Sound Investing

How much money can you take from your investments in retirement?  Planning for this “distribution" involves the biggest series of investment decisions of your lifetime. How much do you need to accumulate in order to retire without fear of running out of money before you run out of life? How much can you take out?  How much should you have in equities and how much in bonds?  Do you need to own any equities in order for your money to last a lifetime?  How much can you take out to maximize your goals of enjoying retirement and helping others, while making sure you are not a financial burden to others? This focus of this podcast is on helping those who plan to retire with “enough” money to meet their basic needs, without goals of spending large amounts beyond the basics. These are often people who would like to retire  A.S.A. P.  (In the next podcast Paul addresses those who intentionally save more than “needed” so they can spend more in retirement.) Paul recommends you review several Fine Tuning Tables, including Table 3 using the S&P 500, Table 4a using the 10-fund Ultimate Buy & Hold Portfolio, 6a using the Worldwide 4-Fund Portfolio and Table 7a All-Worldwide-Value Portfolio. These combinations of asset classes form the basis of the Fixed Distribution Tables: Table 10 uses a 3% initial distribution with combination of the S&P 500/bonds, Table 11 uses a 4% initial distribution with the S&P 500/bonds, Table 12 uses a 5% initial distribution with the S&P 500/bonds and Table 13 uses a 6% initial distribution with the S&P 500/bonds. Table 15a uses a 4% initial distribution with the 10-fund Ultimate Buy and Hold Portfolio, Table 23a does the same using the Worldwide 4-Fund Portfolio and Table 27a does the same thing using a Worldwide All-Value Portfolio.

This podcast is one of the most important for young investors. Most young investors are going to build their wealth on their home and their investments in tax-free or tax-deferred IRAs, 401(k) or similar tax-sheltered growth. Both types of investments will grow with the use of monthly payments. This podcast will help you understand how the monthly dollar-cost-averaging process works. Many investors are afraid of taking risk. This discussion makes it very clear that majority of risks investors fear are, in fact, almost non-existent for most of the years they are building their retirement accounts. This podcast is built on the foundation of the three previous podcasts: 1. The selection of equity asset classes  2. The wide range of ways to combine those equity asset classes to build conservative to aggressive combinations, and 3. 51 years of return data for each of the strategies Several sample pages represent the path investors who follow our work will travel. During the introduction, Paul uses Table 3, of the Fine Tuning Table for the S&P 500. While Paul encourages investors to review all of the Fixed Contribution Tables for 50/50 and 70/30 U.S./international, he spends most of the podcast reviewing the lessons on the S&P 500 (Table 73), Ultimate Buy & Hold 50% U.S. and International Portfolio ( Table 74a), Worldwide 4-Fund 50% each U.S. and international, and the U.S. and International All Value Portfolio (Table 77a). For those considering the 10-fund Ultimate Buy & Hold, he suggests you look carefully at the strategies results as compared to the Worldwide 4-Fund strategy. They track closely for almost the entire period. For those interested in taking more risk, he suggests careful review of the All-Value portfolio. And for those who want to take even more risk with a part of their portfolio, the Small-Cap Value are worth exploring. In all cases, the tables are constructed so you can compare the most conservative to most aggressive combinations of equity and fixed income asset classes to decide what works best for you.

The two previous podcasts —  The Ultimate Buy and Hold Strategy 2021 and How to Simplify the Ultimate Buy and Hold for Higher Returns  — were dedicated to building the Ultimate Buy and Hold Strategy with the traditional 10 equity positions, as well as 2 additional similar portfolios with fewer funds. Plus there were value-only portfolios that produced considerable additional returns at higher risk. In this podcast, the focus is on comparing all of these portfolios in terms of returns, risk and impact of adding fixed income to the portfolio to reduce risk to tolerable levels for the individual investor. This is easily done with tables of each years return (1970-2020), as well as worst losses by the quarter, year, 3 years and 5 years. The challenge for the investor is to compare the results of the S&P 500 (the benchmark) with each of these portfolios. For young investors it is important to understand that every extra half percent return can add over a $1,000,000 to their retirement income and what is left to heirs. Paul hopes all investors will take time with the Fine Tuning Tables to gain a firm understanding of the relationship between long-term return and short-term risk, and make their investment decisions accordingly. Access all Fine Tuning 2021 Tables here. This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation: 1)     Leave a podcast review on your player of choice. 2)    Sign up for our biweekly newsletter at PaulMerriman.com 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 fee at no cost to you, which helps support our financial education projects. 4)    Buy our latest book, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement available at Amazon and other online outlets. 5)  Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors.  Thank you!

This is the second podcast in a series of what Paul Merriman thinks are "the most important investment information” the Merriman Financial Education Foundation updates annually. Paul starts with a quick review of the previous podcast, The Ultimate Buy and Hold Strategy Update 2021 regarding the 10 equity asset classes.  For those who did not hear the previous, it will help to download 2 tables: Table 1a, which reflects returns of a 50/50 split between U.S. and international equity asset classes and Table 1b, which reflects the returns of a 70/30 split between U.S. and international equity asset classes.  From these two tables investors can easily compare the impact of adding 9 different equity asset classes to the S&P 500. The following is the MarketWatch article that discusses these portfolios. Paul moves on to the same 50/50 and 70/30 balance of U.S. and international, except the number of holdings are fewer... and in some cases creating higher returns due to the minimization of growth in the portfolio. See tables 2a and 2b. He makes the point that the original Ultimate Buy and Hold Strategy was not built to be the most profitable... but to exposed investors to similar risk as the S&P 500 along with meaningful high returns.  If higher returns without regard to risk were the only limit, the portfolio could have overweighted value more than it does. Paul then discusses the risk and return of two 4-Fund Combinations: The All U.S. and the 50/50 U.S. and International. Of particular note is that the returns and risk of the 4 Funds are almost the same as the 10-fund portfolios. This is not "earth shattering." as the exposure to small/large/value/growth is close to that in the 10-fund portfolios. After helping investors find an easier path to expected returns, the objective is changed to finding a way to get higher returns by eliminating most of the growth holdings.  In each case, these All-Value portfolios increase returns by .5% to 1% more. The impact on the total dollar growth is astounding for the All Small Cap Value portfolios, but likely beyond the risk tolerance for most investors.  However, that doesn’t mean there isn’t a place for a portion of the portfolio. The next podcast will focus on all of these different combinations of equity asset classes to see what happens to risk/return in an All-Equity portfolio as well as different combinations of equities and fixed income.

Paul Merriman discusses the 2021 updated Ultimate Buy and Hold Strategy, designed to show why the 10 equity asset classes should be part of a diversified portfolio. This new study uses an expanded base of returns so that all 10 equity asset classes are reflected in the 1970 to 2020 period. While the expansion of returns makes the returns more dependable, the results are virtually the same as with the previously limited data base. Every year since 2012, The Merriman Financial Education Foundation updates this UB&H Strategy as among its most important work. The 2021 study makes reference to two tables that listeners will want to review. They are the Worldwide Equity Portfolio Tables 50% US/50% Int’l and the Worldwide Equity Portfolio Tables 70% US/30% Int’l. This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation: 1)     Leave a podcast review on your player of choice. 2)    Sign up for our biweekly newsletter at PaulMerriman.com 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 fee at no cost to you, which helps support our financial education projects.. 4)    Buy our latest book, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement available at Amazon and other online outlets. 5)  Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors.  Thank you!

In this fast-paced, fun and educational interview by Paula Pant — the self-described “writer and instigator” behind the weekly podcast, “Afford Anything” — Paul and Paula discuss: Meeting Vanguard founder John Bogle 2 Funds for Life What’s wrong with Target Funds? What’s different about investors today? Why should investors make more in future? Should you add internationals to your portfolio? What happens to bond portion of portfolio in 2 Funds? What should investors do with the market at historical highs? How can you know the risk you’re taking? As Paul commented, “It was the 300th podcast of “Afford Anything” and I can see why Paula is so popular… she’s a terrific interviewer and wonderful teacher! I like how, in the beginning of the podcast, she defined some terms to be used during discussion, including an explanation of asset allocation, and provided a powerful wrap-up at the end with “5 Key Takeaways.” Visit Paula Pants’ website for podcasts, blogs, community and her free book, Escape: https://affordanything.com/ This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation: 1)     Leave a podcast review on your player of choice. 2)    Sign up for our biweekly newsletter at PaulMerriman.com 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 fee at no cost to you, which helps support our financial education projects.. 4)    Buy our latest book, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement available at Amazon and other online outlets. 5)  Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors.  Thank you!

Of the many mutual fund and ETF portfolios on our website, paulmerriman.com, which of the dozen-plus portfolios is most appropriate for you, given your risk tolerance and need for investment return? The goal of this lively discussion — with Paul Merriman, Chris Pedersen and Daryl Bahls — is to help you decide. Topics covered include: A short history of the Vanguard,Fidelity,T Rowe Price and Schwab portfolios — offered first on the Merriman Wealth Management website and moved to the website for The Merriman Financial Education Foundation. The Vanguard ETF Portfolio as well as the many Best-in-Class ETF portfolios, including the Ultimate Buy and Hold, U.S. 4 Fund Combo, Worldwide 4 Fund Combo, All Value, All Small Cap Value, and a series of 2 Funds for Life Portfolios. Regarding the Ultimate Buy and Hold Strategy, Paul discusses the use of the Fine Tuning Your Asset Allocation Tables to determine the best combination of stocks and bonds. Plus, those tables are used later in discussing the 4 Fund Combos. The many psychological considerations in selecting the right portfolio, explored by Daryl. A reminder of how patient a small-cap investor must be, by Chris, who also presents a new Tell Tale chart from 1928 to 2019. Consideration of the pros and cons of each of the ETF portfolios, by Chris. Watch video here.

Paul Merriman is amazed at the interest in GameStop. People he's known for years and never had an interest in the stock market are getting involved…. only emotionally for most, but for many both emotionally and financially. In this podcast, Paul explains the difference between going “long" and ‘short” in the market, and what drove him to buy GameStop when it was selling for under $10 a share. He addresses the problems with short selling and why the unit-of-return per unit return stinks. If people are happy to see hedge funds fail, they should be happy to learn that only about 5% of hedge funds stay in business for more than 10 years. The good news is GameStop is a major holding for Vanguard and DFA — over 9 million shares between them. Paul discusses the Grizzly Fund (GRZZX), which is one of the better performing short funds. Over last 15 years, a $1000 investment became worth $100, which is better than the average short fund where $1000 became worth $50. Why? The answer includes the long-term returns of short recommendations from "The Hulbert Financial Digest"’s study of newsletters. Questions & Answers How should I invest for the next 10 years?  Do you think 2 Funds for Life would be right for me? Paul answers and also references Chapter 10 of his book, Financial Fitness Forever. In our current low-interest-rate environment, do you think that will affect the ability of bonds to help counteract market downturns? Is it possible to include the inflation rate along with the return in the tables the foundation creates? Paul suggests a number of other data points that would be nice to have. Finally, Paul explores an investor's claim that he has done well since the mid-1980s. Was it luck or was it skill? This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation:

Paul Merriman, founder and president of The Merriman Financial Education Foundation, Chris Pedersen, director of research, and Daryl Bahls, director of analytics, discuss the 2021 Best-in-Class ETFs  Paul starts the discussion with a short history of his commitment to providing mutual fund recommendations  He makes it clear that they are not CFPs, CFAs or registered investment advisors, and he notes that selecting the “best" ETFs has its limitations and is not a science. Chris then discusses the steps he takes to identify the final choice in each equity asset class, and why he chose several new ETFs, including his expectation for additional return. Chris, Daryl and Paul answer related questions including: Should I immediately switch old positions into the new recommendations? Should I hold the old positions and start a new portfolio at M1 Finance? Having started an account for a one-year-old child with a small-cap value fund, should I buy more small-cap value or put the next investment into another asset class? Why are you suggesting ETFs with higher expenses? Why have you eliminated the more risky emerging markets ETFs? To see the Powerpoint slides, click here. To watch the video click here.

Paul announces Chris Pedersen's Best In Class ETF Recommendations for 2021 and Paul’s updated Mutual Fund recommendations for Vanguard, Fidelity, T. Rowe Price and Schwab. In anticipation of next week’s Zoom call to discuss the new portfolios and fund recommendations, Paul Merriman, Chris Pedersen and Daryl Bahls are soliciting questions from you, our listeners. If you have questions related to this work, please submit them to info@paulmerriman.com with subject line: ETF/MUTUAL FUND QUESTION. They will try to address them in next week’s recording. Paul answers these recent questions from our readers and listeners: How should I invest $160,000 for my 66-year-old mother who doesn’t need the money to live on? 12:28 What are the advantages and disadvantages of the Ultimate Buy and Hold Strategy and 2 Funds for Life for a 57 year old? 18:39 What is the most tax-efficient way to rebalance an All-Equity portfolio? 26:39 Should I pay off a mortgage or invest in my retirement accounts? 29:45 Why are your large-cap value index higher than the large-cap value at Vanguard? 33:12 How is having $300,000 at age 65 a million dollar advantage? 42:55 Why do you think index funds are better than owning an investment in real estate property? 48:45 I want to put money into a Roth IRA. Should I use your tax-deferred or taxable portfolio recommendations? 58:54 Don McDonald’s Talking Real Money Minute — “Cryptocurrency: yes or no?" Don McDonald, Co-Founder and co-host of the "Talking Real Money" podcast, produces the “Money Minutes” often featured on “Sound Investing” podcasts. Don also produced the soon-to-be-released audio version for our latest book, We’re Talking Millions!.