Sound Investing

While the coronavirus pandemic has changed everyone’s life — and hopefully without illness or loss — for The Merriman Financial Education Foundation it has been a huge game changer, in a very good way. In this podcast Paul shares some new ways he’s able to serve more investors and he answers seven questions from his listeners and readers. 1. Can you discuss the funds to hold in different types of investments, like Roth and regular IRAs, 401ks and taxable accounts? 5:00 2. I have several accounts. Should I try to build your Ultimate Buy & Hold portfolio in each account or build it with 3 or 4 funds per account? 12:35 3. As a 28-year-old investor with a 40-year time horizon, why shouldn’t I put all my investments into more volatile funds, like U.S. and international small cap value and emerging markets, rather than all 10 asset classes in the Ultimate Buy and Hold Strategy? 15:20 4. Many academic studies, as well as your advice, show strong correlation between low expense ratios and mutual fund performance. Your mutual fund and ETF recommendations largely include funds with low expense ratios, however the "International Small Cap Value" asset class ETF (DLS) has a higher expense ratio (0.58%) than I would like. In order to minimize investment expenses, would you recommend substituting another similar investment with a lower expense ratio? I am considering international small cap (VSS - 0.11% ER) or Vanguard Total International Index Fund (VTSNX - 0.08% ER) as a substitute. 18:00 5. Why should we think that HISTORY is the best source of guidance for asset class allocation? Your recommendations for both the "Ultimate Buy and Hold" and the “Two Funds for Life" look to history for efficient asset class weightings. The other source that could be looked to is THE MARKET. It seems that The Market includes all the historical information, as well as the wisdom and knowledge of Paul Merriman, Warren Buffet, all the academic research, all the hedge fund managers, all the mathematicians with supercomputers, etc. Also, in some instances, The Market seems to give a more credible answer than History. For example, history shows bonds returned 6% annually, but the market shows bonds will return about 1.5% going forward.   23:05 6. How can you justify investing in a market that is highly likely to go down due to the coronavirus, coming recession, 30% unemployment, historically high P/E ratios and sky high debt? 37:50 7. What are the likely losses investors must expect in the market? 48:55 Mentioned in this podcast: "Your Complete Guide to a Successful & Secure Retirement by Larry Swedroe and Kevin Grogan Choose FI Seattle Zoom Meetup, Saturday May 16. link to Kelly Cannon’s list of topics Join 20,000+ savvy investors and receive Paul’s free twice-a-month newsletter. Sign up now Plus visit Paul's website for NEW VIDEOS: “12 Million-Dollar Decisions Guaranteed to Change Your Financial Future” and Chris Pedersen’s “Two Funds for Life”.

"Many people, including myself, tend to consider the bad things that might happen before considering the good outcome that is more likely to happen,” " says Paul Merriman. "That challenging state of mind requires having a "little house” plan... just in case the list of catastrophic events actually happens.  The massive loss of employment means a lot of people have experienced loss of employment for the first time in their life.  Even those who are retired, and have more than they likely need, have reason to consider what that “little house” plan looks like in retirement, as my wife and I recently discussed. On this podcast I touch on the long list of possible adjustments we can make if we have to reduce our retirement lifestyle.” Paul also talks about new tables, developed by Daryl Bahls, that make the numbers-heavy tables easier to use. Daryl’s Tables will be shared as part of a Free Zoom presentation. See details below. Free Zoom presentation Saturday, May 9, 9 a.m.-11 a.m. PDT, hosted by the San Diego Chapter of AAII. Paul Merriman and Chris Pedersen will address the two best buy and hold strategies they know, including 2 Funds for Life and the Ultimate Buy and Hold Strategy, as well as 12 million-dollar investment decisions. Daryl Bahls will join Paul and Chris to answer your questions.  For more information on this free webinar and to register, go to: https://www.aaii.com/chapters/Meeting?mtg=4817&chapterid=13 In another Free Zoom Event later in the day, May 9, 4 p.m.-7 p.m. EDT, with ChooseFI, Paul will present "12 Million Dollar Decisions Guaranteed to Change Your Financial Future," and Chris will present "Two Funds for Life”. Their sessions will be followed by Q&A. This event is live, free and open to all, hosted by Jennifer Mah of Choose FI (Financial Independence). For more info: https://www.facebook.com/events/249958663036416/ Join Paul Merriman in these Zoom events and join 20,000 savvy investors to receive his free twice-a-month newsletter. Go to paulmerriman.com

For the past eight weeks, Paul focused on what he considers among the most important decisions an investor is likely to make in a lifetime. In this podcast he quickly reviews those key decisions through the articles, podcasts and tables that were recently created to help investors be the best they can be. And he discusses the topics contained in his website's “Best Advice”, which include: The Ultimate Buy and Hold Strategy (2020 Update) Fine Tuning Your Asset Allocation (2020 Update) Distributions in Retirement (2020 Update) Fixed Contributions  Target Date Funds 4 Fund Combo All About Small Cap Value All Value Equity Portfolio Turn $3,000 Into $50 Million 90 Years of Performance  Get notified of PAUL’S FREE ZOOM SESSIONS by visiting  PaulMerriman.com and subscribing to Paul's free newsletter.

In discussing the latest Fixed Contribution Tables, Paul gives investors an opportunity to explore the differences between many of the various strategies that he, Chris Pedersen and Daryl Bahls have developed. In discussing the Tables, Paul first provides an overview for those in the early years of investing, and then a more thorough explanation for seasoned investors who want to dive deeper or who give guidance to first-time investors. The tables show the impact of regular monthly contributions (DCA) on different combinations of equity and fixed-income asset classes. These tables help investors see the long-term impact of adding value and small-cap asset classes to their portfolios, as well as staying the course during difficult markets. And, finally, the tables make the case for getting started as soon as possible. Paul references the following tables: Fine Tuning Tables Table 1- S&P 500 Table 2- Worldwide Equity (50% U.S./50% International) Table 3- Worldwide Equity (70% U.S./30% International) Table 4- All Value (50% U.S./50% International) Table 5- All Value (70% U.S./30% International) Table 6- Fine Tuning Table – US SCV Equity Portfolio 4-Fund Fine Tuning Table Fixed Contributions Tables 2020 Fixed Contributions – S&P 500 ($1K) 2020 Fixed Contributions – Worldwide (50-50) ($1K) 2020 Fixed Contributions – Worldwide (70-30) ($1K) 2020 Fixed Contributions – All Value (50-50) ($1K) 2020 Fixed Contributions – All Value (70-30) ($1K) 2020 Fixed Contributions – US SCV ($1K) 2020 Fixed Contributions – 4-Fund Combo ($1K) Be sure to check out Paul’s site for many more academically-researched tables and portfolio recommendations at paulmerriman.com and sign up for Paul’s free twice-a-month newsletter.

This podcast introduces the Distribution and Contribution Tables for the 4-Fund Combo, plus Paul discusses how these results compare with the other equity asset classes on the  Fine Tuning, Distribution and Contribution tables. More than 60 new and updated tables are now available at PaulMerriman.com, generously created by Daryl Bahls. These tables are designed to help you decide which  equity asset classes you should have, and .how much fixed income you should hold to both meet your need for return and stay within your risk tolerance.  Also the new tables help you compare the fixed and flexible distribution strategies using many different  rates of distributions. The challenge is to consider each of the pieces until you put it all together and find the one column that suggest you will meet your personal financial goals. When you find that column, you’ll know how much and which equity asset classes you should own, how much you’ll have in fixed income, how much you’ll have to spend in retirement, and how much you’ll likely leave to others. Follow along in the discussion of the 4-Fund Combo with links to: Contribution Tables: Table 47, Table 48, Table 50, Table 52 and Table 62 Check out all of Paul’s investment and retirement strategies and sign up for his free newsletter at paulmerriman.com

One of the biggest financial decisions we make can be the choice of distribution strategy in retirement. In this podcast Paul compares the risks and returns of flexible and fixed distribution strategies, not just in terms of money available for retirement expenses but also for heirs and charities at the end of life. He compares results of 4 and 5 percent fixed and flexible distributions, using both the S&P 500 and the Worldwide Equity Portfolio. For more on the subject, read our MarketWatch article, How much should you take out of your portfolio when you retire? To get the most out of The Ultimate Distribution Strategy Paul suggests you download the following tables: Fine Tuning Tables 1 and 2 Fixed Distribution Tables 8 and 9 Flexible Distribution Tables 28, 29, 32 and 33 Check out all of Paul’s investment and retirement strategies and sign up for his free newsletter at paulmerriman.com

From explaining how index funds are built to his opinion on how far the market will fall; from where to find resources for teaching highschoolers about personal finance to custodial accounts and rebalancing Target-Date funds, Paul answers 20 questions from his readers and listeners. Scan through and listen to those that interest you or tune in to the whole podcast for answers and insights into a variety of investor questions.

When the market finally turns around and heads back up, what kind of portfolios are likely to perform better than the market in general?  In this podcast Paul shares what he calls the Comeback Portfolio.  During the discussion he uses some existing tables plus a couple of new tables to make his case.  For those who want to download the tables here are the links in order of use: Summary of 1, 15 and 40 years of Equity Returns (1928-2019) Table 1 and Table 3 from Annualized Asset Class Returns by Decade: 1930-2019 Ultimate Buy and Hold Worldwide Equity Portfolio Tables (50% US / 50% Int'l) 4-Fund Combo Equity Portfolio Tables (100% US / 00% Int’l) Fine-Tuning Table  4-Fund Combo Equity Portfolio On April 11, Silicon Valley AAII is hosting an online workshop with Paul and Chris Pedersen. For those interested in attending please find the details at https://www.eventbrite.com/e/sv-aaii-april-main-event-the-ultimate-buy-and-hold-strategy-tickets-100032899094 Check out hundreds of free articles, videos, books and mutual fund/ETF recommendations at PaulMerriman.com and sign up for Paul’s free twice-a-month newsletter! https://paulmerriman.com/signup/

The two most important articles and podcasts The Merriman Financial Education Foundation produces each year are the "Ultimate Buy and Hold Strategy” — which helps you determine what equity asset classes to hold in your portfolio — and "Fine Tuning Your Asset Allocation” — which shows how much you should own in bonds to control volatility. However, when it comes time to take money out of investments for retirement, our site includes a series of tables to aid you in determining the Best Distribution Strategy. In this podcast, Paul focuses on strategies for investors who have saved “enough” but not much extra. These investors usually use a Fixed-Distribution Strategy.  There is a long series of Fixed-Distribution Tables, but today Paul talks specifically about Tables 7, 8, 9, 12 and 13. Paul also discusses the beginnings of the recent bear market, plus longer-term bear market results.  The average bear market loss is 33% to 37%, depending on the period covered.Next week Paul addresses Flexible or Variable Distributions, the "Ultimate Distribution Strategy". Be sure to sign up for Paul’s free twice-a-month newsletter here.

Focusing on small-cap value from every angle Paul knows, this podcast compares Price-to-Earnings ratios, Price-to-Book ratios, average size company and one-year and 40-year period returns.  Paul shares the latest academic research on small-cap value, comparison of risk and return for S&P vs. small-cap value asset classes, and the likely long-term impact of adding even a little small-cap value to a portfolio. He also discusses the Fine Tuning Your Asset Allocations table for small-cap value, and Tables 1 and 3 from "90 Years of Evidence Shows Investor Patience Leads to Better Returns". Also See: “All About Small-Cap Value" 2020 paper by Eugene F. Fama and Kenneth R. French paper, The Value Premium Join our community of more than 20,000 savvy investors. Sign up now for Paul’s free newsletter published every other week.