Sound Investing

Many of the risks we face in retirement are relatively under our control, while others are not. In this presentation Christine Benz https://www.morningstar.com/authors/30/christine-benz— Morningstar’s Director of Personal Finance, author of 30-Minute Money  Solutions: A Step-by-Step Guide to Managing Your Finances  and co-host of “The Long View” podcast — on which Paul Merriman was recently interviewed by Christine and Jeff Ptak — showed pre-retirees and retirees how to manage your portfolio and financial plan to protect against six very serious risks.  Those risks include retirement date risk, sequence of return risk, low-yield risk, inflation risk, health care and long-term care risk and longevity risk.  She also shared her favorite in-retirement mutual funds and exchange-traded funds (ETFs), and discussed her model bucket portfolios geared toward retirees. You might also enjoy: An index of Christine’s articles at Morningstar “Morningstar’s Benz: My journey from copy editor to fund analyst”.  A great story about Christine’s career. I think parents who wonder what their child is going to do in the future will find interesting Christine’s growth that came when she took a job for reasons most of us wouldn’t have considered. You can also follow Christine on Twitter

The world of investing had a wild ride in 2020, and is continuing into 2021. In this presentation, Paul Merriman explores the history and nature of stock market bubbles, long bull markets and short bear markets, day trading, hedge funds and the uncertainty that can accompany market bubbles. Issues covered include the good, the bad and the ugly about Robinhood, 4 free lunches of investing, whether Bitcoin is the “new gold,” how to invest in a bubble and much more. Click here for the slideshow materials. This is the first in a 5-part series of Financial Literacy Month Events on Bainbridge Island co-sponsored by The Merriman Financial Education Foundation in partnership with the Bainbridge Community Foundation and Library U, a program of the Bainbridge Public Library. Calling upon some of his favorite nationally renowned experts in their fields, Paul organized five free virtual events in April 2021 to help you better plan for your future. Presenters include Paul, Christine Benz of Morningstar, Larry Swedroe, author and director of research for Buckingham Asset Management and BAM Advisor Services, and Tim Ranzetta of NextGen Personal Finance. This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation: 1)     Leave a podcast review on your player of choice. 2)    Sign up for our biweekly newsletter at PaulMerriman.com3)    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 fee at no cost to you, which helps support our financial education projects. 4)    Buy our latest book, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement available at Amazon and other online outlets. 5)  Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors.  Thank you!

Paul talks with Christine Benz and Jeff Ptak about his commitment to indexing, why he believes in small value stocks, the perils of performance-chasing, and more. They covered such topics as: Best ways to get young people to understand investment process How to get investment information to people who need it most Why Paul was attracted to index funds and DFA The future of the value premium The risk of value investors capitulating The pros and cons of 2 Funds for Life Why target date funds have more value The risk of bonds in a rising interest rate market Use of target date funds in retirement The value of an advisor Check out the extensive list of related articles and podcasts compiled by “The Long View” team at: https://www.morningstar.com/podcasts/the-long-view/103 Join Christine Benz Thursday April 8, 4:30-6 p.m. PT, via Zoom, for a special presentation, “Six Retirement Blind Spots and How to Fix Them”. RSVP by clicking here or email RSVP@bainbridgecf.org with “Christine Benz”. This free presentation, the second in the series of five, is part of the Financial Literacy Month series, “Taking Control of Your Financial Future,” co-sponsored by The Merriman Financial Education Foundation, the Bainbridge Community Foundation and Library U, a program of the Bainbridge Public Library. The series is free and open to the public. Registration required. For more info, go to: https://paulmerriman.com/financial-literacy-month-events-on-bainbridge-island/ Click here to hear Paul’s brief recording about Christine’s presentation.

This podcast is a must for anyone within 5 years of retirement as Paul discusses the annual update on the comparison of fixed and flexible distributions in retirement. The tables are intended help you determine how much you need to retire and how much you can take out without the risk of running out of money before running out of life. Paul illustrates key points using Tables 10, 45, 11, 46, 12, 47, 49a, 57a, 58a and 59a. You may also find these two articles useful: How much should you take out of your portfolio when you retire? (fixed distributions) How do you know how much you can afford to withdraw from your retirement accounts? (flexible distributions) This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation: 1)     Leave a podcast review on your player of choice. 2)    Sign up for our biweekly newsletter at PaulMerriman.com 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 fee at no cost to you, which helps support our financial education projects. 4)    Buy our latest book, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement available at Amazon and other online outlets. 5)  Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors.  Thank you!

How much money can you take from your investments in retirement?  Planning for this “distribution" involves the biggest series of investment decisions of your lifetime. How much do you need to accumulate in order to retire without fear of running out of money before you run out of life? How much can you take out?  How much should you have in equities and how much in bonds?  Do you need to own any equities in order for your money to last a lifetime?  How much can you take out to maximize your goals of enjoying retirement and helping others, while making sure you are not a financial burden to others? This focus of this podcast is on helping those who plan to retire with “enough” money to meet their basic needs, without goals of spending large amounts beyond the basics. These are often people who would like to retire  A.S.A. P.  (In the next podcast Paul addresses those who intentionally save more than “needed” so they can spend more in retirement.) Paul recommends you review several Fine Tuning Tables, including Table 3 using the S&P 500, Table 4a using the 10-fund Ultimate Buy & Hold Portfolio, 6a using the Worldwide 4-Fund Portfolio and Table 7a All-Worldwide-Value Portfolio. These combinations of asset classes form the basis of the Fixed Distribution Tables: Table 10 uses a 3% initial distribution with combination of the S&P 500/bonds, Table 11 uses a 4% initial distribution with the S&P 500/bonds, Table 12 uses a 5% initial distribution with the S&P 500/bonds and Table 13 uses a 6% initial distribution with the S&P 500/bonds. Table 15a uses a 4% initial distribution with the 10-fund Ultimate Buy and Hold Portfolio, Table 23a does the same using the Worldwide 4-Fund Portfolio and Table 27a does the same thing using a Worldwide All-Value Portfolio.

This podcast is one of the most important for young investors. Most young investors are going to build their wealth on their home and their investments in tax-free or tax-deferred IRAs, 401(k) or similar tax-sheltered growth. Both types of investments will grow with the use of monthly payments. This podcast will help you understand how the monthly dollar-cost-averaging process works. Many investors are afraid of taking risk. This discussion makes it very clear that majority of risks investors fear are, in fact, almost non-existent for most of the years they are building their retirement accounts. This podcast is built on the foundation of the three previous podcasts: 1. The selection of equity asset classes  2. The wide range of ways to combine those equity asset classes to build conservative to aggressive combinations, and 3. 51 years of return data for each of the strategies Several sample pages represent the path investors who follow our work will travel. During the introduction, Paul uses Table 3, of the Fine Tuning Table for the S&P 500. While Paul encourages investors to review all of the Fixed Contribution Tables for 50/50 and 70/30 U.S./international, he spends most of the podcast reviewing the lessons on the S&P 500 (Table 73), Ultimate Buy & Hold 50% U.S. and International Portfolio ( Table 74a), Worldwide 4-Fund 50% each U.S. and international, and the U.S. and International All Value Portfolio (Table 77a). For those considering the 10-fund Ultimate Buy & Hold, he suggests you look carefully at the strategies results as compared to the Worldwide 4-Fund strategy. They track closely for almost the entire period. For those interested in taking more risk, he suggests careful review of the All-Value portfolio. And for those who want to take even more risk with a part of their portfolio, the Small-Cap Value are worth exploring. In all cases, the tables are constructed so you can compare the most conservative to most aggressive combinations of equity and fixed income asset classes to decide what works best for you.

The two previous podcasts —  The Ultimate Buy and Hold Strategy 2021 and How to Simplify the Ultimate Buy and Hold for Higher Returns  — were dedicated to building the Ultimate Buy and Hold Strategy with the traditional 10 equity positions, as well as 2 additional similar portfolios with fewer funds. Plus there were value-only portfolios that produced considerable additional returns at higher risk. In this podcast, the focus is on comparing all of these portfolios in terms of returns, risk and impact of adding fixed income to the portfolio to reduce risk to tolerable levels for the individual investor. This is easily done with tables of each years return (1970-2020), as well as worst losses by the quarter, year, 3 years and 5 years. The challenge for the investor is to compare the results of the S&P 500 (the benchmark) with each of these portfolios. For young investors it is important to understand that every extra half percent return can add over a $1,000,000 to their retirement income and what is left to heirs. Paul hopes all investors will take time with the Fine Tuning Tables to gain a firm understanding of the relationship between long-term return and short-term risk, and make their investment decisions accordingly. Access all Fine Tuning 2021 Tables here. This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation: 1)     Leave a podcast review on your player of choice. 2)    Sign up for our biweekly newsletter at PaulMerriman.com 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 fee at no cost to you, which helps support our financial education projects. 4)    Buy our latest book, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement available at Amazon and other online outlets. 5)  Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors.  Thank you!

This is the second podcast in a series of what Paul Merriman thinks are "the most important investment information” the Merriman Financial Education Foundation updates annually. Paul starts with a quick review of the previous podcast, The Ultimate Buy and Hold Strategy Update 2021 regarding the 10 equity asset classes.  For those who did not hear the previous, it will help to download 2 tables: Table 1a, which reflects returns of a 50/50 split between U.S. and international equity asset classes and Table 1b, which reflects the returns of a 70/30 split between U.S. and international equity asset classes.  From these two tables investors can easily compare the impact of adding 9 different equity asset classes to the S&P 500. The following is the MarketWatch article that discusses these portfolios. Paul moves on to the same 50/50 and 70/30 balance of U.S. and international, except the number of holdings are fewer... and in some cases creating higher returns due to the minimization of growth in the portfolio. See tables 2a and 2b. He makes the point that the original Ultimate Buy and Hold Strategy was not built to be the most profitable... but to exposed investors to similar risk as the S&P 500 along with meaningful high returns.  If higher returns without regard to risk were the only limit, the portfolio could have overweighted value more than it does. Paul then discusses the risk and return of two 4-Fund Combinations: The All U.S. and the 50/50 U.S. and International. Of particular note is that the returns and risk of the 4 Funds are almost the same as the 10-fund portfolios. This is not "earth shattering." as the exposure to small/large/value/growth is close to that in the 10-fund portfolios. After helping investors find an easier path to expected returns, the objective is changed to finding a way to get higher returns by eliminating most of the growth holdings.  In each case, these All-Value portfolios increase returns by .5% to 1% more. The impact on the total dollar growth is astounding for the All Small Cap Value portfolios, but likely beyond the risk tolerance for most investors.  However, that doesn’t mean there isn’t a place for a portion of the portfolio. The next podcast will focus on all of these different combinations of equity asset classes to see what happens to risk/return in an All-Equity portfolio as well as different combinations of equities and fixed income.

Paul Merriman discusses the 2021 updated Ultimate Buy and Hold Strategy, designed to show why the 10 equity asset classes should be part of a diversified portfolio. This new study uses an expanded base of returns so that all 10 equity asset classes are reflected in the 1970 to 2020 period. While the expansion of returns makes the returns more dependable, the results are virtually the same as with the previously limited data base. Every year since 2012, The Merriman Financial Education Foundation updates this UB&H Strategy as among its most important work. The 2021 study makes reference to two tables that listeners will want to review. They are the Worldwide Equity Portfolio Tables 50% US/50% Int’l and the Worldwide Equity Portfolio Tables 70% US/30% Int’l. This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation: 1)     Leave a podcast review on your player of choice. 2)    Sign up for our biweekly newsletter at PaulMerriman.com 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 fee at no cost to you, which helps support our financial education projects.. 4)    Buy our latest book, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement available at Amazon and other online outlets. 5)  Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors.  Thank you!

In this fast-paced, fun and educational interview by Paula Pant — the self-described “writer and instigator” behind the weekly podcast, “Afford Anything” — Paul and Paula discuss: Meeting Vanguard founder John Bogle 2 Funds for Life What’s wrong with Target Funds? What’s different about investors today? Why should investors make more in future? Should you add internationals to your portfolio? What happens to bond portion of portfolio in 2 Funds? What should investors do with the market at historical highs? How can you know the risk you’re taking? As Paul commented, “It was the 300th podcast of “Afford Anything” and I can see why Paula is so popular… she’s a terrific interviewer and wonderful teacher! I like how, in the beginning of the podcast, she defined some terms to be used during discussion, including an explanation of asset allocation, and provided a powerful wrap-up at the end with “5 Key Takeaways.” Visit Paula Pants’ website for podcasts, blogs, community and her free book, Escape: https://affordanything.com/ This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation: 1)     Leave a podcast review on your player of choice. 2)    Sign up for our biweekly newsletter at PaulMerriman.com 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 fee at no cost to you, which helps support our financial education projects.. 4)    Buy our latest book, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement available at Amazon and other online outlets. 5)  Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors.  Thank you!