Sound Investing

Enjoy this wide-ranging conversation between Rob Berger and Paul Merriman on Rob’s “Financial Freedom Show” (YouTube video channel) as they discuss these important investor topics: Timestamps  0:00 - Welcome to the Financial Freedom Show!  0:61 - Small Cap Value  20:44 - Other consistent funds 22:59 - Equity portfolio 27:00 - Deciding/4 fund strategy 30:13 - Links below/Quilt chart 45:19 - Stock vs Bond allocation/Market Timing 49:37 - Investing strategies/risk 50:50 - Retirement withdrawal strategy 53:14 - Challenge 55:23 - Glide Path 58:18 - Market Timer's strategy with the current market 1:00:59 - AVUV over VBR 1:08:10 - Measuring value 1:10:46 - Paul's Bond Portfolio 1:12:35 - REIT's 1:13:55 - Tired 1:15:21 - What's next for Paul 1:18:33 - Bogelheads conference 1:19:51 - Links below/Financial Freedom Recorded with a live Zoom audience, they also fielded questions. Some comments on Rob’s video page include: “My two favorite financial experts alive today discussing personal finance together. Perfect! Thank you both for your time, talent and wisdom.” “Rob, for the recent interviews you have done, this is my favorite! Paul is so passionate about his beliefs. I have been listening to Paul's podcast over the last 18 months. He has convinced me of the long term power of tilting your equity portfolio towards small cap value. I added the 10% tilt at the beginning of 2022.” “Great down to earth, easily explained info I can put to good use. Best guest to date!” Links to help investors: This link gives the case for the 10 U.S. and international equity asset classes: https://paulmerriman.com/ultimate-buy-and-hold-strategy/ This link shows 9 different ways to combine the 10 equity asset classes and the 52 year returns for each. https://paulmerriman.com/wp-content/uploads/2022/06/Sound-Investing-Portfolios.pdf This link provides data combining each of the 9 equity portfolios along with different percentages of fixed income: https://paulmerriman.com/fine-tuning-your-asset-allocation/ This link shows the impact of using the 9 portfolios and all the combinations of fixed income assuming an initial annual investment of $1,000 with a 3% annual increase on investment: https://paulmerriman.com/2021-fixed-contributions/ This link shows the impact of using the 9 different equity/fixed income as a source of fixed retirement distributions. Each years distribution is adjusted for inflation. Beginning distributions range from 3 to 6 percent: https://paulmerriman.com/2021-fixed-distributions/ This link shows the impact of annual distributions based on a percentage of assets, without inflation adjustment. Distributions range from 3 to 6 percent: https://paulmerriman.com/flexible-distributions-2021/ This link compares the annual to 20 year returns of 4 major U.S. asset classes: https://paulmerriman.com/90-years-of-evidence-shows-investor-patience-leads-to-better-returns/ This links to the Merriman Lifetime Investment Calculator. The calculator can be used for investors in both the accumulation and distribution periods of their investment life: https://paulmerriman.com/lifetime-investment-calculator/

Paul talks to retirees about the handful of decisions you can make that can either benefit you and your heirs or cost you millions. He covers: · Ways to make or lose .5% · The best combination of equity asset classes · Fixed and flexible distribution strategies · How to best analyze recommended strategies · And other major decisions and topics, like: When to take Social Security? How much and when to spend savings? Spending taxable vs tax deferred vs. tax free? When to pass risk to others? When to get professional help? Elder abuse, and more. This presentation was part of Financial Literacy Month 2022, co-sponsored by the Bainbridge Community Foundation and The Merriman Financial Education Foundation. Links: Slides show: https://paulmerriman.com/wp-content/uploads/2022/08/Bainbridge-Island-Final.pdf Bainbridge Community Foundation: https://bainbridgecf.org/ Paul’s Website: https://paulmerriman.com/ Paul’s YouTube Channel: https://www.youtube.com/c/PaulMerrimanSoundInvesting/videos Get your free copy of We’re Talking Millions! 12 Ways to Supercharge Your Retirement: In 2020, Paul’s presentation, “My Favorite 12 Vanguard Funds for Retirees,” became one of the most-watched on his YouTube channel. https://www.youtube.com/watch?v=L1ltcfD9CpE&t=42s You Can Support Financial Education! 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. 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 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!

This video and podcast introduces the "Sound Investing Portfolio Fixed Allocation Configurator.” This new tool helps investors figure out how to implement the portfolios we analyze using different fund families. Chris Pedersen, Director of Research joins Paul Merriman to discuss Chris’ latest investor education project. The process is simple, involving four choices: portfolio strategy (e.g., Ultimate Buy and Hold, Worldwide 4-Fund, All-Value, etc.), account tax status, fixed income percentage, and fund family (e.g., Best-in-Class ETFs, Vanguard Mutual Funds, etc.).  Once selected, the configurator shows the required percentage investments in particular funds and several characteristics of the resulting portfolio, such as expense ratio and geographic distribution. Chris suggests this “configurator” could replace the older Custom ETF Calculator (not to be confused with our Lifetime Investment Calculator) and several of our pre-calculated mutual fund and ETF portfolios.  He also asks for feedback at info@paulmerriman.com. Together, they answer several listener questions: • Does active management ever make sense? Or are ALL people better off with an index fund-based strategy? • Is the 2 Fund Portfolio (half each S&P 500 and small cap value) really as good as the 10 fund Ultimate Buy and Hold Portfolio? • What advice do you have for a 73-year-old investor who is about to fire their advisor and become a do-it-yourself investor? • Do you suggest reinvesting dividends from your ETFs or do you save them to reinvest in other ETFs? • I am investing money for my mother in several ETFs.  What time of day do you suggest making the investment? Here are the links mentioned in the podcast. Portfolio Configurator Preview: https://bit.ly/3QL77tQ Long-Term Bond Returns Study: https://globalfinancialdata.com/four-centuries-of-stocks-and-bonds-in-retrospect The Merriman Financial Education Lifetime Investment Calculator: https://paulmerriman.com/lifetime-investment-calculator/

Paul presents, “The #1 Reason I Want Small Cap Value in Your Portfolio” with compelling evidence as to why SCV should be the one asset class you must own. This is further illuminated by the tables and charts shown in the video presentation and available in the slide show and handout. (links below). This presentation was recorded at the “Retiremeet 2022” conference, sponsored annually by our friends at Vestory and billed as “The Northwest’s Premier Retirement Event.” Click here for handout: https://7112649.fs1.hubspotusercontent-na1.net/hubfs/7112649/HAND OUT Paul Merriman Retiremeet-2022-Final.pdf Click here for the slide show: https://7112649.fs1.hubspotusercontent-na1.net/hubfs/7112649/PRESENTATION RETIREMEET PAUL MERRIMAN.pdf Learn more about to the event: https://www.youtube.com/watch?v=as9D8TDZ0xI View all the event presentations: https://retiremeet.com/presentations To benefit from Vestory’s investment knowledge, sign up for their podcast at talkingrealmoney.com and their free monthly newsletter at realinvestingjournal.com. 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!

Are you seeking a simple but effective lifetime investment strategy? In this podcast and video, Katie Gatti, host of “Money With Katie,” interviews Chris Pedersen, Director of Research for The Merriman Financial Education Foundation and author of Two Funds For Life – A quest for simple & effective investing strategies.   Chris explains: • The Two Funds for Life strategies during accumulation and retirement stages • Addresses criticisms of target date funds • Explains why this two-fund strategy is well justified by deep historical analysis • Why it can be ideal for those looking for a simple but effective lifetime investment strategy From Katie’s Notes: The best part about living in 2022 is the fact that you don’t have to know anything about investing to be a successful investor thanks to products like Betterment (and financial technology more broadly). But what if you do want to manage your own investments? Then what? Before I learned about Paul Merriman and Chris Pedersen’s Two Funds for Life strategy, I never really knew what to tell people aside from do your research and best of luck to you, madam. So this week, I’m joined by Chris (who created the Two Funds for Life model) to talk about an amazing 80/20 solution for getting proper, low-cost diversification with only two funds (hence the name). Not only that, but the “rebalancing” is more or less taken care of for you. Chris’ Book, Two Funds For Life, provides a deep dive into the subject and is available at Amazon (https://amzn.to/3BxTFoM) and other online booksellers. For a simple explanation of the Two Funds for Life strategy, read We’re Talking Millions—12 Simple Ways to Supercharge Your Retirement. Available at Amazon, Audible, and as a free download on our website. Your purchase helps support our Foundation’s financial education outreach. Amazon print book: https://amzn.to/2KH36Kr Audible: https://www.audible.com/pd/Were-Talking-Millions-Audiobook/B094QSQ4QF?asin=B094QSQ4QF Free PDF AND/OR AUDIO BOOK: https://paulmerriman.com/signup/ Find out more about The Merriman Financial Education Foundation at: https://paulmerriman.com/the-merriman-financial-education-foundation/ Katie Gatti presents a weekly newsletter and blog on personal finance. Visit her site: https://moneywithkatie.com/. In January 2022, her blog and podcast brand, “Money with Katie,” was acquired by Business Insider's Morning Brew, https://www.morningbrew.com/contributor/moneywithkatie Read “Two Funds are better than one” by Katie Gatti at: https://www.morningbrew.com/money-scoop/stories/2022/04/19/two-funds-are-better-than-one

Paul addressed the AAII Los Angeles Chapter with “The Inside Story on the ‘150 Portfolios Better Than Yours’,” on June 18, 2022.  In 2014, Dr. James Dahle, of White Coat Investor, wrote a column titled, "150 Portfolios Better Than Yours." The article included a link to a list of almost every popular model portfolio, including recommendations from Vanguard, Warren Buffett, Ray Dalio, Betterment, and a host of others. The list is now over 200. In this presentation, Paul compares the range of returns from many of the portfolios, plus his own recommended portfolios (https://paulmerriman.com/portfolios/). The 52-year returns of the all-equity combinations ranged from less than 10% to over 14%. The study reviews the risks and returns of the portfolios. Paul explores six different risk measurements that can help investors select the best portfolio for their needs. In this presentation you’ll learn: · How to select the best equity asset classes to construct the best portfolio · How to build a diversified portfolio of equity asset classes · The best way to compare the long-term returns of your portfolio For the PowerPoint accompanying this video/podcast, go to: https://paulmerriman.com/wp-content/uploads/2022/07/150-Portfolios-Better-Than-Yours-AAII.pdf Learn more about the American Association of Individual Investors at www.aaii.com. AAII members: log into your online AAII Local Chapter Community at https://community.aaii.com. Click here for a direct link to the Los Angeles, CA online chapter community: https://community.aaii.com/communities/community-home?CommunityKey=2a40c785-42cd-4ce3-8c3f-458a13346a5f

In this engaging interview, Paul talks with Stan The Annuity Man on his “Fun with Annuities” podcast. (https://www.stantheannuityman.com/). They discuss: The seven big things you need to know about investment Putting children on a glide path Avoiding market-timing Investing is simple Key Takeaways: Figure out a way to identify what equity asset classes you should have and figure out how to put them together. Everyone needs a glide path, and in theory, it starts when a child is born. Parents and grandparents must immediately take steps to put their children on a glide path – all equities while they’re young and more fixed income as they get older. Don’t panic. If you want to be a successful long-term investor, you have to stay the course. Don’t market time; you might be able to avoid losses short-term, but you will pay the price in the long term. Investing is simple, but it takes faith in the system. It is easy to set it and forget it if you can keep your hands off the trigger. Winning in investing means thinking defensively, not aggressively.

Paul Merriman and Chris Pedersen, Director of Research for The Merriman Financial Education Foundation, address a number of topics and questions: •  Is the combination of the S&P 500 and Small Cap Value really more risky than the S&P by itself? •  Why the exceptional performance of Chris’ Best In Class (BIC) during the first 6 months of 2022? •  If small and value outperformed large and growth, why did the Total Market Index underperformed the S&P 500 by more than 1%? •  Are the higher costs of the Avantis Funds likely to pay a higher premium than lower cost Vanguard funds? •  A first time investor, who has invested in Avantis Small Cap Value ETF “for life,” wants to know, “Can I plan on leaving it in this fund forever?” •  Jeff, a follower of our Foundation’s work, thanks us for our educational material but states that “the past results you spend so much time reviewing” have nothing to do with how he invests. Paul addresses who he thinks is actually keeping Jeff committed to his asset allocation. •  Is it better to own mid-cap funds instead of a combination of small- and large-cap funds?  Paul and Chris each share their beliefs in response to this common question. Much of this podcast/video is focused on a discussion of DFA and Avantis ETFs. Using both Portfolio Visualizer and Morningstar websites, Chris explains the major factor differences. (Podcast listeners: This section is more meaningful if viewed on the Youtube video). Chris recommends Rob Burger’s video discussion of Avantis Small-Cap Value.  https://www.youtube.com/watch?v=MdShSQcScsk Rob Berger, lawyer, investor, podcaster, blogger and author of Retire Before Mom & Dad, is one of our Truth Tellers and we will be writing about him in the coming months. Since 2007, Rob has run the financial blog doughroller.net and contributed to Forbes, US News, AOL, and Business Insider and been featured in HuffPost. For more on Chris’ research results for the first 6 months of 2022, see The Worst Bear Market Ever Sound Investing Portfolios Chart

While the headlines have focused on the first 6 months of 2022 as “The Worst First 6 Months of the Last 50 Years!”,  the reality is that well-diversified investors have suffered modest losses.  In this podcast, Paul reviews the major losses of growth stocks, cryptocurrencies, and barely bear market losses in the major indices, as well as the returns of the Best-In-Class (BIC) returns for all of the major asset classes. The good news is in both the equity and bond markets, the BIC performed better than the averages. The bad news is they were still losses. Paul compares the difference in returns for the average fund in each asset class, each asset class index, and the return of the Best-In-Class ETF recommendations by Chris Pedersen, as well as the BIC ETF recommendations with similar Vanguard ETFs. Bond funds are another area of concern for investors this year and Paul also compares the BIC bond fund returns individually as well as a portfolio, and the returns for the S&P 500 and Total Market Index. See Fine Tuning Tables: https://paulmerriman.com/wp-content/uploads/2022/02/Fine-Tuning-Tables-50-50-2022-1.pdf See Sound Investing Tables: https://paulmerriman.com/wp-content/uploads/2022/06/Sound-Investing-Portfolios.pdf See Best-In-Class ETF Recommendations: https://paulmerriman.com/best-in-class-etf-recommendations/ Read article: "The Worst 6 Months Ever For Financial Markets" by Ben Carlson: https://awealthofcommonsense.com/2022/07/the-worst-6-months-ever-for-financial-markets/

Paul begins this Q&A session with the true story of helping a young relative open an investment account. The good news is a young investor got started but, with the misguided “help" of a Fidelity rep, he made a $250,000 mistake. Learn what happened. Questions: Where can I find an advisor who will work for me virtually? What are your recommendations as we are going into a severe correction? Will you be providing Vanguard recommendations for the Sound Investing Portfolios, including the Worldwide 4-Fund Portfolio? Do you recommend working with Merriman Wealth Management? Why include small-cap blend when that same money could be in small-cap value funds? Under what conditions would you include cryptocurrency in a portfolio? Why don’t you include energy funds in your portfolio? Paul mentions the list of Washington State hourly advisors- Lisa Weil lisa@claritynorthwest.com Tom Nowak info@quantumfinancialplanning.com  Tim Massie tim@timepiecefp.com Katy Cook katy@abacusfinplan.com Trish Howe trish@howefinancialadvisory.com Get your free copy of We’re Talking Millions at: https://paulmerriman.com/signup