Sound Investing

Paul leads off with the news that Chris Pedersen's book 2 Funds for Life is now available as a free PDF to people who sign up for our free newsletter at https://paulmerriman.com/signup/. Watch the video here. Chris Pedersen joins Paul to discuss the 2023 update to his Best-in-Class ETF recommendations.  Chris explains the selection process and why the DFA International Value ETF (DFIV) is replacing the iShares EFV fund for the international large-cap blend asset class.  They cover the recommended portfolios, the philosophy they are built on, the asset classes they use, and the specific funds they recommend for each asset.  Chris and Paul then cover several questions that listeners may have about their next steps or alternatives not covered. Through the discussion, Chris refers to the following tools and website content that are now updated to reflect the new recommendations: The Best-in-Class ETF Recommendations page. The Best-in-Class ETF Portfolios. The Portfolio Configurator. The M1 Pies. The Merriman Aggressive Target-Date Glidepath calculator (copy to your Google Drive Account to edit it). The Sound Investing Portfolios Chart.

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 B14A to help make the determination.  https://paulmerriman.com/wp-content/uploads/2022/04/SCV-vs-SP500-Fine-Tuning-Table-2022-v0.2.pdf   This table is the most viewed of all Foundation tables over the last year. 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 listeners watch the video for accompanying slides.  You will learn: • Why you need true diversification • How to avoid decade-long S&P 500 market crashes • How to create & manage a long-term bond strategy • How to create retirement income without expensive and confusing annuities • The biggest risk to the investor Links: Table B1– Fine Tuning Table: S&P 500 Equity Portfolio- https://paulmerriman.com/wp-content/uploads/2022/02/Fine-Tuning-Tables-50-50-2022-1.pdf  Table D1.4 – Fixed Distributions: S&P 500 Equity Portfolio (Conservative) https://paulmerriman.com/wp-content/uploads/2022/12/d1.4.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 all tables here. Table B1 Fine Tuning Table for S&P 500 Table 14A Fine Tuning Table for S&P 500 and Small Cap Value Table H1  Sound Investing Portfolio results Table C1 Fixed Contribution Table for S&P 500 Portfolio Table C14 Fixed Contribution S&P+US SCV Equity Portfolio Table D1.4 - Fixed Distributions: S&P 500 Equity Portfolio ($40,000/year)  Table D14.4 - Fixed Distributions: S&P+US SCV Equity Portfolio  ($40,000/year)  Sound Investing Portfolios H1 Sound Investing Portfolio results Sound Investing U.S. Portfolio (1928-2021)-Ordinal Rank Summary Tell Tale Chart

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