Sound Investing How to Bake a Cake: An Asset Allocation Mashup | Rick Ferri & Paul Merriman
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Apr 16, 2025 
Join Rick Ferri, a leading expert in low-cost investing and host of the Bogleheads on Investing, along with Paul Merriman, founder of the Financial Education Foundation. They dive into essential topics like the pros and cons of small-cap value versus total market funds. Discover the significance of asset allocation, the challenges of target date funds, and the value of including international equities in a portfolio. They also share insights on maintaining a disciplined investment strategy amidst market volatility and the importance of informed decision-making for young investors.
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Simple US/International Index Mix
- Use low-cost index funds tracking US and international markets for broad equity exposure.
- Allocate approximately two-thirds to US stocks and one-third to international stocks for diversification and growth potential.
Diversify Across Several Equity Classes
- Diversify equities with multiple asset classes including small cap and international.
- Simplify by focusing on a few diversified funds rather than complex many-fund strategies.
Use Target Date Index Funds
- Target date index funds are great for retirement accounts, offering low cost and automatic rebalancing.
- Choose a fund matching your risk tolerance and investment horizon, then hold it long term.