Sound Investing

Each year Paul (with the many hours of dedicated work from Director of Analytics Daryl Bahls ) updates and  reviews the latest returns and important lessons from the Ultimate Buy and Hold Portfolio.In this review he references a series of tables including:Table A1-Ultimate Buy & Hold Equity Portfolio (50% US/50% Int’l)Table A2 - Alternative Equity Portfolio Tables (50% US/50% Int’l)Table A101 - Ultimate Buy & Hold Equity Portfolio (70% US/30% Int’l)Table A102 - Alternative Equity Portfolio Tables (70% US/30% Int’l)Table B14A - Fine Tuning Table S&P 500 vs.  US SCV PortfolioFor those listening to this podcast it will likely be useful to review the tables before hearing Paul’s comments.Topics include: Why these tables are important to do it yourself investors. The random returns of the S&P 500. The huge impact of small changes in returns. The unexpected low risk of adding risky asset classes. The impact of rebalancing annually vs. monthly. How several low risk 2 fund portfolios outperform  the 10 fund Ultimate Buy & Hold Portfolio. How likely the future will be like the past. The 2023 Ultimate Buy and Hold video will be coming out later today on YouTube, you can find it here- https://paulmerriman.com/youtube

“Three Keys to Long Term Investment Success” was my presentation at the 9th Annual Retiremeet America Conference.  For those who wish to watch other presenters here is a link to the entire almost 6 hour video. 0:00 Welcome from Tom Cock and Don McDonald 13:17 "Financial Fysics" with Don McDonald 46:16 "Paying for Retirement" with Tom Cock 1:15:00 "The Value of a Financial Plan" with Jason Gentile 1:46:00 "Getting Medicare Right" with Kevin Peterson 2:15:00 "Planning for Long-Term Care" with Barbara Devereaux 2:41:48 "Saving on Taxes in Retirement" with Diana Bacon 3:17:00 "Critical Investing in Retirement" with Paul Merriman 3:49:00 Investing Q&A with Tom Cock and Paul Merriman 4:22:00 "Charitable Giving" with Tayor Cock and Stacie Nemetz 4:30:42 "Navigating Turbulent Markets" with Apollo Lupescu 5:23:00 "What's Next?" with Rebecca Chrichton I would like to encourage our subscribers to also view the presentation by Apollo Lupescu, Vice President at Dimensional Fund Advisors, on “Navigating Turbulent Markets.”

In the coming weeks we will be posting the updated history of equity and fixed income returns for the last  53 and 95 years.  These returns will be used to study the impact of investing in combinations of equity asset classes as well as assuming they are being used in the accumulation and distribution periods of an investor's life.  We must ask the question:  How meaningful are these historical returns?  Ben Carlson, one of our Truth Tellers, has written several articles on the topic. https://awealthofcommonsense.com/2023/03/backtests-are-unemotional-humans-are-not/ https://awealthofcommonsense.com/2017/01/10-things-you-cant-learn-from-a-backtest/

March 1 through March 4, I attended the White Coat Investor Conference (WCICON 2023).  On the 2nd, I made a 2 hour presentation focused on "How to Create and Execute a Lifetime Investment Strategy".  I was thrilled with the turnout and positive feedback.  I also received many questions in the following days.  The following are some of the many questions.  More to come in the future.  It was a wonderful conference.  I want to thank Katie and Jim Dahle for putting on one of the best conferences I have ever attended. Here are the questions addressed on this podcast: 3:40   1.  Why do value companies make more money than growth companies?  The answer includes comments from a 1997 article by Eugene Fama and Kenneth French.  Rethinking Stock Returns https://www.chicagobooth.edu/review/rethinking-stock-returns 14:55  2.  How much small cap value should I add to my target date fund? 19:30  3.  How much small cap value should I combine with my Vanguard Total Market Fund?  In this article Table B14A is referenced.  https://paulmerriman.com/wp-content/uploads/2022/04/SCV-vs-SP500-Fine-Tuning-Table-2022-v0.2.pdf 22:19  4.  What is the difference between the expected long term returns of the S&P 500 (VOO) and the Total Stock Market (VTI)? 25:40  5.  There are a lot of different small cap value funds.  Which one do you recommend at Vanguard? 28:45  6.  Should I put small cap value in my taxable, Roth IRA or 401k?  Larry Swedroe’s, “Your Complete Guide to a Successful & Secure Retirement” is recommended as  a great source of important investment advice.  33:25  7.  What do you think of being all equity all the time?  I mean for the rest of my life. 38:54  8.  I’m 38 and a fairly aggressive investor.  I want to build a do it yourself custom target date fund. While I did not mention our custom ETF Allocation Calculator listeners should check it out. https://paulmerriman.com/custom-etf-allocation-calculator/ 45:55  9.  You have portfolios that are all small cap value and another that is a combination of small and large cap value.  The returns for all small cap value are almost one percent higher.  Why not just use an all small cap value portfolio?  Sound Investing Quilt Charts   49:30  10.  What strategy would you recommend with 5 to 7 years until retirement? More of the WCI questions will be answered in the coming weeks.

In this episode, Paddy has a great chat with Paul Merriman from The Merriman Financial Education Foundation in the USA. The foundation is dedicated to providing financial education to those of all ages. Paul shares his wealth of knowledge from decades of experience from starting his own Merriman Wealth Management after retiring to setting up his foundation. Key topics covered: Investing successfully Equity asset classes Emotions of Investing Hardest thing about investing Maths of investing Follow the history

The following questions were sent to Paul during the 90 minute video presented to Western Washington University alumni on February 10, 2023. 2:38 1. How much more do you get with AVUV which has higher fees than FISVX which is super low cost? Check out:  BOGLEHEADS.ORG/REBALANCING Check out:  whitecoatinvestor.com/portfolio-rebalancing-spreadsheet/ 11:20 2. What are your thoughts on robo advisors and investing? Check out:  whitecoatinvestor.com/top-robo-advisors/// 17:57 3.  I have over $5 million and need very little to live on.  I am 43% equities and 57% bonds.  Is now the time to add more equities to a 60/40 asset allocation.  Check out:  https://paulmerriman.com/fine-tuning-your-asset-allocation/  You will find article, podcast and tables on the page 22:25 4.  I only need to take out 2% a year to meet my cash needs.  Most of my investments will eventually go to children and charities.  Is an 80% or 90% equities position appropriate?  Check Out:  https://paulmerriman.com/2021-fixed-distributions/   For article, tables and podcast 27:00 5.  What are the conditions (time/wealth) that suggest hiring an advisor?  How do you find one? Check out:  https://paulmerriman.com/wp-content/uploads/2013/03/get-smart-or-get-screwed-how-to-select-the-best-and-get-the-most-from-your-financial-advisor1.pdf 31:57 6.  What changes should a 50-something make to boost the returns of a 401k? 35:20 7.  What is your advice for a parent to persuade their adult children to educate themselves about investing? 42:22 8.  What do you mean by rebalancing and what are the tools and strategies you can use to do the rebalancing? 49:36 9.  What do I do with penny stocks that are down 80% to 90%? 51:10 10 What are the relative tax implications of the Total Market Index and small cap value, REITS and large cap value? 56:00 11.  What are the returns of combining U.S. large cap value, U.S. small cap blend, international large cap blend and international small cap value? Check out:  https://paulmerriman.com/wp-content/uploads/2022/06/Sound-Investing-Portfolios.pdf 58:30 12. The Fidelity Target Date Funds have very high expenses.  Should I still use them even though the expenses are higher? 1:01 13. Do you recommend a solo 401k or SEP IRA for a single employer who will never have any employees?  Check out: solo401k.com

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/