The following are Dr. Pass’ note to his podcast:  "This week to conclude 2024 we speak with noted investment expert Mr. Paul Merriman to discuss a few topics related to personal finance and investing. First we tackle the notion of having 'enough' to retire. Is there a magic value and how would one think about this? Why is an S&P 500 Index or Total US Stock Market Index a fine 'core' investment and how might one possibly improve upon its performance? What are some of the psychological hurdles we have as investors and potential retirees? Mr. Merriman reviews these and other topics on our end of year episode.” Paul Merriman's Website Paul's "Quilt" Chart  Paul's "Bootcamp" page Last Year's episode of Pediheart was replayed on Mr. Merriman's site Paul's book "We're Talking Millions"

Dive into the compelling reasons to embrace index funds, from their diversification and lower costs to their tax efficiency. Explore the unpredictable world of active management versus the reliability of index funds, emphasizing the importance of steady performance. Discover how the S&P 500 can offer robust long-term returns, debunking myths about its risks compared to riskier options like cryptocurrencies. This engaging discussion serves as a perfect guide for anyone, especially young investors, looking to secure their financial future.

Paul, Daryl, and Chris discuss the risks of investing and life. Paul starts with an introduction and admission of his challenges managing risks related to diet and health.  He then gets Chris and Daryl to chime in with their definitions and perspectives on risk.  Daryl then shares a framework for evaluating risk from his days as a systems engineer.  The framework looks at risks in two dimensions: likelihood and impact (or severity).  He describes how the framework can help prioritize which risks to mitigate and gives examples of how some financial risks might be reduced in both dimensions.  Chris is reminded of the book "Die with Zero," and mentions how risks extend beyond finances to experiences. Paul, Chris, and Daryl then discuss some of their challenges in managing the risks of their own portfolio allocations and how their behaviors differ from what might be considered ideal. This leads to discussing the dangers of learning the wrong lessons with examples from inside and outside the personal finance world. Paul reads from the Jonathan Clements article that inspired this podcast: "The Risks We Miss."  Paul then closes out the podcast. Outtakes include Paul and Chris discussing how the Best-in-Class ETFs can help mitigate risk, and what Daryl wants for Christmas. Watch video here- https://youtu.be/veXXh-YVYKU

While I was at the Bogleheads conference in Minneapolis earlier this year, I had a lengthy interview with Paula Pant.  I enjoyed the interview and found lots of questions and comments under the YouTube presentation that I wanted to answer.  While I wrote short comments on the site, I decided many of the questions were worthy of more discussion.Here is a link to the YouTube interview and podcast: #1.  “Most of my holdings are in cash as I cashed out last time the market went down.  How do I stay invested and think long-term to help me ride out the ups and downs of the market?”  02:17 #2.  “I’m just beginning my investment journey and planning to put 85K into dividend stocks so that I will be making up to 30% per year in dividend returns.”   https://rethinking65.com/the-preference-for-dividend-paying-stocks-is-irrational/ 10:41  #3. "What Fidelity Funds do you recommend to build your 4 Fund Portfolio?"   15:00 #4.  "How often do you recommend rebalancing the 4 Fund Portfolio?" 17:02 #5  "Nobody knows what’s going to happen next so we should practice some humility and CHOOSE a strategy with a long-term edge."  What is the edge and what else do you need to know dividend stocks k? 21:02 #6.  "I”m not looking to beat the S&P 500…I’m more than happy with the returns I get from it.”  Does that mean it’s right for you? 24:36 #7.  In response to Paul's recommendation of the 4 Fund Portfolio this is what one viewer said, “For what it's worth, backtesting shows his proposed fund portfolio does not do better than VTI or VOO.”  Paul responds. 28:32 #8.  "The only small cap value available in my 401k is DFSVX which has an expense ratio of .30%.  Is this expense ratio too high? 32:32 #9. "Can you give ETF recommendations for all of the equity asset classes?"   Here are the Best In Class recommendations. 35:23 #10. "How do you fund a Roth IRA when a child doesn’t have earned income?" #11.  Please recommend more information on how I might adjust my 401k. We're talking millions and 2 funds for life. 36:37 #11 "Would you accomplish similar performance results by setting up a strategy using sector diversification instead of asset class diversification?" 40:01 #12  "I’m helping my 17 year old daughter with her Roth IRA.  What do you think about shooting for an all equity 40/30/30 portfolio of US small cap value/S&P 500/Total International market?” 42:23 #13. “This guy has been pushing small cap value  and underperforming for years.  Sorry, no thanks." 44:25

The podcast is dedicated to answering questions about:  Target date funds:  “Do you think someone that simply maxes out their retirement accounts with target date funds and total market funds will be “fine”? Selecting a distribution strategy:  What advice can you give to a DIY investor who is trying to decide what to do about how they access their money to live on and how much to take out? Buy and Hold vs. market timing:  I believe in buy and holding  index funds, with low expenses. I don’t think I need to pay an investment advisor to help me do that.  I see the Merriman Wealth Management firm offers buy and hold and market timing services and charges AUM fees.  This is very different from what you suggest on your Foundation website.  What is your relationship with the Merriman firm and what are your beliefs about market timing? All small cap value portfolio:  Do you know investors who are investing 100% of their portfolios in small cap value?  It seems like it might be a smart thing to do with very long term investments for a very young person. Time to start market timing:   I am thinking about using timing with a large amount of new money.  Who do you use for the market timing aspect of your portfolio management?   Flexible vs. fixed distribution strategies:  "I believe you expect that a flexible withdrawal strategy will pay out more money to live on, as well as leave more money to heirs.  Bill Bengen seems to believe that this strategy is not sustainable over the long term even if a person had enough money to accept lower annual withdrawal amounts in market draw downs.  Flexible withdrawal strategies make sense to me but there isn’t much writt en about them.  What am I missing?” The answer to this question includes 4 distribution tables:   Table D1.4 - Fixed Distributions: S&P 500 Equity Portfolio - Conservative ($40,000/yr) Table F1.4 - Flexible Distributions (Conservative-4.0%/yr): S&P 500 Equity Portfolio Table D4.4 - Fixed Distributions (Conservative-$40,000/yr): US 4-Fund Equity Portfolio  Table F4.4 - Flexible Distributions (Conservative-4.0%/yr): US 4-Fund Equity Portfolio  Finally Paul reads four Ben Carlson quotes about the nature of bull and bear markets.  Paul makes reference to a table of annual Price to Earning (P/E)ratios starting in 1871 and another comparing the S&P 500 Price to Book Value from 2000 to 2024.  

Thanksgiving gratitude sets the tone, as personal connections and community support are celebrated. An intriguing discussion emerges around the perception of value in financial markets, highlighted by an outrageous $5.2 million banana art piece. Goal setting takes center stage, showcasing its transformative impact on financial planning, motivating personal strategies tailored to individual values and circumstances. The episode also delves into the intricate balance of risk and return in investments, emphasizing the vital role of financial planners in navigating these challenges.

Brian Barnes, Founder and CEO of M1 Finance, shares insights on revolutionizing portfolio management. He discusses the genesis of M1 and its appeal to buy-and-hold investors, emphasizing tax-efficient strategies and automation. The conversation highlights the advantages of M1's target-date pies over traditional funds, revealing surprising benefits like tax efficiency. Brian also touches on the importance of long-term investing, regulatory safeguards, and the entrepreneurial journey in fintech, offering a holistic view on modern investing.

Chris Pedersen, Director of Research at Sound Investing and a retired engineer, dives deep into the impressive performance of the AVUV fund compared to Vanguard small-cap value options. He explains AVUV's systematic investment approach and introduces the 'rich minus weak' ratio. The discussion also tackles the future potential of AVUV and its active management style. Additionally, Chris addresses key differences between investment strategies like VTI and AVUS, suggesting AVUS could yield higher returns. Tune in for valuable insights on small-cap strategies and market dynamics!

On November 16, 2024 Paul will speak to the L.A. Chapter of AAII via a Zoom presentation.  Here is the link:   2 Funds to Own Forever, and How to Invest in Small CapsIn this podcast Paul addresses 4 major considerations when selecting a small cap value ETF.  His discussion compares the returns, along with 4 major factors, for AVUV, VBR, VB,, VIOV, DFSVX and DFSV.Is gold worthy of a place in our portfolios?  Probably not but Paul talks about his gold position and why bonds are likely a lot better.He also discusses the important decision to choose buy and hold over market timing.  He references the following article from Truth Teller Ben Carlson: Don’t Take Financial Advice From Hedge Fund Managers

Watch the video here.Paul Merriman, a former wealth manager turned financial educator, joins us to share investing wisdom that could reshape how you think about your money.We kick things off talking about portfolio diversification. Paul suggests a simple four-fund strategy that includes large cap, small cap, and value stocks. He says this mix has historically beaten the S&P 500 with lower risk.We then dive into international investing. Paul explains that while adding international stocks doesn't necessarily boost returns, it can help smooth out the ride. He keeps half his equity portfolio in international stocks, even at age 81.Got kids? Paul's got some advice for you too. He tells us about putting money aside for his new granddaughter, aiming to fund her Roth IRA as soon as she can earn income. He breaks down how investing just a dollar a day from birth to age 21 could turn into millions by retirement age. It's a powerful lesson in starting early and the magic of compound interest.We also chat about some common investing mistakes. Paul stresses that young investors often underestimate the power of stocks over bonds for long-term growth. He shares some eye-opening numbers: $100 invested in bonds since 1928 would have grown to about $12,000, while the same amount in small cap value stocks would be worth nearly $15 million.Paul wants you to think of investing as a partnership with businesses. When you buy a mutual fund, you're becoming a senior partner in thousands of companies. At first, your contributions drive most of the growth. But over time, market returns take over, and you become the junior partner to a much larger fortune.We wrap up with Paul sharing his excitement about a 40-hour financial education program he helped create at Western Washington University. It's designed to teach students essential money skills throughout their college years, from budgeting as freshmen to understanding 401(k)s as seniors.Throughout our chat, Paul's message is clear: start early, stay diversified, and think long-term. He believes that with the right education and mindset, anyone can build a solid financial future.4 Fund Combo GuideTable NumbersQuilt ChartsHistorical Risk and Return TablesPortfolio ConfiguratorTimestamps:Note: Timestamps will vary on individual listening devices based on dynamic advertising run times.0:00 Intro to Paul Merriman and podcast topic0:57 Two-fund portfolio strategy3:55 Four-fund portfolio strategy explained5:31 Large cap performance concerns7:06 S&P 500 vs Total Market Index10:59 AI impact on large companies14:43 Market trends and historical performance20:41 International equity in portfolios25:26 ETFs vs index funds29:41 Non-US investor asset allocation38:41 Setting up kids financially43:57 Early investing importance48:37 Common investor mistakes50:25 Investing as business partnership52:51 Evolving financial education landscapeFor more information visit the show notes- https://affordanything.com/550-paul-merriman-the-4-fund-strategy-that-beats-the-sp-500/