Episoder
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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 Caps
In 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
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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 Guide
Table Numbers
Quilt Charts
Historical Risk and Return Tables
Portfolio Configurator
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times.
0:00 Intro to Paul Merriman and podcast topic
0:57 Two-fund portfolio strategy
3:55 Four-fund portfolio strategy explained
5:31 Large cap performance concerns
7:06 S&P 500 vs Total Market Index
10:59 AI impact on large companies
14:43 Market trends and historical performance
20:41 International equity in portfolios
25:26 ETFs vs index funds
29:41 Non-US investor asset allocation
38:41 Setting up kids financially
43:57 Early investing importance
48:37 Common investor mistakes
50:25 Investing as business partnership
52:51 Evolving financial education landscape
For more information visit the show notes- https://affordanything.com/550-paul-merriman-the-4-fund-strategy-that-beats-the-sp-500/ -
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The Marriage Kids and Money Podcast is dedicated to helping you do just that. Each week, Andy Hill interviews personal finance experts, millionaire parents and financially independent couples to find out how they achieved their success. He then takes that information and breaks it down into digestible takeaways that will help you win with money.
With over 400 episodes and counting, Marriage Kids and Money has been awarded “Best Family Finance Content” by Plutus two years in a row and "Content Creator of the Year". We review everything from how to achieve family financial independence to how to help your kids become future millionaires (who are generous).
Paul Merriman shares how DIY investors could become millionaires through a 2 Fund Portfolio and/or 4 Fund Portfolio! GUEST BIO - Paul MerrimanWhen I sold my investment advisory practice, I founded a financial education foundation designed to help do-it-yourself investors of all ages improve their investment returns, at less risk and with greater peace of mind. I am the author of 8 books including "We're Talking Millions! 12 Simple Ways to Supercharge Your Retirement."
Watch the video here.
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Investors need to get past marketing and sales pitches to know what they're getting when they invest. Morningstar is a great place to get that depth.
Paul and Chris describe how they each use the free Morningstar tools to evaluate mutual fund and ETF characteristics, such as:
* Expense ratios
* Liquidity and bid/ask spreads
* Geographic focus
* Value and size tilts
* Financial characteristics
* Factor exposures
* Number of holdings
* Tax efficiency and* Charted historical performance with side-by-side comparisons.
Chris also briefly describes how he uses the premium X-Ray feature to compare portfolios with different fund families, including the Best-in-Class ETFs, which he plans to update early next year.
For those interested in a more quantitative approach, please take a look at the Bootcamp video Chris created for the Best-in-Class ETF selection process, where he describes how he uses Portfolio Visualizer to quantify fund factor exposures and factor statistics to estimate expected returns. Here's a link to that video at the time where the Portfolio Visualizer discussion begins: https://youtu.be/UaEC-JZYYJA?t=852
Here is the video link for this podcast.
https://www.youtube.com/watch?v=rDN3LyEFk3E
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Paul updates his list of reasons to use index funds plus comparing the handful of Vanguard Small Cap Value ETFs (VTWV, SLYV, VBR AND VIOV) with the newer Avantis and DFA small cap value ETFs. He also makes the case that AVUS and DFAU total market funds are likely to produce better returns than VTSAX, VTI, VOO AND VFINX.
He also discusses the 15 year returns of 6 each large cap growth, large cap value, small cap blend, small cap growth and small cap value indexes. The lessons from these tables should be enough to encourage investors to take a closer look at the holdings in their holdings in these asset classes.
In his discussion of indexing he mentions a podcast "#1 reason to own index funds " that has had more than 1,067,000 opens and his MarketWatch article entitled “30 Reasons I Love Index Funds.” He also committed to producing a video, on how to use Morningstar to compare your mutual fund and ETF investments, before the end of the year.
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Chris & Paul walk through the changes to The Merriman Financial Education Foundation’s relationship with M1 Finance, including affiliate commissions, a new emphasis on accurate messaging, and improved pre-made portfolio shortcuts (M1 calls them Pies).
The new Pies now include all of our Sound Investing equity portfolios, taxable and tax-deferred fixed-income portfolios, and 5-year increments of the Merriman Aggressive Target-Date Glide Path allocations. Chris shows how easy it is to mix them to get the equity and fixed income ratio you want. He also shows how to approximate intermediate years along the target-date glide path. Finally, Paul challenges him to create a mix of several different equity strategies, which he demonstrates.
Following the demonstrations, they briefly discuss how M1 compares to Fidelity’s offering.
They close with a request for listener questions to be used in an upcoming interview with M1 Finance’s founder and CEO, Brian Barnes. If you have any, please email them to [email protected].
M1-Related Disclosures
This podcast and video were recorded on September 12, 2024. All information is subject to change. The opinions expressed are solely those of the authors and do not reflect the views of M1. They are for informational purposes only and are not a recommendation of an investment strategy or to buy or sell any security in any account. They are also not research reports and are not intended to serve as the basis for any investment decision. Prior to making any investment decision, you are encouraged to consult your personal investment, legal, and tax advisors.
M1 is a technology company offering a range of financial products and services. “M1” refers to M1 Holdings Inc., and its wholly-owned, separate affiliates M1 Finance LLC, M1 Spend LLC, and M1 Digital LLC.
If you choose to transfer your account to another broker-dealer, only the full shares are guaranteed to transfer. Fractional shares may need to be liquidated and transferred as cash.
All examples above are hypothetical, do not reflect any specific investments, are for informational purposes only, and should not be considered an offer to buy or sell any products.
All investing involves risk, including the risk of losing the money you invest. Brokerage products and services are offered by M1 Finance LLC, Member FINRA / SIPC, and a wholly owned subsidiary of M1 Holdings, Inc.
M1 does not provide investment advice, and this is not an offer or solicitation of an offer, or advice to buy or sell any security, and you are encouraged to consult your personal investment, legal, and tax advisors. M1 is not recommending or endorsing this investment by making it available to its customers.
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In preparation for his presentation at the Bogleheads Conference Paul reread John Bogle’s “The Little Book of Common Sense Investing” He has been recommending the book since 2007 but in 2017 Wiley published the updated and revised edition. There is some terrific new material in the revised edition.
Paul focuses on several topics from the book including Bogel’s statement that index funds are the only “honest” funds. Paul discusses the reasons actively managed funds can’t afford to tell the truth.
Paul also discusses Chapter 2 on Rational Exuberance. In this chapter Bogle discusses the very important topic of investment returns vs. speculative returns. This topic is essential for do it yourself investors to understand as it prepares them for a reality of investing that could help them stay the course during difficult times.
Paul ends by reading Bogle's list of 8 common sense realities that every investor should know. It would probably be smart to reread this short list at least once a year.
At the Bogleheads conference Paul will speak twice: once in an interview with Jim Dahle (The White Coat Investor). The topic is factor investing. We have developed a page of links to all of the tables that are focused on the use of factor funds to build a portfolio. Here is a link to that list of tables, charts and graphs.
In his second opportunity to share he is part of a panel on investing. That will be a free for all and should be fun.
All of the conference presentations are being taped so they will be available in the coming months. -
I had an amazing conversation with David Baughier on the Forget About Money podcast!
We discussed my 12 One-Million Dollar Ideas for building wealth, the power of starting early, and why index funds are a game-changer for long-term investing.
We also covered the importance of diversification, the benefits of small-cap value stocks, and why sticking with a buy-and-hold strategy beats trying to time the market.
Whether you're new to investing or looking to refine your retirement plan, this episode has actionable tips to help you secure your financial future. Give it a listen—you won’t want to miss it!
Watch the video here.
Download the transcript here
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Paul starts the podcast with a discussion of his special presentation to the graduating nurses from the College of Nursing at Texas A&M. This presentation was part of a Life Transitions Series. He discusses how he might be able to do a similar presentation for other groups of graduating college students, as well as groups of investors who are trying to get the most from their company 401k.
The second topic is regarding a new set of tables that should help investors figure out potential future returns for the S&P 500, Small Cap Value, U.S. 2 Fund Index Portfolio and U.S. 4 Fund Index Portfolio.
The third topic was motivated by Ben Carlson’s articles on “Why Housing is Everyone’s Favorite Investment” and “What is the Historical Rate of Return on Housing?” Paul recently sold his home and discusses the challenges of figuring out how the profits compared to the S&P 500., As promised Paul had his meeting with David Sterman, an hourly CFP, who has followed our recommendations. Paul discusses his services and costs.
Here is his contact information:https://huguenotfinancialplanning.com
1358 Old Ford Rd. New Paltz, NY 12561
Phone: (917) 553-0675
For those interested in the Boglehead Conference:
https://boglecenter.net/2024conference/
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Paul starts the podcast talking about the upcoming Boglehead Conference (Sept.27-29) in Minneapolis. The following link lists the speakers and topics. https://boglecenter.net/2024conference/
Q1: Should I invest $300,000 inheritance all at once or dollar cost average? 02:23
Q2: If SCV is such a great asset class why do the companies all have such low P/E ratios? 8:06
Q3: Given that our Roth IRAs have unlimited investment options how should we approach investing in our Roth accounts to best complement the life cycle funds in our 401k? 21:54Q4: Should we invest our IRA contributions the first of the year or dollar cost average over the year? 24:56
Q5: I’m 70 and am considering a combination of the 2040 target date fund and small cap value. How much should be in each? 26:34
Q6: Been in Ultimate Buy and Hold since 2013. I’m thinking about simplifying by using 2 or 4 fund portfolios. What are the pros and cons of change? Recommended reviewing. 29:37Q7: Can I still rollover regular IRAs into Roth now that I am retired? Recommended reading. 35:50
Q8: As a risk reducer to equities can I use T-Bills and money market funds rather than any kind of bonds. 37:35
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Paul starts with a general discussion of the decision to trust recent returns or make investment based on longer term returns. He uses AVUV and ARKK as two investments you could have made in September 2019. In the discussion he references a video where arkk creator and fund manager predicts future arkk returns.
Q: #1: Why should future results look like the past? 16:15
Q: #2 We are in mid 50s and we think we have more money than we will need in retirement. Is there a rule of thumb for how much money one needs? Should one just figure out their cost of living and back into the amount needed for retirement? 26:50
Q#3 Have you done a comparison of your returns compared to Dave Ramsey’s recommended portfolios? 32:55
Q #4 How can we teach young investors about the advantage of starting investing ASAP? See the following set of PowerPoints for the Orange County AAII. 40:02
Q #5 What is your take on Crypto Currency? Here is what people I trust say about CC.
Warren Buffett: “In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending,” Buffett said in 2018. And his stance hasn’t wavered since. According to Benzinga, Buffett believes that cryptocurrencies aren’t a viable or valuable investment. “Now if you told me you own all of the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it because what would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything,” Buffett said at the Berkshire Hathaway annual shareholder meeting in 2022.
Ben Carlson: I have no idea what will happen with bitcoin or cryptocurrencies in general in the years ahead. Anyone who thinks they know with certainty how this all plays out is delusional. But I can say that my stance on crypto has evolved over the years to the point where I think the best-case scenario just might be the new digital gold.
Larry Swedroe Swedroe took a more skeptical view of Bitcoin. He pointed out that Bitcoin’s value proposition is questionable. Bitcoin has a theoretical limited supply, capped at 21 million coins. However, the existence of an unlimited number of substitute cryptocurrencies means Bitcoin faces a daunting challenge. An asset with an unlimited supply typically sees its value approach zero. Swedroe categorized Bitcoin as a Ponzi scheme, though he acknowledged that it could achieve high trading values based on what people are willing to pay.
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1. My husband and I are moving to Fidelity to set up your Ultimate Buy and Hold Portfolio. How do we make the change from our holdings to your portfolio? Do I have to sell all of my holdings? Plus we want to find an hourly advisor to help. Can you make a recommendation? 1:45
2. I have $1million in a money market fund. Do you think it is time to start reducing the cash position and moving to short term bonds or equity ETFS? 8:45
3. Are target date funds the same as all in one funds? 17:15
4. I would like your guidance on the decision to put together a S&P 500 and Small Cap portfolio using 3 to 1 leveraged fu?nds. Does the extra return justify the higher risk? 20:00
5. How should I protect my portfolio against inflation from the loss of the petrodollar? 35:00
6. From what I can see you have not addressed investment needs of older people in their 80s and 90s. How should I invest? I just can’t afford to lose money at my age. 39:17
7. Would I be dumb to have 10% of my retirement funds in gold? 46:20
8. With the fed getting ready to lower interest rates should I move my money market funds into 10 year Treasuries? 52:40
9. In the small cap blend and small cap value indexes it seems investors don’t get the advantage of owning small companies that grow to be the giants of corporate America. How do you get the premium when you have to sell the companies when they move beyond their index? 59:15
10. What is the difference between your 2 Funds for Life strategy and the two fund strategy that holds the S&P 500 and small cap value? 1:01
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1. What is the best glide path (asset allocation) for a 58 year old pre-retiree and then in retirement? This is the link for Chris Pedersen’s 2 Funds for Life glide path. 2:50
2. I don’t need all of my RMD (required minimum distribution). How should I invest the excess? Here is the link to the video on "My 12 Favorite Vanguard Funds for Retirees” and the link to all of the Fine Tuning Tables. 11:19
3. My wife has easily onset demential. It’s costs $200,000 a year. How should a family invest in a situation like ours? Here is the link to the Vanguard Brokerage CDs (https://investor.vanguard.com/investment-products/cds) and stantheannuityman.com for MYGA rates. 17:18
4. What are your thoughts regarding precious metal investing? And if there is a place, what is the best way to do it? 22:52
5. Will the massive increase in passive investing, which has benefited the large cap growth indices, reduce the long term returns of small cap value? Here is the link to the long term returns Paul mentions. 28:50
6. How would the long term returns change if we overweight the U.S. 4 Fund Portfolio with slightly more small and large cap value? Here is the link to the Equity Asset Classes (1928-2023) 32:01
7. I’m 72 and my wife is 63. How different should our glide paths be? Here is the link to the Vanguard and Blackrock TDFs. 44:10
8. Are REITTs more like stocks or bonds? 46:41
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On July 25, 2024 Paul and Chris made a presentation to the Puget Sound AAII. Paul spoke to the latest research on small cap value and Chris spoke to the latest research on his 2 Funds for Life Portfolio. Following the presentation they answered questions from the guests.
Q: What advice do you give on conversion of regular IRAs to Roth IRAs?
Q: What investments do you recommend to offset large losses in the equity markets?
Q: Why do you recommend AVUS over VOO, or other S&P 500 funds? In Chris’ answer he recommends listeners read his AAII article on ETF Selection.
Q: Why don’t you recommend Long Term Treasury Bond fund? Vanguard Long Term Treasury VGLT
Q: Do you recommend a pension and/or Social Security be considered the equivalent of a bond fund?
Q: Can you compare RSP (an equal weighted S&P 500 Fund) vs. SPY?Watch the full video here.
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In this podcast Paul discusses an article by Truth Teller Ben Carlson (The Biggest Winners in the Stock Market), regarding a study by Dr. Hendrik Bessenbinder (Which U.S. Stocks Generated the Highest Long-Term Returns )
This study is an update from an earlier study from Bessenbinder that Paul has recommended many times.
Paul also discusses an article by Truth Teller John Rekanthaler, "When Rebalancing Creates Higher Returns—and When It Doesn’t”This article adds to THE discussion of the impact of rebalancing on the latest video/podcast.
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Paul, Daryl, and Chris are together again to discuss what they each think are the best single charts or graphs to help people understand investing and make good decisions.
Paul starts by asking Chris and Daryl how much we can rely on the past to predict the future.
Paul follows that with a deep dive into his choice for the most important chart -- the quilt chart.
Daryl follows up with his choice -- a discussion of the tell-tale chart.Chris finishes with his choice: a discussion of the 2 Funds for Life Fine Tuning Table.
Tables referrenced-
Table J1b- Equity Index Returns: 1-yr Periods (1928-2023)
Table K1a- 4 US Asset Class Indexes & 4 Fund Combo Relative Return Ranking (1928-2023)
Table K2a Asset Classes & 4 Fund Combo (1928-2023) - Return Rank Frequency
Table K1b S&P 500 & US SCV Relative Return Rank Comparison (1928-2023)
Table K8a Sound Investing Port. Returns: 10 Yr Periods (1928-2023)
Table K6a Sound Investing Portfolios, S&P 500 & US SCV Relative Return Ranking (1928-2023)
Table K7a Sound Investing Portfolios, S&P 500 & US SCV (1928-2023) - Return Rank Frequency
Watch video here.
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One of the most challenging aspects of being a 100% do-it-yourself investor (DYI) is dealing with the emotions of wanting to make major changes in a portfolio due to what may easily be seen as catastrophic news. The DYI doesn’t have a professional to help them think through the difficult times like the 2008 meltdown, the October 19, 1987 22% one day decline or currently, the upcoming election results.
Paul believes one of the best sources of professional support a DYI could have is George Sisti’s, "On Course Financial Planning Vectors" newsletter. On this podcast Paul reads Sisti’s July issue focused on “The Election!” as well as the misleading “noise” that investors get from the typical predictions that Wall Street produces this time of year.
Paul recommends investors read George's letters anytime they are feeling uncomfortable with the market. He even suggests that investors download his archived letters for future reading.
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Paul starts the podcast discussing the upcoming (July 13, 2024) presentation for AAII Puget Sound Chapter (9-10:30). Chris Pedersen and Paul will present, “2 Investment Decisions Guaranteed to Change Your Financial Future. ”Here is a link for more information and to sign up for this presentation. Here is the link to sign up.
Today’s podcast is a discussion of the latest research from Daryl Bahls, Director of Analytics for The Merriman Financial Education Foundation. Paul believes these new tables are likely the best teaching tool he has found to give investors a realistic idea of the future sequence of returns. While Paul focuses on several of the 20 slides in the attachment, more of these will be discussed next week with Daryl and Chris.
Paul starts his discussion with his latest update of the Equity Asset Classes (1928-2023) table.
He then explains why Daryl’s Quilt Charts are a better way for investors to understand the sequence of returns they are likely to experience.
Paul asks listeners to send him questions from the slide deck so they can be addressed in next week's podcast with Daryl and Chris. -
Join Paul as he is interviewed by Ed Fulbright, CPA and host of Mastering Your Money on WNCU 90.7 FM in Durham, N.C.
How do Grandparents decide to help with education or retirement or legacy building of their grandchildren? You often recommend small cap value as the primary investment vehicle for creating legacy for your grand children. Why did you select this investment? You recommend a low cost strategy for $365 per year. Can you tell our listeners about how this works? You also have different options for people who may have older children or grandchildren. Can we discuss those options? You suggest writing a letter to a child or grandchild. Can we discuss the power of the letter to the child or grandchild? What is the best advice you have ever received? -
The following questions were generated during a presentation Paul made to the Orange County and New York City AAII Chapters.
1. How do we go about finding someone (money manager) who follows your portfolio recommendations? Plus what is a reasonable fee to pay for advisory services? In the answer I do mention David Sterman. link:https://huguenotfinancialplanning.com/and two videos by Rob Berger: 5 Hidden Costs of Fee-Only Advisors and 5 Key Questions to Ask Your Investment Advisor
2. How can I decide whether to go from 50/50 stocks and bonds to 70/30? I suggest looking at table B1 and B9.
3. What bond durations do you recommend?
4. What are the ETFs that you recommend for each of the equity asset classes you list?
5. Can I share your presentation with my children? Here is a presentation that might be good for a young person.
6. How do I find a good money manager and what questions should I ask? Here is a link to our free book, “Get Smart or Get Screwed: How to Select the Best and Get the Most Out of Your Financial Advisor.”
7. How do I get access to all of your charts and tables? Here is the link to Boot Camp where you can have access to all the tables.
8. What is your view of small cap value returns over the coming decades? In my answer I mention Ben Carlson’s article on randomness of historical returns- When is the Mean Reversion Coming in the Stock Market? and his article Long-Term Recency Bias.
And here is the new graph that Daryl Bahls proceeded to see the returns of a couple of portfolios over the same periods as Ben addressed.
- Se mer
