Join Christine Benz, Director of Personal Finance and Retirement Planning at Morningstar, for answers to seven of the biggest questions facing those entering or in retirement.
Financial literacy is empowering—yet good, practical education about financial management is too often out of reach for people, especially those with limited incomes. Former BCF Board member Paul Merriman—founder of The Merriman Financial Education Foundation—has dedicated his retirement to providing free education for all ages about how to secure a more stable financial future.

On behalf of BCF, every year Paul organizes ⁠free virtual events⁠ with speakers who are nationally renowned experts in their fields in order to help educate our community on how to better plan for our futures. These events target all ages and levels of financial literacy, including youth, first-time investors who are still in the workforce, and those who have just entered retirement.

Watch video here

Today, we bring you an exclusive conversation between two investment gurus, JL Collins and Paul Merriman. They debate the secrets of building wealth, focusing on investment strategies, index funds, and the potential power of small-cap companies. If you're looking to sharpen your investment acumen, this episode is full of knowledge and insights! Join us as we navigate through the crucial aspects of long-term investing, risk management, and the dynamics of the S&P 500 and Total Stock Market Index Fund. Paul and JL dissect the importance of diversification, disciplined strategies, and the psychology behind successful investing. Whether you're a seasoned investor or just starting out, this episode is packed with valuable tips and strategies for a robust financial future.

Watch the video here

So, you've chosen to be a buy-and-hold investor following one of Paul's Sound Investing portfolios.  Now, the question is, what to buy?  It's time to become a knowledgeable shopper.

Chris Pedersen describes the attributes that make an ETF or mutual fund more or less suited to implementing the portfolios we've discussed. 

He then shows how to use Morningstar and Portfolio Visualizer to evaluate funds and points to the Best-in-Class recommended funds he's chosen.

Finally, he demonstrates how the Portfolio Configurator can compare different fund family implementations and calculate the needed percentages of different funds for your personal portfolio choices.  

Along the way, we learn that, like Warren Buffet, he has a thing for Diet Coke.

Resources:

AAII Article describing his Best-in-Class ETF selection process- 

Video link to section of prior video showing more detail of the factor analysis he uses- Time mark- 46:00

Best-in-Class ETF's article 

Best-in-Class ETFs

Portfolio Configurator

Chris Pedersen shows how to automate investing with simple 2-fund portfolios.  He discusses how target-date funds work and how to combine them with small-cap value funds to achieve results similar to more complicated portfolios.  He highlights the 2 Funds for Life fine-tuning table in the Portfolio Configurator and shows how it can be used to set expectations based on different allocations.

He also shows how 2 Funds for Life approaches can be compared to Sound Investing portfolios using the Configurator.  Finally, he takes advantage of Paul's absence to praise Paul's example and highlight the importance of non-financial investments.

Resources mentioned:https://lookerstudio.google.com/u/0/reporting/a941a5d4-0929-45ea-b22e-3bb82dc334ff/page/p_zy32acuhdd?s=hqmha3-AK5k

Watch the video here.

In this podcast Paul addresses the advantage of using a Flexible Distribution strategy.  He starts by mentioning the earlier podcasts that focused on the Sound Investing Portfolios, Fine Tuning Your Asset Allocation Tables and Fixed Distribution Tables D1.4, D1.5, D9.4 and D9.5.
He then focuses on  Flexible Distribution  Tables F1.4, F1.5, F1.6, F9.5 and F9.6.
The following are links for listeners who want to review all the Fine Tuning Tables, all the Fixed Distribution Tables and all the Flexible Distribution Tables.

⁠9 Fine Tuning Your Asset Allocation Tables

S&P 500 (⁠Table B1⁠)

U.S. 2-Fund (50/50 S&P and Small Cap Value) (⁠Table B9⁠)

Fixed Distribution Tables

Flexible Distribution Tables

For questions on Flexible Distributions please send to paul@paulmerriman.com or  post the questions in the comments section of the Flexible Distribution video. (link)

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

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

In this podcast Paul uses 11 tables  to address the questions above.  It is recommended the viewer print out the PDF of the tables to make it easier to follow the numbers.

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

If you have questions about the presentation please leave comment or question in the comment section below or email paul@paulmerriman.com.

In segment #5 of the 2024 Book Camp Series Paul applies all of the first 4 segments lessons to putting the portfolios to work by making a regular monthly investment into several of the Sound Investing Portfolios. For those coming to the series for the first time Paul suggests listening to the first 4 segments.

#1 Stocks vs. Bonds: The $10 Million Decision

#2 The Ultimate Buy and Hold Portfolio 2024 Update

#3 Sound Investing Portfolios: 2024 Update

#4 Fine Tuning Asset Allocation 2024 Update
In his presentation Paul references Tables J1a, A1a, H2a, B1, B9, C1 and C9.
The purpose of the podcast is to familiarize investors with how to use and compare the rest of the Fixed Contribution Tables. This link takes investors to the rest of the C tables.

In the previous three podcasts we have addressed the long term decision between investing in stocks vs. bonds, what equity asset classes you might use in building your equity portfolio and how to combine the different equity asset classes to build the best portfolio for your different investments.

The purpose of each of the Boot Camp Series is to address some of the most important investment decisions.  In this podcast I discuss the question of how much fixed income an investor should  hold in their portfolio.

There are 9  Fine Tuning Your Asset Allocation Tables.  Each one assumes the use of one of the nine Sound Investment equity portfolios.  Paul focuses on two of them and expects that those who are interested will be able to view the rest of the tables on their own.

The two tables use the S&P 500 (Table B1) and the U.S. 2-Fund (50/50 S&P and Small Cap Value) (Table B9).  Each of these tables represents the annual returns of  11 combinations of equities and bonds.  The goal is for investors to find the combination of equities and bonds for their risk limits and and return expectations.

Paul will be monitoring the YouTube videoand will respond to questions there. Disclosures Data Disclosure Notice - Funds (1970-Present)

Data Disclosure Notice - Indexes (1928-Present)

In this podcast Paul addresses the construction, returns and risks of the Sound Investing Portfolios.

Table H1a lists the 9 Sound Investing Portfolios and includes percentages of each of the asset classes included in each portfolio.Table 

H2a lists the risk and return data for each portfolio.  The table compares profitable  years, unprofitable years, decade returns and total return of a $10,000 investment.

Table H3a lists the portfolios annual return for each year for the period 1970-2023.

Paul encourages listeners to pose questions regarding the Sound Investing Portfolios.  Send questions to paul@paulmerriman.com.  

Paul recommends new listeners listen to the previous podcast on ⁠Equities vs. Bonds⁠ prior to this podcast. 

The purpose of this annual update is to remind investors of the power of equity asset class diversification.  Paul makes the case for the 10 equity asset class portfolio that he introduced over 25 years ago.  During the presentation he uses Tables A1a and A2a.  A1a shows the series of portfolios, starting with the S&P 500 on its own, and then the results of adding 9 other asset classes one at a time.

 In A2a Paul reviews the Ultimate Buy and Hold results to 7 other portfolios that investors may select for better returns with fewer funds and similar volatility. 

In both cases he shows the results with both annual and monthly rebalancing. 

On the next podcast Paul will dig into the important differences of the risk and return for all  9 portfolios, including the S&P 500 as the single holding.

This podcast is the first in the series of 8 to 10 podcasts, videos and articles that will be found under Bootcamp and Best advice.

In this podcast Paul discusses the biggest investment decision of an investor's lifetime:  Invest in stocks or bonds.  He reviews the  long term risk and return for both important asset classes.  In each case there is a set of 3 tables that reflect the returns from 1928 to 2023.  In Tables J1a and J2a he compares the annualized return for the entire period as well as for all the 15 and 40 year periods.  His discussion includes the impact of inflation as well as rebalancing.  He also encourages those who have not read  "We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement” to  download the free pdf.

Join Paul and Chris for this podcast/video they recorded. During the conversation Paul  mentions Chris’ free copy of  “2 Funds for Life”  and a fascinating interview with Professor Scott Cederburg on Rational Reminder.  Cederburg is an advocate for a lifetime portfolio of all equities. 

The following are the topics and questions they discussed:  

What does an investor do if a small cap value fund is not available in their 401(K)?  Does a small cap blend fund, that is available, have the same impact as small cap value? How do you choose between investing in a higher expense ratio ETF (say Avantis) compared to investing in a low expense ratio small cap value index fund?  Would the decision be as simple as going with the lower expense ratio fund?  
How do taxes impact your recommendations whether the asset class is held in taxable or tax advantaged accounts?  Specifically, the S&P 500 fund that has little to no annual taxes vs small cap value which is less tax efficient.
Are you tempted to invest in individual stocks or actively managed funds?  
Since small cap value funds can have long periods of underperformance,  does that suggest  those approaching retirement should avoid small cap value funds?
How did you react to the March 2020 Market Meltdown and other past major market declines?   Did you try to take advantage of the declines as a buying opportunity?
What about combining 25% each small cap value and S&P 500 fund with  50%  target date fund?  
What’s the best way to move from your present holdings to a 2 Funds for Life Portfolio?
Where do I find information on how you make your selection of Best In Class ETFs?  Here is the page that has links to the articles, podcasts and video.  Plus here is a link to Chris’ AAII article on the topic.
 I’m setting up a  50/50 small cap value/target date fund.  Would it help to add international small cap value?
How about using two small cap value ETFs?  DFA and Avantis each have similar ETFs but different portfolios.  
What is the status of Chris’ new white paper on 2 Funds for Life?

Paul looks at the guaranteed advantages of 10 different investment decisions.  He also challenges one of the oldest claims about our expectations for returns. 

During the presentation he discusses the important differences between investment success and investor success.  He encourages all listeners to get the free pdf of Paul Heys book, “Spending Your Way to Wealth(s).” 

In the process of looking for a document I  came across a group of questions that had been hidden away in my saved documents. 

The good news is the list included some great questions.  The bad news is I'm not sure which presentation generated the questions. 

1.  What are the best investments to make and what milestones should an investor reach?

2.  Do you recommend a solo 401k or SEP IRA for a single employee LLC that will never have employees?  Recommended reading from Truth-Teller Jim Dahle- https://www.whitecoatinvestor.com/sep-ira-vs-solo-401k/

3.  How much more do you think Avantis Small Cap Value (AVUV), which has higher fees, will make than Fidelity Small Cap Value Index (FISVX)?

4.  I have $1.5 million in cash and a total portfolio value of $5.8 million.  My asset allocation is 43% equities and 57% bonds.  I have Social Security and other income of $90,000.  Should I change my balance to 60% equities and 40% bonds?

5.  If you only need a 2% withdrawal rate, what would be the right asset allocation for a someone really investing for my survivors?  How about 90% equities and 10% bonds? 

6.  Is there a time or value of investments that someone should get a trusted advisor?  If so, how do you find them?  Several sources mentioned:  https://www.garrettplanningnetwork.com/about/contact/ and https://adviceonlynetwork.com/

7.  What changes can a 50-something make to boost their 401k returns?

8.  What are your thoughts on robo advisors/investing?

9. What is your advice for a parent who wants to persuade their adult children to educate themselves about investing?  After you listen to the answer please send me an email  to paul@paulmerriman.com about what steps you would take?  Please include your phone number.  

10.  Will the program be recorded?  Of course I don’t know as I don’t know where the list came from.  If you know, please let me know.

11.  What should I do with penny stocks that are down 89 to 90 percent?

In this podcast Paul discusses ten million dollar mistakes investors make, along with the mistake that is the biggest reason he believes most investors fail to achieve the return they deserve.  As part of his presentation he references the following two tables.

Table 1 and Table 2. 

D1.3

D1.4

Paul reminds listeners to forward copies of our 3 free books.

Paul, Chris, and Daryl are back together for the first time in 2024.  The podcast starts with Chris demonstrating a new and improved Portfolio Configurator, which adds the 2 Funds for Life portfolios. Now, investors can see how the equity portion of Sound Investing Portfolios, like the Ultimate Buy and Hold or Four Fund Combos, compare to various 2 Funds for Life approaches.  

Next, they discuss the question "Which backtested portfolio has the highest return per unit of risk, and shouldn't we all be using that one?"  Daryl uses Table H2, and Chris uses the 2 Funds for Life Fine Tuning Table to point out various ways investors might define risk and try to find the portfolio with the best return per unit of risk.

The podcast closes with some thoughts on 2024, and requests for feedback on the new Portfolio Configurator.   Chris, Daryl and Paul also comment on the new documentary, “Turn Off the Noise.”This documentary is available free through the end of the month.

Trust is the key for most investors to stay the course for the long term.  I formed a lasting trust in the academic work of Drs. Fama and French when I attended a 2 or 3 day workshop at Dimensional Fund Advisors in 1994.  
That trust led our firm to use the DFA funds since the mid 90s.  While I believe there are a lot of people who find our long term studies helpful, I’m not sure that all of those people understand that almost all of our studies that go back to 1928 are based on the work of the academics who are associated with DFA.
If you don’t immediately feel better about the source of our data, I think you will feel better if you watch the new documentary, “Turn Off the Noise.”  I sent it to Daryl and he responded, “Spectacular!”   I sent it to Chris and his response was, “We stand on tall shoulders.”
You can watch the documentary at no cost by going here.  You will be asked to fill in a few pieces of information and use the Access Code: RATIONAL  This offer only extends through January 31, 2024
Then I would like you to watch a wonderful interview of Errol Morris, an Academy Award-winning film director and author.   The following are the notes from interviewers Ben Felix and Cameron Passmore.
In today’s episode, Errol Morris, Academy Award-winning film director and author, joins us to talk about his recently released documentary called Tune Out the Noise. The documentary focuses on the revolution that's happened in the financial system, how the markets work, and why the advancements made are so vital. Errol is an acclaimed figure in film and literature, boasting an impressive array of accolades, notably securing an Oscar for his renowned documentary The Fog of War.

His work spans various arenas, encompassing short films for prestigious events and many charitable and political organizations. In our conversation, we delve into the significance of storytelling in communicating complex subjects, the power of serendipity, the evolution of finance, and the enigmatic nature of truth. We discuss the necessity of storytelling, the unexpected occurrences that influenced finance, the importance of empirical data in understanding truth, the central story of Tune Out the Noise, and much more. He also provides insights into the amazing economists, many of whom are past guests, who helped shape the financial landscape. Discover how chance, humility, and the pursuit of truth intertwine in this captivating episode, where the intriguing art of storytelling converges with the complexities of the financial world. Tune in now!

In this podcast Paul starts by recommending, “Episode 285:  A Year In Review" a podcast/video.

In Paul’s review of 2023 returns he compares Chris’ Best In Class ETF recommendations with similar Vanguard ETFs and the average return in each equity asset class. 

He also gives returns for the most popular portfolios including, Ultimate Buy and Hold, 2 Fund U.S., 4 Fund U.S. and 4 Fund WW.

Using an article from Ben Carlson  Paul is able to find even more reasons 2024 should be a very profitable year for investors.Paul discusses his nominee for the #1 Fund Family in America.

He closes with a portion of a letter from Subah Randhawa, President of Western Washington University.

In the last podcast of the year Paul discusses the many important projects Chris Pedersen, Daryl Bahls and he will explore in 2024.

He then addresses a question from a listener:  Why not all equities forever?  The question is the focus of a wonderful interview with  Scott Cederburg, Associate Professor of Finance at the University of Arizona.  Scott is the guest of Truth-Teller Ben Felix and Cameron Passmore on their podcast, Rational Reminder.

In this podcast (https://rationalreminder.ca/podcast/284) entitled "Challenging the Status Quo on Lifecycle Asset Allocation” Scott discusses his groundbreaking research on the implications of retirees using all equities during their entire retirement vs. the traditional stock/bond allocation most experts recommend.

Paul uses Tables D1.4 Fixed Distributions S&P 500 and D9.4 Fixed Distributions U.S. 4 Fund to demonstrate how much better returns than all equity large cap blend can be earned with a combination of small, large, growth and value and up to 50% in fixed income.

Another listener asks where one can find the tables referenced in the podcast entitled,  "The best gift of all? A financial legacy for a child"    

Here is the link to the pdf that includes the tables mentioned in the article. He also recommends he review these tables that Daryl put together to show the impact of two investors starting at age 18 and 23.   

Paul Merriman and Chris Pedersen introduce the 2 Funds for Life Fine Tuning table and describe how it can be used by investors of all ages to evaluate various combinations of target-date and small-cap value funds.  

Historically, these combinations have produced higher returns and higher safe withdrawal rates with only modest increases in risk compared to the target-date fund alone.  The table provides investors a way to see what these differences have been in the past for target-date funds across their lifetimes when combined with 0% to 50% small-cap value in 10% increments.  

Paul and Chris also discuss rebalancing approaches and the methodologies used in the backtests.  Whether you're a young investor, mid-career, or well into retirement, we think this information will be relevant and hope that it will be life-changing.

Watch video here- https://youtu.be/SiByQZzf3vQ

Paul wishes to warn podcast listeners that this podcast contains a lot of important numbers from the following 4 tables.  The torrent of numbers can be irritating but these are some of the most important aspects of risk and return we should know.
Paul asks that investors email him with questions about the tables.  paul@paulmerriman.com

In this podcast Paul introduces a new way to understand and compare the likely risk and return of equity asset classes. The biggest challenge for first time investors is not understanding the likely losing periods they will experience as part of the normal progression of successful investments.  These 4 tables compare the historical risk and return of the S&P 500, Small Cap Value, a 2 fund portfolio that’s 50/50 S&P and SCV and 4 fund portfolio with 25% each in S&P, Small Cap Value, Large Cap Value, and Small Cap Blend.

The biggest challenge of educating first time investors is reaching them with our educational materials. One of the best ways to reach young investors is through young podcasters who have loyal audiences of these first time investors.  Jose and his podcast, Slow Brew Finance is a great example.  It is available both as an audio  and video podcast. 

During the presentation Paul mentions a table of returns for the S&P, U.S. large cap value, small cap blend and small cap value. Here is the link.

To sign up to Slow and Steady, a bi-monthly email newsletter with bite-sized practical personal finance thoughts and tips https://slowbrewfinance.com/subscribe

The topics in this interview include:
00:00 - Intro 

03:04 - Your Own Small Value Portfolio 

07:23 - Value and Quality 

10:12 - What if Value Doesn't Work Anymore?

14:47 - International Diversification

19:51 - Momentum

23:14 - Size 

27:55 - Market Timing via Trend Following 

39:13 - The Key to Becoming a Good Investor

46:42 - Investor Psychology 

55:59 - Outro

Paul begins the podcast by noting a recent interview he had with Andrew Giancola of Master Money and the Personal Finance Podcast.  The topic is “Simple Financial Steps With Massive Payoffs.”
In this podcast Paul discusses a new study that compares long term returns of the S&P 500 and the 4 Fund Portfolio.  The study was motivated by an article written by Ben Carlson. 
Paul discusses the same 20 year periods starting in 1930 and compares the results of The 4 Fund Portfolio to that of the S&P 500.  He also makes the case, using one of his favorite quilt charts, that the 4 Fund Portfolio is not only more profitable but is less risky on an annual basis. 

Doc G interviews Paul.

"Join me in an eye-opening conversation with renowned investing advisor and philanthropist Paul Merriman as we delve into the question: Is personal finance inherently selfish? In this episode, we explore the broader impact of financial decisions and discuss Paul's recent $3.6 million gift to empower students at Western Washington University through investing education."

Listen to more of Doc G on Earn and Invest-

https://www.earnandinvest.com/episodes-7/youre-not-spending-enough
https://www.earnandinvest.com/episodes-7/test
https://www.earnandinvest.com/episodes-7/spreading-the-financial-independence-gospel-are-we-preaching-to-the-choir

Topic 1: The industry has responded loudly to an announcement by Dave Ramsey that he would be comfortable about taking 8% a year from a retirement account.  Here is what Rob Berger has to say
In a recent video answering a caller's question, Dave Ramsey described those promoting the 4% Rule as "stupid," "goobers," and "morons. He described the 4% Rule as stupid and said he's "perfectly comfortable" with an 8% withdrawal rate. In this video, I'll describe his rationale and why I'm "perfectly comfortable" telling him he's wrong. New RetirementFICalcDave Ramsey Video
Here is the latest from Morningstar on withdrawal rates
And another good article from Amy Arnott from Morningstar  
In my discussion I try my best to explain the real thinking by Dave Ramsey.  

Topic 2: “ iShares just came out with target date funds as ETFs.  What are your thoughts on their returns and  their tax efficiency?

Topic 3:  Today I listened to my 1st Youtube Paul Merriman video --- your Ultimate Buy & Hold  Update 2023.  Very intrigued by your strategy as I'm also a DIY investor.  Since I'm retired & 62 years old with a wife that will be working for another 3 years, can you direct me towards your more specific information that would be more relevant to my situation?
Topic 4:  New study on market timing vs. buy and hold from Vanguard

The following questions were sent from the October 11, 2023 presentation to the NYC AAII Chapter.

You can watch the video here- https://www.youtube.com/watch?v=QjFlcDAlH1k

Chris Pedersen's section starts at 59:00. Paul and Chris conclude with a Q&A session.

If I have a pension and social security that cover my cost of living, is it inappropriate to have 100% of my  long term portfolio in stocks? How should I create a do it yourself target date fund using one of your Sound Investing portfolios?   What are the tax implications of the portfolios you recommend?  Are some better for taxable accounts? Paul, do you invest in any individual stocks?  If not, why not? I have relied on professional managers for most of my life but would like to quit paying the fees to have someone else do it.  How can one feel confident in taking over the management of an account? What about 50% half small cap value and S&P, AND 50% in a target date fund? If I am dollar cost averaging is there a point (size of market decline) at which it would make sense to go ahead and invest it all? Does it make THAT big of a difference if someone lump sums vs dollar cost averaging? which is better/worse? Is there a small cap value emerging markets ETF you recommend for best in class? No investment advisor I know recommends a 100% allocation to small value. More common is a tilt toward the favored factor, say, 80% in the market and 20% in small value. What do you recommend? Do you recommend tax loss harvesting in a taxable account?

https://www.whitecoatinvestor.com/tax-loss-harvesting/

https://www.whitecoatinvestor.com/how-to-tax-loss-harvest-a-large-taxable-account/

12. Does a large cap blend fund that’s equal-weighted compare well with a cap-weighted fund?  

Paul answers 12 questions  from the AAII New York City Chapter October 2023

Meeting

The video can be watched here- https://www.youtube.com/watch?v=QjFlcDAlH1k

Paul's section begins at 08:40. 

The following links are used in this presentation: Table B14B, ETF portfolios,  and SPIVA Report 

1.  Do you recommend using index funds for international funds? 
2.  Since small cap value underperforms the S&P 500 for long periods of time, should SCV be avoided by those who are nearing retirement?
3. I don’t have small cap value available in my 401(k).  Will a small cap blend fund have the same impact?
4. How can there be such radical return differences between the small cap value indexes?
5.  Are you going to show risk-adjusted returns for the index funds? Treynor ratios?  Sharpe ratios?  Sortino ratios?
6.  How does one juggle the choice between investing in a higher expense ratio ETF (example AVUV) compared  to investing in a lower cost index fund?  Would the decision be as simple as going with the lower cost fund?
7.  If everyone invests in small cap value funds will that reduce the premium in the future?
8.  Some say the SCV premium is declining because private equity companies are taking SCV companies private.  Any truth to the comment?
9.  How do I rebalance a target date fund and a small cap value fund?  What gets rebalanced?
10. Please recap what the good, bad and ugly of small cap value funds and ETFs.
11. How long have you been aware of the small cap value premium?  Did you know about it before they became popular?
12.  Fidelity Freedom TDF 2035 has an expense ratio of .7%.  When the expenses are that high does it change your recommendation of adding a small cap value fund?

Paul is interviewed by Andrew Stotz and the My Worst Investment Ever podcast

BIO: Paul Merriman is a nationally recognized authority on mutual funds, index investing, and asset allocation. After retiring in 2012 from Merriman Wealth Management, which he founded in 1983, Paul created The Merriman Financial Education Foundation, dedicated to providing investors of all ages with free information and tools to make better investment decisions.

STORY: Paul has had a series of bad investments, and they were all driven by emotions. It wasn’t until Paul got the emotion out of that process that his money started to grow.

LEARNING: The first five years of the money you put away can, theoretically, represent 40% of the value of your portfolio over the long term. Start investing early so that you can benefit from the compounding effect.

I went to the Bogleheads Conference with high hopes I would convince guests that small cap value should be at least a small part of every equity portfolio.  Many respond that they have all the small cap value they need in a total market index like VTI.
Why I failed:  I only had 20 minutes, as compared to 45 a couple of days earlier for the NYC AAII Chapter.  I took a dozen slides out of the shorter presentation but still had at least another dozen tables and graphs to address in the 20 minutes.  What I should have done is spend the 20 minutes on one table.  That table is B14B. In this podcast I make the presentation I wish I made at the conference. 
If you have a friend you think could use the information, please pass it on.

In this week’s podcast I focus on two topics:  The first is the culmination of a 10 year project that just took a giant leap forward.  As you know the mission of our Foundation is  to help do it yourself investors make better investment decisions.  The bottom line is we want to help  them improve their financial future.

While it is not addressed in our written mission, it is our desire to have the work continue beyond what the present group of volunteers can provide. That means finding a stable institution or organization  to carry on our work. 

The following release from the Western Washington University introduces a new program that will soon establish a financial literacy program that will impact every student who attends WWU.   Over the next 100 years this endowment should help millions of students and their families make better financial decisions.

The second topic is about someone I think everyone of our readers should become familiar.  On October 11 I will be speaking to the New York City AAII Chapter and on October 13 the Bogleheads Conference in Rockville, MD.  In both cases I will be speaking on The Good, the Bad and the Ugly aspects of investing in small cap value.  My hope is my presentation will motivate investors to give serious consideration to adding SCV to their portfolio.

While I am excited about the opportunity to present our findings, I must admit the work that Ben Felix, one of our Truth Tellers, has done is about the best I have found on the topic.  If you want to see one of the best cases for SCV please watch Ben do his magic.

How Can Mindfulness Help You Reach Financial Independence?

Do you want to reduce money anxiety, but don’t know who to trust?

Would you like to learn how to set up and manage your own retirement plan?

Do you want to know how we create a passive income stream you can’t outlive?

If yes, join us and learn how to answer the 4 critical financial independence questions:

Learn more: https://courses.mindful.money/financial-independence-bootcamp

Paul Merriman is a nationally recognized authority on mutual funds, index investing, and asset allocation. He founded Merriman Wealth Management in 1983, retired from the firm in 2012, and created the Merriman Financial Education Foundation. Everything he does is dedicated to providing investors of all ages with information and tools to make informed decisions for their own best interests.

Today, Paul joins the show to reflect on early financial lessons he learned, discuss the current state of financial education, and share the top three decisions everyone must make in their financial lives.

Paul opens with information on the Oct. 11 AAII presentation.  Here is the link to sign up.
There was a time when Paul was very critical about target date funds.  But important circumstances made him more accepting of the important value of target date funds.  He discusses why he changed his mind but explains why he still thinks you should build the glide path on your own.
He also responds to Ken Fisher’s comments about the small cap and large cap historical returns. In the discussion Paul recommends listeners take a look at the quilt charts that show individual asset class and portfolio annual returns.

Tom Cock and Don McDonald record a daily podcast Talking Real Money and a 2 hour radio show on KNWN (previously KOMO) each Saturday afternoon from 12 to 2.  Last Saturday Don was taking a day off and Tom asked me to join him.  While I was in their studio I asked Tom to join me for a discussion about the challenges of educating  investors as well as giving some advice to  those interested in building a career as a financial advisor.  Here are a few of the topics we discussed:

How to teach investors to develop realistic expectations for risk and return Best advice for first time investors Major changes in the financial planning industry How advisors bill for investments under management and those "held away”
Robo advisory services
Advice to young and older adults who want to get into the financial planning industry

Working with Tom is always fun!

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 funds created equal?  Should there be meaningful differences in returns? Chris compares the returns of 4 total market funds using Portfolio Visualizer.

3.  I am a 79 year old retiree who wants to use your 2 Funds for Life strategy.  How do you recommend I put my portfolio together? 

4.  How would I establish an expected rate of return for the U.S. 4 Fund Portfolio? 

5. I’m a young investor with a Worldwide All Value Portfolio.  As I age should I start to transition to a lower risk equity portfolio? 

6.  The Avantis funds use a quality factor to produce better returns.  Why don’t all small cap value funds use the quality factor in their selection of companies? 

7.  How have real returns of equity asset classes compared to theoretical returns? 

8.  I want to carefully build my portfolio to work within my risk limits. My challenge is to decide what period of time represents the kind of losses I’m willing to accept.  If I use the information starting in 1928 or in 1970 the loss exposure is very different.  Which period should an investor use to match their asset allocation to their risk tolerance? 

9. Chris, Daryl and Paul discuss the long term implications of the risk and return of a 60% equity and 40% bonds using a  combination of equal percentages of the S&P 500 and small cap value.

During the presentation Daryl and Chris reference a new 1928-2022 Fine Tuning Table for an equity portfolio of 50/50 S&P 500 and Small Cap Value. 

Daryl introduces a new table that compares the returns from 1928-1969 with 1970-2023 

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:

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 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 class.

After Paul speaks, Chris’ presentation will focus on 2 Funds for Life in retirement and how to select the Best In Class ETFs.
One of Paul’s favorite Truth Tellers, Ben Carlson, has recently written, "The Luckiest Generation”.  Paul reads highlights from the article.  It turns out “The Luckiest Generation”  faced a lot of serious headwinds.  Then Paul suggests the steps we should take if we aren’t so lucky.

The annual SPIVA Report is one of the most important studies in the industry on mutual fund performance.  While many may wish to read the whole report, 
Paul focuses on the tables on pages 9, 10, 13, 14, 17 and 19.
Those who take the time to review this information will hopefully reconsider holding any actively managed funds in their portfolio.  

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 loss.  The following short article is referenced in a discussion of Bill Miller and Legg Mason Value Trust's 15 year record of returns ending in 2005.Russel Kinnel Jan 3, 2006 

"Bill Miller has done it again, but it was a close call. Miller's  Legg Mason Value (LMVTX) extended its winning streak against the S&P 500 Index to 15 straight years, with a 2005 return of 5.32%. The S&P 500 returned 4.91% for the year.

Miller's aversion to commodity producers, specifically energy stocks, meant he had an uphill climb in 2005. In addition, duds like Tyco International   and  eBay (EBAY) added to the challenge. However, big bets on  Google (GOOG) and  UnitedHealth Group (UNH) won the day.

Those stocks nicely illustrate Miller's style. He believes that you have to stick your neck out on controversial or at least misunderstood names to beat the market. EBay and Google are bold bets because their multiples are so steep that they need nearly flawless execution to produce good returns for shareholders. Yet, Miller will also buy fallen growth stocks where controversy has frightened off less-secure money managers. Hence, Tyco and UnitedHealth.

While his streak against the S&P 500 is a fun way to keep score of Miller's accomplishments, his goals revolve around long-term success versus the market. The consistency of his record helps to keep investors in, but his 10-year return is more impressive. The fund has gained an annualized 15.19% over that period, which is about 6 percentage points per year better than the index. For more perspective on the streak, read Chris Traulsen's Fund Spy column from November 2005."

The Long Term Investor – Episode 62 – Investing for Higher Returns with Eduardo Repetto  

Rational Reminder – Eduardo Repetto : Deep Dive with Avantis Investors’ CIO – 11/24/2022 

Paul recommends investors listen to the following interviews with Eduardo Repetto, the Chief Investment Officer of Avantis Funds.         Bogleheads on Investing (the one w Rick Ferri)  - Episode 43: Eduardo Repetto on factor investing    

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 today vs. 40 years ago?  And how  is  investing likely to be different in the future? 01:11

Topic 2:  Will the new Avantis All Equities Market Value ETF be a good substitute for your Worldwide All Value Portfolio?  7:00

Topic 3:  Do you recommend converting traditional IRA funds to a Roth IRA using the back door Roth IRA strategy?  Paul suggests reading:  https://www.thebalancemoney.com/when-does-a-backdoor-roth-ira-make-sense-4153803  and various articles at The White Coat Investors:  https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/.  14:30

Topic 4:  What is the most important table on your website?  Paul mentions tables at these pages:  https://paulmerriman.com/ultimate-buy-and-hold-strategy/,  https://paulmerriman.com/portfolios-2023-updates/ (most important), https://paulmerriman.com/fine-tuning-your-asset-allocation/,  https://paulmerriman.com/fixed-contributions/,  https://paulmerriman.com/fixed-distributions-2023/ and https://paulmerriman.com/flexible-distributions-2023/.  18:25

Topic 5:  Should a younger investor (20s, 30s, 40s) put TIPs as part of their fixed income or just stick to the Total Bond Market? 22:17

Topic 6:  Can you discuss your recommendations for the bond portion of a portfolio?  For example, how do you decide how much would go with the Worldwide 4 Fund Portfolio?   23:57Topic 7:  Could there be a problem when small cap value funds get too large? 28:02

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 using a balanced fund such as Vanguard Wellington in retirement?
01:44

2.  I subscribe to your mantra of index funds, keep costs low, buy and hold etc,  Is Merriman Wealth Management your company as well?  I ask because that company espouses buy and hold and market timing and charges “AUM” fees. 14:15

3.  I am a new retiree at 65 and have decided to use the “2 Funds for Life” target date fund with a 10% small cap value portfolio.  Do you recommend the 10% small cap value be split between U.S. and international small cap value funds?  23:30

4.  Is it too late for someone just entering retirement to change their investment portfolio to the 10-Fund Merriman Ultimate Buy and Hold Portfolio?   26:39

5.  What is your impression of a recent Vanguard study that showed a large percentage of investors over 85 with an asset allocation of 100% in stocks? 30:14

6  How about using a technology fund instead of a small cap value funds? 35:00

7.  What are some short term bonds funds you recommend?  Bonds funds discussed VSBSX, VMLTX and VSCSX 39:24

8.  I am 25 years old and have a high risk tolerance.  Would it be okay to be all small cap value and would it be okay to invest 10% of the portfolio in individual small cap value stocks? 41:06

9. I have been using the Merriman 10 fund portfolio for 10 years.  The annual rebalancing takes a lot of time.  Do you recommend I move to the worldwide 4 fund portfolio instead? 43:00

10. I am retired and just took a full distribution from my 401k and invested the cash in a Vanguard Rollover IRA.  I I use one of Merriman's portfolios should I stage my investment over many months or invest it all immediately? 44:45

11.  I currently hold a large amount of cash and want to start investing.  Do you recommend a lump sum investment or dollar cost average over a few months? 48:25   Fine Tuning tables.

12.  Do you think the Avantis All Equity Markets Fund (AVGE) has enough small cap value to compete with the returns of your Worldwide 4 Fund Portfolio? 53:53

13.  How does the Avantis Small Cap Value ETF (AVUV) compare to the DFA Small Cap Value ETF (DFSX)? 56:46

14.  Do you recommend buying individual bonds instead of bond funds? 59:58

15.  Do you recommend moving to a target date fund with a later retirement to get more exposure to equities? 1:02:00

16.  What would happen if one of the Avantis funds closed?  Paul recommends reading this article. 1:03:39

17.  I own VBR (Vanguard Small Cap Value ETF) in a taxable account.  Should I take the tax hit and move the investment in AVUV (Avantis Small Cap Value ETF)? 1:07:00

18.  What is your opinion of holding target date funds or a fund of funds during retirement? 1:10:33

19.  What is the range of Price to Earnings (P/E) ratio of large and small growth and value funds? 1:13:00

20.  I think I need a professional advisor to help me with my financial decisions.  Will the fees I pay be covered by higher returns?  Financial Advisor services. 1:17:21

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 weeks.  While  Chris answered  many questions during his presentation, there were over 60 questions remaining unanswered.  In this podcast and several to follow Chris and Paul will try to answer all of the questions.  Here are the answers to the first 16 questions:

Should investors limit their bond holdings to short term bond funds? Are CDs a good place to park cash right now? Do you think investing in an internationally diversified index fund is a good way to manage currency risk? My wife and I are 70 with our portfolio 75% in cash.  Is now a good time to invest and should we put it all in now or dollar cost average?  Chris mentions a podcast on dollar cost averaging vs lump sum investing by Rob Berger. Dimensional Small Cap Value Fund appears to have less than a 2% return over the last 16 years.  Could that be true? For retired investors wouldn’t it be prudent to apply a market timing system that will protect against a big selloff? How does your Ultimate Buy and Hold Portfolio compare to your other portfolios in terms of risk and return?  Paul mentions Table H1 at this link. Would an investor be better served in a target date fund or managing a simple 3 Fund Bogleheads portfolio?  Paul mentions H1 here as well. Why not put your bond holdings into a diversified stock fund that pays dividends, like the Schwab U.S. Dividend Equity ETF (SCHD)? What is average maturity of the short-term bond funds you recommend? If I don’t have small cap value available in my 401k, should I substitute a small cap blend fund in my 2 Funds For Life portfolio? How does Portfolio Visualizer work on target date funds? Your charts show the possibility of an 81% decline.  Does that mean the fund could see the value fall from $100,000 to $19,000? Please explain the term investment factor. Instead of comparing different market factors, how would you compare the returns of different market sectors? Would you consider producing a factor regression video/course so do it yourself investors could learn to evaluate funds for themselves?

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 Tables 1 and 2  to show the impact of making an extra .5 and 1 percent a year.  Click here to view all the tables. He also references information from the annual SPIVA Report  on pages 7, 9, 13, and 19. 

He mentions Morningstar risk and return date for the Investment Company of America (AIVSX) and the Vanguard S&P 500 (VFIAX).

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 to being best-in-class in all three of these areas.

The public is invited to attend this webinar.  Please share this information with your family and friends.  The FREE WEBINAR will be live-streamed to your computer or mobile device, but you must register at https://us02web.zoom.us/webinar/register/WN_xYAAhMVnT--qDnipfpaIqQ#/registration

After registering, you will receive a confirmation email containing information about joining the webinar.

Paul mentions a new survey on AI. 45% say they would turn to AI to make financial decisions. Paul mentions AI eliminates wading through 20 advertisements to get to the information you’re after.

Paul mentions his lists of 80 project.  One list of 80 focuses on important Investment lessons. One lesson is figuring out how to deal with the reality that there is always good news and bad on every important economic factor.  In a recent Ben Carlson article, "Good News-Bad New About the Economy” he explores the good  and bad news about the economy, inflation, cost of housing prices, wage growth and unemployment. So what do investors do with this list?  Paul suggests it’s best to ignore the temptation to take sides.

Paul mentions a new fund from Avantis.  The Avantis All Equity Markets Value fund combines U.S. and international small, mid cap and small cap value asset classes.  Will this new fund be a one fund solution for the 5 fund Worldwide All Value Portfolio on Table H102?

Paul suggests investors watch the Morningstar U.S. Barometer style box returns on a daily basis.  The purpose of this exercise is to become aware of the wide swings of the range of equity asset classes over short periods of time.

Paul updates the work of Truth-Teller Tim Ranzetta and his non profit NGPF.org.  Their mission is to have every state require a semester of personal finance as necessary for graduation from high school by 2030.  In the last 2 years the number of states that meet the requirement rose from 8 to 22, with 6 more expected this year.

Paul recommends parents consider ways to help their family and their school district make the move.  Here are ways Tim suggest you can help your family and local schools:

Paul recommends parents subscribe to one or more of the NGPF regular newsletters:  

https://www.ngpf.org/blog/current-events/whats-new-with-investing-2023/

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 use portfolios that don’t include any international funds?

The following links were referenced in the podcast:

https://paulmerriman.com/wp-content/uploads/2023/04/7-Sound-Investing-Portfolios-50-50-2023.pdf

SCV vs S&P500 Fine Tuning Tables (2022)

Paul also talks about his early 80th Birthday party, it was a magical success.

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 investors what they should do to be sure they address all of the risks investors accept, with or without a professional advisor.

Paul uses ChatGPT as the source to a number of lists. 
Paul also mentions free books:

If You Can by William Bernstein

We’re Talking Millions — 12 Simple Ways To Supercharge Your Retirement

2-Funds for Life: a quest for simple and effective investing strategies

101 Investment Decisions Guaranteed to Change Your Financial Future

Get Smart or Get Screwed: How To Select The Best and Get The Most From Your Financial Advisor 

First Time Investor: Grow and Protect Your Money

And for DYI investors to learn the most important investment decisions please visit:  https://paulmerriman.com/bootcamp-for-investors-2023/

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/

Paul is working on a list of 80 quotes investors might use to remind themselves of the important investment beliefs that keep investors on track.  He asks listeners to send him the quotes that have kept you on track.  Please send to paul@paulmerriman.com.

Our Truth Tellers are individuals or organizations that, in our opinion, are 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 be a better long-term investor.

Here is a Truth Teller page for Ben Felix.

Ben is  the host of a popular YouTube series.  His over 100 videos are some of the best teaching tools in the industry.  The following are a few samples:

Is Investing Risky?

Dave Ramsey's Investing Advice

Small Cap and Value Stocks

Plus  Ben and Cameron Passmore interview other financial experts on their podcast, Rational Reminder.  They have made a special effort to interview many of the academics who have studied the investment process.

Here is a wonderful interview with:

Prof. Meir Statman: Financial Decisions for Normal People

5:16 Meir defines Behavioral Finance

15:37 The difference between a "normal" investor and a rational one

21:48 Why normal investors like lottery-like assets despite low or negative expected returns

26:24 The downsides to the "consume from dividends but don't dip into capital" rule

32:59 Why dollar-cost averaging is so persistent, when it is well-known to be rationally suboptimal

36:48 What makes strategies like covered calls and structured products so attractive to normal investors

43:19 Why normal wealthy people seek to invest in hedge funds and private equity, despite their questional benefits to a rational investor

48:24 How normal investors should deal with currency hedging in global portfolios

53:03 How behavioral portfolio theory differs from mean-variance portfolio theory

1:00:21 How an optimal behavioral portfolio differs from an optimal CAPM portfolio

1:09:21 How the typical risk-profile questionnaire can be adapted to improve the behavioral dimension of portfolios

1:15:53 How financial advisors can use behavioral finance principles to improve client outcomes

1:17:55 What puts financial advisors in a position to give well-being advice

1:23:27 Meir defines success in his life

There is no question AI is a hot topic.  I have watched “end of the world” interviews with people who know a lot more than I do about AI.  In a recent poll, noted in The New Yorker, half of A.I. scientists agreed that there was at least a ten-per-cent chance that the human race would be destroyed by A.I.” 

I have also watched marketing people use Chat GPT to create very good marketing pieces.  

So I thought it’s time to find out how good a source of general and specific investment advice Chat GPT might be.  Will it help people understand the important investment decisions that will lead them to higher rates of return within their personal risk limits.  Will it help them to understand the sources of information that will possibly put more money into the presenters pocket or the investors pocket.

Since I recently discussed Dave Ramsey,  the very controversial and very popular guru, I thought it would be interesting to see what Chat GPT would say about Ramsey’s advice.

On this podcast I ask Chat GPT: What are the pros and cons of advice from Dave Ramsey?  What is Dave Ramsey's position on index funds vs. actively managed funds? I asked again:  How does Dave Ramsey feel about index funds? Does Dave Ramsey recommend an advisor be a fiduciary? Are all the advisors that Dave Ramsey recommends fiduciaries?

Here are links to what Motley Fool has to say about Dave Ramsey’s advice:

https://www.fool.com/the-ascent/personal-finance/articles/dont-follow-this-dave-ramsey-advice-about-getting-out-of-debt/

https://www.fool.com/the-ascent/personal-finance/articles/4-things-dave-ramsey-is-dead-wrong-about/

The following links are to Dave Ramsey’s literature:

https://www.ramseysolutions.com/retirement/why-dave-prefers-up-front-fees

https://cdn.ramseysolutions.net/media/pdf/daves_investment_philosophy.pdf

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 - Sound Investing Portfolios Performance (50-50) - 2022

Table H102 - Sound Investing Portfolios Performance (70-30) - 2022

Paul also discusses a new table that Daryl is building that will show more long term details on U.S. portfolios from 1928-2022.  The discussion includes an interesting comparison of lump sum and dollar cost averaging from 1928-1937.  He also digs into the relative returns of large and small cap value in good times and bad.

In the last newsletter there was a section regarding a lawsuit that investment guru Dave Ramsey is facing.  In this podcast Paul makes a recommendation that would eliminate the conflicts of interest Dave may have and provide a much needed service to help investors find the kind of advisor they prefer.

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 focuses on the returns investors should expect in the future.  Paul reviews the 5, 10, 20, 50 and 80 years ending 2022,
as reported by Dimensional Fund Advisors 2023 Matrix Book.  He also reviews the DFA asset class returns from 2000 to 2022.  The period starting in 2000 is used as 1999 was the end of one of the longest market runs in history. 

Paul compares both the U.S. and international returns for large, small, value, growth and NASDAQ indices.

 
The only other tables that are referenced are the 1928-2022 1,15 and 40 year returns.Paul ends the podcast asking listeners to email him (paul@paulmerriman.com) with any questions or comments they have regarding the  recent series of 8 major investor decisions.  These topics were covered in articles, podcasts and videos on the following pages.

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

"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

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.

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

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.

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)

This podcast is Part 5 OF AN 8 PART series ON THE MOST IMPORTANT INVESTMENT 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

This podcast is the 4th in a series of our series to help do it yourself investors build a lifetime investment strategy.  

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)

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

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:

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.

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

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

“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 McDonald 13:17 "Financial Fysics" with Don McDonald 46:16 "Paying for Retirement" with Tom Cock 1:15:00 "The Value of a Financial Plan" with Jason Gentile 1:46:00 "Getting Medicare Right" with Kevin Peterson 2:15:00 "Planning for Long-Term Care" with Barbara Devereaux 2:41:48 "Saving on Taxes in Retirement" with Diana Bacon 3:17:00 "Critical Investing in Retirement" with Paul Merriman 3:49:00 Investing Q&A with Tom Cock and Paul Merriman 4:22:00 "Charitable Giving" with Tayor Cock and Stacie Nemetz 4:30:42 "Navigating Turbulent Markets" with Apollo Lupescu 5:23:00 "What's Next?" with Rebecca Chrichton

I would like to encourage our subscribers to also view the presentation by Apollo Lupescu, Vice President at Dimensional Fund Advisors, on “Navigating Turbulent Markets.”

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/

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 Execute 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-returns

14:55  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.pdf

22:19  4.  What is the difference between the expected 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 Swedroe’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 Charts

 
49:30 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.

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:

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?

42:228.  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?

56:0011.  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

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 following are the Paul’s responses to questions and comments from listeners.

1.  How do active mutual fund managers invest their own money?  Article referenced in podcast:
https://ritholtz.com/2023/01/how-do-active-managers-invest-their-own-money/

2.  Why not use market timing to protect investments from declining markets?

3.  How should I put money into an account when facing important news like the possibility of a government shutdown over the debt ceiling?

4.  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?

5.  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

6.  What’s wrong with speculating with part of a portfolio.

7.  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?

8.  What one fund should I invest my childs first IRA?  Paul mentions table B14Ato 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.

9.  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.

10. 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.

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.

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 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!

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 listenerswatch 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.pdf

Table 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/

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

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 Links
How $10,000 will help my newborn granddaughter have a better retirement
The best gift of all: a financial legacy for a child
See 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=1000504041514

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 Value

The latest Table H1

Ordinal Rank Summary

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

1. How do you increase the rate of return on your investments? (1:58)

2. What do you think of using “Robo Advisors” like Schwab Intelligent Portfolios? (6:33)

3. What portion of my investments should be in mutual funds? (11:16)

4. 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)

5. What resources do you recommend to learn about investing? (15:42)

6. What made you go into the industry that focuses on saving and investing? (20:28)

7. What is the biggest investment mistake young adults make? (23:13)

8. What is the best outlet/place to find up-to-date advice on how to invest? (28:55)

9. Is there a mutual fund that doesn’t pay any interest? (34:38)

10. What are the steps to start investing a small amount of money now? (35:20)

11. Do you have advice on how to invest in real estate and how much of your portfolio should be in real estate? (39:04)

12. Do you have suggestions on diversifying a portfolio including real estate hedge funds, private equity, etc.? (42:06)

13. How important is learning about macro-economic cycles in making investment decisions? (43:15)

14. What is the single-most important decision investors make? (46:58)

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 alltables here.

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 Shen

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 thevideoand/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:

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/

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.

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!

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 he is thankful. While many of the people would be unknown to our audience, others are responsible for helping our Foundation reach and be of service to those who find our work helpful.  One such essential behind-the-scenes person is Angela Moore, Senior Editor at Marketwatch.com. Angela is responsible for putting the final touches on thehundreds of “MarketWatch" articles by Paul and Rich Buck. Her kind guidance and care plays an important role in the success of our Foundation reaching and educating investors.  Angela was recently interviewed by Ari Parker on "Legacy—Aging With Purpose.” Listen to her speak about “The Value in Money and Memories" at: https://cms.megaphone.fm/channel/legacy?selected=CAC1135958443. We think you will understand why we feel very fortunate to have Angela as our MarketWatch editor.

Paul believes successful investing is largely a long-term series of random events, much as lives can be. To illustrate this point, he recalls an unlikely meeting of a fellow high school graduate as he was standing by himself watching the 1961 "Seafair Parade" in Seattle. That casual conversation ends up being a single step responsible for his Foundation’s work 60 years later. He also shares a single sentence that summarizes the steps young investors should take, inspired by the encouraging responses he received in recently speaking with college students at Rutgers and Western Washington University.

Paul suggests this article by Ben Carlson, one of our Foundation’s Truth Tellers  “Who Wants to Be a Billionaire” is an excellent read filled with an interesting list of “real wealth" measurements.  https://awealthofcommonsense.com/2022/11/who-wants-to-be-a-billionaire/    Along this same line, Paul also recommends a book  for anyone in their 20s and 30s seeking to learn the most-important basics of investing. Spending Your Way to Wealth by Paul Heys, a director of our Foundation, does a terrific job of addressing the real wealth we accumulate.  We heartily recommend this book. You can get it at Amazon or—for a discounted copy with a personal autograph—take a look at Paul Heys’ site: https://investorship.com/financial-services-clients/

The first part of this broadcast describes the investment strategy Paul and his wife are giving to their latest grandchild. After Paul describes the strategy, Daryl Bahls, Director of Analytics for The Merriman Financial Education Foundation, shares tables that represent the 95-year potential financial implications of this investment.

Then, Chris Pedersen, our Director of Research, Daryl and Paul address the following questions:

· What’s the best way to compare the risk and return of different combinations of equity asset classes? · How should someone move a major part of their portfolio from bonds to equities?  Dollar cost average or make a lump sum investment? · Which is better: the 10-fund portfolio or Chris’ 2 Funds for Life? · What kind of problems are investors having at M1 Finance? · What ETFs is Chris considering when he reviews his picks next year? · What kind of returns should we expect from small-cap-value funds in the future? · How should future returns of a globally diversified total market fund, like Vanguard Total World ETF (VT), be compared to the Worldwide 4 Fund Portfolio? · Why do you recommend different ETFs for taxable and tax-deferred accounts? · What do you plan to do to help investors make the best of their 401k investment choices?
 

See: New Tables by Daryl Bahls:

Fund for Granddaughter (R4)

No-Nonsense Portfolios 'Quilt Chart' (1970 to 2021)

7-Sound Investing Portfolios (50-50) - 2022 (color)

(Paul makes reference to Table H1)

Get your copy of: 2 Funds for Life—A quest for simple & effective investing strategies by Chris Pedersen at Amazon (https://amzn.to/3BxTFoM) or other online book sellers.

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 and anyone wanting to understand why and how to invest over the long term. Paul covers the 12 big decisions—each worth about a million dollars—that every saver/investor needs to make to set and stay a course for financing their retirement.

These decisions, or steps, are further elaborated in his book, We’re Talking Millions, available for free in pdf and audio at his website. Paul’s goal is get this book into the hands of a million reader/listeners. Even if you’re a seasoned investor, you will find value in reviewing these steps for yourself and those you might share it with to empower them to become a sound investor as well.

Get you free pdf or audio book: https://paulmerriman.com/signup/
or buy the print, eBook or audio book: https://amzn.to/2KH36Kr

The Youth Business Alliance (https://youthbizalliance.org) was formed in 2012 and provides a year-long four-part course to high school youth. In the YBA program, students learn soft skills, workforce readiness, financial literacy and entrepreneurship skills to prepare them for their career trajectories. In addition, students hear from volunteer guest speakers every week who speak about their life stories and professional careers and field trips to get behind the scenes visits to local businesses.

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 doing open enrollment, especially if they have an employer-provided 401k program. “For those who invest in defaults of the 401k programs, most typical across the industry, and do that for 40 years of their career, and then do fixed 4% withdrawals in retirement, and you look at all the cash flows in and cash flows out, and the standard investment, which is a target date fund, and then you adjust for inflation and you ask, ‘What was the impact on how much they have to spend over a lifetime?’ It doubles their spending power, even adjusting for inflation, just by investing in a target date fund, which is kind of unbelievable.”

Read Chris’ article at: https://www.aaii.com/journal/article/21644-double-your-lifetime-purchasing-power-in-20-minutes

You may be asked to enter your name and email for full access. You can join AAII (American Association of Individual Investors) risk-free for a month or become a member for a small fee. The AAII is an independent nonprofit corporation formed in 1978 for the purpose of assisting individuals in becoming effective managers of their own assets through programs of education, information and research.

Podcast listeners should know there is a slideshow available on the YouTube video version.

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 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 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 to better returns.  

The podcast references our following Tables: Fine Tuning Your Asset Allocation, Sound Investing Portfolios and Fixed Distributions and Flexible Distribution.  The math portion of the podcast focuses on the impact of small increases in return, along with small increases in annual investments and a lifetime of accumulating, distributing and passing money to others. The discussion covers the tables in this PDF.

Leaving the simple math, Paul uses historical returns to compare hypothetical returns and the choices investors must make. Everyone of these choices is likely a million dollar decision:

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 & Secure Retirement. (See details in ‘Links’ below).

Q&A

Which asset classes should be in taxable accounts and which in tax-advantaged accounts? 
To answer this oft-asked question, Paul recommends Larry Swedroe’s book, Your Complete Guide to a Successful & Secure Retirement and encourages investors to read Chapter 10 from the book, “The Asset Location Decision." See “Links” below for details to buy the book and access the free chapter.

“Is there a rebalancing bonus?”
Chris answers this question and illustrates his answer with the chart, “Is There a Rebalancing Bonus? … Not Much.” See thischartand others mentioned below.

“I want to help my 36-year-old daughter establish a retirement portfolio. What do you think of using Vanguard Life Strategy Moderate Growth Fund (VSMGX)?”
Chris answers by suggesting a better answer may be a Target Date Fund and shows the Vanguard Target Date Fund Glidepath.See this and other charts and tables mentioned here.

“Can I expect to invest in the funds you recommend today and hold them for the rest of my life?” Daryl’s answer is yes, using our 4-Fund portfolio. He shows why by comparing the Total Market Index funds to our “No-Nonsense Portfolios” in Table 1a: “No-Nonsense Portfolios for Sound Investing: Equity Asset Allocation” and Table 2a.1, which shows “Comparison Data,” drawing special attention to our U.S. Only 4-Fund Portfolio over the Total Market Index and S&P 500. 

Daryl also offers a third Table, “No-Nonsense Portfolio Performance Rankings by Decade (1970-2021). See these and all charts and tables mentioned here.

MORE LINKS

Rebalancing: The implications of adding a small amount of small-cap value to a Total Market Index portfolio. See this Table.

You can get your copy of Larry Swedroe’s book, Your Complete Guide to a Successful & Secure Retirement at: https://amzn.to/3gb3noz. If you purchase via our link, it may result in our Foundation receiving a small commission that supports our financial education outreach at no additional cost to you.

Read this FREE chapter from Larry’s book, “The Asset Location Decision,”  courtesy of Mr. Swedroe and publisher Harriman House.

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 on earth…you!  Paul also gives an overview of the 12-million-dollar decisions covered in his book, We’re Talking Millions: 12 Simple Ways to Supercharge Your Retirement.

Stay tuned to about 1:20 for some great questions:
•  Does Total Market Index or S&P 500 approximate your 4-Fund approach and which has better returns?
•  Are there target date funds that approximate the 4-funds in the equity portion?
•  How do you approach international funds in the 4-fund approach?
•  What is it about small-cap value companies that gives a premium?
•  Can you define ‘value’?
•  Is there an advantage to the 4-fund strategy if you’re retired, with a 15-year horizon?
• Which of your Best-in-Class ETF recommendations should I follow?
• Regarding equities and taxable accounts versus tax-advantage accounts, do you mirror the 4-fund across both types accounts and will I have a large tax liability in the taxable account?

Watch the slideshow

About The John C. Bogle Center for Financial Literacy (https://boglecenter.net/):
It is a non-profit organization dedicated to improving financial literacy. The Center’s mission is to expand the legacy of John C. Bogle, the founder of Vanguard, by promoting the principles of successful investing and financial well-being through education and community. Bogleheads® is a registered trademark of the John C. Bogle Center for Financial Literacy.

The Center envisions a world of well-informed, capable, and empowered investors. Community outreach is achieved through the Bogleheads forum, wiki, and blog, as well as in-person and virtual Bogleheads chapters worldwide.

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 relatively easy to stay the course. Of all the defensive steps we should be able to control personally, there is one hurdle for investors that often leads to serious, and likely costly mistakes: maintaining the commitment to buy-and-hold in bear markets! While buy-and-hold sounded realistic when the portfolio was established, the experience of losing 30% (average bear market loss) is a difficult pill to swallow.  Human nature is shouting, “Don’t be a patsy! Why sit there and watch your life savings disappear without a fight or flight to safety?” Paul discusses the best ways he knows to help control the temptation to cut your losses.

See Mentioned Link: The 12 Best Retirement Investing Lessons:  https://paulmerriman.com/the-12-best-retirement-investing-lessons/

George Sisti,CFP™, is a certified Financial Planner™ practitioner and the founder of On Course Financial Planning, a fee-only Registered Investment Advisor firm.

https://oncoursefp.com/

You can read more by and about George at: https://paulmerriman.com/george-sisti-certified-financial-planner/

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 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!

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:

1. Should investors believe the “experts” predictions of catastrophic future returns for the stock market?

2. What are the most important investment decisions that people have to make?

3. What are the biggest financial mistakes that retirees make?

4. What are the new tools your Foundation has developed to help people invest in equity funds?

5. What is the one asset class that every stock investor should own?

6. Is it really possible to invest successfully with just two funds?

7. Are there really 150 model portfolios that are performing well?

8. What are those 7 factors investors should be focused on in building their retirement portfolios?

9. How can the combo of S&P 500 and Small Cap Value be less risky than the S&P 500 itself?

10. What are your thoughts about the bear market we are in, and is this one of the worst bear markets ever?

11. Should people include cryptocurrencies in their portfolio?

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 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!

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:

Paul recommends Jordon Grumet’s new book, Taking Stock: A Hospice Doctor's Advice on Financial Independence, Building Wealth, and Living a Regret-Free Life

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 Retirementand  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.

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 a variety of questions from our listeners, viewers and readers. See links below.

1.  Can you compare 3 years of returns of your Vanguard ETF, Vanguard mutual fund and Best-In-Class (BIC) ETF recommendations?  Chris answers and discusses the likely reason for the BIC outperformance.

2.  Would it make sense to get rid of the small-cap blend fund and hold 1/3 each of large-cap blend, large-cap value and small-cap value? (The questioner notes that small-cap blend rarely outperforms small-cap value.)  Daryl answers this by discussing his findings by using the 1928-2019 Quilt Chart.

3.  What are the pros and cons of multi- and single-factor funds?  Chris responds.

4. Should micro-cap value be considered as a part of a diversified portfolio?  Daryl responds.

5.  Which is more risky, large-cap blend (S&P 500) or large-cap value?  Daryl responds.

6.  How should I manage investments during major declines? Chris and Daryl answer.

Mark Your Calendar: Paul invites listeners to a Zoom presentation on Saturday, Sept. 17, 2022 at Noon (Eastern Time), sponsored by The Boston Bogleheads Chapter.  It’s free and open to the public.  As The Merriman Financial Education Foundation is in its 10th year of educating investors, Paul will focus most of the presentation on the "10 most important new lessons of the past 10 years,” followed by Q&As.

Here is the zoom link for this meeting:

https://us06web.zoom.us/j/89860498182?pwd=OVFZeWtKNGh2bTVGQUtzeUlPMGlOUT09

Meeting ID: 898 6049 8182

Passcode: 311045

Links:

The Merriman Financial Education Foundation: https://paulmerriman.com/the-merriman-financial-education-foundation/

Vanguard ETF: https://paulmerriman.com/vanguard-tax-deferred-etf-portfolios/

Vanguard mutual fund: https://paulmerriman.com/vanguard-tax-deferred-etf-portfolios/

Best-In-Class (BIC) ETF recommendations: https://paulmerriman.com/best-in-class-etf-recommendations/

1928-2019 Quilt Charts: https://paulmerriman.com/wp-content/uploads/2022/06/Sound-Investing-Portfolio-Quilt-Chart-1928-2021-V1.3-1.pdf

Boston Bogleheads: https://www.bogleheads.org/blog/portfolio/boston-bogleheads/

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 4-Fund of Life portfolio?

•  Is it too late to reduce your equity exposure if you can’t sleep at night?

•  How accurate and meaningful are the Sound Investing charts showing returns that go back to 1928?

Mark Your Calendar: Paul invites listeners to a Zoom presentation on Saturday, Sept. 17, 2022 at Noon (ET), sponsored by The Boston Bogleheads Chapter.  It’s free and open to the public. As The Merriman Financial Education Foundation is in its 10th year of educating investors, Paul will focus most of the presentation on the "10 most important new lessons of the past 10 years."

Here is the Zoom link for this presentation:

https://us06web.zoom.us/j/89860498182?pwd=OVFZeWtKNGh2bTVGQUtzeUlPMGlOUT09

Meeting ID: 898 6049 8182
Passcode: 311045

You Can Support Financial Education! 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 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!

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!
 0:61 - Small Cap Value
 20:44 - Other consistent funds

22:59 - Equity portfolio

27:00- Deciding/4 fund strategy

30:13 - Links below/Quilt chart

45:19 - Stock vs Bond allocation/Market Timing

49:37 - Investing strategies/risk

50:50 - Retirement withdrawal strategy

53:14 - Challenge

55:23 - Glide Path

58:18 - Market Timer's strategy with the current market

1:00:59 - AVUV over VBR

1:08:10 - Measuring value

1:10:46 - Paul's Bond Portfolio

1:12:35 - REIT's

1:13:55 - Tired

1:15:21 - What's next for Paul

1:18:33 - Bogelheads conference

1:19:51 - Links below/Financial Freedom

Recorded with a live Zoom audience, they also fielded questions.

Some comments on Rob’s video page include:

“My two favorite financial experts alive today discussing personal finance together. Perfect! Thank you both for your time, talent and wisdom.”

“Rob, for the recent interviews you have done, this is my favorite! Paul is so passionate about his beliefs. I have been listening to Paul's podcast over the last 18 months. He has convinced me of the long term power of tilting your equity portfolio towards small cap value. I added the 10% tilt at the beginning of 2022.”

“Great down to earth, easily explained info I can put to good use. Best guest to date!”

Links to help investors:

This link gives the case for the 10 U.S. and international equity asset classes: https://paulmerriman.com/ultimate-buy-and-hold-strategy/

This link shows 9 different ways to combine the 10 equity asset classes and the 52 year returns for each.
https://paulmerriman.com/wp-content/uploads/2022/06/Sound-Investing-Portfolios.pdf

This link provides data combining each of the 9 equity portfolios along with different percentages of fixed income:
https://paulmerriman.com/fine-tuning-your-asset-allocation/

This link shows the impact of using the 9 portfolios and all the combinations of fixed income assuming an initial annual investment of $1,000 with a 3% annual increase on investment:
https://paulmerriman.com/2021-fixed-contributions/

This link shows the impact of using the 9 different equity/fixed income as a source of fixed retirement distributions. Each years distribution is adjusted for inflation. Beginning distributions range from 3 to 6 percent:
https://paulmerriman.com/2021-fixed-distributions/

This link shows the impact of annual distributions based on a percentage of assets, without inflation adjustment. Distributions range from 3 to 6 percent:
https://paulmerriman.com/flexible-distributions-2021/

This link compares the annual to 20 year returns of 4 major U.S. asset classes:
https://paulmerriman.com/90-years-of-evidence-shows-investor-patience-leads-to-better-returns/

This links to the Merriman Lifetime Investment Calculator. The calculator can be used for investors in both the accumulation and distribution periods of their investment life:
https://paulmerriman.com/lifetime-investment-calculator/

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

· And other major decisions and topics, like: When to take Social Security? How much and when to spend savings? Spending taxable vs tax deferred vs. tax free? When to pass risk to others? When to get professional help? Elder abuse, and more.

This presentation was part of Financial Literacy Month 2022, co-sponsored by the Bainbridge Community Foundation and The Merriman Financial Education Foundation.

Links:
Slides show: https://paulmerriman.com/wp-content/uploads/2022/08/Bainbridge-Island-Final.pdf
Bainbridge Community Foundation: https://bainbridgecf.org/
Paul’s Website: https://paulmerriman.com/
Paul’s YouTube Channel: https://www.youtube.com/c/PaulMerrimanSoundInvesting/videos

Get your free copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement:

In 2020, Paul’s presentation, “My Favorite 12 Vanguard Funds for Retirees,” became one of the most-watched on his YouTube channel. https://www.youtube.com/watch?v=L1ltcfD9CpE&t=42s

You Can Support Financial Education!
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.

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.

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.

Thank you!

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., Ultimate Buy and Hold, Worldwide 4-Fund, All-Value, etc.), account tax status, fixed income percentage, and fund family (e.g., Best-in-Class ETFs, Vanguard Mutual Funds, etc.).  Once selected, the configurator shows the required percentage investments in particular funds and several characteristics of the resulting portfolio, such as expense ratio and geographic distribution.

Chris suggests this “configurator” could replace the older Custom ETF Calculator (not to be confused with our Lifetime Investment Calculator) and several of our pre-calculated mutual fund and ETF portfolios.  He also asks for feedback at info@paulmerriman.com.

Together, they answer several listener questions:

• Does active management ever make sense? Or are ALL people better off with an index fund-based strategy?

• Is the 2 Fund Portfolio (half each S&P 500 and small cap value) really as good as the 10 fund Ultimate Buy and Hold Portfolio?

• What advice do you have for a 73-year-old investor who is about to fire their advisor and become a do-it-yourself investor?

• Do you suggest reinvesting dividends from your ETFs or do you save them to reinvest in other ETFs?

• I am investing money for my mother in several ETFs.  What time of day do you suggest making the investment?

Here are the links mentioned in the podcast.

Portfolio Configurator Preview: https://bit.ly/3QL77tQ

Long-Term Bond Returns Study:
https://globalfinancialdata.com/four-centuries-of-stocks-and-bonds-in-retrospect

The Merriman Financial Education Lifetime Investment Calculator: https://paulmerriman.com/lifetime-investment-calculator/

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 was recorded at the “Retiremeet 2022” conference, sponsored annually by our friends at Vestory and billed as “The Northwest’s Premier Retirement Event.”

Click here for handout: https://7112649.fs1.hubspotusercontent-na1.net/hubfs/7112649/HAND OUT Paul Merriman Retiremeet-2022-Final.pdf

Click here for the slide show: https://7112649.fs1.hubspotusercontent-na1.net/hubfs/7112649/PRESENTATION RETIREMEET PAUL MERRIMAN.pdf

Learn more about to the event:

https://www.youtube.com/watch?v=as9D8TDZ0xI

View all the event presentations:
https://retiremeet.com/presentations

To benefit from Vestory’s investment knowledge, sign up for their podcast at talkingrealmoney.com and their free monthly newsletter at realinvestingjournal.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 Retirement and2 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!

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 Two Funds for Life strategies during accumulation and retirement stages
• Addresses criticisms of target date funds
• Explains why this two-fund strategy is well justified by deep historical analysis
• Why it can be ideal for those looking for a simple but effective lifetime investment strategy

From Katie’s Notes: The best part about living in 2022 is the fact that you don’t have to know anythingabout investing to be a successful investor thanks to products like Betterment (and financial technology more broadly).

But what if you dowant to manage your own investments? Then what?

Before I learned about Paul Merriman and Chris Pedersen’s Two Funds for Life strategy, I never really knew what to tell people aside from do your research and best of luck to you, madam.

So this week, I’m joined by Chris (who created the Two Funds for Life model) to talk about an amazing 80/20 solution for getting proper, low-cost diversification with only two funds (hence the name). Not only that, but the “rebalancing” is more or less taken care of for you.

Chris’ Book, Two Funds For Life, provides a deep dive into the subject and is available at Amazon (https://amzn.to/3BxTFoM) and other online booksellers.

For a simple explanation of the Two Funds for Life strategy, read We’re Talking Millions—12 Simple Ways to Supercharge Your Retirement. Available at Amazon, Audible, and as a free download on our website. Your purchase helps support our Foundation’s financial education outreach.

Amazon print book:https://amzn.to/2KH36Kr
Audible:https://www.audible.com/pd/Were-Talking-Millions-Audiobook/B094QSQ4QF?asin=B094QSQ4QF
Free PDF AND/OR AUDIO BOOK:https://paulmerriman.com/signup/

Find out more about The Merriman Financial Education Foundation at:
https://paulmerriman.com/the-merriman-financial-education-foundation/

Katie Gatti presents a weekly newsletter and blog on personal finance. Visit her site: https://moneywithkatie.com/. In January 2022, her blog and podcast brand, “Money with Katie,” was acquired by Business Insider's Morning Brew, https://www.morningbrew.com/contributor/moneywithkatie

Read “Two Funds are better than one” by Katie Gatti at:
https://www.morningbrew.com/money-scoop/stories/2022/04/19/two-funds-are-better-than-one

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 recommendations from Vanguard, Warren Buffett, Ray Dalio, Betterment, and a host of others. The list is now over 200.

In this presentation, Paul compares the range of returns from many of the portfolios, plus his own recommended portfolios (https://paulmerriman.com/portfolios/). The 52-year returns of the all-equity combinations ranged from less than 10% to over 14%. The study reviews the risks and returns of the portfolios.

Paul explores six different risk measurements that can help investors select the best portfolio for their needs. In this presentation you’ll learn:

· How to select the best equity asset classes to construct the best portfolio

· How to build a diversified portfolio of equity asset classes

· The best way to compare the long-term returns of your portfolio

For the PowerPoint accompanying this video/podcast, go to: https://paulmerriman.com/wp-content/uploads/2022/07/150-Portfolios-Better-Than-Yours-AAII.pdf

Learn more about the American Association of Individual Investors at www.aaii.com. AAII members: log into your online AAII Local Chapter Community at https://community.aaii.com. Click here for a direct link to the Los Angeles, CA online chapter community: https://community.aaii.com/communities/community-home?CommunityKey=2a40c785-42cd-4ce3-8c3f-458a13346a5f

In this engaging interview, Paul talks with Stan The Annuity Man on his “Fun with Annuities” podcast. (https://www.stantheannuityman.com/). They discuss:

Key Takeaways:

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 months of 2022?

•  If small and value outperformed large and growth, why did the Total Market Index underperformed the S&P 500 by more than 1%?

•  Are the higher costs of the Avantis Funds likely to pay a higher premium than lower cost Vanguard funds?

•  A first time investor, who has invested in Avantis Small Cap Value ETF “for life,” wants to know, “Can I plan on leaving it in this fund forever?”

•  Jeff, a follower of our Foundation’s work, thanks us for our educational material but states that “the past results you spend so much time reviewing” have nothing to do with how he invests. Paul addresses who he thinks is actually keeping Jeff committed to his asset allocation.

•  Is it better to own mid-cap funds instead of a combination of small- and large-cap funds?  Paul and Chris each share their beliefs in response to this common question.

Much of this podcast/video is focused on a discussion of DFA and Avantis ETFs. Using both Portfolio Visualizer and Morningstar websites, Chris explains the major factor differences. (Podcast listeners: This section is more meaningful if viewed on theYoutube video).

Chris recommends Rob Burger’s video discussion of Avantis Small-Cap Value.  https://www.youtube.com/watch?v=MdShSQcScsk

Rob Berger, lawyer, investor, podcaster, blogger and author of Retire Before Mom & Dad, is one of our Truth Tellers and we will be writing about him in the coming months. Since 2007, Rob has run the financial blog doughroller.net and contributed to Forbes, US News, AOL, and Business Insider and been featured in HuffPost.

For more on Chris’ research results for the first 6 months of 2022, seeThe Worst Bear Market Ever

Sound Investing Portfolios Chart

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 well as the returns of the Best-In-Class (BIC) returns for all of the major asset classes. The good news is in both the equity and bond markets, the BIC performed better than the averages. The bad news is they were still losses. Paul compares the difference in returns for the average fund in each asset class, each asset class index, and the return of the Best-In-Class ETF recommendations by Chris Pedersen, as well as the BIC ETF recommendations with similar Vanguard ETFs. Bond funds are another area of concern for investors this year and Paul also compares the BIC bond fund returns individually as well as a portfolio, and the returns for the S&P 500 and Total Market Index.

See Fine Tuning Tables: https://paulmerriman.com/wp-content/uploads/2022/02/Fine-Tuning-Tables-50-50-2022-1.pdf

See Sound Investing Tables: https://paulmerriman.com/wp-content/uploads/2022/06/Sound-Investing-Portfolios.pdf

See Best-In-Class ETF Recommendations: https://paulmerriman.com/best-in-class-etf-recommendations/

Read article: "The Worst 6 Months Ever For Financial Markets" by Ben Carlson: https://awealthofcommonsense.com/2022/07/the-worst-6-months-ever-for-financial-markets/

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:

Paul mentions the list of Washington State hourly advisors-

Lisa Weil lisa@claritynorthwest.com Tom Nowak info@quantumfinancialplanning.com  Tim Massie tim@timepiecefp.com Katy Cook katy@abacusfinplan.com Trish Howe trish@howefinancialadvisory.com

Get your free copy of We’re Talking Millionsat: https://paulmerriman.com/signup

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 of Analytics for The Merriman Financial Education Foundation.

See the Tables here: https://paulmerriman.com/wp-content/uploads/2022/06/Sound-Investing-Portfolio-Quilt-Chart-1928-2021-V1.3-1.pdf

They provide the picture of five different portfolios over their history from 1928 to 2021: 1. All S&P 500; 2. All Small Cap Value (USSV); 3. All Value (USAV) half Large Cap Value and half Small Cap Value; 4. 4-Fund (US4F) with 25% of each of four major asset classes; 5. 2-Fund strategy (US2F) with half USSV and half S&P 500.

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 tables provided at his Foundation’s website (https://paulmerriman.com). He also shares information that relates to JL Collins' view of the future and how his view differs, as is meaningfully illustrated in the accumulation tables for the same portfolios.

See link to the Fine Tuning Your Asset Allocation table for the S&P 500: https://paulmerriman.com/wp-content/uploads/2022/02/Fine-Tuning-Tables-50-50-2022-1.pdf and https://paulmerriman.com/wp-content/uploads/2022/05/12-Fine-Tuning-Tables-70-30-2022.pdf

See link to U.S. 4-Fund table:  https://paulmerriman.com/wp-content/uploads/2022/03/2-4-Fund-Equity-Returns-1928-2021-C.pdf

Get your free copy of We’re Talking Millionsat: https://paulmerriman.com/signup