise. Plus or minus a few percent here and there will get lost in the noise of market returns. If I were using the 1.5xAge 2 Funds for Life approach, I’d calculate the allocation percentages at the beginning of the year based my age at the time and use them to rebalance and set contribution percentages for the following year. So, if I had just turned 26 (oh, to be young again!), I would rebalance to 39% in the target-date fund, and 61% in the second fund (small-cap blend in her case). I would also set the contribution percentages for the coming year to match that 39% TDF, 61% SCB allocation.
Editor’s Note: Learn all about Two Funds for Life strategies in Chris Pedersen’s book, 2 Funds for Life – A quest for simple & effective investing strategies. All profits from the sale are generously donated by the author to support our Foundation.
Personal Story
Paul, That was an excellent video on teen investing! My son is 17 and now starting to make decent money with his first job. I’ve always wanted to talk to him about investing, like my dad did with me. And I always wondered what the best investment would be for a teen starting out, and how that would roll over once he got a ‘career’ job. Meaning, if he started now, what investment vehicle would he use and how would that be combined with the 401k he sets up with an employer?
Now I know!! It’s the Roth IRA that we will try to get him a nice lump sum of money in over the next 5-10 years. And then he can decide if he wants to let it ride after that (not contribute any future money to) and then just focus on contributing to his 401K. Thank you so much for this timely advice to help beef up his wealth when it’s time for him to retire. I have followed many of your investing principals over the years and love the contributions you are making to the investment world, for those willing to listen :-). – Kevin D.
Helping you build a better financial future,
with more peace of mind,
Paul
This post may contain affiliate links, which means our Foundation may receive a commission if you make a purchase using these links. As an Amazon Associate and M1 Finance affiliate, The Merriman Financial Education Foundation earns from qualifying purchases.
The post Should you change course now? appeared first on Paul Merriman.
In this podcast, you’ll learn about the long-term impact of using regular Fixed Contributions and our updated Tables for 2022. For young investors, this can mean adding millions to your retirement. Before listening to this podcast, Paul suggests you review the YouTube 2022 updates on The Ultimate Buy and Hold, Fine Tuning Your Asset Allocation, and No-Nonsense Portfolios.
There are 9 Tables that investors can use to compare the long-term results of using each of these different equity combinations, with the addition of bonds for more conservative investors. The purpose of the tables and this podcast is to help young investors understand the long-term impact of a small monthly investment along with 3% annual increases. The corresponding Fine Tuning Tables are used for return calculations. Paul compares the decade returns of the S&P 500 only with a 50/50 split between the S&P 500 and small-cap value.
Doubling in value: Paul highlights the extra risk of having all the money in one asset class. In the 10 years ending 2009, the S&P 500 declines in value, even including additional investments. Meanwhile, the more diversified 50/50 S&P/SCV doubled in value for the same period. In fact, almost every other portfolio doubled over that 10 year period.
The sequence of return can mean a $1.5 million difference. Paul shows another situation (Tables C8 and C9) where two portfolios had almost the same compound rate of return, but one beats the other by about $1.5 million. It points to how important the sequence of return is. Use The Merriman Lifetime Investment Calculator to test different beginning dates to see the impact of different sequences of return.
Interestingly, the annual result of regularly adding new money seldom leaves the portfolio with less value than the previous year. For example, in the case of the S&P 500, there were only 7 years out of 52 that the following year wasn’t higher than the last. In the case of the 50/50 S&P/SCV, there were only 5 years that the following year wasn’t higher.
Hopefully, this knowledge will help you consider building different portfolio combinations with unique parts of your long-term investments. For example, you could segregate one smaller account that is all small-cap value for the entire period, another in the U.S. 4 Fund Portfolio, and yet another in a Worldwide 4 Fund Portfolio.
This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3. If you found value in this podcast, here are five ways to support the podcast and our foundation:
1) Leave a podcast review on your player of choice.
2) Sign up for our bimonthly newsletter at PaulMerriman.com and join 30,000 savvy investors who value free financial education. You can download a free pdf copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement at https://paulmerriman.com/wp-content/uploads/2021/01/Were-Talking-Millions.pdfWe ask that you share it with family and friends!
3) Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee — at no cost to you — which helps support our financial education projects.
4) Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirementand 2 Funds for Life: A quest for simple & effective investing strategies, the profits from which help support our work.
5) Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors at all stages of life. Thank you!
The post You can retire with millions more (and it takes less than $100 a month) appeared first on Paul Merriman.
In this podcast and video, Paul Merriman, Chris Pedersen and Daryl Bahls discuss the 2022 update of “No-Nonsense Portfolios” Tables along with new tables used in a recent presentation at the 2022 White Coat Investor Conference. That presentation was entitled “The Inside Story of 150 Portfolios Better Than Yours.” The two tables compare the risk and return of 20 different portfolios.
Those listening to the podcast should review the tables before listening.
Lessons learned:
For each of the 20 portfolios the tables compare:
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The annual, decades, and total returns from 1970 through 2021
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The number of up and down years and average of each
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The growth of $10,000 (range from $1.9 to $9.5 million)
-
The most popular portfolios earned less than 1/3 of the two most profitable
The discussion covers many important lessons in the tables:
- There are many ways to measure risk
- Higher returns can be achieved at less risk
- The risk of having too much of a portfolio in one asset class
- The importance of combining small and value with traditional large-cap blend portfolio
- Rebalancing of an equity portfolio can increase the long-term return
- A portfolio can never score well during the decade periods but end up #1 for the whole period
- The portfolio that grew to $9.5 million was less risky than the one that grew to $1.9 million
After the discussion of the tables, Chris, Daryl and Paul talk about the portfolios they would recommend.
This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3. If you found value in this podcast, here are five ways to support the podcast and our foundation:
1) Leave a podcast review on your player of choice.
2) Sign up for our bimonthly newsletter at PaulMerriman.com and join 30,000 savvy investors who value free financial education. You can download a free pdf copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement at https://paulmerriman.com/wp-content/uploads/2021/01/Were-Talking-Millions.pdfWe ask that you share it with family and friends!
3) Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee — at no cost to you — which helps support our financial education projects.
4) Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirementand 2 Funds for Life: A quest for simple & effective investing strategies, the profits from which help support our work.
5) Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors at all stages of life. Thank you!
The post Comparing the risk and return of 20 different (mostly) popular portfolios for do it yourself investors appeared first on Paul Merriman.
Dear Friends,
In the first two months of every year, our team buckles down to update our core data, our most essential and important work. (You can find this on our website under “Best Advice”). We begin with The Ultimate Buy and Hold Strategies: 2022, based on combinations of 10 equity asset classes. I’ve been writing about and teaching this to Do-It-Yourself investors since 1995. While sound investing principles remain the same, our ability to track and present historical data has improved massively.
Please check out my podcast on The Ultimate Buy and Hold Strategies: Update 2022 in which I use the UBH table (70-30) and UBH tables (50-50) to make the case for 10 equity asset classes I think investors should consider owning in the equity portion of their long-term investments.
The key takeaways:
- The S&P 500 can easily be “beat” without taking more risk.
- The impact of adding just 10% of another equity asset class can improve long-term returns.
- The impact of even .1% more return can be life changing over long periods of time.
- Adding more risky asset classes can substantially reduce risk.
- Diversification of equity asset classes is as important as diversification of individual stocks.
- Rebalancing is not about higher returns but is about limiting risk.
- Adding international equities can have a meaningful impact on long-term returns whether you add 30% or 50% to the portfolio.
- There is not risk in the past, we always know what we should have done.
- The UBH Portfolio is not designed to get the best return, but is designed to get a better return than the S&P 500 without substantially more risk.
We continue, in this next podcast, Fine Tuning Tables: Update 2022, to use updated tables to show you the risk and reward of different equity asset classes — along with different combinations of equity and fixed income — so that you gain a firm understanding of the relationship between long-term return and short-term risk, and make your investment decisions accordingly.
When we started this, more than 25 years ago, there were two tables — one for the S&P 500 (as the equity position) and a second for the Ultimate Buy and Hold combination of 10 different equity asset classes. In this podcast, I discuss and review 9 different combinations of equity asset classes and look at the 9 different equity asset classes we have added, which form the basis of the 9 Fine Tuning Tables. Many thanks to Daryl Bahls for creating the tables!
Lifetime Calculator Update
Craig Appl continues his generous contribution to our Foundation by updating and improving our Lifetime Calculator. I hope you will take a look and use it to better understand and project your financial future.
As Craig explains, “We updated the Merriman Foundation Lifetime Investment Calculator to reflect the 2022 Fine Tuning Tables that were launched on the 16th of February. The calculator now shows the 52 years of returns from 1970 to 2021. This update also includes the All Value US and 50% S&P 500/50% All Small Cap Value US that were added this year. You can view the updated calculator at https://paulmerriman.com/lifetime-investment-calculator/.”
The Thing About A Gold Rush
Every morning I read Ben Carlson, whom you learned more about in our last newsletter as one of our “Truth Tellers,” and Seth Godin. I read Carlson for the studies he shares (mostly from others) and Godin for the perspective he shares.
As I read Godin’s blog this morning about gold, I thought of these lines from a poem, “The Spell of the Yukon,” by Robert Service, “The Bard of the Yukon”:
There’s gold, and it’s haunting and haunting;
It’s luring me on as of old;
Yet it isn’t the gold that I’m wanting
So much as just finding the gold.
It seems Seth is talking about every high-emotion investment that makes speculation exciting, and more likely to lead to “regrets” than “satisfaction.”
The Thing About a Gold Rush by Seth GodinIt’s not the “gold.”
It’s the “rush” that changes the way people behave.
When consumed by a gold rush, people make decisions that they would never make on ordinary days. They trust entities, make assumptions and suspend disbelief. Not because there’s gold on the line, but because everyone else is rushing, and the fear of missing out is significant.
Rushing can help us overcome the status quo and our fear of the unknown. It can also lead to choices that hurt us in the long run.
We should rush on purpose. It’s a choice.
A huge win on a stock bet today doesn’t mean much if you lose it tomorrow.”
The Possible vs. The Probable
The goal of all our work is to help investors focus carefully on the choice… not the allure of gold and the possibility of “striking it rich.” We should never forget: with speculation anything is possible. But the goal of long-term successful investing is to find what is most probable.
It’s possible to win the lottery but not probable. The odds of winning Powerball are 292 million to one. According to the internet you are more likely to be hit by a meteorite.
You are equally likely to be struck by lightning on 250 different occasions in your lifetime as you are to nailing the right lottery numbers, Newsweek reported. Here rae some other odds:
- Yellowstone erupting: 1 in 730,000 in any given year, according to the USGS.
- Being eaten by a shark: 1 in 3.7 million, according to CNBC. Whale Bone Mag adds that those numbers change to 1 in 7 million for Americans living in a landlocked state.
- Being killed by a meteorite: 1 in 700,000, according to astronomer Alan Harris in “Discover” magazine. Those odds are considerably lower for getting struck directly by a meteor, however, dropping to 1-in-1.9 million should a meteor hit Earth.
- Death by vending machine: 1 in 112 million, according to “The Book of Odds” by Amram Shapiro. According to data from the National Electronic Injury Surveillance System, an average of four Americans died per year, between 2002 and 2015, due to vending machine mishaps.
I can tell you the historical odds of the long-term success of the S&P 500, as well as all public stocks in general. According to the study by Dr. Bessembinder 58% of public companies have a long-term return less than risk-free 90 day U.S. Treasury Bills. The S&P 500’s worst compound rate of return was 3 times the long-term return of U.S. T-Bills, and the best was 4 times. For small-cap value, the worst was almost 4 times the T-Bill rate and as high as 6 times.
What are the odds that cryptocurrency will do better than T-Bills for the long term? I have no way to know. There is no track record. I’m looking but so far I can’t find a currency that has grown at the rate of Bitcoin but I have found examples of currency buying power shrinking.
I do know that a loaf of bread in Germany rose from 250 marks in January 1923 to 200,000 million marks by November 1923.
The 2022 Financial Key Financial Data Card
Ed Fulbright, CPA, PA and host of “Mastering Your Money” radio program, has put together, with his team, a 2022 financial “cheat sheet” in a simple graphic format.
The Key Data Card can help you organize your finances without having to search the internet for numbers on tax brackets, deductions, credits, Social Security, retirement plans, and more. It’s a quick resource you can post on your bulletin board. You can get your free copy at: https://moneyful.com/2022-financial-cheat-sheet
Smart Money Moves for Expats
To add to a recent article, Resources for Americans Living Abroad, by Aysha Griffin — our Director of Communications and women’s financial empowerment coach who lives in Catalunya, Spain — our Lifetime Calculator wizard, Craig Appl, suggested these two resources:
FIRE for US Expats: How to Make Smart Money Moves
IRA Contributions for American Expats Explained
Transparent Investing: Last Chance to Get a Free Copy
On Jan. 25, we sent a special mailing to alert you to a limited-time free offer of the electronic version of Patrick Geddes’ book, Transparent Investing: How to Play the Stock Market without Getting Played (A Data-Proven, Simple Investing Strategy)
Some of you kindly wrote to say you could not download it for free, as the link we shared refers the ‘Kindle Unlimited’ eBook. Apparently, Amazon makes it look like you need to join to get the book, but Patrick assures us that on a “Free Day” it really is available free, without joining. We apologize for any confusion and misunderstanding.
On February 20 only, for one final day, Patrick has provided this link so you can get a free copy of Transparent Investing, without joining Kindle Unlimited.
Also, you may want to consider buying the Kindle or print version because Patrick is donating all net proceeds from the book to support financial education at the Consumer Federation of America; specifically, CFA’s America Saves initiative, to which Patrick has made a $300,000 contribution.
For more insight into Patrick and Transparent Investing, I recommend this recent conversation between Patrick Geddes and Tim Ranzetta, co-founder of Next Gen Personal Finance. In this NGPF Podcast, Patrick shares insights from a career in the world of investments.
And, for fun animated videos about smart investing, check out these by Patrick’s team: https://patrickgeddes.co/media/#investingfun. Additional information can be found at patrickgeddes.co.
Personal Story
Note: This is a fairly long but exciting exchange between one of our “sound investors,” Brian Rogers, and me. Brian did what I hope many of you have done and will do: help others invest wisely. I also thought you might enjoy knowing about Brian’s music at Facebook or his website.
Hi Paul and Team, Just tonight, my buddy transferred 20K he was holding in the bank, over to M1 Finance… I spent about 10 hours with him over the last two weeks, mainly listening but also giving him a shotgun education on investing.
Tonight he finally bought 3 ETF’s: 80% VT, 10% AVUV and 10% AVDV. He committed to contribute 2000 a month to this portfolio. And we developed a 20-year accumulation plan in which he’d get a 100% fee-only fiduciary advisor in 13 years, when he turns 50.
Paul, I couldn’t have done this without your knowledge you’ve shared so freely: Hours & hours of “Sound Investing,” your YouTube channel, Daryl Bahls’ charts, Chris Pederson’s analysis. All made it quick and easy for me to answer any questions my buddy had at any point along the way… Thank you! You’ve helped my friend greatly: a 37 year-old musician who makes good money, but doesn’t want to HAVE to play a gig at 67, just to survive. – Brian
Hi Brian, Your story made a relatively old man feel relatively young, very good and appreciative of all the information that our team was able to provide to you and your friend. My hope is he will be able to stay the course over the coming years. I hope our Foundation will be here to help, even after I’m put out to pasture.
We will be recording a podcast/video on how to select the right combination of equity asset classes in the coming weeks. I’m considering discussing what your friend has created as a way to address an investor’s need to create a custom combination. I look forward to hearing Chris’ and Daryl’s comments.
In April I will present a podcast, as part of our April Financial Literacy Month Series on: “Hire an advisor or do it yourself?” My hope is your friend will start to think about hiring an advisor by the hour. In the meantime, it seems you are doing a terrific job getting him started in the right direction.
Our dream has been that our work would help others pass on what we have learned from the smartest experts we know. Your story convinces me it’s working. With your permission we will pass on your story, which is golden. — Paul
Hi Paul, right away you definitely have my permission to share this story. I think the idea of addressing an investor’s need to create a custom combination is just great. And if this story helps illustrate the point in any way, it’s an emphatic ‘yes’ from me.
I really considered Two-Funds For Life at first. But after listening to my buddy’s situation, I felt he’s such a do-it-yourselfer in so many other areas of life that eventually he might want to reallocate things himself. He might even want to add a few additional asset classes as he learns more. Yes, I will point him to https://www.garrettplanningnetwork.com/ and inform him that an hourly advisor is probably all he needs whenever he meets a crossroads.
I’m very happy this email has landed with you the way you described, Paul. Your dream of helping others pass on what you, Chris and Daryl have learned from the smartest experts you know, is definitely working. And you’ve taught me that leaving a lot of money to heirs is half of a great legacy. While the other half is leaving knowledge and practical tools behind for others to build their legacy. — Brian
Helping you build a better financial future,
Paul
The post Get better returns with less risk appeared first on Paul Merriman.
The idea began more than 25 years ago: Use tables to show the risk and reward of different equity asset classes — along with different combinations of equity and fixed income — so that investors gain a firm understanding of the relationship between long-term return and short-term risk, and make their investment decisions accordingly. At that time, there were two tables — one for the S&P 500 (as the equity position) and a second for the Ultimate Buy and Hold combination of 10 different equity asset classes. Since then, we have added more combinations of these asset classes equity combinations. We call these the Fine Tuning Tables.
In this podcast Paul discusses and reviews 9 different combinations of equity asset classes from the stand-alone S&P 500 to the 10-fund Ultimate Buy and Hold Portfolio.
To get the most out of this podcast, Paul suggests you revisit the previous one, (Ultimate Buy and Hold Strategies: 2022 Update) and this table (Table A1).
He begins with a quick review of the previous podcast and then looks at the 9 different equity asset classes that are the basis of the 9 Fine Tuning Tables. (Table A2: Alternative Equity Portfolio Table). Then he reviews Table B1 for the S&P 500 and bond combinations. The goal is to alert users to the many risk and return lessons on this table. Following this table, he reviews the Tables B7 through B14 that represent the different portfolio combinations that can be built with the 10 funds in the Ultimate Buy and Hold Portfolio.
Those include:
Ultimate Buy and Hold
Worldwide 4 Fund
U.S. 4 Fund
Worldwide All Value
U.S. All Value
Worldwide All Small Cap Value
All U.S. Small Cap Value
S&P and Small Cap Value (50/50)
Next week’s podcast will be a discussion about the 9 different equity asset class combinations. Paul will be joined by Chris Pedersen and Daryl Bahls to help Sound Investing investors select from the variety of strategies.
This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3. If you found value in this podcast, here are five ways to support the podcast and our foundation:
1) Leave a podcast review on your player of choice.
2) Sign up for our bimonthly newsletter at PaulMerriman.com and join 30,000 savvy investors who value free financial education. You can download a free pdf copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement at https://paulmerriman.com/wp-content/uploads/2021/01/Were-Talking-Millions.pdfWe ask that you share it with family and friends!
3) Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee — at no cost to you — which helps support our financial education projects.
4) Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirementand 2 Funds for Life: A quest for simple & effective investing strategies, the profits from which help support our work.
5) Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors at all stages of life. Thank you!
The post Fine Tuning Your Asset Allocation: 2022 Update appeared first on Paul Merriman.
Since 1995 Paul has been writing and teaching Do-It-Yourself investors about the Ultimate Buy and Hold Portfolio. In this 2022 update he uses the UBH table (70-30) and UBH tables (50-50) to make the case for 10 equity asset classes he thinks investors should consider owning in the equity portion of their long-term investments.
The key takeaways:
- The S&P 500 can easily be “beat” without taking more risk.
- The impact of adding just 10% of another equity asset class can improve long-term returns.
- The impact of even .1% more return can be life changing over long periods of time.
- Adding more risky asset classes can substantially reduce risk.
- Diversification of equity asset classes is as important as diversification of individual stocks.
- Rebalancing is not about higher returns but is about limiting risk.
- Adding international equities can have a meaningful impact on long-term returns whether you add 30% or 50% to the portfolio.
- There is not risk in the past, we always know what we should have done.
- The UBH Portfolio is not designed to get the best return, but is designed to get a better return than the S&P 500 without substantially more risk.
This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3. If you found value in this podcast, here are five ways to support the podcast and our foundation:
1) Leave a podcast review on your player of choice.
2) Sign up for our bimonthly newsletter at PaulMerriman.com and join 30,000 savvy investors who value free financial education. You can download a free pdf copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement at https://paulmerriman.com/wp-content/uploads/2021/01/Were-Talking-Millions.pdfWe ask that you share it with family and friends!
3) Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee — at no cost to you — which helps support our financial education projects.
4) Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirementand 2 Funds for Life: A quest for simple & effective investing strategies, the profits from which help support our work.
5) Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors at all stages of life. Thank you!
The post Ultimate Buy and Hold Strategies: Update 2022 appeared first on Paul Merriman.
Dear Friends,
Sometimes, what we believe are important attributes and habits in our daily lives just don’t apply when it comes to investing. I recently watched a TED Talk, “Grit: The power of passion and perseverance.” In six minutes, based on her work as a public school math teacher, Angela Lee Duckworth explainsher theory of “grit” as a predictor of success.
She defines grit as “passion and perseverance for very long-term goals. Grit is having stamina. Grit is sticking with your future, day in, day out, not just for the week, not just for the month, but for years, and working really hard to make that future a reality. Grit is living life like it’s a marathon, not a sprint.”
This got me thinking. While sound investing means sticking with your long-term goals, too much tinkering with and attention to investments can lead to worse outcomes for investors. And managing your portfolios should not require “working really hard.” Once you’ve gotten the education to know what a good portfolio is for you, it’s best to keep your hands off it.
As John Bogle said about market swings in 2011, “My rule — and it’s good only about 99% of the time, so I have to be careful here — when these crises come along, the best rule you can possible follow is not “Don’t stand there, do something,” but “Don’t do something, stand there!”
In this week’s podcast, “How to Be The Perfect Investor,” I speak to habits and attitudes and read from Chapter 11 of Financial Fitness Forever. Trust, resilience, perspective, patience and common sense, plus six productive habits, seem to favor investors over the long term. I cover more on this in the video, “Habits and Attitudes of Successful Investors,” from the 2016 Vestory Retiremeet Conference.
Our most-recent “MarketWatch” article, “The ‘perfect’ investor has these two traits,” also examines this important subject.
Truth Teller: Ben Carlson
You’ve probably heard me mention certain individuals as “Truth Tellers.” Why? Because I see them as committed to helping investors better understand the facts and act in their own best interest. Their work and voice consistently provides useful, evidence-based information and advice, often on topics that we do not cover, and we want you to be aware of them to help you as you become a better long-term investor.
Over the course of this year, we plan to continue introducing you to these Truth Tellers. Please note that while I respect their published writings and presentations, I cannot and do not endorse any services, products or advertisements they may offer on their websites or elsewhere. You decide for yourself.
Today we feature Ben Carlson, CFA.
Ben is author the blog, “A Wealth of Common Sense,” which focuses on wealth management, investments, financial markets and investor psychology. I subscribe and enjoy his insights, and think you might too.
His recent articleanswers the question, “How Do Stocks Perform When the Fed Raises Rates?”
Ben manages portfolios for institutions and individuals at Ritholtz Wealth Management LLC. He was named to the “Investment News” “40 Under 40” list of top financial advisors in 2017. He is author of four books about saving, investing and money:Everything You Need To Know About Saving For Retirement (2020),A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan (2015), Don’t Fall For It: A Short History of Financial Scams (2019), and Organizational Alpha: How to Add Value in Institutional Asset Management (2017).
Every Wednesday, you can listen to a new episode of his podcast “Animal Spirits” with Ben and colleague Michael Batnick. “Fortune” named “Animal Spirits” to its list of Best Business Podcasts. Investopedia named Animal Spirits to its top 10 investing podcast list.
About his blog, Ben writes, “The main reason I started this website is to try to explain the complexities of the various aspects of finance in a way that everyone could understand them. Both the economy and the financial markets are complex adaptive systems, but I’ve never found complex problems require complex solutions. Common sense and self-awareness are extremely underrated attributes in the world of finance.
Less is more is one of my guiding principles. Perspective and understanding can get you much further than tactics or textbook knowledge. I’ve always found that the most intelligent people I’ve learned from over the years are able to simplify to make any topic more understandable and put difficult concepts into common sense language. That’s always been my goal here as well.”
When Will The Market Bottom?
This article, also by Ben Carlson, addresses the unanswerable question: “When will the recent decline be over?” The key to staying the course for the long term is often having a good perspective of what the likely ride will be. For young investors, it is easy to deal with the normal volatility of the stock market. For older investors, like myself, it is very different.
With a relatively few years to live the downside volatility might impact what I have to spend (we take out 5% of the year-end value of the account, and 2021 was a favorable outcome) and what will be left to children and charitable causes. For example, my entire IRA will be left to help fund our Foundation after my death.
Resources for Americans Living Abroad
Of the many emails we gladly receive at The Merriman Financial Education Foundation, we occasionally hear from our subscribers abroad, both US citizens and foreign nationals. Some share their “sound investing” success while others pose questions related to investment products and services in their country or tax-related issues which, unfortunately, we are not in a position to answer.
We can only speak to what we know, which is US-based investing. However, we hope that the financial education we offer – diversification, asset allocation, contributions and distributions and the possible adaptation of portfolio recommendations – are useful in many other countries. For those considering moving abroad, or have already done so, we asked our Director of Communications, a US citizen, current resident of Spain and former resident of Mexico, to share some of her knowledge. Read her article here.
Personal Story
Paul, I am an avid listener to your podcast and reader of your articles. I’ve been meaning to write to you for ages, but never got around to it until today. Since you certainly have little time and are drowning in emails, I will keep it short: I thank you from the bottom of my heart for the work you have been doing for decades.
Showing people what they can achieve with their assets and how to use them responsibly is a life-changing skill. With your media you reach people worldwide and improve their lives. I myself am a good example. I’m in my mid-thirties, live in Germany and now have a small family. With the help of your motivation and material, I have been able to build a successful portfolio over the last few years that is now close to the 1 million mark.
I am only 4-5 years away from being “financially free” – Would somebody have told me that 5 years ago, I surely wouldn’t have believed a word. Most importantly, I feel secure and don’t have to worry about providing for my family. That is priceless and yet has the most value!
I just wanted to let you know that there are even people across the ocean that you have helped through your work. Thank you so much for that! – Tobias B.
Helping you build a better financial future,
Paul
The post How to Be The Perfect Investor appeared first on Paul Merriman.
What are the most important attitudes and habits of successful investors? In this podcast, Paul examines this question through the lens of “hard work,” or what is often called “grit.” He references a special 6-minute TED talk by Angela Lee Duckworth, a psychology professor at the University of Pennsylvania. The video is about the importance of “grit” in your life. While the hard work and the passion of grit may make people more successful in their daily life, Paul makes the case that it may lead to worse outcomes as an investor. In fact, the grit for an investor is to remain still and let your investments take care of themselves.
Since the grit is largely a matter of habits and attitude, Paul reads chapter 11 from Financial Fitness Forever. He discusses the importance of trust, resilience, perspective, patience and common sense, plus six productive habits that seem to favor investors over the long term.
He also suggests you watch his the video or audio, “Habits and Attitudes of Successful Investors,” from the 2016 Vestory Retiremeet Conference. https://paulmerriman.com/habits-attitudes-successful-investors/
This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3. If you found value in this podcast, here are five ways to support the podcast and our foundation:
1) Leave a podcast review on your player of choice.
2) Sign up for our bimonthly newsletter at PaulMerriman.com and join 30,000 savvy investors who value free financial education. You can download a free pdf copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement at https://paulmerriman.com/wp-content/uploads/2021/01/Were-Talking-Millions.pdfWe ask that you share it with family and friends!
3) Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee — at no cost to you — which helps support our financial education projects.
4) Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirementand 2 Funds for Life: A quest for simple & effective investing strategies, the profits from which help support our work.
5) Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors at all stages of life. Thank you!
The post How to Be The Perfect Investor appeared first on Paul Merriman.
Paul shares the dire predictions from several gurus and includes a list of reasons a sharp decline could happen. He includes history of corrections and bear markets since 1950. https://awealthofcommonsense.com/2021/02/a-short-history-of-u-s-stock-market-corrections-bear-markets/
Question: Is the 60/40 portolio “in danger?” Paul uses ‘Fine Tuning Table 3’ to show investors how to figure out the risk of Vanguard Wellington and Vanguard Wellesley Funds, as well as other similarly built funds. https://paulmerriman.com/wp-content/uploads/2021/02/Fine-Tuning-Tables-50-50-2020.pdf
Paul is outraged by what he learned from a recent report by “The Motley Fool” on what Gen Z, Millenials and all investors 18 to 40 years old have made. https://www.ngpf.org/blog/question-of-the-day/question-of-the-day-what-percent-of-18-24-year-olds-own-individual-stocks/ The Motley Fool newsletter is advertising very high returns. Are they real? The best source of real newsletter returns is hulbertratings.com. Paul references the 20 year results: hulbertratings.com/20-yearscoreboard/.
Question: They say small-cap growth is the black hole of investing: high volatility, low reward. Should we keep small-cap blend if the growth companies will continue to pull returns down?
Question: What do I have in my portfolio to protect against a market crash?
This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3. If you found value in this podcast, here are five ways to support the podcast and our foundation:
1) Leave a podcast review on your player of choice.
2) Sign up for our bimonthly newsletter at PaulMerriman.com and join 30,000 savvy investors who value free financial education. You can download a free pdf copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement at https://paulmerriman.com/wp-content/uploads/2021/01/Were-Talking-Millions.pdfWe ask that you share it with family and friends!
3) Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee — at no cost to you — which helps support our financial education projects.
4) Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirementand 2 Funds for Life: A quest for simple & effective investing strategies, the profits from which help support our work.
5) Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors at all stages of life. Thank you!
The post Is the market going to crash? appeared first on Paul Merriman.
Dear Friends,
Already three weeks into this new year and, while I’m preparing a virtual presentation for the White Coat Investor’s Physician Wellness and Financial Literacy Conference, February 9-12 in Phoenix, my team is full steam ahead on projects to keep you up-to-date on our latest research and resources for DIY investors at all stages of life.
In this week’s podcast and video, Chris Pedersen, Daryl Bahls and I “Zoom in” to discuss our plans for the next few months. Chris will update the Best-In-Class recommendations. Daryl will update all of the important tables, including: Ultimate Buy and Hold Portfolio, Fine Tuning Your Asset Allocation, Accumulation and Distributions and the No Nonsense portfolio tables. (Currently found at: https://paulmerriman.com/best-advice/). And I will create a new presentation discussing the very popular “White Coat Investor” article by Dr. James Dahle, “150 Portfolios Better Than Yours.”
Next month I will record the presentation for our “sound investors” with updated numbers and additional information to help investors evaluate the portfolios for your personal use.
Why is this article important?
Jim Dahle’s article, “150 Portfolios Better Than Yours” (LINK TO LATEST UPDATE https://www.whitecoatinvestor.com/150-portfolios-better-than-yours/) was originally published in 2014, has grown to over 200 portfolios. The list includes many of our portfolios. While there are thousands of portfolio strategies – and many investors spend their lives moving from one strategy to another – this list of 200 shines light on the fact that the key to choosing the right one(s) is to find the strategy you will use and maintain for a lifetime. That is, stay the course!
As far as we know, no one has studied which of 200 should be the best. But, it seems to me there are two meaningful ways to measure “the best”: the return you are likely to get and the risk of loss you will likely experience.
My presentation reviews 20 portfolio strategies, measuring return and risk in a way that I hope will help investors compare the portfolios so they can find the balance of risk and return to meet their personal needs.
Of the 20 portfolios we examined, the range of long-term returns was 10% to 14% on the equity portion. Of these 20 portfolios, 8 have considerably higher returns. We want investors to understand what these highest returning portfolios have in common, and what will likely make these portfolios better over the long term.
In regard to White Coat Investor, they provide a lot of valuable information for all investors, not just doctors. Jim and his team cover many investor issues, like student loans, insurance, taxes, and IRAs. To get a sense of the quality of their information I recommend these recent articles, “The Backdoor Roth Lives On” and “Can I Be My Own Financial Advisor? 8 Reasons You Can and Should Be”.
7 Things We Do Best
When it comes to personal finance, such as estate, retirement and tax planning, we all know there are many aspects to consider. We try our best to bring you links to experts we trust in these fields. However, we are a small organization and believe we can best serve you by focusing on helping do it yourself investors make seven of the most important financial decisions of their lifetime.
In our articles, podcasts, videos and books we touch on a lot of topics but here are the seven that we think will make the biggest difference in your financial future.
- Selecting the best equity asset classes
- How much to take out of retirement investments
- Selecting a lifetime glide path
- Selecting the best mutual funds and ETFs
- How much to invest in each equity asset class
- How much in equities and fixed income
- How to take retirement distributions
Retirement Investing with Dr. Robert H. Pass
I thoroughly enjoyed my conversation with/interview by Dr. Robert H. Pass, MD, host of the Pediheart Podcast. Dr. Pass is Professor of Pediatrics at Icahn School of Medicine at Mount Sinai, Division Chief of Pediatric Cardiology and Director of Pediatric Cardiac Electrophysiology Mount Sinai Kravis Children’s Hospital.
In his notes, he wrote: To end 2021 we speak with noted investing author and authority Paul Merriman about his thoughts on how to simply invest one’s 403b retirement plan for a good investment return. What are the many benefits of target date funds and why does Mr. Merriman love them but suggests a simple way to do even better?
During the podcast Dr. Pass offers a free copy of “We’re Talking Millions!” to his listeners by emailing him. You don’t need to contact him for your free copy of our book but, rather, get it here now, and please share it with others! You can direct them to: https://paulmerriman.com/signup/
Questions & Answers
In our latest podcast/video, Daryl, Chris and I review 2021 returns and answer the following questions. I hope you’ll watch or listen to discover our answers. Access and search our archive of Q&A’s on our website at “Ask Paul”.
- How Chris selects the best ETFs.
- The two layers of unnecessary costs when hiring an advisor who recommends actively-managed funds.
- How to decide between an inexpensive index fund in a less-productive asset class and a more-expensive fund in a more-productive asset class. In this case, Vanguard Small Cap Index (VSCIX () and Goldman Sachs Small Cap Value (GSSIX).
- How to invest a $200,000 inherited IRA when the proceeds won’t be used by the present owners in their lifetime.
- An investor asks if it’s OK to invest in a group of asset-class funds that are not the same as the recommended portfolios on our website. Spoiler alert: Investor puts together a reasonable portfolio.
- How to invest a big hunk of money when the market looks like it is going to go down or should go down or might go down?
- Does Chris’ evaluation of ETFs include leveraged ETFs? Are they worth considering?
- What to do about large positions in a single company that will trigger big capital gains taxes?
Personal Story
“Thank you Paul. Perhaps the best YouTube video you’ve made as of yet. I was so focused on my investments as a pre-retiree – to minimize drawdowns in the upcoming de-cumulation phase of life – that I lost focus on the power of compounding for the young teens. I will open 2 custodial Roth IRA’s today. Nice job sir.”
Helping you build a better financial future,
Paul
The post Your best portfolios don’t need more risk appeared first on Paul Merriman.
This podcast (also a video) answers questions from our listeners, viewers and newsletter subscribers, and updates you on our upcoming projects. Paul Merriman, founder and president of The Merriman Financial Education, is joined by Chris Pedersen, Director of Research and author of 2 Funds for Life — A quest for simple & effective investing strategies, and Daryl Bahls, Director of Analytics.
Topics:
- What’s on the trio’s to-do list over the next few months? Chris will update the Best-In-Class recommendations. Daryl will update all of the important tables, including: Ultimate Buy and Hold, Fine Tuning Your Asset Allocation, Accumulation and Distributions and the No Nonsense portfolio tables. [Currently found at: https://paulmerriman.com/best-advice/]. Also, Paul will create a new presentation with a discussion of the “White Coat Investor” article, “150 Portfolios Better Than Yours.”
- Review of 2021 returns.
- How Chris selects the best ETFs.
- The two layers of unnecessary costs when hiring an advisor who recommends actively-managed funds.
- How to decide between an inexpensive index fund in a less-productive asset class and a more-expensive fund in a more-productive asset class. In this case, VSCIX (small cap index) and GSSIX (a small cap value fund).
- How to invest a $200,000 inherited IRA when the proceeds won’t be used by the present owners in their lifetime.
- An investor asks if it’s OK to invest in a group of asset-class funds that are not the same as the recommended portfolios on our website. Spoiler alert: Investor puts together a reasonable portfolio.
- How to invest a big hunk of money when the market looks like it is going to go down or should go down or might go down… who knows?
- Does Chris’ evaluation include leveraged ETFs? Are they worth considering?
- What to do about large positions in a company that is your employer?
This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3. If you found value in this podcast, here are five ways to support the podcast and our foundation:
1) Leave a podcast review on your player of choice.
2) Sign up for our bimonthly newsletter at PaulMerriman.com and join 30,000 savvy investors who value free financial education. You can download a free pdf copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement at https://paulmerriman.com/wp-content/uploads/2021/01/Were-Talking-Millions.pdfWe ask that you share it with family and friends!
3) Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee — at no cost to you — which helps support our financial education projects.
4) Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirementand 2 Funds for Life: A quest for simple & effective investing strategies, the profits from which help support our work.
5) Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors at all stages of life. Thank you!
The post Your questions answered, our plans revealed appeared first on Paul Merriman.
In this review of 2021 investment results, Paul shares 10 lessons he thinks will be of interest to you following our advice.
- How many up and down days did the market produce and how that compares to longer-term profitable vs. losing periods?
- The market reached 70 new highs during the year. Is that good news or bad?
- The biggest drawdown for the year was 5.1%. How does that compare to past years?
- Commodities, oil and Bitcoin were among the big winners in 2021. But why do the reported returns of the S&P and other equity asset classes understate their actual returns?
- Paul focuses on a short report from Dimensional Funds: When It’s Value vs. Growth, History is on Value’s Side https://www.dimensional.com/us-en/insights/when-its-value-versus-growth-history-is-on-values-side. This study highlights the high volatility in the difference between these two asset classes. Bottom line average advantage to value is more than 5%.
- Sometimes investing results can be hard to explain. Paul reviews the 2021 small and large value and growth returns in U.S., international and emerging markets. Investors may be surprised to see the huge differences from what might be considered similar asset classes.
- In our Best In Class ETF recommendations our Director of Research, Chris Pedersen, works hard to identify the ETFs that should be among the best. Paul reviews the results of his recommendations compared to the returns of the average ETF in each equity asset class.
- Many investors struggle to make the decision Best In Class ETFs or all Vanguard all the time. Paul compares the returns of the BIC ETFs portfolios (U.S. 4 Fund, Worldwide 4 Fund and Worldwide All Value and more) to similar portfolios with Vanguard ETFs. Paul also compares BIC with similar DFA portfolios. Investors have to decide whether those differences will be similar in the future or 2021 was an aberration.
- Many investors have chosen the Total Stock Market over the S&P 500. Paul discusses the reasons their historic returns are almost the same and why the S&P 500 way outperformed the TMI in 2021.
- While equity is considered the gas for growth in a portfolio, bonds are considered the brakes. Paul explains why he doesn’t recommend international bonds to stabilize a portfolio and why international bonds lost more money than U.S. bonds in 2021.
This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3. If you found value in this podcast, here are five ways to support the podcast and our foundation:
1) Leave a podcast review on your player of choice.
2) Sign up for our bimonthly newsletter at PaulMerriman.com and join 30,000 savvy investors who value free financial education. You can download a free pdf copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement at https://paulmerriman.com/wp-content/uploads/2021/01/Were-Talking-Millions.pdfWe ask that you share it with family and friends!
3) Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee — at no cost to you — which helps support our financial education projects.
4) Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirementand 2 Funds for Life: A quest for simple & effective investing strategies, the profits from which help support our work.
5) Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors at all stages of life. Thank you!
The post 2021 investment results you should know appeared first on Paul Merriman.
| Dear Friends,First, a warm welcome to 2022 and an enormous thanks to you who generously answered our year-end requests for support. Your contributions will help us accomplish even more this year! Of course, we welcome your donations any time of year.We are already deep into planning and starting on our many new-year projects, such as annual updates of our core offerings (“Best Advice” and portfolio recommendations) and our Lifetime Investment Calculator, and some good surprises as we celebrate our 10th anniversary. This spring marks a decade since starting The Merriman Financial Education Foundation with no mailing list or online presence… just the desire to keep educating DIY investors to make the most of their investments for retirement.As we enter 2022, as in every January, you’ll no doubt see a plethora of emails, advertisements and other inducements to get in on “the latest” and “the best” investments and advice. Big claims, big cautions, and big ways to try and get you to change course, to “not miss out,” to “act now.” Please don’t.We’re doing our best to get you to ignore and overcome the noise, understand the academic research about long-term investing, make sound decisions and exercise the discipline needed to keep the most money in your pocket, not in those who are trying to sell you something to enrich themselves. Understand why you’re doing what you’re doing and stay the course!How to Teach a Teenager About InvestingThis week, I hope you’ll watch or listen to my latest offering, “How to Teach a Teenager About Investing,” which is one of the most common questions I get. Rich Buck also addressed this in a “MarketWatch” article. Maybe you don’t think this applies to you, but if you know anyone in their teens, you can make a significant difference in his or her life.We know that the earlier a person gets started saving and soundly investing, the more they will have for retirement and to leave to others. As a group, teenagers are at a phase where they are seeking independence, moving from childhood to adulthood, and are eager to exercise their freedom, which comes with increasing self-responsibility.Therefore, the best way to teach them about investing is to involve them in selecting and opening a long-term investment account. In this video/podcast I suggest the young investor find a partner (parent, grandparent, uncle, aunt, godparent, mentor, etc.) to match $50 a year for 10 years. (This could be done with $10) and what that will mean to them over the years. I include a set of 24 tables that can be used to investigate many of the choices the investor has (see “$100/Year Tables” below). For information on Custodial Roth IRAs here’s a link to Schwab Custodial IRA and Fidelity Custodial IRA. See: $100/Year Tables.Our Top 10 “MarketWatch” Articles of 2021The average page views per article was over 80,0001. The best way to have plenty of money in retirement 2. The 9 best Vanguard funds for retirees 3. This investment mix beats the S&P 500 — by a mile 4. Saving for retirement? Here are four key lessons 5. Why you should plan to leave money to your kids 6. How to have substantially more money when you retire without saving even one additional dollar 7. The quick and easy way to lose your life savings 8. To get rich investing, the power of time beats a lucky stock pick 9. Why this fund combination is better than the S&P 500 10. 10 mistakes nearly everyone makes when saving for retirement
Our Top 5 Most-Listened to Podcasts 20211. How to Plan for a Successful and Secure Retirement 2. The Evidence (Part 1) 12 Simple Ways Can Supercharge Your Retirement 3. Financial Education Can Change The World 4. The Only Way to Guarantee Your Fair Share of Stock Market Returns 5. The Evidence (Part 2) 12 Simple Ways Can Supercharge Your Retirement
Our most listened to podcast of all time, with more than 500,000 opens:“Could this be the #1 reason to use index funds?”Our Top 5 Most-Watched Videos 20211. Best In Class ETFs Explained 2. My Favorite 12 Vanguard Funds for Retirees (almost 110,000 views) 3. Which investment portfolio is best for you? 4. Which is the best 2, 3 and 4 fund portfolio? 5. Simple & Effective Balanced Portfolios for Lifetime Investing Success AAII with Chris Pedersen
Q&A with Chris PedersenQ: Which is the best International Value fund – EFV or VYMI?” — Scott L.A: The iShares fund (EFV) is the current Best-in-Class ETF recommendation, but the Vanguard fund (VYMI) is also recommended as part of our all-Vanguard portfolio. Both funds sit at similar spots on the Morningstar Style Boxes, but they’ve provided different exposures to the various factors that academics say drive performance. Since the Vanguard fund focuses on dividends, it has a higher yield (3.9% vs. 3.1%), holds companies with higher quality financials, and provides lower exposure to the value factor. In recent years, this has allowed it to outperform EFV. In other business conditions, EFV might have outperformed. In choosing between them, you should weigh the tax burden of the higher yield if it’s in a taxable account, their different costs (0.35%/year for EFV, and 0.28% for VYMI), and the likelihood that value will come back into favor. I will also be evaluating the relatively new Dimensional Funds International Value ETF (DFIV) when I update the Best-in-Class ETF recommendations in early 2022.Q: Several months ago you sent out a picture of this glide path. I looked at it and realized there was some thing I had not noticed before. I am 77 years old, so I am interested In the part of the glide path for over age 65. I thought that the equity part of the glide path would be 10 funds, each 4% of the total. No, the 5 US funds were 5% and the 5 International and emerging market funds were each 3%, total 40%. Is my observation correct? – Mark N.A: Is this the chart you’re thinking of? .If so, it has 10 equity funds that account for 50% of the total, but you’re right that there’s more in the US funds than the International funds. That’s something you can customize using the calculator on the website. We did that because we knew that many people are more comfortable investing in their home market, and there is still meaningful diversification to be had with a 70/30 US/International allocation. You can also customize the retirement year bond/equity allocation. You need to decide what’s right for you.Q: Chris, Love your work. Have you done any work on long life expectancy? My wife and I are both in our early 70’s; her parents lived into their early 90’s, mine both until 98. My aunts and uncles all lived into their 90’s. I just rolled over $1.1 mm from my 401(k), $350,000 of which is in a Roth IRA. (There is another $650k in various IRAs and Roth IRA we have.) Realizing you don’t give advice but education, any relevant education out there you’ve done on similar cases like ours?Lastly, do I remember some sort of calculator on one of the web sites for projecting?Heck of a problem… never in my wildest dreams did I think I’d have well over $1million to my name in cash. Shows the power of investing monthly and “forgetting” to look at statements. Started my working career in 1973 and invested 10% of my paycheck.Thanks for educating me.A: Congrats on making it this far, and doing so well! Regarding your question “have I done any work on long life expectancy?” The answer is a qualified “yes.” I back-tested 30 and 40-year retirement durations in my book 2 Funds for Life. For someone retiring at age 65, that would mean living to 95 or 105. The upshot was that more broadly diversified portfolios that included meaningful amounts of small-cap and value stocks and some bonds had higher safe withdrawal and survival rates than portfolios that were less well-diversified. Most of the analysis assumed a traditional 4% fixed withdrawal rate which increased with inflation every year. For lower withdrawal rates, diversification becomes less important. Almost all of the portfolios tested would have survived more than 40 years with a <2% “fixed” withdrawal rate. Q: I wonder if you have any thoughts on Cambria ETFs (SYLD/FYLD/EYLD). They use a method/approach called Shareholder Yield but their returns (so far) are similar to Avantis [in some cases better (AVUV vs SYLD)]. | | The U.S. market seems expensive right now… Do you think over the long run (+40 years) is it prudent to have a bigger allocation to Emerging markets (30% for example)?I’m thinking of buying the EYLD for my future allocations to Emerging markets. Do you see any issues with it ?Are there any studies that compare the returns/risks of the Fama French 5 factor model to the Shareholder Yield approach over the long-term as both Avantis & Cambria ETFs are relatively new ?I’m not asking you for personal financial advice or to predict the future. I just want to know your thoughts on these topics. — Saed A.A: I do evaluate the Cambria funds as part of my best-in-class research. I’ll be updating it in 2022 and will look again. So far, they haven’t made the cut. That’s not too surprising given their focus is more on something akin to “quality” rather than size and value. If you want to know more about their rationale and approach, I would think Meb Farber’s book might help. I haven’t read it, but Meb’s a smart guy and a good teacher. I spend very little time on market timing questions, but you’re right to think that chasing what’s done poorly lately is more likely to help than chasing what’s been hot. I sometimes look at the RAFI Smart Beta Interactive website which estimates future returns based on recent valuations. They currently show emerging markets having much higher expected returns than the US market. What no one knows is when that reversion might happen. One final thought about Shareholder Yield is that it generates more taxable income, just like DGS (Wisdom Tree’s Dividend Income EM fund). If it’s in a tax-deferred account with reinvested dividends, that doesn’t matter so much. In a taxable account though, it might produce some tax drag on the overall returns. I wish you luck deciding which is best for you. P.S. The Portfolio Visualizer factor regressions and factor statistics suggest a value-focused approach to EM has done better than a quality-focused approach in the past. There are no guarantees that will continue, but there are also no indications that the relationship will change. Q: What should I/we do with the fixed income part of our portfolios? Following your advice In “best in class” portfolios, the fixed income part is all invested in government paper of one type or another to decrease volatility of the overall portfolio. Following that advice, it is likely that we will either lose or make no money on this part of portfolios in the near future. Not many of us will head for the junk bond solution. Perhaps Paul could touch on this in an upcoming podcast? Even a little pep talk would help. — Mark N.A: I think Paul has discussed the low expected returns for government bonds in recent podcasts. Their role in the portfolio is primarily ballast or brakes on market drops. Their long-term expected real (inflation-corrected) returns have always been near zero. In recent years, they’ve done better, but I’d just call that good luck. If you can live without them and tolerate more volatility, you can expect higher returns. If you are skittish and likely to sell in a big downturn, then the lower returns are easily offset by holding sufficient bonds to not exceed your risk tolerance. I’m not sure what more could be said. Personal StoriesPaul, Thank you to you and your team for the excellent podcasts, videos, and supportive data on your website. I’m a recently retired engineer/MBA and plan to use your financial education materials to help me manage my investments throughout retirement. I’ve read a LOT of investment books in my 65 years, but yours are by far the best and easiest to understand. I’ve also turned on a number of my well educated friends to your website, and they all have been very impressed with your website, most especially your fine tuning tables! — Larry N.My response: Thanks for your kind comments. We will be updating the fine tuning tables in the coming weeks. I expect we will be adding one more combination of equity asset classes. “My personal lesson for 2021 is how two of my accounts at Schwab did, reflecting on how I tinkered with them. One was a taxable brokerage account which I had invested “best in class” 60/40. I rebalanced that at the end of May last year (voiding short-term capital gains) and haven’t touched it since then. The other was my IRA account and when a well-respected guru here in NC predicted in our AAII meeting that there would be a major market correction in the first three months of 2021, I cut my equity allocation to 20% (from 40%). When the correction didn’t happen as predicted, I began dollar cost averaging in April back to the 40% equity allocation. I don’t have to tell you which brokerage account did better in 2021. Every time I have tried market timing, I have regretted it. Maybe, I have learned my lesson this time. Thank you very much for replying to my questions. — Mark N.Chris’ Note: Thanks for sharing Mark. Your experience reminds me of the old adage that your investments are like a bar of soap – the more you touch them, the smaller they get. I’ve found it to be true for us too. — ChrisHelping you build a better financial future,PaulDon’t forget to buy your copy of Chris Pedersen’s book!“Most books on investing are great, but 2 Funds for Life is the best book on investing I’ve ever read.” — YouTube comment |
The post The best of 2021 and teen investing appeared first on Paul Merriman.
If you know anyone in their teens, you can make a significant difference in his or her life. We know that the earlier a person gets started saving and soundly investing, the more they will have for retirement and to leave to others. As a group, teenagers are at a phase where they are seeking independence, moving from childhood to adulthood, and are eager to exercise their freedom, which comes with increasing self-responsibility. Therefore, the best way to teach them about investing is to involve them in selecting and opening a long-term investment account. In this video/podcast discussion Paul suggests the young investor find a partner (parent, grandparent, uncle, aunt, godparent, etc.) to match $50 a year for 10 years. (This could be done with $10) and what that will mean to them over the years. This presentation includes a set of 24 tables that can be used to investigate many of the choices the investor has (see pdf below).
Watch this as a video.
https://paulmerriman.com/wp-content/uploads/2022/01/100-per-year.pdf
For information on Custodial Roth IRAs include a link to Schwab Custodial IRA https://www.schwab.com/ira/custodial-ira?src=SEM&ef_id=CjwKCAiA8bqOBhANEiwA-sIlN2MT3u5rQ88ibNnybVheXC-EFqyvlmYK1VsOqo8E_ofYodnmseoaYBoCBDEQAvD_BwE:G:s&s_kwcid=AL!5158!3!495093339246!p!!g!!custodial%20ira%20charles%20schwab!651813075!33944985558&keywordid=kwd-194438821700&gclid=CjwKCAiA8bqOBhANEiwA-sIlN2MT3u5rQ88ibNnybVheXC-EFqyvlmYK1VsOqo8E_ofYodnmseoaYBoCBDEQAvD_BwE and Fidelity Custodial IRA https://www.fidelity.com/learning-center/personal-finance/retirement/turbocharge-childs-retirement
This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3. If you found value in this podcast, here are five ways to support the podcasts and our foundation:
1) Hit the thumbs up, subscribe, leave a comment, and share the link with your social media and friends.
2) Sign up for our twice-a-month newsletter at PaulMerriman.com and receive a free pdf copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement. We ask that you share it with family, friends, associates and teachers!
3) Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee — at no cost to you — which helps support our financial education projects.
4) Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirementand 2 Funds for Life: A quest for simple & effective investing strategies, the profits from which help support our work.
5) Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors at all stages of life. Thank you!
The post How To Teach a Teenager To Invest appeared first on Paul Merriman.
Jacek Lempart, the Belguim-based host of System Trader “The craft of investing,” interviews Paul Merriman in this extraordinary in-depth conversation, unlike others you may have heard. It has been divided into two parts. You’ll learn:
- Who’s Paul, and what’s the story of his careers?
- How have markets changed over the years?
- Why is Paul a big fan of academic/scientific knowledge?
- What should we do to feel satisfied and have a happy life?
- How to adjust strategy so that it has an appropriate level of risk?
- Where’s the border between passive and active investing?
- A systematic approach to investing vs. discretionary
- The philosophy behind the Ultimate Buy & Hold portfolio?
- What does Paul think about holding a bit of cryptocurrency as another asset class?
- Gold and commodities
This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3. If you found value in this podcast, here are five ways to support the podcast and our foundation:
1) Leave a podcast review on your player of choice.
2) Sign up for our bimonthly newsletter at PaulMerriman.com and join 30,000 savvy investors who value free financial education. You can download a free pdf copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement at https://paulmerriman.com/wp-content/uploads/2021/01/Were-Talking-Millions.pdfWe ask that you share it with family and friends!
3) Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee — at no cost to you — which helps support our financial education projects.
4) Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirementand 2 Funds for Life: A quest for simple & effective investing strategies, the profits from which help support our work.
5) Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors at all stages of life. Thank you!
The post Part 2 – Strategic Planning for Investing in Every Stage of Life appeared first on Paul Merriman.
Dear Friends,
At the forefront of all the work my team and I do, our thoughts are always tuned to how to best to educate, motivate and give you the tools by which to make the wisest, most informed decisions for your financial future. As we reflect on 2021, we hope your financial knowledge and wellbeing has been enhanced by our efforts this year.
Of all our accomplishments this year, I am especially proud of publishing Chris Pedersen’s book, 2 Funds for Life – A quest for simple & effective investing strategies; Daryl Bahl’s 100+ Tables illuminating the most important decisions investors make for those who choose to make decisions by the numbers and not emotions; Craig Appl’s contribution of our interactive Lifetime Investment Calculator; our sales and free copies of Rich Buck’s and my book, We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement, scores of podcasts, “MarketWatch” articles, videos, presentations to investors, educators and students, and being honored by AAII with its James Cloonan Award for “Excellence in Financial Education.”
Last week’s podcast, “The Only Way to Guarantee Your Fair Share of Stock Market Returns,” I used Using our Fine Tuning Tables and The Merriman Lifetime Investment Calculator, to show 3 simple ways a conservative well-diversified portfolio, with a retirement portfolio worth only $500,000, would have produced an additional $2,000,000 over 30 years of retirement. This focused on the period of distributions only.
After the first of year, we’ll present a discussion of how to put the calculator to work on the period of accumulation. Later in January, we’ll take an “ultimate” look at a lifetime of investing. The implications of doing it right are mind blowing. Our Lifetime Investment Calculator makes obvious the ways you could of have made better lifetime investment decisions.
A Gift That Costs You No Money
I am so excited about next year and the future of our foundation’s work. Through your generous donations, we’ve been able to do more to help more people make huge life-changing financial decisions. We plan to ramp up our support for teachers across America at the high school and university level. But we need your help… and this sort of gift costs you no money and can make a huge difference in the lives of others!
Many of you know teachers — from your children, grandchildren, your own education. We need your help to introduce us to people we can help.
I thought that when I offered our book, We’re Talking Millions — 12 Simple Ways To Supercharge Your Retirement, as a free pdf, it would inspire the thousands of you who purchased it (Thank you!) to forward it to your email list. Some 15,000 free downloads have occurred. BUT my goal, before I shake off this mortal coil, is to get it into the hands of a million young people! I can’t do it alone and need your help.
I hope you will consider emailing and/or posting on your social media about the free book and join us in giving the gift of financial education – and ultimately, financial freedom – to everyone you know.
Prioritizing and Simplifying
In the past few weeks, my wife and I were in San Miguel de Allende, Mexico, closing on the sale of the winter “retirement” home we’d bought there in 2006. (I put retirement in quotes as my wife is still wondering when I plan to do so). We’ve always enjoyed our time there and take away many wonderful memories, leaving behind a lot of “good stuff” we’d acquired, and with the idea that we can always return and rent a fine place for a month or two should we choose that.
At my ripe young age of 78, this transition caused me to consider the assumptions we made about what retirement would be like. But just as we always say about investing, we can know the past but not the future. Things change. The adjustments we were willing to make 16 years ago are no longer viable.
The complications of owning property in another country, the obvious realization that we don’t need a 5,000 square-foot vacation home, and the fact we don’t want to have to fly our three dogs around, were all part of the decision to sell. We felt doubly confirmed in our decision by getting to know the wonderful couple who bought the home and love it. Between the realities of our changing world and the preciousness of time we have left, simplifying logistics to more enjoy our friends, family and our life together are the new priorities… along with continuing the work of our Foundation.
End of Year Financial Checklist 2021
While we offer a specific focus for DIY investors, Dr. James Dahle, founder of White Coat Investor, does a great job addressing many of the aspects we do not. I think any DIY investors will find great benefit in this resource. And you may want to subscribe to Jim’s blog, as I consider him one of the trusted Truth Tellers in our industry.
“One more year in your financial life has almost come and gone. Before the year ends, run through this checklist to make sure you took care of everything that needed to be done before the calendar year is out. While every item may not apply to your situation, it’s still worth a few minutes to make sure you have not forgotten anything you will regret.” [Continue Reading…]
Comments, Questions & Answers
Editor’s Note: In the past, we’ve boiled down emails to the bare-bones question(s) being posed. In this edition, we’re including more of the original correspondence and hope you find the comments, questions and Chris Pedersen’s answers helpful. You can search our archive of Q&A here.
What’s with M-1’s securities lending program
Q: Good day Paul, Chris and Team, I came across an issue thread online that seems to be genuine regarding M1 which I feel is a deceitful and financially harmful business practice that I think you should be aware of, since you suggest the M1 platform on your website. I am by no means an expert on this matter, so please verify this for yourselves as being accurate.
M1 can loan out your ETF shares. During the time that the shares are loaned out, the dividends that you would have received are paid to you by M1 in the form of “substitute payments”. These substitute payments are taxed as ordinary income, rather than as dividends, which have a lower tax rate. This can greatly increase the taxes one would pay, correct?
Apparently, this is not a unique business practice, but other firms (e.g. Fidelity), will “gross you up” as described on the post, which I take as meaning increasing the amount of the substitute payment to reflect the additional taxes you will pay due to the classification change from dividend to substitute payment.
I enjoy the “Sound Investing” podcasts very much, and have recently read Chris’ 2 Funds for Life book and started implementing some of the strategies in it (using M1!). Since you are volunteers and gain nothing financially from the education you are providing, I know you would not promote a business practice that seems to hurt the very people you are trying to help. Perhaps you can use your platform to inspire/influence a change in this business practice at M1?
You do have the ability of opting-out of having your shares loaned out, but it is not the default setting, and this is probably deeper in the weeds than the vast majority of your audience would ever know. I found this thread purely by luck while looking at the M1 reddit page. Perhaps a note on the Sound Investing website warning people to opt-out of share lending would be a good idea. — David K.
A: Hi David, Thank you for bringing this to our attention. I agree that the M1 securities lending and consequential substitute dividend payments could generate unnecessary higher taxes and investor frustration. The good news is that investors can opt-out of the securities lending program by sending an email. There do not seem to be any added costs for doing it, and I can’t think of any reason an M1 investor shouldn’t do it. — Chris
Is this small cap fund worthwhile for a 401k using a 2 Funds for Life Strategy
Q: Hi Chris, I have been listening to you and Paul for a while now and I just finish your book. It is very detailed and informative. I have a question about my son’s 401k. He has just started employment and is contributing the max to his 401k. The employer has Vanguard TDFs which is great (we are “Bogleheads”). The problem is they only have a small cap fund (GWEZX a AMG fund), not a small cap value. The fund is all small cap, but only 18% is in value. Our son does have Vanguard’s SCV fund in his Roth IRA and non-retirement accounts.
My question is: Do you feel that this small cap fund is worth considering for his 2 Funds for Life strategy in his 401k. If they had the Vanguard SCV fund, there is no question about what we would do. Thank you for your time and any thoughts you might have about using “just” a small cap fund and not a small cap value fund. — Jay C.
A: Hi Jay, First, thanks for reading my book! Second, congratulations on having a son that’s maxing out his 401k. Getting started is half the battle.
Regarding your son’s limited options, Appendix 2 of the book shows how the Easy, Moderate, and Aggressive 2 Funds for Life approaches did in the past using a small-cap blend instead of a small-cap value fund. Not surprisingly, they didn’t deliver as much return. The drawdowns were a little lower too, but not as much as you might expect because you give up some diversification.
Since the Easy approach doesn’t require rebalancing during accumulation, your son could consider investing in small-cap value in a separate brokerage account. He may also be able to access more funds through a linked brokerage account. Some 401ks allow for that. Whatever path he chooses, I think he’s likely to do well. — Chris
How much small cap value would you suggest that I add to my Roth IRA?
Q: I would like to say thank you for all of the work you have done and published surrounding investments. It is amazing for investors like myself to have access to research which individuals like you have done and shared with the public. You will change many people’s lives!
My question regards the two funds for life strategy. I am 23 years old maxing out my Roth IRA and my current holdings are in 100% VTSAX (Total stock market fund). I have been looking into adding to that position with small cap value. I understand this would be a slight deviation to the traditional two funds for life, but I would like to maximize returns and I have many years until retirement so the nominal additional risk compared to the returns is what I am looking for.
How much small cap value would you suggest that I add to my Roth IRA? Should this be a mere 20% or should I look more towards 50%? FYI, I have a standard taxable brokerage account as well which consists of a single stock and small cap ETF’s including fintech. I understand any suggestions which you make are what you would do in my situation and not legal/ financial advice, I am simply looking for your opinion. — Hayden
A: I’m glad you find value in our work and think it will change lives. That’s the goal.
Your question about using VTSAX (total US stock market) and a US small-cap-value fund as a 2 Funds for Life strategy is close to what I explored in chapter 7 of my book. I’ll include figure 22 from that chapter here.
Although it uses the S&P 500 instead of the total stock market, their returns are very similar. The chart shows how adding equities to an all-fixed income portfolio increased real compound returns (after removing inflation) from about 3% to over 6%. Those increased returns came with worst-case drawdowns of 51% instead of 9% for all bond portfolios.
The chart also shows how shifting some of an all S&P 500 portfolio to small-cap value increased the real (inflation-adjusted) returns by 0.4% to 3.5%. Interestingly, the worst-case drawdowns only increased from 51% to slightly more than 60%. So, yes, history suggests this is a prudent way to be more meaningfully diversified and get a higher return per unit of risk, provided you can stick with the approach. I hope the data help you decide on a strategy that’s best for you. — Chris
Is it better to hold SCV in tax advantaged accounts?
Q: Hi Chris – I bought your book (via pre-order) when Paul first mentioned you were writing and I’m really happy with how it turned out. Congrats! Quick question though, I know you can’t give tax advice but thinking through things, SCV is not as efficient as a total market index. That said, is it better to hold SCV in tax advantaged accounts? In my case, it would be in an IRA since my 401k doesn’t offer any SCV funds.
Also, thinking this through, it’ll allow me to trade without penalty in the future if your recommendations change from Avantis to “better” SCV funds. Is my understanding correct? Or is it that even though Avantis funds are actively managed, they are still relatively efficient and can be left in taxable accounts? — Rami R.
A: Hi Ram, I’m very glad to hear you purchased and like the book! It was a lot of work, so it’s nice to know it’s appreciated.
Your rationale for holding SCV in tax-advantaged accounts makes sense to me, but it can complicate rebalancing. Personally, I try to hold as much of my SCV in Roth IRA accounts as possible since their higher expected gains will all be tax-free. You’re right that the Avantis funds are classified as actively managed, but their returns history shows very consistent exposure to market factors over time suggesting they are systematically managed to give us what we’re looking for in a small-cap value fund and not trading on discretion to try and beat the market. Although small-cap value funds can have more holdings turnover, the ETF wrapper allows them to still be quite tax-efficient compared to mutual fund alternatives. — Chris
P.S. If you think my book would be useful to others and don’t mind writing a review at Amazon, that would be appreciated too. They help more than you know.
Personal Story
“Paul, We have never met and probably never will but, I want you to know that you changed my life. Growing up my parents never talked about money, the stock market or investing. I am currently 32 and started investing in the market in April 2020. I figured it was a better time than ever. It was around that time I stumbled upon your podcast. I have read most of your work and spend a great deal of time on your website and love the calculator. I am a huge fan of your work and especially love your thoughts on small-cap value. As a side note, I have a two-year-old son and a 3-month-old daughter who already have brokerage accounts and half their portfolios are in small cap value. After reading Chris Pedersen’s book, my wife’s 401k is now 90% in a target date fund and 10% in SCV. She’s becoming a fan now too.” — Matt P.
“Thanks, Paul. The work you and your team did this year on the calculator alone was worthy of a donation. I’m looking forward to your continued work on that tool, and everything else you mentioned. You may remember that you were kind enough to call me a little more than a year ago (on your birthday, if I remember correctly) to talk through some strategies for getting the school I work for to improve the fund offerings in our 403(b) program. I’m pleased to report that, working as a member of the school’s 403(b) committee, I was able to get them to add Vanguard’s small cap value and growth index funds. There’s still more work to do, but I appreciate your guidance and all of the resources you continue to put our through the foundation. They have been very helpful in making the case to add more index funds to our lineup. Best wishes for a happy holiday and a wonderful new year!” — Dan M.
My Team and I are grateful for you — our readers, podcast listeners and video watchers — and we wish each of you, and your loved ones, a healthy, peaceful and happy holiday season!
Paul
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