Sound Investing
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The move from the accumulation to distribution period of an investors lifetime includes some very important decisions. __ __ In this podcast Paul uses 11 tables to address the questions above. It is recommended the viewer print out the PDF of the tables https://irp.cdn-website.com/6b78c197/files/uploaded/Fixed%20Distributions%202024%20update.pdf to make it easier to follow the numbers. Many may find it is easier to follow the information on Paul’s video https://www.youtube.com/watch?v=rSiMlL4k9Tk 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 https://www.paulmerriman.com/stocks-vs-bonds-the-10-million-decision #2 The Ultimate Buy and Hold Portfolio 2024 Update https://www.paulmerriman.com/the-ultimate-buy-and-hold-portfolio-2024-update #3 Sound Investing Portfolios: 2024 Update https://www.paulmerriman.com/sound-investing-portfolios-2024-update #4 Fine Tuning Asset Allocation 2024 Update https://www.paulmerriman.com/fine-tuning-asset-allocation-2024-update In his presentation Paul references Tables J1a https://irp.cdn-website.com/6b78c197/files/uploaded/J1a.pdf, A1a https://irp.cdn-website.com/6b78c197/files/uploaded/(A1a)-UBH%20Tables%20(50-50)%20-%202023%20Returns.pdf, H2a https://irp.cdn-website.com/6b78c197/files/uploaded/H2a-soundinvesting.pdf, B1 https://irp.cdn-website.com/6b78c197/files/uploaded/FineTuningTableB1.pdf, B9 https://irp.cdn-website.com/6b78c197/files/uploaded/FineTuningTableB9.pdf, C1 https://irp.cdn-website.com/6b78c197/files/uploaded/c1-2024.pdf and C9 https://irp.cdn-website.com/6b78c197/files/uploaded/c9-2024.pdf. 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 https://irp.cdn-website.com/6b78c197/files/uploaded/(C)%20Fixed%20Contribution%20Tables%20(50-50)%20-%202023%20Returns.pdf.
In the previous three podcasts we have addressed the long term decision between investing in stocks vs. bonds https://www.paulmerriman.com/stocks-vs-bonds-the-10-million-decision#gsc.tab=0, what equity asset classes you might use in building your equity portfolio https://www.paulmerriman.com/the-ultimate-buy-and-hold-portfolio-2024-update#gsc.tab=0 and how to combine the different equity asset classes to build the best portfolio https://www.paulmerriman.com/sound-investing-portfolios-2024-update#gsc.tab=0 for your different investments. The purpose of each of the Boot Camp Series https://www.paulmerriman.com/bootcamp#gsc.tab=0 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 https://irp.cdn-website.com/6b78c197/files/uploaded/(B)%20Fine%20Tuning%20Tables%20(50-50)%20-%202023%20Returns.pdf. 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 https://irp.cdn-website.com/6b78c197/files/uploaded/FineTuningTableB1.pdf) and the U.S. 2-Fund (50/50 S&P and Small Cap Value) (Table B9 https://irp.cdn-website.com/6b78c197/files/uploaded/FineTuningTableB9.pdf). Each of these tables represents the annual returns of 11 combinations of equities and bonds. The goal is for investors to find the combination of equities and bonds for their risk limits and and return expectations. Paul will be monitoring the YouTube video https://youtu.be/WVT6HRr1gJYand will respond to questions there. DISCLOSURES Data Disclosure Notice - Funds (1970-Present https://irp.cdn-website.com/6b78c197/files/uploaded/Data%20Disclosure%20Notice%20-%20Funds%20(1970-Present).pdf) https://irp.cdn-website.com/6b78c197/files/uploaded/Data%20Disclosure%20Notice%20-%20Funds%20(1970-Present).pdf Data Disclosure Notice - Indexes (1928-Present) https://irp.cdn-website.com/6b78c197/files/uploaded/Data%20Disclosure%20Notice%20-%20Indexes%20(1928-Present).pdf
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 https://irp.cdn-website.com/6b78c197/files/uploaded/H2a-soundinvesting.pdf 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 https://irp.cdn-website.com/6b78c197/files/uploaded/h3a-soundinvesting.pdflists 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 https://www.paulmerriman.com/stocks-vs-bonds-the-10-million-decision#gsc.tab=0 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 https://irp.cdn-website.com/6b78c197/files/uploaded/(A1a)-UBH%20Tables%20(50-50)%20-%202023%20Returns.pdf and A2a https://irp.cdn-website.com/6b78c197/files/uploaded/(A2a)%20UBH%20Tables%20(50-50)%20-%202023%20Returns.pdf. A1a https://irp.cdn-website.com/6b78c197/files/uploaded/(A1a)-UBH%20Tables%20(50-50)%20-%202023%20Returns.pdf 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 https://irp.cdn-website.com/6b78c197/files/uploaded/(A2a)%20UBH%20Tables%20(50-50)%20-%202023%20Returns.pdf 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 https://www.paulmerriman.com/bootcamp and Best advice https://www.paulmerriman.com/best-advice#gsc.tab=0. 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 https://irp.cdn-website.com/6b78c197/files/uploaded/J1a.pdf and J2a https://irp.cdn-website.com/6b78c197/files/uploaded/j2a.pdf 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 https://irp.cdn-website.com/6b78c197/files/uploaded/Were-Talking-Millions.pdf.
Join Paul and Chris for this podcast/video https://youtu.be/YZPgNq-TZv0 they recorded. During the conversation Paul mentions Chris’ free copy of “2 Funds for Life https://irp.cdn-website.com/6b78c197/files/uploaded/2-Funds-for-Life-Final.pdf” and a fascinating interview with Professor Scott Cederburg on Rational Reminder https://rationalreminder.ca/podcast/284. Cederburg is an advocate for a lifetime portfolio of all equities. The following are the topics and questions they discussed: __ __
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).” https://investorship.com/wp-content/uploads/2023/10/SYWTW.pdf
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 https://irp.cdn-website.com/6b78c197/files/uploaded/Table1.pdf and Table 2 https://irp.cdn-website.com/6b78c197/files/uploaded/Table%202.pdf. D1.3 https://irp.cdn-website.com/6b78c197/files/uploaded/D1.3.pdf D1.4 https://irp.cdn-website.com/6b78c197/files/uploaded/D1.4%20Fixed%20Distributions.pdf Paul reminds listeners to forward copies of our 3 free books https://www.paulmerriman.com/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 https://lookerstudio.google.com/u/0/reporting/a941a5d4-0929-45ea-b22e-3bb82dc334ff/page/p_4gwmgvmhdd?s=hqmha3-AK5k, which adds the 2 Funds for Life portfolios. Now, investors can see how the equity portion of Sound Investing Portfolios https://www.paulmerriman.com/portfolios, like the Ultimate Buy and Hold https://www.paulmerriman.com/ultimate-buy-and-hold-strategy or Four Fund Combos https://www.paulmerriman.com/4-fund-combo, 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 https://soundinvesting.com/2023/04/7-Sound-Investing-Portfolios-50-50-2023.pdf, 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. https://lookerstudio.google.com/u/0/reporting/a941a5d4-0929-45ea-b22e-3bb82dc334ff/page/p_4gwmgvmhdd?s=hqmha3-AK5k Chris, Daryl and Paul also comment on the new documentary, “Turn Off the Noise.” https://film.dimensional.com/podcast/login?redirect=%2FpodcastThis documentary https://www.youtube.com/watch?v=D0l-yIdkZ7Q 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. https://film.dimensional.com/podcast/login?redirect=%2Fpodcast” 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 https://film.dimensional.com/podcast/login?redirect=%2Fpodcast. 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 https://www.youtube.com/watch?v=D0l-yIdkZ7Q, 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 https://rationalreminder.ca/podcast/285/video https://www.youtube.com/watch?v=FG889fVNXvE. In Paul’s review of 2023 returns he compares Chris’ Best In Class ETF recommendations https://www.paulmerriman.com/best-in-class-etf-recommendations#gsc.tab=0 with similar Vanguard ETFs https://www.paulmerriman.com/best-in-class-etf-portfolios#gsc.tab=0 and the average return in each equity asset class. He also gives returns for the most popular portfolios including, Ultimate Buy and Hold https://www.paulmerriman.com/ultimate-buy-and-hold-strategy#gsc.tab=0, 2 Fund U.S https://www.paulmerriman.com/2-funds-for-life-update-2023#gsc.tab=0., 4 Fund U.S. and 4 Fund WW. https://www.paulmerriman.com/4-fund-combo#gsc.tab=0 Using an article from Ben Carlson https://awealthofcommonsense.com/2023/12/what-happens-after-a-20-up-year-in-the-stock-market/ 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 https://irp.cdn-website.com/6b78c197/files/uploaded/D1.4%20Fixed%20Distributions.pdf and D9.4 Fixed Distributions U.S. 4 Fund https://irp.cdn-website.com/6b78c197/files/uploaded/D9.4%20Fixed%20Distributions%20U.S.%204%20Fund.pdf 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 https://soundinvesting.com/wp-content/uploads/2022/12/Fund-for-a-Grandchild-Slides.pdf that includes the tables mentioned in the article. He also recommends he review these tables https://irp.cdn-website.com/6b78c197/files/uploaded/CNBC%20(20230621)%20-%20Consolidated.pdf 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 https://irp.cdn-website.com/6b78c197/dms3rep/multi/2FFL-FTT.png 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 https://www.paulmerriman.com/historical-risk-and-return-tables compare the historical risk and return of the S&P 500 https://irp.cdn-website.com/6b78c197/files/uploaded/Index%20Portfolio%20-%20S-P%20500%20-%20Historical%20Risk%20-%20Return%20(final%20231206)-3db9b08c.pdf, Small Cap Value https://irp.cdn-website.com/6b78c197/files/uploaded/Index%20Portfolio%20-%20US%20SCV%20-%20Historical%20Risk%20-%20Return%20(final%20231206).pdf, a 2 fund portfolio https://irp.cdn-website.com/6b78c197/files/uploaded/Index%20Portfolio%20-%20US%202-Fund%20-%20Historical%20Risk%20-%20Return%20(final%20231206).pdf that’s 50/50 S&P and SCV and 4 fund portfolio https://irp.cdn-website.com/6b78c197/files/uploaded/Index%20Portfolio%20-%20US%204-Fund%20-%20Historical%20Risk%20-%20Return%20(final%20231206).pdf 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 https://www.slowbrewfinance.com/ is a great example. It is available both as an audio and video https://www.youtube.com/watch?v=4-XJ1hmgWjU 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. https://irp.cdn-website.com/6b78c197/files/uploaded/Historical%20Returns.pdf 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 https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqbHlpdmdOZ1lWQmMxTVp1UEl1YzVEV1YtYVB5QXxBQ3Jtc0trZnF0dUZaR05kOUpWNmRWNXdFbEVTTmUzS0lzMHJLc1VnTnAyekUxSkRPTzZINkJwcjhvMFJLNmMzcGdYSUs4NmNCdXVmUUd1NEYzQmdiVlgzWmFOTHIwV0syblU4R2xMMHJGLU1MajctWGljQno3aw&q=https%3A%2F%2Fslowbrewfinance.com%2Fsubscribe&v=4-XJ1hmgWjU The topics in this interview include: 00:00 https://www.youtube.com/watch?v=4-XJ1hmgWjU&t=0s - Intro 03:04 https://www.youtube.com/watch?v=4-XJ1hmgWjU&t=184s - Your Own Small Value Portfolio 07:23 https://www.youtube.com/watch?v=4-XJ1hmgWjU&t=443s - Value and Quality 10:12 https://www.youtube.com/watch?v=4-XJ1hmgWjU&t=612s - What if Value Doesn't Work Anymore? 14:47 https://www.youtube.com/watch?v=4-XJ1hmgWjU&t=887s - International Diversification 19:51 https://www.youtube.com/watch?v=4-XJ1hmgWjU&t=1191s - Momentum 23:14 https://www.youtube.com/watch?v=4-XJ1hmgWjU&t=1394s - Size 27:55 https://www.youtube.com/watch?v=4-XJ1hmgWjU&t=1675s - Market Timing via Trend Following 39:13 https://www.youtube.com/watch?v=4-XJ1hmgWjU&t=2353s - The Key to Becoming a Good Investor 46:42 https://www.youtube.com/watch?v=4-XJ1hmgWjU&t=2802s - Investor Psychology 55:59 https://www.youtube.com/watch?v=4-XJ1hmgWjU&t=3359s - 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 https://www.thepersonalfinancepodcast.com/simple-financial-steps-with-massive-payoffs-with-paul-merriman/.” 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 https://awealthofcommonsense.com/2023/11/how-your-market-shapes-your-portfolio/. 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 https://irp.cdn-website.com/6b78c197/files/uploaded/9%20Lessons%20over%209%20Decades%20-%20Return%20Data%20Quilt%20Chart%20(EXCLUDING%20Exp%20Ratio).pdf, 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/ 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 https://www.youtube.com/watch?v=CkasQp3TeXM In a recent video answering a caller's question, Dave Ramsey described those promoting the 4% Rule as "stupid," "goobers," and "morons. He described the 4% Rule as stupid and said he's "perfectly comfortable" with an 8% withdrawal rate. In this video, I'll describe his rationale and why I'm "perfectly comfortable" telling him he's wrong. New Retirement https://www.newretirement.com/?_ef_transaction_id=558ea5633e634d5da2d00ac6b2792f6e&nr_a=20&utm_source=20FICalc https://ficalc.app/Dave Ramsey Video https://twitter.com/mbontrager5/status/1722478848573329702?fbclid=IwAR1WVMNqltqzGsjxGg-OawXkYFOgwHBpmc49rZctlxna25tysMqYJBPU1vE Here is the latest from Morningstar on withdrawal rates https://www.morningstar.com/lp/the-state-of-retirement-income?utm_medium=referral&utm_campaign=linkshare&utm_source=link And another good article from Amy Arnott from Morningstar https://www.morningstar.com/retirement/good-news-safe-withdrawal-rates 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 https://www.youtube.com/watch?v=-m8qq-yM9MM. 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 https://advisors.vanguard.com/content/dam/fas/pdfs/FAEXPCCA.pdf
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. __ 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 MeetingThe video can be watched here- https://www.youtube.com/watch?v=QjFlcDAlH1kPaul's section begins at 08:40. The following links are used in this presentation: Table B14B https://soundinvesting.com/wp-content/uploads/2023/10/B14b-table.pdf, ETF portfolios https://www.paulmerriman.com/best-in-class-etf-portfolios, and SPIVA Report https://www.spglobal.com/spdji/en/documents/spiva/spiva-us-mid-year-2023.pdf 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 https://myworstinvestmentever.com/ep734-paul-merriman-what-you-do-when-you-are-young-is-golden/ 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. https://soundinvesting.com/wp-content/uploads/2023/10/B14b-table.pdf 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 https://news.wwu.edu/with-36m-gift-wwu-establishes-the-merriman-financial-literacy-program?fbclid=IwAR1MhfR50csA1JHQ3iJVHdf3GcacIYWHv38aT9bCGRs5AdpzFUc2ALhAvrE 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 https://www.youtube.com/watch?v=2MVSsVi1_e4&t=1s.
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 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 https://us02web.zoom.us/webinar/register/WN_EHG4t7IeSiCGs8DfcAYxLQ#/registration. 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 https://paulmerriman.com/wp-content/uploads/2023/09/Quiltcharts.pdf that show individual asset class and portfolio annual returns.
Tom Cock and Don McDonald record a daily podcast Talking Real Money https://talkingrealmoney.com/ and a 2 hour radio show on KNWN https://nwnewsradio.com/northwest-newsradio-on-air-schedule/ (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: __ __ Working with Tom is always fun!
Watch the video here. https://youtu.be/M7GdcMebpyk 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 https://paulmerriman.com/wp-content/uploads/2023/09/3-Fund-Fine-Tuning-Table-28-22.pdf 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 https://paulmerriman.com/wp-content/uploads/2023/09/Asset-Class-Index-CAGR-Comparison-1927-2023-1.pdf
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 https://paulmerriman.com/2-funds-for-life/”. Not only will you learn about Chris’ book https://paulmerriman.com/signup/ 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 https://paulmerriman.com/signup/ 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 https://www.youtube.com/watch?v=GqstHzIb_TY. 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 https://www.youtube.com/watch?v=GqstHzIb_TYto friends and family that are looking for better ways to invest.
