Sound Investing

At 82 years old, I still work. Not because I have to, but because I want to.

I joined Brian Herriot and Kirby Denison on “The Time Freedom Podcast” to talk about exactly that. But we ended up covering a lot more than I expected.

Here's something that might surprise you: I managed money for thousands of people over 30 years and built a firm to $1.6 billion under management. And I have never once managed my own money.

Why? Because I know myself too well. When the market drops, I would second-guess everything. I'd probably hesitate to put more money in, even though that's exactly what I teach people to do. So I let someone else handle it. I don't even check how I did last year.

We also got into my disagreement with John Bogle. I had the privilege of sitting with him for about 90 minutes earlier in my career. Bogle preached Enough and it's even the title of one of his books.

I respectfully disagree. I believe the goal should be more than enough. Because life gets in the way. Bad things happen. And they often happen during retirement, when you have the least ability to recover. If you stop working the moment you have just enough, you're one bad year away from trouble.

📚🎧 Brian's book Time Freedom is available for pre-order! Pre-order and get the audiobook free... instant access today, paper copy in September. Normally that takes three copies, but for my listeners, just one.

timefreedombook.com | code: PAUL

Q&A Highlights

How does a 4-fund portfolio compare to a 10-fund portfolio?
What is the best way to invest for a child’s future?
Is it too late to use a diversified strategy like the 10-fund portfolio at age 50?
Can I create and test my own custom portfolio using your tools?
How should I invest during periods of inflation or uncertainty?
What are some recommended fund options available at Schwab?
Is a portfolio combining large-cap value and small-cap blend a good approach?
Are there good alternatives to intermediate-term bonds?
Who are some trustworthy voices in personal finance and investing?
What is your opinion on separately managed accounts (SMAs)?

Key Takeaway

Long-term investment success is driven by asset allocation, discipline, and consistency—not complexity. A simple, well-structured portfolio that you can maintain through market cycles is often the most effective approach.

Listen to the individual questions here.

Paul Merriman is dedicated to helping do-it-yourself investors build portfolios they can stick with for life. In this episode, he shares what he believes is the closest thing to a perfect long-term equity strategy he's ever seen.

Paul traces the evolution of index investing — from John Bogle's cap-weighted S&P 500 funds to the academic research of Fama and French, whose factor-based work showed that small cap value, large cap value, and other equity asset classes have historically outperformed the broad market over time.

For years, the best factor-based funds from Dimensional Fund Advisors (DFA) were only available through select advisors. That changed when Avantis launched its ETF lineup in 2019, followed by DFA's own ETFs — putting institutional-quality, factor-based investing within reach of every self-directed investor.

Paul introduces a recommended ETF list spanning 10 equity asset classes across both fund families, explains the key differences between DFA and Avantis, and makes the case for owning both. He also covers where to buy them and why Fidelity's fractional shares make it easy to start with any dollar amount.

Key topics: Factor-based vs. traditional index funds · Accessing DFA and Avantis ETFs · The case for owning both · Simplifying rebalancing with M1 Finance

The Q&A Paul references was recorded separately.

In this episode, we explore how flexible (variable) withdrawal strategies can strengthen your retirement plan—and why fixed, inflation-adjusted withdrawals may increase risk over time.

Using detailed distribution tables—including Table F1.3(flexible withdrawals) and comparisons to

 Table D1.3(fixed withdrawals)—Paul walks through real historical outcomes across decades to show how adjusting withdrawals based on market performance can improve long-term results.

You’ll learn:

Fixed vs. flexible withdrawal strategies

Insights from TablesF1.3,F1.4vs.D1.3,D1.4

How flexibility helps defend against bear markets

The role of diversification and low-cost investing

Why oversaving creates powerful financial freedom

If you’re planning for retirement or already taking withdrawals, this episode may offer a smarter, more adaptable approach to generating income.

Watch Youtube

Boot Camp 7 page

In Boot Camp #6, Paul Merriman walks through real historical data starting in 1970 to test what happens when retirees withdraw 3%, 4%, or 5% from a $1 million portfolio — adjusted for inflation — across some of the toughest market conditions in history.

This episode covers:

The difference between retiring with “enough” and “more than enough”

How inflation quietly turns $30,000 into $130,000+ over 30 years

What happens if you retire into a bear market

Why 1% more in withdrawals can cost millions

S&P 500 vs. a globally diversified four-fund strategy

How diversification impacts lifetime income and legacy outcomes

The real risk of sequence of returns in retirement

Why some portfolios ran out of money — and others didn’t

You’ll hear side-by-side comparisons of:

100% S&P 500 portfolios

40/60, 50/50, and 60/40 stock-bond mixes

A worldwide four-fund equity strategy

Fixed inflation-adjusted withdrawals over 30 years

The results may surprise you — especially when comparing 3%, 4%, and 5% withdrawal rates.

If you're approaching retirement, already retired, or helping someone make distribution decisions, this episode breaks down the numbers in plain English and shows how small choices can create million-dollar differences.

Next week: the strategy Paul considers the very best distribution method — for investors who retire with more than enough.

Watch Video Here

Catch up on the previous Boot Camp 2026 here

In Boot Camp #5 of 10, Paul delivers what he believes is the most important session in the series—especially for new and early investors (teens, 20s, 30s, and anyone just getting started).

Instead of treating investing like speculation, Paul reframes it as building—or buying—a business over decades.

Using clear, data-driven tables and “fine-tuning” comparisons, he walks through a simple, repeatable plan: start with $1,000 per year (about $83.33/month), increase contributions by 3% annually, and stay invested for 40+ years. You’ll see how long-term outcomes change based on asset allocation (100% stocks vs. 60/40 stocks and bonds), and why diversification can matter when markets go sideways.

Paul also compares an S&P 500-only approach with a globally diversified “worldwide four-fund” strategy (mixing U.S. and international, large and small, value and growth). Along the way, he explains the real power source in early investing: your contributions, not short-term market performance—and why tax-advantaged accounts like a Roth IRA or Roth 401(k) can dramatically increase the impact of compounding over a lifetime.

If you want a practical framework for long-term, low-cost, diversified investing, plus a clear-eyed discussion of volatility, sequence of returns, and retirement withdrawals (including the concept of a 5% annual withdrawal strategy), this episode lays the groundwork.

Why Paul believes this is the most important boot camp session

Investing as building a business (the “portfolio mortgage” analogy)

Starting with $83/month and increasing contributions by 3% annually

Understanding the fine-tuning tables and historical market returns

S&P 500 vs. 60/40 portfolio: balancing growth and volatility

The Worldwide Four-Fund Portfolio and the benefits of deeper diversification

How sequence of returns impacts accumulation and withdrawals

Why you rarely notice individual company failures inside diversified funds

The long-term advantage of Roth IRA / Roth 401(k) compounding

Staying disciplined through crashes, recessions, and sideways markets

Watch Video

How much should you really have in stocks vs. bonds — and what happens when the market turns south with a vengence?

In Boot Camp #4, we break down the fine-tuning asset allocation tables that show exactly how different combinations of equities and bonds have performed from 1970 through 2025. This episode goes beyond average returns and dives into what investing actually feels like during the worst 3-month, 12-month, and 60-month market declines.

You’ll learn:

Why equities have historically dominated bonds for long-term retirement investing

How the S&P 500 compares to diversified strategies like the Four-Fund portfolio

The real impact of worst-case drawdowns (including 50%+ bear markets)

What happens to a 100% stock portfolio during retirement withdrawals

How 50/50, 60/40, and other stock-bond allocations reduce volatility

Why median returns matter — and why averages can mislead

How to control risk through asset allocation, low costs, tax efficiency, and index investing

We explore real historical data — including the 1973-74 bear market, the 2000-2002 tech crash, and the 2008 financial crisis — to help you understand both accumulation and retirement distribution phases.

Whether you're in your 20s building wealth, in your 50s preparing for retirement, or already retired and managing withdrawals, this episode helps you align your portfolio with your risk tolerance, return needs, and long-term financial goals.

If you want to be a confident do-it-yourself investor — without paying a 1% management fee — this episode gives you the framework to make informed decisions about stocks, bonds, diversification, and risk control.

Watch Boot Camp #4 video

Welcome to Bootcamp #3 of the Sound Investing Series with Paul Merriman — where real investing data meets practical long-term strategy. 📈 In this session, Paul breaks down the performance of diversified portfolios vs. the S&P 500 using decades of historical data going back to 1970. You’ll learn how different combinations of equity asset classes have performed in good markets, bad markets, and everything in between.

📊 What You’ll Learn in This Video:
• A deep dive into the Sound Investing Portfolios and how they work for DIY investors
• Historical returns of 2-, 4- and multi-fund strategies compared to the S&P 500
• Why diversification matters and how it can reduce risk and improve returns
• How different portfolios performed in tough decades like the 1970s and 2000s
• Practical takeaways for long-term investors, retirees, and those choosing equity allocations

Whether you’re a beginner or experienced investor, this Bootcamp episode gives you real numbers and evidence-based insights to help shape your portfolio strategy with confidence. 

💡 Topics Covered:
✔ Sound Investing Portfolios explained
✔ Risk vs. return comparison
✔ Historical performance of diversified portfolios
✔ The role of small-cap & value stocks
✔ Why a 2-fund strategy can compete with the S&P 500
✔ How to think about risk in real market conditions

🔗 Useful Resources & Tables - https://www.paulmerriman.com/sound-investing-portfolios-2026
To follow along with the charts, tables, and data Paul references during the presentation, check the pinned links and video notes.

📈 Perfect For:
✔ DIY investors
✔ Retirement planners
✔ Anyone curious about portfolio diversification
✔ Investors who want to avoid common mistakes

📩 Questions? Paul encourages you to leave comments and reach out — he often uses viewer questions in future episodes!

➡️ Don’t forget to subscribe for more deep-dive investing education and future Bootcamp episodes from the Merriman Financial Education Foundation: Paul Merriman’s mission is to help you make more money with less risk and more peace of mind.

In this second session of our 10-part Boot Camp series, we dive into the piece that’s helped shape decades of investing decisions: The Ultimate Buy & Hold Portfolio.

For nearly 30 years, this research—co-created with the late Rich Buck—has explored a simple but powerful question: What happens when you go beyond the S&P 500 and build a lifetime portfolio across 10 equity asset classes?

Starting with data back to 1970, we walk through the math of compounding, diversification, and disciplined rebalancing. You’ll see how adding small amounts of large value, small cap, REITs, international equities, and emerging markets historically increased returns—without meaningfully increasing risk. The result? A dramatic difference over time, powered by patience and structure.

Whether you’re new to these concepts or have followed this work for years, this episode breaks down the numbers, the lessons, and the real-world implications for long-term investors.

This recording is also a tribute to Rich Buck—an extraordinary collaborator whose work on this topic has reached millions of investors.

Download the tables and watch the video, follow along, and join us as we revisit one of the most impactful investing frameworks we’ve ever created—and set the stage for next week’s deep dive into the Sound Investing portfolios.

What if small decisions — just a half-percent here or an extra year there — could change your financial future by millions?

In this episode, we continue our annual Boot Camp series by tackling one of the biggest forks in the road investors face: stocks and bonds. Drawing on nearly a century of academic research and data, we break down what the math actually tells us about compounding, risk, diversification, and long-term returns.

You’ll hear why:

Tiny differences in returns can mean millions over a lifetime

Bonds are designed for safety — not wealth creation

Equity asset classes behave very differently from year to year

Diversification across asset classes smooths volatility and improves outcomes

Trying to “pick winners” is a losing game — and why owning the whole market works

This episode is educational, not personal advice — think of it as a roadmap that helps you ask better questions and make more informed decisions.

 Important: The tables and charts referenced in this episode are available in the PDF. Watching the companion video will make these concepts even clearer.

If you care about making smarter long-term decisions for yourself and your family — this is one to share.

Sometimes the best moments are the unexpected ones. This week brought one of those moments when Daryl Bahls delivered an extraordinary surprise: access to every table used across our entire investing Boot Camp Series — months of work, ready ahead of schedule.

That gift makes it possible to move forward faster, including setting up pages for the upcoming Series and potentially releasing the tables before all the podcasts and articles are complete.

The White Coat Investor: 150+ Portfolios That Work

We revisit the White Coat Investor article “150 Portfolios Better Than Yours” (now over 200 portfolios), originally published in 2014.

The key lesson:
There is no single “best” portfolio — most of the portfolios are legitimate and effective. What matters most is:

Choosing a sound portfolio

Understanding why it works

Staying the course over decades

Early success can be misleading, but the portfolio you choose in the beginning can mean millions of dollars more in the long-term.

Why Portfolio Design Matters So Much

Using historical data going back to 1970, we explore how different strategies produce dramatically different outcomes over time:

S&P 500 only vs. globally diversified portfolios

Multi–asset-class investing

Value-focused portfolios (U.S. and international)

Even small starting amounts can lead to large differences over a lifetime.

What We Do — and What We Don’t Do To Help Investors 

We are:

Focused on education

Dedicated to do-it-yourself investors

Grounded in academic research and evidence-based investing

We are not:

Financial planners

Estate planners

Tax advisors

Our goal is to help investors build portfolios they can trust through good markets and bad — with the potential to land in the top 5–10% of long-term outcomes.

Preview: The 10-Part Boot Camp Series

Over the coming weeks, we’ll release a comprehensive boot camp covering:

Stocks vs. Bonds — why this decision alone can be a $10 million difference

Equity Asset Class Selection — based on academic research, not trends

Simple Sound Investing Portfolios — small, powerful, manageable

Adding Bonds Intelligently — controlling risk without killing returns

Long-Term Contributions — what steady investing really looks like

Fixed Withdrawal Strategies — taking distributions when you retire with only "enough"

Flexible Withdrawal Strategies — especially for those who’ve oversaved

Target-Date Funds & Glide Paths — with added diversification insights

ETF Selection — why DFA and Avantis may help investors stay the course

Investing for Children & Newborns — including new retirement account considerations

Each topic will eventually include:

A podcast episode

A written article

Supporting data tables

Daryl has now produced 247 educational tables, all designed to support smarter portfolio decisions.  You will see all of them during the 10 week series.

Upcoming Event + What’s New

Before jumping into today’s questions—there are some good ones—I want to share a quick note.

I’ll be at the Annual RetireMeet on March 7 in Bellevue at the Maidenbauer Building. I’ll be there all day at the booth and will be discussing the inside story on diversification, including new thinking on rebalancing that I believe you’ll find useful.

Christine Benz —HOW TO RETIRE

Don McDonald — RETIREMENT EVOLUTION: FROM NONE TO FUN

Tom Cock — RETIREMENT INCOME: THE 4% RULE & BEYOND

Kevin Peterson — GETTING THE MOST FROM MEDICARE

Joe Saul-Sehy — COMMON MISTAKES THAT MAKE RETIREMENT MISERABLE

The event is available in person and online. In-person attendees receive lunch. Online attendees pay a small fee that supports nonprofits focused on financial education.

I also spent time this week with Daryl Balls, working on updates to the quilt charts and new tables. We’re excited to share those soon, along with the next Boot Camp series, starting later this month.

Questions of the Day

How can I avoid getting scammed by a bad financial advisor? 04:03How can my parents decide when to start Social Security? 07:08How do I identify my target asset allocation if I am 41 and plan to retire at 65, taking Social Security at 70 and with a pension? 08:47Can you help me build a sample asset allocation? 11:46What should I learn first to understand asset allocation? 14:10How do target date funds fit into asset allocation? 17:42How does VTSAX fit into this strategy? 17:04My 401(k) only offers Vanguard Total Market, Mid-Cap Index, and Small-Cap Index. Can I build a good portfolio? 20:40If I’m contributing monthly, should I rebalance using contributions or make separate trades? 27:59I have a closed 401(k) with a target date 2050 fund. Is that a good core holding? 28:50

A Final Thought

I recently spoke with an investor who realized they didn’t need to draw from their investments at all, thanks to Social Security and a pension—even with nearly $2 million invested.

When you don’t need the money, you get to choose your medicine—aggressive or conservative.

We’re excited about the upcoming Boot Camp, new tables, and educational tools. If we can do a better job teaching, our hope is that you’ll do a better job investing—for yourselves and for those who count on you.

 Links Mentioned in This Episode

Investor Education

Truth Tellers – Social Security

Asset Allocation & Target Date Funds

Event

Research & Tools

In this week’s Sound Investing episode, Paul Merriman answers a wide-ranging set of listener questions — from choosing ETFs and building portfolios to managing risk in retirement and investing wisely at every age.

One of the biggest takeaways? There is no universally “best” ETF or portfolio. The right answer depends on your goals, risk tolerance, time horizon, and — just as importantly — your ability to stick with a strategy during difficult markets.

Here are some of the highlights from the episode:

What’s the “best ETF”?
Paul explains that for simple exposure (like the S&P 500), the lowest-cost option often wins. But once you move into areas like small-cap value or factor investing, fund construction and index methodology matter far more than expense ratios alone.

Single-fund vs. DIY portfolios
Paul compares all-in-one solutions like AVGV (Avantis All-World Value ETF) with building the same asset classes yourself. While a DIY approach can sometimes produce higher returns, it also requires discipline and comfort with tracking and rebalancing multiple funds.

Portfolios for different stages of life

Younger investors (30s): Paul favors all-equity portfolios for long time horizons, assuming the investor can tolerate volatility.

Pre-retirees and retirees: The focus shifts to managing downside risk, withdrawal rates, and behavioral comfort — not maximizing returns at all costs.

Retirement withdrawals and sequence risk
Using historical examples starting in 1970, Paul shows how withdrawal rates (4%, 5%, 6%) and portfolio composition can mean the difference between ending with millions — or running out of money entirely.

Mutual funds vs. ETFs
ETFs have become more tax-efficient, more flexible, and easier to trade — making them ideal for the smaller, diversified portfolios Sound Investing now recommends.

How to self-manage a portfolio
Paul walks through how to:

Choose equity asset classes

Use best-in-class ETF recommendations

Rebalance intelligently

Invest weekly without overcomplicating the process

Resources mentioned in the episode:

Sound Investing Boot Camp
https://paulmerriman.com/bootcamp/

Ultimate Buy & Hold Portfolio
https://paulmerriman.com/ultimate-buy-and-hold-portfolio/

2025 Sound Investing Portfolios
https://paulmerriman.com/sound-investing-portfolios/

Avantis Investors & AVGV
https://www.avantisinvestors.com/

Morningstar Fund Comparison Tools
https://www.morningstar.com/

Ben Felix (Canadian investing insights)
https://www.pwlcapital.com/profile/benjamin-felix/

REIT background and tax considerations
https://en.wikipedia.org/wiki/Real_estate_investment_trust

Paul closes the episode with a reminder that diversification means always owning some underperformers — and that’s not a flaw, it’s the price of long-term success.

Thanks for listening, and we’ll see you next week.

For first-time listeners, welcome! In this opening episode of the year, Paul Merriman—founder of the Merriman Financial Education Foundation—looks back at 2025 to uncover what the markets taught us and how those lessons can help do-it-yourself investors make better decisions going forward.

Despite endless predictions about what markets should do, Paul reminds us that his role isn’t to forecast the future—but to help investors understand risk, return, and how to build portfolios they can truly stick with.

In this episode, Paul explores:

A surprising result from the “Magnificent Seven” stocks

Why diversification mattered more than ever in 2025

How different equity asset classes really performed

What 56 years of data (1970–2026) tells us about staying the course

Why portfolio structure matters far more than chasing winners

Two very different—but valid—approaches to fixed income investing

If you want perspective instead of predictions—and data instead of hype—this episode is a powerful way to start the year.

The following are Dr. Pass’ note to his podcast:

This week we end 2025 with a Pediheart tradition - an episode on personal finance for medical professionals with noted authority on index investing and personal finance, Mr. Paul Merriman.

Paul is a retired investment advisor who now has a popular podcast "Sound Investing" and website in which he offers advice on investing for 'do it yourself' investors. In this week's episode, the 5th of his visits to Pediheart, Mr. Merriman discusses 'factor investing' via index-like ETF's and funds.

He also reviews who he believes might benefit from a financial advisor, what sort of advisor most should seek out and why he believes that many do not need one if they can 'stay the course'.

Resources mentioned in today's podcast are below. Wishing all a happy and healthy new year in 2026. 
Paul's website:
https://www.paulmerriman.com/#gsc.tab=0
'Best In Class' ETF's:
https://www.paulmerriman.com/Best-in-Class-ETF-Recommendations2025#gsc.tab=0
Sound Investing 'Quilt Charts':
https://irp.cdn-website.com/6b78c197/files/uploaded/(K)_Quilt_Charts_(1928-2024)_-_2024_Returns_(1).pdf
DFA 'Turn Out The Noise':
https://www.dimensional.com/film
As a reminder, all of the information provided in this week's episode should be considered entertainment and all financial decisions should be vetted with professionals or knowledgeable and trusted friends/family. 

In this episode, Paul shares the thinking behind what he believes may be one of the most important projects of his career—a project guided by a single goal:

That every investor who follows our work will know how to invest for the rest of their life.

To explain why that goal matters, Paul walks through the forks in the road every investor eventually faces—from betting on individual companies to owning entire markets, from chasing excitement to embracing simplicity.

Drawing on real experiences, including private investments that went to zero and one that unexpectedly turned into millions, Paul explains why diversification beats prediction, how a simple portfolio decision may quietly add about 1% a year over time, and why many academics draw a clear line between investing and speculation.

This episode isn’t about chasing returns.
It’s about building a plan you can live with—through good markets and bad—for the rest of your life.

If you’re looking for clarity, discipline, and a framework that helps you stay the course, this conversation is a powerful place to start.

Next week, I’ll be reviewing what we learned in 2025—and what those lessons may mean for 2026 and beyond.

Thank you, and happy holidays to you and your family.

Compounding Project Podcast – Episode 36

In Episode 36 of The Compounding Project Podcast, legendary investing educator Paul Merriman shares timeless insights on long-term investing, the power of compounding, and how everyday investors can build lasting wealth.

Paul explains why starting early is one of the most important financial decisions you can make, how compound growth works quietly over decades, and why low-cost index funds remain the foundation of successful investing strategies.

This episode dives deep into portfolio diversification, the hidden impact of investment fees, and the role of small-cap value investing in improving long-term returns. Paul also offers practical, evidence-based guidance for young investors, parents, late starters, and anyone seeking financial independence through disciplined investing.

Whether you’re new to investing or refining an existing portfolio, this conversation delivers actionable lessons on building wealth the smart way.

Starting early and staying consistent matters more than market timing or stock picking.

Low-cost index funds and diversification are the most reliable tools for long-term wealth building.

Small-cap value investing and minimizing fees can significantly increase lifetime investment returns.

Your Money and Your Brain

The Psychology of Money

Thinking, Fast & Slow

Spending Your Way to Wealth

Watch the full episodefor expert insights on investing, compounding, and financial freedom.

Follow Paul Merriman On Social Media: ⤵︎📷 Instagram: /   / paulamerriman2012  📱 YouTube: /    / @paulmerrimansoundinvesting  To Know More,Follow Sathish Gajula On Social Media: ⤵︎ 📷 Instagram: /   / compoundingproject  📱 YouTube: /    / @compoundingproject  

Timestamps:

00:00 Episode Trailer

02:00 Intro to Wealth and Index Funds

03:20 The Million Dollar Decision

07:04 Investing Tips for Young Parents

12:47 Saving When Money Feels Tight

15:35 Stocks vs Bonds

19:58 Rethinking Stock Market Risk

24:36 Why Investing Is Easier Today

27:06 How Fees Hurt Returns

29:08 When Bonds Make Sense

32:56 Investing Across Generations

34:58 Portfolios by Age

35:52 Starting Late in Investing

41:05 Defensive Investing Basics

42:10 Why Stocks Matter Most

43:04 Beating the S&P 500

48:09 Market Returns Explained

51:22 Why Diversification Matters

54:49 Fees and Long-Term Returns

58:28 Small Cap Value vs Total Market

01:03:25 Equal-Weight S&P 500

01:08:36 Handling Market Volatility

01:11:05 Picking Small Cap Value Funds

01:12:50 Trust in Investing

01:16:42 Hotseat Questions

Over the last couple of weeks, I’ve been recording a series of Q&As that came out of a presentation I gave in November for the American Association of Individual Investors — AAII.

At the end of that nearly two-hour talk, I promised that I’d do a podcast answering every single question that came in. Well… there were 36 questions. That’s a little too much for one episode, so we broke them into three parts.

This is Part 3 — the final 12 questions. If you haven’t heard Parts 1 and 2 yet, we’ll link those in the show notes so you can catch up.

Before we jump in, I just want to say: I’m a huge fan of AAII. I started teaching their local chapters way back in 1984, and over the years I think I’ve presented to just about every chapter in the country — sometimes in person, sometimes by Zoom — but always to people who are genuinely committed to learning how investing works.

If you’ve never checked out AAII, I’ll include a link in the notes for a low-cost trial membership. Take a look around and see if it’s a resource that fits your investing journey.

Alright — let’s get to the last 12.

Will you develop strategies using the equal-weighted S&P 500? 01:44

Can you recommend advisors who follow your strategy? 07:20

Should I move mutual funds to ETFs in taxable accounts despite taxes? 11:26

With markets at highs, should I keep dollar-cost averaging or rebalance? 16:17

What portfolio fits 10 years to retire and 20–30 years of decumulation? 24:08

Will the configurator shift to only Avantis/DFA funds in 2026? 30:37

What does “inflation-adjusted fixed withdrawals” mean? 33:56

How should I invest an inheritance for kids/grandkids ages 2–45? 38:21

Ultimate Buy-and-Hold vs. two- or four-fund strategies — which is better? 49:03

Should political conditions change retirement portfolio decisions? 59:12

How do I find a fee-based/hourly advisor (Rhode Island question)? 1:05:56

Should very conservative 91-year-olds move beyond bonds and cash? 1:13:28




Part 1 of the AAII Q&A Series 
Part 2 of the AAII Q&A Series 
AAII trial membership offer (the ~$2 first month deal)
Boot Camp series hub 
Fine-Tuning Your Asset Allocation table / lesson

Sound Investing / portfolio decade return tables —
Fixed vs. Variable Withdrawal episode/article 
H-2A table referenced in Q9 
Chris Pedersen Boot Camp presentation (Two-Fund for Life) 
Garrett Planning Network advisor directory 
HelloNectarine hourly advisor platform 
PlanVision / Mark Zoril reference 

Paul continues his three-part series responding to questions from his November 8 AAII presentation. In this episode, he digs into risk-parity portfolios, the role of gold, how the 10-Fund Strategy compares to the S&P 500, growth vs. value, rebalancing discipline, and how to choose the right bond allocation in retirement. If you were at the AAII event, you’ll find the exact 12 questions listed below so you can jump straight to your topic.

12 AAII Questions Covered

Thoughts on risk-parity portfolios during retirement distributions? 2:12

Was the 10-Fund Strategy originally meant to mirror 60/40? 14:51

Should investors add gold (IAU) after its recent streak? 21:40

What is a double-rung bond ladder? 24:03

Which of the nine portfolios has the best return per unit of risk? 26:36

Analysis of growth funds outperforming over the last decade? 31:36

How to invest new money when the economic outlook looks uncertain? 36:40

Will the AAII slide deck be available? 38:54

How often do you rebalance? 39:25

How do you tune out the noise and stay the course? 41:13

How to choose your bond allocation in the distribution phase?  45:25

Can you share ETFs for the bond portion of a retirement portfolio? 52:12

Resources Mentioned

AAII presentation slides

10-Fund vs. S&P long-term comparison

Fine-Tuning Your Asset Allocation tables

Sound Investing tables

Retirement withdrawal tables

Lifetime Investment Strategy calculator

Best-in-Class ETF recommendations

Recorded from our new home on Bainbridge Island and released on Thanksgiving, this episode is equal parts gratitude and practical investing help. I open with my annual tradition of writing a fresh Thanksgiving list—people, communities, and institutions that have shaped my life and this work. I’m especially thankful for you, the DIY investors who keep showing up to learn, ask thoughtful questions, and hopefully staying the course.

I also share appreciation for the resources that support disciplined investing—Morningstar, the Bogleheads community, and the American Association of Individual Investors (AAII). After a recent AAII presentation (over 150 attendees), we ran out of time for a live Q&A. I promised to respond to every legitimate question, so this episode kicks off a multi-part series answering them in depth.

Here are the first 12 AAII questions covered in today’s episode:

(9:42) What alterations in portfolio construction do you recommend in transition from accumulation to distribution in order to maximize diversification of uncorrelated assets, safe withdrawal rates, and spending? ⁠Table h2a (21:21) I’m a huge fan of your U.S. two-fund portfolio. Why is diversification between large-cap growth and small-cap value so important, while diversification between VTSAX and AVUS (within the same asset class) is not? Should we diversify fund selection within the same asset class? Table K2b(26:49) Have you considered creating a quilt chart for the Ultimate Buy-and-Hold portfolios with a 70/30 U.S./international split? Table K1a and H2a and H2b(32:04) You appear to have avoided any mention of mid-cap. Should we be ignoring mid-cap funds?(33:35) What do you think about adding alternative investments to the portfolio (for example, managed futures)?(38:39) Are your recommendations for everyone, or does the game change when you have a pension for life?(43:07) I was fighting with the Zoom link and arrived 25 minutes into the presentation. Will a video recording be available to participants?(44:08) What would you expect the difference between the S&P 500 cap-weighted index (VFINX)and the S&P 500 equal-weighted index (VADAX)  to be?(49:53) The four-fund portfolios are equal-weighted across their asset classes, which results in a value tilt overall. Why weigh them equally?(54:35) One might think that adding international large-cap growth and international small-cap value to the two-fund approach would improve results. Does international allocation mainly reduce volatility/drawdown length, or also increase returns?  H2a and H2b(56:26) Can you buy DFA and Avantis funds at Charles Schwab?(58:40) What should you do if you have a lump sum to invest today, but current market highs make entry uncomfortable? https://awealthofcommonsense.com/2025/11/do-we-need-a-long-bear-market/

Paul Merriman brings 60+ years of investing experience to the Retire Today podcast, breaking down what really determines retirement success. Most investors think it’s about picking the right fund or timing the market—but Paul says the biggest threats aren’t headlines. They’re costs and emotions.

In the 1960s, investors routinely paid 8.5% to buy a mutual fund. Today fees are far lower, but the impact is still huge. Paul notes that even a 1% difference in expenses “can cost you about $3.5 million over a lifetime” because compounding works both for you and against you.

Behavior can cost even more. “When the market goes down, people panic,” Paul explains. Selling in a downturn—the “I just can’t take it anymore” moment—means locking in losses and missing the recovery. His advice: don’t time the market. Build a plan you can actually stick to.

When asked what separates retirees who thrive from those who struggle, Paul’s answer is simple: education. What you learn and who you learn it from shapes your decisions—and helps you stay calm when markets get rough. That’s why his nonprofit work focuses on teaching diversified, simple, low-cost strategies through guides like Sound Investing Portfolios and We’re Talking Millions!

Paul once promoted a 10-fund “Ultimate Buy-and-Hold” portfolio, but even John Bogle told him it was too complex. After testing simpler versions, Paul found that two-, four-, and six-fund portfolios often matched or beat the original. You can explore these models at PaulMerriman.com/portfolios. The takeaway: simplicity makes discipline easier.

We also discussed retirement withdrawals. Paul recommends a flexible approach: take a bit less after down years and a bit more when markets are strong. This can reduce stress and help your portfolio last. “If you know how long you’re likely to live and how much you have,” he says, “that knowledge gives you freedom—not fear.”

If you’re approaching retirement, here’s Paul’s short list:

Diversify with low-cost index funds. Focus on the right mix, not the perfect pick.

Match risk to reality. Choose a stock/bond split you can live with in bad markets.

Use flexible withdrawals. Adjust spending based on market conditions.

Keep behavior boring. Automate rebalancing and ignore predictions.

Invest in education. Knowledge keeps emotions from running the show.

You’ve worked hard to build your savings. Now build a plan that works just as hard—quietly, efficiently, and with confidence. Watch the full conversation on YouTube for more on fees, behavior, portfolio design, and practical withdrawal strategies.

First, a big thank-you to everyone who joined me for the AAII presentation last Saturday. I appreciate your patience during my rocky Zoom start—and a special shout-out to Suzette Moskwa, who saved the day by running the slides!

As promised, I’m following up on your chat comments and questions from the session. This week’s focus is on your insights; in the next couple of weeks, I’ll share a full Q&A edition covering listener questions on portfolio construction, diversification, and long-term investing strategy.

Key Takeaways from This Week’s Discussion

ETFs vs. Mutual Funds — Tax Efficiency Matters
Mutual funds often create higher annual taxes in taxable accounts. ETFs and index funds are more tax-efficient because of how they handle capital gains—saving investors up to 1% a year. Keep mutual funds inside IRAs to avoid unnecessary taxes.

Equal-Weighted vs. Cap-Weighted Portfolios
The Invesco Equal Weighted S&P 500 (RSP) holds the same 500 companies as the standard index but gives each stock equal weight. This creates different exposure and more turnover, yet the ETF version reduces the tax drag—a key advantage for long-term investors.

Small-Cap Value Funds — Choosing the Right Fit
VBR (Vanguard) performs best when large-cap growth leads, while AVUV and DFSV outperform when smaller value companies rise. The lesson: size and style matter in long-term returns.

The Power of Rebalancing & “Shannon’s Demon”
Mentioned by Bill Yount from the Catching Up to FI podcast,  Shannon’s Demon illustrates how periodic rebalancing can turn volatility into profit. By selling high and buying low, you can enhance long-term performance while keeping risk in check.

Morningstar Ratings — Don’t Chase the Stars
Star ratings mostly reflect recent trends, not future potential. Focus instead on the underlying asset class and decades of evidence, not last year’s winners.

Small-Cap Value Slump — Patience Pays Off
Small-cap value has struggled this year, but historically it offers one of the best long-term premiums. Remember: asset class selection drives up to 99% of overall portfolio performance.

Risk Parity Portfolios — Balancing Risk the Smart Way
Paul compared traditional diversification to risk parity, which balances exposure across stocks, bonds, and commodities. He prefers government bonds over commodities since bonds generate income and often rise when stocks fall.

Diversifying Within an Asset Class
Instead of going “all or nothing,” you can hold multiple ETFs—like AVUV and DFSV—for extra balance within a category. Just keep the lineup manageable for your brokerage or platform.

Factor Investing — What Really Drives Returns
The strongest long-term drivers are size and value. Momentum and quality can help, but smaller, cheaper companies historically deliver the best rewards.

Growth Funds & Ten-Year Performance
Ten-year snapshots can mislead. From 2000 to 2025, small-cap value funds far outperformed growth and the S&P 500, showing the value premium remains powerful across full market cycles.

S&P 500 vs. Total Market — Nearly Identical Over Time
Since 1928, returns differ by only 0.1%. The S&P’s recent edge comes mainly from a handful of mega-cap tech stocks, not fundamental differences in the indexes.

Hiring an Advisor — When It’s Worth It
A skilled fiduciary advisor can help manage emotions, discipline, and rebalancing. If you struggle to stay consistent, professional guidance may be worth far more than the fee.

The DIY Investor Myth — Overcoming Human Biases
“No one cares more about your money than you” sounds good, but behavioral biases—recency, overconfidence, and loss aversion—can derail results. Automation or a trusted advisor can protect you. For more insight, see Paul Hayes’ free book Spending Your Way to Wealth, especially the appendix on 48 investor biases.

Thank you again for your time, attention, and thoughtful participation. Despite the technical hiccups, your engagement made this an incredibly rewarding session!

In this episode, Paul dives into one of the most important themes in long-term investing: staying the course, even when individual asset classes deliver unexpected short-term results. Whether you’re a seasoned DIY investor or still building confidence, Paul shares timely lessons to help you make better decisions—and support others who rely on your guidance.

Paul also previews his upcoming presentation for the AAII Puget Sound Chapter, where he’ll take one of the deepest dives yet into Daryl Balls’ latest quilt charts, the Sound Investing portfolios, and the vital differences between traditional and non-traditional index funds.

You’ll hear Paul discuss insights from two of the industry’s leading “truth tellers”:
• Jim Dahle (The White Coat Investor) and his Bogleheads presentation on reasonable vs. unreasonable portfolios
• Dr. Bill Bernstein, and why staying disciplined may be investors’ greatest lifelong challenge

Along the way, Paul reviews 10-month, year-to-date performance for the Best-in-Class ETF portfolios—including the 10-fund, 4-fund, and 2-fund strategies—and explains why the surprising 2025 return patterns are completely normal.

Key topics include:

Why some equity asset classes “disappoint” this year—and why that’s expected

The resurgence of international value, small international, and emerging markets

How Chris Pedersen’s 4-Fund Worldwide strategy kept pace with the 10-Fund

The powerful role of non-traditional index funds (DFA & Avantis)

Why small-cap value’s recent struggles shouldn’t discourage long-term investors

How to access DFA-style factor premiums through today’s ETFs

The importance of keeping an investing approach simple, reasonable, and durable

Why staying the course—not forecasting—is the true key to long-term success

Paul also shares personal updates about moving back to Bainbridge Island and reflects on what it means to serve a community of dedicated DIY investors.

If you know someone who would benefit from this work, please share this episode. And don’t miss the links in the show notes—including Jim Dahle’s video, portfolio references, quilt charts, and upcoming AAII registration details.

Thank you for listening—and all the best to you and your family.

Paul Merriman welcomes back Chris Patterson, Director of Research, and Daryl Balls, Director of Analytics, for another thoughtful roundtable discussion. These three “underpaid volunteers” reflect on how far the Merriman Financial Education Foundation has come — and where it’s headed next. Together, they cover everything from new educational tools to a data-driven look at one of the most common investor questions: Has small-cap value lost its punch?

The episode revisits this hot topic with evidence from decades of historical data, including several key Merriman Tables that illustrate why small-cap value (SCV) continues to deserve a place in long-term portfolios.

📊 Quilt Chart: Year-by-Year Performance of the Major Asset Classes
Created by Daryl Balls, this visual “quilt” shows how the four major U.S. equity asset classes — large-cap blend, large-cap value, small-cap blend, and small-cap value — have rotated in and out of favor since 1928. The randomness of short-term returns underscores the importance of diversification and patience. Despite long stretches of average performance, small-cap value’s cumulative results remain powerful.
➡️ View the Quilt Chart on PaulMerriman.com

📈 Table G-1b: Fine-Tuning Table — S&P 500 vs U.S. SCV Equity Portfolio Outperformance
Prepared by Daryl Balls, this 54-year comparison (1970–2024) demonstrates how small-cap value has consistently outperformed the S&P 500 over time. The two rightmost columns — highlighting rolling 15-year and 20-year outperformance — are especially compelling, showing that even after periods of apparent weakness, SCV regains its strength.
➡️ Explore Table G-1b: Fine-Tuning S&P vs SCV

📉 Tables B1, H2, H2A, and D1.4: Core Bootcamp Comparisons
From the Foundation’s Sound Investing Bootcamp series, these tables reveal how diversified equity portfolios have performed versus the S&P 500, both in accumulation and distribution phases. They help investors see that broad diversification — especially adding small-cap value — historically improves returns and risk-adjusted outcomes.

➡️ See all Bootcamp Tables

Paul, Chris, and Daryl explain that small-cap value premiums come in bursts — often following years of average performance. As Paul notes, SCV has had multiple 15- to 20-year stretches of breaking even with the S&P 500, followed by explosive 3- to 10-year “catch-up” periods that deliver outsized gains. The data in Table G-1b makes this clear: over 54 years, SCV continues to deliver a meaningful performance edge.

As Daryl reminds listeners, “those two columns on the right are powerful.” They show that long-term investors who remain patient — and maintain a disciplined exposure to small-cap value — have been well rewarded.

🎧 Listen now on Spotify orYouTube to hear Paul, Chris, and Daryl discuss new tools like the Two Funds for Life Calculator, updates to the Best-in-Class ETF Recommendations, and their vision for the next generation of financial education.

Featured Tables and ChartsWhy Small-Cap Value Still Packs a PunchEducational Takeaways

In this practical and inspiring ETFatlas podcast episode, host Jack Lempart welcomes Paul Merriman for a return conversation focused on the biggest mistakes beginner investors make—and how to avoid them.

The discussion reveals why most investing errors are emotional, not technical. Paul emphasizes that successful investing is usually simple, though almost never easy.

Paul Merriman draws on decades of experience as an educator, advisor, and founder of the Merriman Financial Education Foundation to spotlight key pitfalls:

Paul’s conversation goes further, sharing actionable tips:

You’ll also hear why academic research has shaped today’s best investment practices. Paul strongly advocates:

Listeners receive clear advice on keeping investing simple, avoiding high fees, and building portfolios designed to withstand uncertainty.

The episode closes with tips for further reading—including free educational resources and helpful links—to support every investor’s learning journey.

Agenda

Watch YouTube video here.

Paul Merriman and Chris Pedersen tackle your biggest questions—from simplifying portfolios and picking best-in-class ETFs to understanding equal-weighted funds, tax efficiency, and how much small-cap value to own. They dig into factor investing (size, value, quality, profitability, momentum), why reversion to the mean matters, and how to think like an owner—not a speculator. Plus: mentors, work-life balance, and the real risk investors face.

Chapters
00:00 – Intro & Mentors
05:07 – Portfolio Simplification
10:13 – Work-Life Balance
11:39 – Which ETFs will outperform?
20:15 – Importance of Quality
22:45 – Equal-Weighted Funds
26:14 – History: how long is enough?
29:58 – Cost of public indexing
33:30 – Equal-weight fund tax vs. ETF
35:21 – How much small-cap value?
39:47 – Why three EM ETFs?
42:28 – “All Avantis” risk?
49:45 – Technology sector history & mean reversion
53:00 – Be an owner, not a speculator
55:27 – Outro

Key Takeaways

“Best” ETF ≠ next year’s top performer—seek consistent factor exposure, low costs, broad holdings, and tax efficiency.

Equal-weighting boosts small/value exposure but can increase turnover and tax drag; pairing large-cap blend with small-cap value can be more efficient.

Decide small-cap value allocation by temperament (common range: 10–50% of equities when pairing with S&P 500/target date).

Index approach vs. index label: DFA/Avantis are systematic and rules-based without telegraphing rebalances.

Think like an owner: over decades, earnings—not sentiment—drive returns.

Resources
• Best-in-Class ETF Recommendations (2025): https://www.paulmerriman.com/best-in-class-etf-recommendations-2025#gsc.tab=0
• Sound Investing Portfolios, Returns & Risks: https://www.paulmerriman.com/sound-investing-portfolios#gsc.tab=0
• “Tune Out the Noise” (DFA Documentary): https://youtu.be/T98825bzcKw?si=kFMugnSSCn2E76sI

In this week’s episode, Paul Merriman shares lessons from a lifetime of investing—prompted by conversations with students, longtime collaborator Rich Buck, and questions from new investors about trust and risk.

Paul dives deep into the data behind his favorite long-term strategies, including the equal-weighted S&P 500 and the classic Four-Fund Portfolio, comparing 25-year results across multiple time periods.

He explains why no one can predict short-term returns, but how history can still guide your long-term strategy. Using decades of data, Paul shows how diversification across size and value has rewarded disciplined investors—even when recent performance has lagged.

Referenced Tables & Data:

40-Year Returns (1928–2024): S&P 500 best 12.5% / worst 8.9%

25-Year Periods (1950–1974, 1975–1999, 2000–2025)

Equal-Weighted S&P 500 (VADDX/RSP) vs. Cap-Weighted (VTSAX, S&P 500)

DFA Small Cap Value (DFSVX and DFFVX)vs. Russell 2000 Small Cap Value (IWN)

Four-Fund Portfolio (S&P 500, Large Cap Value, Small Cap Blend, Small Cap Value)

Two-Fund Portfolio (S&P 500 + Small Cap Value)

From 2000–2025, the S&P 500 compounded at 8.3%, while the equal-weighted version earned 9.9%, and small-cap value reached 11.1%. Paul explains why this premium persists and why patience—backed by data—is an investor’s greatest advantage.

Full tables and charts available at PaulMerriman.com 

In this final episode of our four-part series, Paul Merriman compares three powerful approaches for a lifetime of investing:

100% S&P 500: high-risk, high-reward growth.

60/40 mix of S&P 500 and bonds: a defensive balance.

100% U.S. Four-Fund strategy: large-cap blend, small-cap blend, large-cap value, small-cap value.

Paul uses 55 years of data (1970–2024) to show how these portfolios performed during both accumulation and retirement distributions. Paul highlights the following critical tables from the Bootcamp series. 

Table B1 - Fine Tuning Table: S&P 500 Equity Portfolio 

Table B4 - Fine Tuning Table: US 4-Fund Equity Portfolio
Table C4 - Fixed Contributions ($1,000/yr): US 4-Fund Equity Portfolio
Table D4.4 - Fixed Distributions (Conservative-$40,000/yr): US 4-Fund Equity Portfolio  
Table H2 – Sound Investing Portfolios (100% Equity)
Table H2A – Sound Investing Portfolios (60/40)
Table D1.4 – Fixed Distributions ($40k + inflation)

Did diversification deliver higher returns without extra risk? Or was the classic S&P 500 enough?

Get the numbers, the tables, and the takeaways to help you decide.

Paul Merriman continues our series on radical lifetime investment strategies—comparing an all-equity S&P 500 portfolio to a balanced 60% equity/40% bonds portfolio.

After two episodes focused on the accumulation phase, this third installment shifts to retirement distributions:

How much income could each portfolio provide?

How did they hold up during major market crashes?

What role did bonds play in protecting withdrawals during tough years?

Using 55 years of historical data (1970–2024) and key tables B1

H2

H2A

D1.4

Paul shows the real-world impact of these strategies when you’re living off your investments.

Listen now to see why adding bonds can be a lifesaver in retirement—even if you love the growth potential of stocks.

At FinCon, Chuck Gaffe-moneylifeshow.comsat down with Paul for a wide-ranging conversation about investing and financial independence.

Paul shared insights on the rise of index funds, the FIRE movement’s “one-fund-for-life” approach, and how small portfolio adjustments can boost long-term returns. He also discussed timeless investing principles like staying the course, understanding risk, keeping costs low, and diversifying wisely.

At FinCon, Paul reflected on everything from the rise of index funds to the FIRE movement’s “one-fund-for-life” strategy. His message was clear: while simple investing solutions can work, small, thoughtful adjustments—like adding different asset classes—can meaningfully improve long-term returns.

Paul also emphasized timeless investing principles:

Stay the course. Don’t bail when markets turn volatile.

Understand your risk. Know how much you can afford to lose before the storm comes.

Avoid unnecessary costs. A fraction of a percent in fees can add up to millions over a lifetime.

Diversify wisely. A broad mix of assets offers protection and opportunity across market cycles.

Whether discussing crypto, ETFs vs. mutual funds, or portfolio allocation strategies, Paul’s advice always comes back to one goal: helping investors achieve financial independence with confidence and peace of mind.

You can explore his free resources, podcasts, and articles at paulmerriman.com

In Part 2 of this 4-part series, Paul Merriman compares the accumulation results of the U.S. 4-Fund Portfolio against the S&P 500, using both all-equity and 60/40 strategies.

Paul analyzes five decades of data, showing how diversification affects returns, volatility, and long-term wealth creation.

Paul also highlights the tables you’ll want to download and follow along with as he explains the numbers:

Next week: We'll look at the distributions in retirement using the S&P 500 in both the 100% equity and 60% equities/ 40% bonds.

This is the first of a series of 4 podcasts focused on the decision to have all of your investments be all equities vs. a balanced portfolio of equities and fixed income.  In this presentation Paul uses the S&P 500 in  both the all equity and the 60/40 stock/bond portfolio.  He uses the following tables during his presentation.

Table B1 Fine Tuning Table: S&P 500 Equity Portfolio

Table H2a Sound Investing Portfolios (these portfolios are all 100% equities)

Table H2 Sound Investing Portfolios (these portfolios are all 60% equities/40% fixed income) (NEW)

Table C1 Fixed Contributions ($1,000/yr: S&P 500 Equity Portfolio
In the next presentation he does the same analysis using the U.S. 4 Fund and Worldwide 4 Fund Portfolios for the equity portion of the portfolio.

Paul starts this letter beginning with aletter from a listener. The letter ends with the reason why our work has had more impact than John Bogle and Benjamin Felix (Both Truth Tellers).

 The rest of the podcast is focused on a recent article- ⁠The Evolution of Financial Advice, by Ben Carlson.  The focus is on the math, history and psychology of investing.

Paul concludes that most steps to successful investoring are well documented.  But two areas are still open for fine tuning:  Portfolio construction and fund selection. To help in that Paul recommends three Boot Camp Presentations:  Fine Tuning Your Asset Allocation, Fixed Contributions and Fixed Distributions.

On this podcast, Paul Merriman dives into three big investor questions: Why would anyone add bonds to their portfolio—even in retirement? How has the Ultimate Buy and Hold Portfolio performed in 2025? And how much Small Cap Value should an investor add to VTSAX? Along the way, Paul explains why diversification and balance matter just as much as chasing higher returns.

During the podcast Paul references ⁠Table G-1b, Fine Tuning Table: S&P 500 vs. US SCV Equity Porfolio - Out-Performance⁠ and ⁠Table H2a - Sound Investing Portfolios: Comparison Data ⁠, Quilt Chart K1a. He also points to Chris Pedersen’s Best In Class ETF Recommendations and his 2 Funds for Life returns table. These resources provide valuable context for comparing U.S. vs. international returns, equity vs. bond allocations, and how small-cap value can enhance a long-term strategy.

Paul Merriman is looking ahead to the 2025 Bogleheads Conference (October 17–19), one of the premier gatherings for long-term investors. The lineup includes Vanguard CEO Salim Ramji, Christine Benz, Bill Bernstein, Rick Ferri, Alan Roth, Jim Dahle, and more. Paul will be there for all three days to connect with listeners, share new projects, and learn from some of the best minds in the field. Even if you can’t make it, all sessions will be available later on the Bogleheads YouTube channel.

In this episode of Sound Investing, Paul also revisits key lessons on building lasting portfolios. He explains why small-cap value has historically outperformed the S&P 500, how the Four-Fund Strategy makes diversification simple and effective, and why tax-efficient investing matters for 401(k)s, IRAs, Roths, and taxable accounts. He also highlights the importance of financial education for young people, pointing to NGPF.org’s Question of the Day as a powerful way to spark conversations about money. And, of course, Paul shares a reminder about the risks of hype-driven assets through the story of Bitcoin Pizza Day.

To close, Paul adds a lighter touch by reading a poem about cryptocurrency—written in the playful rhythm of The Music Man.

I had never heard of Erin Moriarity before she contacted me about having a conversation with her on “Erin Talks Money.”When I visited her Youtube channel I immediately realized what a powerhouse she is. She has over 200,000 subscribers to her Youtube channel and her videos are terrific. She has over 800 videos on topics most young investors or beginners at any age need to see. 36 videos on budgeting, 133 on retirement, and much more. Recently she started interviewing old experienced “experts." Her first two guest interviews were Ed Scott and Bill Bengen. I felt honored to be a part of a team who want to help teach her followers. Plus, if you read the comments on the YouTube video it’s obvious she has a large group of loyal followers. By the way, her followers made me feel very welcome.

"Erin, that was an absolute Masterclass in investing! Thanks for bring Paul to your channel. I enjoyed seeing how comfortable you and the guest were and how the conversation naturally flowed between topics. I’m going to make sure my kids view this. Advice and insights for LIFE!"

"Excellent video, Erin! How do we know Erin is a force in investing advice? Look at the people she's had on her channel! I'm thankful to Erin not only for the great advice, but she is someone I can show my daughters, ages 21 and 25, and go "Look at Erin. If she can invest and make good choices w her money, so can you!". This means the world to me for them to see someone they can relate to, who disseminates complicated ideas and concepts in an understandable way. And BTW, I confirmed I'm subscribed to her channel “

0:00 Introduction & Meet Paul Merriman 2:14 The Power of Starting Early (For You & Your Kids) 7:14 100% Equities for Young Investors & Avoiding Overexposure to the S&P 500 14:02 Predicting Future Returns, Compounding & Patience 22:27 Market Cycles, Psychology & Preparing for Bad Times 25:12 Choosing the Right Portfolio Complexity (Levels 1–3) 34:08 Traditional vs. Non-Traditional Index Funds & Vanguard Loyalty 41:34 Why We Own the Whole Market & The Case for 60/40 46:19 Staying the Course, Chasing Returns & Capturing Extra Gains 57:00 How Investing Has Changed & Automatic Enrollment Benefits 1:01:45 Knowing When You Have Enough & The Rise of Hourly Advisors 1:08:44 The 3 Things Every DIY Investor Should Do & Closing Thoughts

Watch the video here

What’s holding investors back from building real wealth? 

Talking Real Money, hosts Don McDonald and Tom Cock take aim at the 10 most damaging myths, lies, and mistakes that cost investors big—often millions.

You’ll learn:

Why "having a guy" isn’t a strategy—it's a setup

Why predicting the market is like calling a psychic

How starting too late can cost you over half a million

The hard truth about individual stocks, expensive advisors, and false promises of risk-free wealth

Why diversification, low costs, and understanding your real risk profile actually work

Don McDonald, a 34-year financial talk radio veteran, and Tom Cock, the former host of Serious Money on PBS, join forces to cut through financial jargon and expose what really works. In every episode, they solve real money problems, share smart long-term strategies, and bring clarity to the complex financial issues that affect all of us.

Talking Real Money is designed to give you the real help you need for a really great financial future—and yes, it’s actually fun to listen to.

Bonus shoutout: Don McDonald also generously donated his time to narrate the audiobook version of Paul Merriman’s bestselling book, “We’re Talking Millions!” His voice brings the content to life with clarity, energy, and heart. He’s not only a brilliant communicator—he’s also a phenomenal reader. Listen to the audiobook here.

On this special Q&A episode—recorded July 29 2025—Paul Merriman gears up for his August 2 keynote at the Garrett Planning Network Retreat, where he will address more than 100 hourly financial advisors about the future of financial literacy. He invites listeners to email questions for the panel (paul@paulmerriman.com) and then dives into ten wide‑ranging listener questions that benefit investors of every age and stage.

What you’ll learn

Paul backs every takeaway with real‑world data—from DFA, Avantis, Vanguard, and Russell indexes—illustrating how disciplined asset allocation can tame the brutal drawdowns that crush performance when investors chase recent winners. You’ll hear why trend‑following protected clients in 1987, how dividends rescued returns in the 1966–1981 “go‑nowhere” market, and why low‑cost indexing plus global value exposure remain his bedrock recommendations.

Got a question for Paul’s hourly‑advisor panel? Email it before July 31 and help shape the conversation on transparent, client‑first advice.

Listen now to sharpen your strategy—whether you’re building wealth, 20 years from retirement, or fine‑tuning a 50/50 portfolio in your 60s.

In this episode, Paul Merriman shares insights into upcoming events, including his presentation at the Garrett Planning Network Retreat, as well as his reflections on asset allocation, government bond strategies, and the benefits of various portfolios for different life stages. 

Tune in for a deep dive into how different funds and asset classes perform over the long term, and how to optimize your investment strategy, regardless of age or risk tolerance.

Key Topics Covered:

1. Long-Term Returns Comparison

Paul compares two small-cap value funds: the Vanguard Small Cap Value Fund (VSIAX) and the DFA Small Cap Value Fund (DFFVX). To find long-term returns for these funds, Paul uses Morningstar’s chart function, which allows users to view the maximum (MAX) historical data for any given fund, helping to compare the performance of these funds since their inception 

2. Best Asset Allocation for Retirees

The best asset allocation for retirees typically depends on individual factors, such as risk tolerance and life expectancy. Generally, Paul suggests a moderate equity allocation of 40-60% in stocks, with the rest in fixed income, for retirees who have enough saved up to comfortably fund their retirement .

3. Asset Allocation for an 83-Year-Old Retiree

For an 83-year-old retiree, Paul discusses a more conservative portfolio with two-thirds in bonds and one-third in equities. This conservative approach, which mirrors the allocation in Vanguard’s target-date funds, aligns well with retirees who are less reliant on aggressive growth but still need some equity exposure to combat inflation .

4. Why Use Three Government Bond Funds?

Paul advocates for a diversified bond strategy that includes TIPS (Treasury Inflation-Protected Securities), short-term government bonds, and intermediate-term government bonds. This combination offers a balance of safety, growth potential, and reduced volatility compared to using just one bond fund, and provides a more stable return over time.

5. How the Worldwide 4 Fund Portfolio Works

The Worldwide 4 Fund Portfolio is structured with 25% in large-cap blend (U.S), 25% in large-cap value (INTL), 25% in small-cap blend (INTL), and 25% in small-cap value (U.S.), giving you a diversified mix of U.S. and international equities. This approach optimizes for both size and value, ensuring a balanced exposure to market growth, volatility, and global investment opportunities.

6. Should a 26-Year-Old Use the 2 Funds for Life Portfolio

Yes, a 26-year-old could benefit from the 2 Funds for Life Portfolio, which typically includes the A TARGET DATE FUND and a small-cap value fund. This strategy allows young investors to focus on equity growth, benefiting from the long-term appreciation potential of small-cap value stocks while minimizing risks associated with bonds at an early stage

7. Managing the 2 Funds for Life Portfolio with S&P 500 & Small-Cap Value 

For someone using only the S&P 500 and small-cap value fund, Paul suggests a flexible allocation approach. You might start with a 50/50 split, or adjust according to your risk tolerance. The small-cap value fund tends to be more volatile but offers higher returns over time, while the S&P 500 provides more stability with lower volatility .

8. Can There Be a 3 Funds for Life Portfolio?

Yes, a 3 Funds for Life portfolio could include the S&P 500, large-cap value, and small-cap value. Paul suggests mixing these three equity asset classes to achieve a balanced portfolio that offers growth potential without overexposing yourself to risk.
⁠
Resources:

1928-2024 Quilt Chart (K1a)⁠
⁠Sound Investing Table (H2a)⁠
Chris Pedersen’s 2 Funds for Life Table: For more detailed insights, visit ⁠Chris Pedersen’s 2 Funds for Life table⁠.

In November 2020 The Merriman Financial Education Foundation released “We’re Talking Millions!  12 Simple Ways to Supercharge Your Retirement.”  The purpose of the book was to focus on a series of very simple steps any investor might take to improve their financial future.  

"Understanding how to invest wisely for your future can be daunting. Many people never get started for fear of making mistakes. Others make choices based on hearsay and hope, sold on hype or risk aversion. In "We're Talking Millions!" you will learn why and how to make a handful of smart choices that can turn modest regular savings into a secure future. You'll discover "12 Small Steps with Big Payoffs," each of which can add $1 million or more to your retirement nest egg if you start in your 20s or 30s. These steps are well known.”

The book has had a huge impact on an untold number of readers.  The numbers are unknown because the Foundation offer the book free as a pdf, as well as a free link to the audio version  (LINK) that was read by Truth Teller Don McDonald.

While the book has had almost 400 online Amazon reviews (averaging 4 1/2 stars), the approximately 100 written reviews have over 95% 5 star ratings.  Here is one from a young student (age 19 at the time) who is now in medical school!  

5.0 out of 5 stars Life-changing book for young people interested in investing

Reviewed in the United States on December 17, 2020

Format: PaperbackVerified Purchase

"We're Talking Millions" was a life-changing book. I am a 19 year-old college student who was directed toward Mr. Merriman's book as a great resource for first time investors. His book was the perfect resource for someone with little to no prior knowledge about investing.

It starts by outlining the twelve steps to boost a retirement fund, listing tips and tricks along the way. One of the most helpful parts for me was that all of the investment lingo was clearly defined and explained, and I could get a very clear sense as to how each of these small steps fits into the overall puzzle. The book then outlines how to get started: explaining the "Two Funds for Life" investment plan, what investment companies are best to use, and suggesting specific investment funds.

I cannot recommend this book enough!! I feel confident about my investment plan after reading this book, and I plan to share it with as many of my peers as possible. I have already given it to my sister and best friend. If you are looking for information about investing and don't have the energy to read a long, dense investing book, then "We're Talking Millions" is the book for you! It is interesting, short, and extremely informative, and I hope that it helps you as much as it helped me.

Now Paul has recorded this podcast and video to discuss the 12 steps.  The video was produced as part of a special offering to introduce Western Washington University alumni to The Merriman Financial Literacy Program that is working to educate all WWU students on the personal finance topics that will be an important part of their future.

Our hope is you will pass along these links to others in your life who might benefit from this free educational information.

Is there someone in your life you think could benefit from the discussion of these 12 huge decisions? Here are several ways to access this information:  The following link is to a free pdf of our book, "We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement.”   A second and third link takes you  to a 2 hour video  and podcast on the 12 million dollar decisions.  And finally a very short (12 minute) podcast or video review of the 12 decisions.  

Many of you have been submitting thoughtful questions through our AI chat, particularly on fund selection, asset allocation, and broader investment strategy. It’s encouraging to see this level of engagement with the core principles that shape long-term financial success.

While the AI generally provides sound and efficient guidance, there are times when its responses lack the nuance or clarity that experience can bring. To provide deeper context and help you make more informed decisions, I’ve selected several recent questions to address—drawing from the AI’s suggestions where appropriate and adding insights based on decades of research and practice.

One brief correction from a recent update: I previously mentioned a resource for ETF investors in Canada, Europe, and the U.S., but misspoke on the name. The correct website is ETFAtlas.com. Jack, the developer behind it, is creating a valuable tool for globally minded investors. Your candid feedback—what’s working well and what could be improved—will be essential as he continues building out the platform. Look for additional features to roll out in the months ahead.

What Sound Investing Portfolio does Paul use and why? 3:02

What funds should I use to set up a Roth IRA account for a 21-year-old? 13:06

Do you think Vanguard funds will get lower returns than Avantis and DFA ETFs?  21:46

Is there a table that represents using the S&P 500 and Aggregate U.S. Bond Index rather than your 3-fund bond portfolio?  26:51

I am 45, hoping to retire by 55-60. Is 25% in bonds too little? 31:04

Does it make sense to have non-taxable bonds in an IRA? 34:34

Your quilt chart (1928-2024) shows a 2-fund portfolio with 50% each small cap value and large cap value. Isn’t that too much in small cap value? 35:39

How often should I rebalance?  38:09

In your podcasts you talk a lot more about the 4-fund portfolios (WW and U.S.) than you do the all-value portfolios. The all-values have higher returns but you recommend them less often. Why? 40:19

Are there conditions where the all-value portfolios will underperform the more balanced portfolios?  40:19. (Answer is integrated with previous question)

I’m 57. How much should I have in bonds?  49:30

On this week's podcast, we dive into my fascinating six-month journey with AI, exploring how tools like ChatGPT are revolutionizing access to information and informed guidance. Drawing inspiration from Seth Godin's insightful piece, "Education is Free, Learning is Expensive," we'll discuss why true learning demands commitment and effort, especially in today's information-rich world.

I've discovered AI's power extends far beyond simple fact-checking. It's a game-changer for understanding diverse perspectives, even helping me tailor advice to different generations. My goal is to help you leverage this incredible tool to build a better financial future.

We'll also gain some valuable perspective on investment returns, especially after the unique first half of the year. While six months isn't a long-term indicator, it's certainly given us plenty to discuss! Many are wondering if now's the time to jump into international equities, especially as they've shown unexpected strength.

Understanding Diversification and Long-Term Investing

I'll share my philosophy on successful long-term investing as a buy-and-holder: identifying equity asset classes that offer a premium for risk and grow faster than inflation. We'll examine the "ultimate buy and hold portfolio," which strategically blends U.S. and international equities, and analyze its performance over the past six months, comparing it to other popular strategies from Vanguard and DFA.

You'll be surprised to see how closely Avantis and DFA ETFs performed, despite some significant individual fund differences. We'll also delve into the fascinating relationship between the U.S. dollar's value and international equity performance. For a deeper dive, I highly recommend checking out this illuminating table from Brandes Investment Partners: https://www.brandes.com/insights/chart-of-the-week/us-dollar-and-international-equities-03312023. It clearly illustrates how the dollar's strength and weakness correlate with international returns, offering historical examples of how these trends ebb and flow. Chasing returns isn't the answer, but a diversified, buy-and-hold approach can significantly reduce volatility and smooth out your equity returns—a major advantage, especially for retirees.

The Allure and Nuance of Long-Term Returns

We'll then shift our focus to long-term performance data, specifically looking at the last 15 years through June 2025. You might be surprised to learn how the S&P 500, growth stocks, and even Berkshire Hathaway have compounded over this period, and how these returns compare to historical averages and expectations. While U.S. growth has been a clear winner recently, we'll discuss why historical norms suggest a different long-term outcome for value and small-cap stocks.

I'll also address the popular Total Market Index and offer a candid take on whether it truly outperforms the S&P 500 for those not seeking broader diversification. We'll explore why, in some cases, a simpler approach might be just as effective, or even more so.

The Power of Information and Future Tools

Finally, I'll emphasize how today's access to free information from sources like Morningstar empowers you to conduct research that was unimaginable just decades ago. Plus, I'll give you a sneak peek at a new, exciting, and largely free tool coming soon from AtlasETF.com, which will allow you to easily test different portfolio strategies.

Join me as we explore these crucial topics and continue to empower you on your journey to becoming a more successful long-term investor.

What are your thoughts on using AI for financial planning? We'd love to hear from you!

Today, we're diving into something super important for anyone interested in mutual funds: the SPIVA Report, it's a big deal, and we'll break down why.

But before we get to that, a quick note about August 4th. Chris, Daryl, and I are getting together that day to figure out how we can do even more to help you, not just now, but for the rest of your life as we all get closer to retirement. This is a huge goal, and we'd love your input! What can we do to improve our educational materials? Please email me your ideas at paul@paulmerriman.com. We're thinking about everything, from AI's role to helping you build a portfolio that truly lasts a lifetime, send your thoughts my way!

The SPIVA Report: Active vs. Passive Investing

Alright, let's talk SPIVA. This report has been around since 2002, tracking the performance of active versus passive mutual funds. They analyze virtually every actively managed fund, comparing them to appropriate market indexes. They go to great lengths to ensure fair, "apples-to-apples" comparisons.

A crucial aspect they address is survivorship bias. Many underperforming funds get merged or liquidated. If you were investing, these funds were part of your initial choices. SPIVA accounts for all funds, not just the ones that survived, giving a much more accurate picture. This is a key difference from other reports that only look at surviving funds, which can make active management look better than it is. They also track style consistency – ensuring funds stick to their stated investment approach, unlike some active managers who might "drift" in their investments.

What the Data Reveals: The Long-Term Advantage

While single years can show active managers doing okay, the real story unfolds over longer periods. Let's look at large-cap core funds (like those tracking the S&P 500):

·      1 year: ~76% underperform.

·      10 years: 96% underperform!

·      15 years: 97% underperform!

·      20 years: 93% underperform.

This is a powerful reason why I advocate for index funds. They're built on a formula, not on human managers trying to guess market winners. Across almost all equity asset classes, over 90% of actively managed funds underperform over 20 years.

Why? The first advantage for index funds is lower expenses. While active fund fees have come down, they're still a major factor. The biggest hidden risk, though, is manager's picks and timing. Active managers try to beat the market with individual stock selections, but the data shows it's incredibly risky. (By the way the report doesn’t address taxes on active funds and that can be another 1% drain annually.)

SPIVA's quartile data highlights this: for small-cap value over five years, the top 25% of active funds started at 10% or more. But the bottom 25% earned significantly less than 7.8%. This means you're taking on volatility and the risk of vastly underperforming your chosen asset class.

Survivorship & Patience

Another eye-opening stat: over 20 years, only 36% of all domestic funds are still in business. For large-cap growth, where the action has been recently, only 26% of funds from 20 years ago are still around. This suggests poor performance led to closures or mergers, hiding underperformance from investors.

In the end, you, the investor, are the hardest worker. Your discipline to stay the course during tough times is paramount. 

The SPIVA report is a quality piece of research, factual and fair. While the future won't be identical to the past, it often "rhymes." The longer your investment horizon, the more likely choosing index funds (traditional or non-traditional) will lead to success, avoiding performance that may be more luck than skill. Patience is key, and we want you to have patience in owning funds with a very high probability of success.

WE ARE rooting for your investment success, not just for you, but for your children and grandchildren! So, good luck, and don't forget to send those suggestions for our August 4th meeting to paul@paulmerriman.com.

Watch video here.

Join Paul Merriman, Chris Pedersen, and Daryl Bahls for a deep dive into questions facing today’s investors! In this episode, our team tackles a wide range of topics designed to help you make smarter financial decisions, whether you’re a seasoned DIY investor or just getting started.Main Topics Covered:1. Midcap Funds – Are They Necessary? 2:24We break down why midcap funds often get left out of recommended portfolios, the impact of fund overlap, and whether including them really adds value or just complexity.2. Listener Allocation Questions 12:49Hear real-life portfolio allocation questions from our listeners—including how to balance S&P 500, value, and midcap funds. The team discusses the pros and cons of various strategies and how to avoid unnecessary overlap.3. The Risks of Small Cap Growth 19:10Discover why small cap growth funds can be risky, the historical performance data, and why value funds may be a better long-term bet for most investors.4. Hourly Advisors & DIY Investing 22:41Thinking about ditching your advisor and going DIY? We discuss the benefits and challenges of working with hourly advisors, how to find one that supports your strategy, and the importance of sticking with a plan you understand.5. Capital Gains & Taxes 27:45Got questions about selling investments and minimizing taxes? While we don’t provide personal tax advice, our experts outline the key considerations and why consulting a tax professional is essential for big moves.6. Financial Freedom Mindset 30:05It’s not just about retirement—it’s about saving for freedom! Learn how reframing your financial goals can keep you motivated and focused for the long haul.7. Avantis vs. DFA Funds 31:15Curious about the differences between Avantis and DFA ETFs? Chris and Daryl compare these two fund families, explaining how their philosophies align, where they differ, and how to choose the best fit for your portfolio.8. AVGE for Granddaughter? 38:32Paul shares his personal approach to investing for his granddaughter, comparing AVUS, AVUV, and AVGE, and why teaching young investors about asset class behavior can be more valuable than just chasing returns.9. Should You Avoid Growth Funds? 45:53They explain why “growth” funds aren’t always what they seem, the pitfalls of chasing expensive stocks, and why a tilt toward value and small cap may offer better long-term results.10. The Rule of 72 – Power of Compounding 52:47Learn how to use the Rule of 72 to teach young investors (and yourself!) the massive impact of compound returns over time. It’s a simple math trick that can change your financial future.Daryl references this table- Sound Investing Portfolios 1970-2024- https://tinyurl.com/4xabhke5

In this special episode, Paul Merriman reflects on six decades of financial evolution, sparked by his son's 60th birthday. He draws fascinating comparisons between life and investing in 1965 and today, offering invaluable insights for every investor.

What You'll Learn:

A Look Back at 1965: Paul revisits societal norms, income levels, and the investing landscape of 60 years ago, including startling facts about mutual fund loads and stock commissions.

The Evolution of Investing: Understand the monumental shift from individual stock picking to the dominance of mutual funds and the revolutionary impact of index funds since their inception.

Market Returns & Bear Markets: Gain perspective on historical S&P 500 returns, including adjustments for inflation, and a review of major bear markets over the past decades.

The Power of Low Costs: Discover how investment costs, from loads to commissions, have drastically reduced, making it easier and more affordable for today's investors.

Modern Investment Tools: Paul highlights the advent of crucial financial tools like IRAs, 401(k)s, and target-date funds that weren't available in 1965, empowering today's investors.

Academic-Driven Investing: Explore the rise of academic influence in investing, with a focus on firms like Vanguard, DFA, and Avantis, and why their approach offers a trustworthy path to your financial future.

The Role of AI in Your Financial Journey: Paul shares his perspective on how Artificial Intelligence can empower investors to make informed decisions and find reliable financial guidance.

Top Financial Education Resources: Learn about the highly recommended (and free!) "Rebel Finance School" by Alan and Katie Donoghan for new investors, and explore how to access financial literacy programs like iGrad.

The Importance of Financial Literacy: Paul emphasizes that financial literacy is often overlooked in traditional education and is essential for building a robust portfolio that will support you for a lifetime.

DIY Investing Philosophy: Paul reaffirms his core mission as a teacher, empowering listeners to "do it yourself" and build their financial future with confidence.

Truth Tellers: Paul asked our listeners for recommendations for Truth Tellersas well as providing the list of our Truth Tellers in the show notes.

Our Truth Tellers

William J. Bernstein

Ben Carlson, CFA 

Jonathan Clements, Financial Writer/Author

Larry Swedroe, Author, Speaker, Chief Research Officer 

Dr. James Dahle, MD and the founder of The White Coat Investor 

Morningstar – Christine Benz and John Rekenthaler, Financial Writers 

Stan The Annuity Man, Annuity Expert

George Sisti, Certified Financial Planner® 

Rob Berger, podcaster, writer and author 

Tim Ranzetta, ngpf.org

Two Cents

Tom Cock and Don McDonald Vestory

Ben Felix

Don't miss this insightful episode filled with historical context, practical advice, and forward-looking strategies for your wealth-building journey.

Today I’ve got a lot to share: my recent trip to Western, new educational tables from Daryl Bahls, a must-read article by Ben Carlson, a fantastic free resource called Rebel Finance, and some takeaways from the latest Bogleheads meeting.

Last week, I spent two full days at Western, meeting with students, faculty, and staff. I gave presentations to graduating seniors, a personal finance class, and the Financial Management Association Club. These students were eager to learn about building a strong financial future, and it was inspiring to see so much enthusiasm.

To get students excited, I sponsored a $1,000 drawing—no strings attached. If the winner wanted, I offered to personally help them set up a Roth IRA and invest the money for long-term growth. The goal was to show how even a single investment can grow over a lifetime.

That brings me to two new tables created by Daryl Bahls. These tables make the power of compound growth real. The first table shows what happens if you invest $1,000 at age 22 in a Roth IRA and let it grow at 8%, 10%, or 12% annually. At 8%, that $1,000 could become $30,000 after 45 years—and even more when you factor in distributions and inheritance. At 12%, the total benefit can reach over $3 million! The second table looks at saving $100 a month for 45 years. With steady returns, this strategy can result in a retirement nest egg of hundreds of thousands—even millions—of dollars, plus generational wealth for your heirs.

A key lesson: with lump sum investing, the sequence of returns doesn’t matter much. But with regular monthly investing, buying more shares when prices are low can significantly boost your long-term results. This is especially true in volatile markets like small-cap value stocks.

Of course, many people face hurdles getting started—thinking it’s too complex, not having enough money, or fearing loss. My advice is: start small, stay consistent, and use the resources available to you.

Speaking of resources, I want to highlight Rebel Finance, a free 10-week course led by Alan and Katie, a couple who retired early and now teach others how to manage money and invest. Their sessions are interactive, practical, and archived on YouTube. If you—or someone you know—needs a supportive, step-by-step introduction to personal finance, Rebel Finance is a fantastic place to start.

I want to highlight the Merriman Financial Literacy Program at Western. This initiative is close to my heart and is designed to give every student—regardless of their background—the tools and knowledge they need to make smart financial decisions for life. Thanks to the program, all graduating students at Western receive free access to iGrad, a comprehensive suite of financial education tools and courses.

I also want to mention Ben Carlson’s article, “On the Inevitability of Bear Markets.” Carlson shows that bear markets are unavoidable—there’s a 77% chance you’ll experience one in any 5-year period, and a 95% chance over 10 years. But the longer you stay invested, the greater your odds for positive returns. Historically, holding the S&P 500 for 20 years has always resulted in gains.

Finally, I had the pleasure of attending a Bogleheads local chapter dinner. It was inspiring to meet others interested in index investing and financial education. We shared ideas, discussed financial planning tools, and talked about helping our families build wealth. I’ll also be speaking at the Bogleheads Conference in October—check the show notes for details.

Before I sign off, a quick note: AI is changing how we learn and teach about investing. I’m using it to organize my thoughts and create better presentations. If you have thoughts or experiences using AI in your financial journey, I’d love to hear from you.

Thank you for listening! If you found today’s episode helpful, please like, subscribe, and share it with someone who could benefit. Your support helps us reach more people and make a bigger impact. Good fortune, and happy investing!

In this episode, Paul Merriman details his upcoming presentations at Western Washington University, where he will be connecting with students, professors, and staff about the critical importance of personal finance education. Paul also gives practical investing advice, including a hands-on guide to using Morningstar’s chart and comparison tools to analyze mutual funds and ETFs.

Special Feature: Free Online Financial Literacy Course
Paul spotlights a fantastic, free multi-week financial literacy course led by Alan and Katie Donoghan—nationally recognized educators from the UK. This course is perfect for first-time investors of any age, as well as anyone looking to build a solid foundation in personal finance.

Course Dates:

Morningstar Tools & Tables Referenced:
Paul walks listeners through using Morningstar’s chart and comparison features, specifically referencing the following funds and time periods:

VFINX (Vanguard 500 Index Fund):

TESIX (Franklin Mutual Shares Fund):

VVIAX (Vanguard Value Index Fund):

DFSVX (DFA US Small Cap Value Fund):

AVUV (Avantis US Small Cap Value ETF):

How Paul Uses Morningstar:

On Morningstar, Paul suggests:

Using Morningstar’s Chart and Compare tools:

PDF showing the above comparisons

Prior to discussing his topic of the day, Paul shares his thoughts on a recent podcast featuring Truth Tellers Tom Cock and Don McDonald, joined by Weston Wellington from Dimensional Fund Advisors. Weston weighs in on some of the most critical issues facing investors right now.

Here are the topics on the podcast with Tom Cock and Don McDonald-

0:53 Weston Wellington on volatility and market uncertainty
2:47 Why volatility is the “price we pay to play”
3:32 The media’s role in investor anxiety
4:57 Should investors act on daily financial advice?
6:15 Portfolio changes should reflect personal changes, not headlines
7:24 Spam vs. Motorola: A lesson in stock picking
9:44 Dimensional’s stance on individual stock ownership
10:02 Diversification as “the closest thing to a free lunch”
11:07 Are alternative investments the new magic bullet?
12:43 Mutual funds vs. ETFs—what works best and when
15:27 Industry evolution: from 8% loads to indexing dominance
18:29 Where Dimensional fits in the modern fund landscape
21:01 AI vs. “aggregated intelligence” in managing portfolios
24:04 How regular people can find real financial advice
25:34 The key to success: Temperament, not timing
26:44 Weston’s side gig as a roving birthday singer
27:58 Why Weston hasn’t been invited lately (and he's lonely)

Next, Paul highlights a recent article by another Truth Teller, Ben Carlson. In “60/40 Portfolio Corrections, Bear Markets and Recoveries,” Ben breaks down the differences in returns during bear markets and the bounce-back that follows. Inspired by this, Paul explores a question that doesn’t get much attention: What’s the impact on a portfolio when you apply a 4% fixed withdrawal rate to the nine Sound Investing equity portfolios, each with a 60/40 equity-to-fixed income split? The results may surprise you!

Paul notes there’s more to come on this topic, as these findings could have a real impact on how investors choose their retirement portfolios.

As promised, here are the links to the Sound Investing Portfolios:

50% U.S. / 50% International

70% U.S. / 30% International

Being a do-it-yourself investor can be both rewarding and challenging. In this episode, we explore the essential mindset and strategies needed to succeed in the long term.

Drawing from academic research, historical data, and decades of experience, this episode covers:

Why short-term returns are often just noise and how to focus on the bigger picture.The importance of a 20-30 year horizon for small-cap value investments.How to avoid emotional decision-making and set realistic expectations.Insights into the performance of small-cap value vs. the S&P 500 over 25+ years.The role of faith, patience, and discipline in building a successful investment portfolio.

Paul also provides a step-by-step guide to help investors analyze the numbers referenced in this episode. Follow these steps to compare small-cap value funds and the S&P 500:

Steps to Analyze Performance on Morningstar:

Open morningstar.com.Enter DFFVX in the search box at the top of the page.Open the Chart option located next to the Quote.Select MAX next to the Start Date to view the full performance history.One by one, enter the following ticker symbols into the Fund Chart Compare search box and hit return after each:

This process allows you to visualize and compare the performance of these funds over time and gain a deeper understanding of the data discussed in this podcast.

Whether you're 25 or 81, this episode is packed with actionable insights and encouragement to help you stay the course and achieve your financial goals.

 Listen now for expert advice and a fresh perspective on long-term investing!

Links that Paul uses in this podcast-

Bootcamp #1 - Biggest Decision of All: Stocks vs. Bonds

Avantis Quilt Chart

"Buy and hold investors don’t just win on average returns— they win by avoiding the behavioral landmines that sabotage long-term success.” Paul Merriman

In this podcast Paul addresses one of the most important investment decisions a do it yourself investor will make.

Paul opens the discussion with comments from a Forbes article from 2008 that discusses Warren Buffett’s market timing decision he made to get totally out of the market in 1969 and back aboard in 1974.

The podcast (with the help of Chatgpt, includes a list of 10 common reasons market timing doesn’t work for amateur investors.

1. Missing the best days

2. Emotional decision-making

3. Perfect timing is impossible

4. Higher costs and taxes

5. Volatility is high during recovery

6. Recency Bias

7. Focus on noise, not timing signals

8. Overconfidence

9. Loss of Compound Growth

10. Data shows long-term investing wins

Paul challenges AI that there are many emotional disadvantages with timing.

The most important performance and non performance hurdles:

1. Decision-making: Timing requires lots of work and buy and hold almost none.

2. Mistakes: Market timing suffers lots of mistakes and buy & hold rarely wrong in the long term.

3. Emotional Toll: Timing has lots of emotional challenges and buy & hold is more peaceful. 

4. Behavioral Risks: Timing has lots of behavioral risks and buy & hold is simple.

5. Time Commitment: Timing takes time and action and buy & hold is rarely touched.

6. Expenses: Costs and taxes are both lower with buy & hold.

7. Timers must be more resilient with many decisions being wrong.

8. Financial Results: A few timers may perform well but all buy & holders are likely to have “won”.

Watch Video here

April is Financial Literacy Month, and to help us celebrate we brought in a returning guest, Paul Merriman. Paul has been on the show before to discuss investment portfolios, but today he talks with us about some extraordinary strides he's making as a financial literacy advocate through his nonprofit, The Merriman Financial Education Foundation. We also share some of our favorite financial literacy resources.

RESOURCES MENTIONED ON THE SHOW🌐 Visit Catching Up to FI website

https://catchinguptofi.comPaul's Website

https://www.paulmerriman.comMerriman Financial Literacy Program at Western Washington University

https://financialliteracy.wwu.eduIGrad

https://www.igrad.com/Next Gen Personal Finance

https://www.ngpf.orgWhite Coat Investor

https://www.whitecoatinvestor.comThe John C. Bogle Center for Financial Literacyhttps://boglecenter.net

TIMESTAMPS / CHAPTERS

00:00 📣 Introduction and Financial Literacy Impact

01:09 👋 Welcome and Guest Introduction

01:35 🤝 Paul Merriman's Nonprofit and Financial Literacy Story

02:33 💡 The Importance of Financial Literacy

06:59 🏫 Nonprofit Initiatives and University Programs

16:15 🏋️‍♀️ Bootcamp and Investment Decisions

18:07 🌐 Other Financial Literacy Organizations

22:09 🏛 State-Level Financial Literacy Education

25:55 ✨ Final Thoughts and Encouragement

31:27 🙏 Conclusion and Farewell

Watch video here

This updated discussion of the Ultimate Buy and Hold Portfolio highlights the advantages of equity asset allocation and worldwide diversification. The presentation was presented to members of the Washington State Society of CPAs.

At the end of the presentation Paul adds his list of 15 million dollar decisions that all investors will make in their lifetime.

Watch the video here

Join me on Catching Up to Fi l with Rick Ferri to discuss key investing topics like asset allocation and the pros and cons of small-cap value vs. total market funds.

TIMESTAMPS / CHAPTERS

00:00 ⛓️ Understanding Bonds and Young Investors

02:31 🌟 Introduction to Financial Literacy Titans

03:12 🎓 Paul Merriman's Financial Education Foundation

04:18 🧠 Rick Ferri and the Bogle Center for Financial Literacy

12:09 ⚖️ The Importance of Asset Allocation

23:11 🌍 Debating International vs. US Stocks

35:12 🗓️ Target Date Retirement Funds: Pros and Cons

45:55 📈 Exploring Small Cap Value Investing

49:34 🧩 Understanding Non-Traditional Index Funds

50:28 🔍 Small Cap Value Performance Analysis

52:56 👨‍👩‍👧‍👦 Generational Wealth and Portfolio Management

53:54 🧬 Diverse Value Factors in Investing

55:55 🚧 Challenges of Small Cap Value Investing

57:33 🧭 The Philosophy of Long-Term Investment Strategies

01:01:11 🧪 Debating the Evidence-Based Investing Approach

01:12:46 🛡️ The Importance of Staying the Course

01:22:05 🎤 Final Thoughts and Recommendations

In the left corner, we have Paul Merriman, the seasoned finance veteran weighing in at 183 pounds. In the right corner, Dr. Karsten Jeske, the scrappy newcomer at 208 pounds. The bell rings, and the small cap value debate begins.

This episode features a financial boxing match between two investment heavyweights with dramatically different perspectives. Paul Merriman champions diversification through the efficient frontier, which means adding small cap value to your portfolio. Dr. Karsten Jeska has “thrown cold water” on this approach, favoring simpler strategies like “VTSAX and chill.”

The stakes are high — we’re talking potentially millions of dollars in your retirement account over decades.

Merriman argues that history shows clear evidence for small cap value’s premium. From 2000 to 2009, small cap value outperformed the S&P 500 in all but one year, compounding at 10 percent while the S&P 500 returned negative 1 percent. He believes this pattern will continue, creating a powerful diversification effect when combined with broader market indexes.

Jeske counters that small cap value’s outperformance is mostly “front-loaded” in history, happening before anyone knew about it. Since 2006, small cap value has underperformed. He argues that once an advantage becomes widely known, it disappears in an efficient market. Adding small cap value might even be “di-worsification” — increasing complexity without improving returns.

The debate expands beyond small cap value to touch on:

While both experts disagree about small cap value’s future, they agree on fundamentals: invest early, stay invested for the long term, and understand that no one can predict markets with certainty.

What starts as a technical debate evolves into a philosophical discussion about evidence, probability, and the limits of our knowledge — all with millions of retirement dollars hanging in the balance.

Timestamps:

Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.

(0:00) Debate intro: small cap value vs index funds

(4:01) Merriman: small cap value offers premium returns

(9:40) Jeske: small cap value underperformed since 2006

(18:20) Historical performance data significance

(25:15) Stakes: difference of millions over time

(33:08) Diversification vs added volatility debate

(41:45) Risk-adjusted returns comparison

(49:08) Questioning true diversification benefits

(57:40) Value traps and actively managed funds

(1:05:08) Technology stocks vs value investments

(1:13:45) Data selection bias in studies

(1:19:40) Faith vs science in investment decisions

(1:29:20) Personal risk tolerance considerations

(1:36:08) Closing arguments on investment strategies

(1:42:08) Paula declares the debate a draw

Watch video here

If a retired investor has the ability to use a flexible distribution strategy it will likely produce one of the best financial outcomes in retirement.

Before discussing flexible distributions Paul lists the reasons he believes that 99% of successful long term depends on defensive steps. After listing 18 defensive decisions he explains why flexible distributions are better than fixed distributions for those who have over said.

The presentation includes 16 distribution tables that can be found in this pdf for the presentation.

In each case Paul compares the difference in returns and risk between the fixed and flexible distribution strategies. The discussion compares returns and total distributions for two of the 9 sound investing portfolios: one using the S&P 500 and the other the U.S. 2 Fund Portfolio (50/50 S&P 500Small Cap Value).

Other links noted in the presentation:

Sound Investing Portfolios

The move from the accumulation to distribution period of an investors lifetime includes some very important decisions.

What asset allocation between equities and fixed income?What combination of equity asset classes in the equity portion, as well as fixed income asset classes?What amount of distribution will be made annually?Will the payments be monthly, quarterly or annually?Will payments be adjusted for inflation and how often?Will the distributions be based on a fixed distribution with regular adjustments for inflation (the topic in this presentation) or on a flexible basis (the topic of the next segment)?

In this podcast Paul uses 15 slides to address the questions above. It is recommended the viewer print out the ⁠PP presentation  to make it easier to follow the numbers.

Many may find it is easier to follow the information on Paul’s video⁠ on the same topic.

If you have questions about the presentation please leave comment or question in the comment section of the video  or email ⁠paul@paulmerriman.com⁠.  For those sending an email please let us know the topic of the Boot Camp presentation.

Watch video here

Young and first time investors have to address a number of monumental decisions.  

This podcast/video helps the investor address those decisions.  For those listening to the podcast here is a link to the pdf of all of the tables referenced in the presentation.  He only focuses on a handful of tables but here is alink for those who want to review the entire set of tables.

Paul discusses the accumulation process from the viewpoint of an investor as well as a small business owner.

 If you have questions please send them to paul@paulmerriman.com or leave them in the comment section below.  

Here is the video link-

This is the 4th in a series of 9 Boot Camp videos/podcasts.  

The previous three segments covered :

Stocks vs. BondsThe Ultimate Buy and Hold Portfolio Sound Investing Portfolios.

In this presentation Paul focuses on the differences between the risks and returns of different percentages stocks and bonds.  He also discusses one table that mixes different percentages of the S&P 500 and small cap value.Here are a couple of videos that focus on small cap value.

$13.83 Million? Yes Please! Paul Merriman’s Small Cap Value Strategy

The one asset class you must own

Watch Video here

Chris Pedersen updates his recommendations and describes his selection process in an interactive presentation with Paul and Daryl along for the ride.

This "Best In Class ETFs Recommendations" presentation is the 9th in the Boot Camp Series.  (We have not completed some of the earlier presentations due to the high interest in Chris' Best In Class Recommendations).

The focus of each the Boot Camp presentation is to help investors make the best of what we consider to be  the biggest long term decisions they will make.

Of course we cannot know the ETFs that will produce the highest returns but we can measure the likely impact of the factors that Chris discusses during his presentation.

On behalf of all of the people who find this work helpful, as well as Daryl Bahls and myself, I want to thank Chris Pedersen for all he has done to help us understand the potential long term advantage of his analysis.  It is our hope that his work will give investors  the confidence and commitment to “stay the course" in the normal ups and downs of the market.

00:00:00 - Intro

00:07:15 - Changes

00:12:31 - Factor Basics

00:18:00 - Selection Criteria

00:20:21 -- Quantifying Differences

00:24:32 -- Comparing in an Asset Class

00:31:10 -- More than just numbers

00:32:12 -- BIC ETFs on Website

00:33:05 -- US Large Cap Blend

00:34:33 -- US Large Cap Value

00:37:40 -- US Small Cap Blend

00:42:30 -- Int'l Large Cap Value

00:43:30 -- Int'l Small Cap Blend

00:44:15 -- Em. Mkts Small Cap Blend

00:44:50 -- Portfolio Configurator

00:46:25 -- Roboadvisor ETFs

00:51:06 -- Versus Russell 2,000?

00:54:00 -- Avantis & DFA Advantage

01:03:36 -- Analysis Timeframes

01:04:44 -- Closing Remarks

Links:

Best-in-Class ETF Recommendations Page

Portfolio Configurator

Sound Investing Portfolios Bootcamp Page

The 2024 numbers are finally in and we have produced the #1 investment decision in the  Bootcamp series. There is no question that the biggest lifetime decision an investor makes is the choice between the safety of bonds and the potential long term growth of stocks.  Here is a⁠ link⁠ to the pdf of the set of slides Paul uses in the presentation.  The presentation includes the ⁠updated 1, 15 and 40 year returns tables ⁠ along with the  ⁠quilt charts for the 1928 to 2024 period⁠.

Our thanks to  Daryl Bahls who has put together most of the tables in the Bootcamp series.

If you have questions please send them to ⁠paul@paulmerriman.com⁠.  Please put  Bootcamp #1 in the subject line. 

Watch video here.

The purpose of this podcast/video is to help investors understand the likely risk and return parameters of small cap value, S&P 500, 2 Fund Portfolio (50% each SCV/S&P) and 4 Fund Portfolio (25% each SCV/S&P/SCB/LCV).  In each case the best, worst, and average 1, 2, 3,  5, 10. 15, 20, 25, 30, 35, 40 year returns are listed.
The following tables are discussed:

S&P 500 Historical Risk and Return 

US SCV Index Portfolio Historical Risk and Return

 US 2 Fund Index Portfolio Historical Risk and Return 

US 4 Fund Index Portfolio Historical Risk and Return 

Also the risk and return page from the Sound Portfolios  is referenced. 

This is the second presentation in the Boot Camp Series.Click for video.

The first presentation (Stocks Vs. Bonds) will be available in the next two weeks.

This presentation makes the case for diversifying a portfolio using multiple equity asset classes.

Paul uses 4 set of tables to make his case:

A1a:Ultimate Buy & Hold Equity Portfolio (50% US/50% Int'l) 

A2a:Alternative Equity Portfolio Tables (50% US/50% Int'l)

A1b:Ultimate Buy & Hold Equity Portfolio (70% US/30% Int'l)

A-2b: Alternative Equity Portfolio Tables (70% US/30% Int'l)

Paul also mentions the recent video/podcast that addresses the Sound Investing Portfolios.https://www.youtube.com/watch?v=XGv0ZdZ8adk

https://www.paulmerriman.com/2025-bootcamp-3-sound-investing-portfolios

In this Podcast, Paul, Chris, and Daryl describe the Sound Investing Portfolios and their background, rationale, construction, and performance.   

00:00 - Intro
02:00 - DFA Background
05:47 - Portfolio Rationale
11:45 - Allocations
14:11 - Backtesting & Comparisons
19:32 - Rewards of Diversification
28:42 - Differing Good Times
32:40 - 70/30 US/Int'l Portfolios
35:05 - Which Funds?
39:08 - Close

During the Podcast the following tables were referenced:
✅ Table H1a - Sound Investing Portfolios: Asset Allocations (50% U.S. / 50% Int’l)
✅ Table H2a - Sound Investing Portfolios: Comparative Data (50% U.S. / 50% Int’l)
✅ Table H3a -  Sound Investing Portfolios: Annual Returns (50% U.S. / 50% Int’l)
✅ Table H1b - Sound Investing Portfolios: Asset Allocations (70% U.S. / 30% Int’l)
✅ Table H2b - Sound Investing Portfolios: Comparative Data (70% U.S. / 30% Int’l)
✅ Table H3b - Sound Investing Portfolios: Annual Returns (70% U.S. / 30% Int’l)

In this insightful conversation, renowned financial expert Paul Merriman shares his wealth of knowledge and experience in investing. He discusses his journey from stockbroker to founding his own investment advisory firm, and eventually establishing the Merriman Financial Education Foundation. Paul delves into various topics, including:

✅ The importance of data-driven investing and understanding the math behind it
✅ His meeting with John Bogle and their differing philosophies on investing
✅ The case for small cap value investing and its historical performance
✅ The challenges of market timing and the benefits of portfolio diversification
✅ The emergence of ETFs and trend following strategies

PaulMerriman.com

Tables, Graphs and Charts
Boot Camp
S&P 500 vs Small Cap Value
Quilt Charts 
Equity Index Returns 
Free Copy- We’re Talking Millions
Free Copy- 2 Funds for Life
Best in Class ETF Update 2024

ETFAtlas.com – A new portal offering a comprehensive catalog of ETFs from the United States, Canada, and Europe.

The podcast starts with a brief history of the growth of the Merriman Financial Literacy Foundation.  From it’s small beginning in December 2012, it has produced over 1000 videos, articles and podcasts, published 6 books, spoken at many national conferences, underwritten a university class on investing for non finance majors at Western Washington University, produced portfolios for do it yourself investors, produced recommended mutual funds and ETFs to build the portfolios.  Most recently there is a new effort to give every Western student a meaningful exposure to personal finance.  This is being done under the Merriman Financial Literacy Program at Western.

Two years ago we introduced the Merriman Boot Camp.  The purpose of the project is to help investors make the best financial decisions.  In the podcast Paul discusses 14 of those decisions and how we are enlarging our educational efforts.  He also notes that the Boot Camp pages will also contain a new Q&A section on each topic as well as additional information from our list of Truth Tellers.

In this first Q&A podcast of 2025, Paul, Daryl, and Chris discuss several listener questions and expand on Paul's rebuttal of Big ERN's recent criticisms of diversifying with small-cap value.

0:00 – Introduction

0:29  – Responding to Big ERN's critique

2:11 –  Small-cap value lumpsum vs. dollar-cost averaging

6:38 –  Daryl's take on SCV's premium persistence

8:46 –  Chris' take on SCV's premium persistence

15:50 –  Paul highlights the random timing of SCV vs. S&P500 returns

19:50 -- Are there good alternatives to Vanguard's Wellesley fund?

26:18 -- Does 2 Funds for Life mean no SCV in retirement?

29:35 -- Why not let Buffet manage our money in BRK.B?

33:52 -- What portfolio to get a 3.6% safe withdrawal rate in retirement?

38:53 -- Which accounts do we tap for our annual spending needs?

49:39 -- Why doesn't the Portfolio Configurator include REITs and emerging markets?

54:52 -- When will the Best-in-Class ETF recommendations be updated?

These tables were referenced-

Table G-1b - Fine Tuning Table: S&P 500 vs US SCV Equity Portfolio - Out-Performance

Tell-Tale_Charts

2 Funds for Life PDF

2 Funds for Life on Amazon

There has been a lot of anti small cap value articles and podcasts over the last several years.   I have been asked many times whether I think the small cap value premium is a thing of the past.In this podcast I have addressed the most commonly discussed criticisms of small cap value.  During the presentation I reference a blog entitled, "Small-Cap Value Stocks: Diversification or Di-WORSE-fication?"

The Early Retirement Now newsletter is written by Karsten Jeske, PhD, CFA.Here is a video of a friendly debate that Karsten and I had on the “Forget About Money” podcast. Listeners will learn that Karsten and I have very different beliefs about what returns best represent the small cap value premium.  I reference the real time  Morningstar performance results of DFFVX (2000 to present), DFSVX (1993 to present) and AVUV (2019 to present).

During my discussion I reference Table G-1b, Fine Tuning Table: S&P 500 vs. US SCV Equity Porfolio - Out-Performance and Table H2a - Sound Investing Portfolios: Comparison Data

I also referenced a Q&A response on Truth Teller Rob Berger regarding his personal take on small cap value in his own portfolio.  

I also mention the interview with Jim Dahle at the 2024 Bogleheads Conference. https://www.youtube.com/watch?v=8C3KhRJCwCQ

On December 26, 2019 Paul recorded a podcast entitled, “Could This Be the  #1 Reason to Invest in Index Funds?”   We were shocked to learn that over 1,000,000 investors opened the podcast.  In this podcast he addresses the topic again in “Could This Be the #1 Reason to Invest in Index Funds? Part 2”

The podcast reviews the well established index advantages and adds one that may be the biggest reason an investor is able to find comfort staying the course in an index fund for the rest of their life. This might be a good podcast to share with your young adult children.

Paul, Daryl, and Chris discuss the risks of investing and life.

Paul starts with an introduction and admission of his challenges managing risks related to diet and health.  He then gets Chris and Daryl to chime in with their definitions and perspectives on risk. 

Daryl then shares a framework for evaluating risk from his days as a systems engineer.  The framework looks at risks in two dimensions: likelihood and impact (or severity).  He describes how the framework can help prioritize which risks to mitigate and gives examples of how some financial risks might be reduced in both dimensions.  Chris is reminded of the book "Die with Zero," and mentions how risks extend beyond finances to experiences.

Paul, Chris, and Daryl then discuss some of their challenges in managing the risks of their own portfolio allocations and how their behaviors differ from what might be considered ideal. This leads to discussing the dangers of learning the wrong lessons with examples from inside and outside the personal finance world.

Paul reads from the Jonathan Clements article that inspired this podcast: "The Risks We Miss." 

Paul then closes out the podcast.

Outtakes include Paul and Chris discussing how the Best-in-Class ETFs can help mitigate risk, and what Daryl wants for Christmas.

Watch video here- https://youtu.be/veXXh-YVYKU

While I was at the Bogleheads conference in Minneapolis earlier this year, I had a lengthy interview with Paula Pant. 

I enjoyed the interview and found lots of questions and comments under the YouTube presentation that I wanted to answer. 

While I wrote short comments on the site, I decided many of the questions were worthy of more discussion.Here is a link to the YouTube interview and podcast:

#1.  “Most of my holdings are in cash as I cashed out last time the market went down.  How do I stay invested and think long-term to help me ride out the ups and downs of the market?”  02:17

#2.  “I’m just beginning my investment journey and planning to put 85K into dividend stocks so that I will be making up to 30% per year in dividend returns.”   https://rethinking65.com/the-preference-for-dividend-paying-stocks-is-irrational/ 10:41

 #3. "What Fidelity Funds do you recommend to build your 4 Fund Portfolio?"   15:00

#4.  "How often do you recommend rebalancing the 4 Fund Portfolio?" 17:02

#5  "Nobody knows what’s going to happen next so we should practice some humility and CHOOSE a strategy with a long-term edge."  What is the edge and what else do you need to know dividend stocks k? 21:02

#6.  "I”m not looking to beat the S&P 500…I’m more than happy with the returns I get from it.”  Does that mean it’s right for you? 24:36

#7.  In response to Paul's recommendation of the 4 Fund Portfolio this is what one viewer said, “For what it's worth, backtesting shows his proposed fund portfolio does not do better than VTI or VOO.”  Paul responds. 28:32

#8.  "The only small cap value available in my 401k is DFSVX which has an expense ratio of .30%.  Is this expense ratio too high? 32:32

#9. "Can you give ETF recommendations for all of the equity asset classes?"   Here are the Best In Class recommendations. 35:23

#10. "How do you fund a Roth IRA when a child doesn’t have earned income?" #11.  Please recommend more information on how I might adjust my 401k. We're talking millions and 2 funds for life. 36:37

#11 "Would you accomplish similar performance results by setting up a strategy using sector diversification instead of asset class diversification?" 40:01

#12  "I’m helping my 17 year old daughter with her Roth IRA.  What do you think about shooting for an all equity 40/30/30 portfolio of US small cap value/S&P 500/Total International market?” 42:23

#13. “This guy has been pushing small cap value  and underperforming for years.  Sorry, no thanks." 44:25

The podcast is dedicated to answering questions about:

 Target date funds:  “Do you think someone that simply maxes out their retirement accounts with target date funds and total market funds will be “fine”?

Selecting a distribution strategy:  What advice can you give to a DIY investor who is trying to decide what to do about how they access their money to live on and how much to take out?

Buy and Hold vs. market timing:  I believe in buy and holding  index funds, with low expenses. I don’t think I need to pay an investment advisor to help me do that.  I see the Merriman Wealth Management firm offers buy and hold and market timing services and charges AUM fees.  This is very different from what you suggest on your Foundation website.  What is your relationship with the Merriman firm and what are your beliefs about market timing?

All small cap value portfolio:  Do you know investors who are investing 100% of their portfolios in small cap value?  It seems like it might be a smart thing to do with very long term investments for a very young person.

Time to start market timing:   I am thinking about using timing with a large amount of new money.  Who do you use for the market timing aspect of your portfolio management?  

Flexible vs. fixed distribution strategies:  "I believe you expect that a flexible withdrawal strategy will pay out more money to live on, as well as leave more money to heirs.  Bill Bengen seems to believe that this strategy is not sustainable over the long term even if a person had enough money to accept lower annual withdrawal amounts in market draw downs.  Flexible withdrawal strategies make sense to me but there isn’t much writt en about them.  What am I missing?”

The answer to this question includes 4 distribution tables:  

Table D1.4 - Fixed Distributions: S&P 500 Equity Portfolio - Conservative ($40,000/yr)

Table F1.4 - Flexible Distributions (Conservative-4.0%/yr): S&P 500 Equity Portfolio

Table D4.4 - Fixed Distributions (Conservative-$40,000/yr): US 4-Fund Equity Portfolio 

Table F4.4 - Flexible Distributions (Conservative-4.0%/yr): US 4-Fund Equity Portfolio 

Finally Paul reads four Ben Carlson quotes about the nature of bull and bear markets.  Paul makes reference to a table of annual Price to Earning (P/E)ratios starting in 1871 and another comparing the S&P 500 Price to Book Value from 2000 to 2024.

As this podcast is being released on Thanksgiving Day Paul begins by thanking those people who choose to follow the Foundation’s work, those who forward our articles, podcasts and videos to others, and those who donate time and money to the Foundation.

He also addresses the challenges of living at three different homes (Bainbridge Island, Portland and Rancho Mirage) in 2024.  We know some donations have been lost in the mail.  

Our concern is people will declare a charitable deduction that did not actually happen.  By the way, the permanent address of the Foundation is now -

2445 NW Westover Road #311,

Portland, Oregon 97210.

Paul comments on his challenges in recommending cryptocurrency.

Finally he discusses the life changing impact of goal setting.  

The following are articles and videos on goal setting from some of the Truth Tellers Paul recommends.

Jim Dahle writes to young doctors but the information is usually good for all people who are putting together a financial plan. The Power of Focus in Your Financial Life

Jonathan Clements is struggling with cancer and for anyone facing death sooner than expected, and the goal setting that might be considered, I think you will find his journey worth reading. The C Word.

William Bernstein has recently updated his best selling , “The Four Pillars of Investing.” In this short introduction you will hopefully decided it’s worth reading the rest of the book.

Here is a podcast that you won’t want to miss.  Larry Swedroe is interviewed by another Truth Teller, Ben Felix and Cameron Passmore.  The book they discuss has been updated since the interview.  "Your Complete Guide to a Successful and Secure Retirement"is one of the best books I know for those trying to address the many important retirement goals.

 While Christine Benz is the Director of Personal Finance at Morningstar I thought it might be interesting to get her take on the non-financial plans we should consider.  Her new book has  become a best seller.  How to Retire: 20 lessons for a happy, successful, and wealthy retirement.

Paul and Chris interview M1 Finance's CEO, Brian Barnes, and ask several listener questions.

This is the follow-up to their previous M1 Finance 2024 update podcast and YouTube video.  

They start by asking Brian how and why he created the company. That's followed by a wide-ranging conversation that includes some interesting surprises, like Chris's realization that using M1's target-date pies instead of traditional target-date funds can result in some real tax efficiency.

Here's the topic list with time codes.

00:00:00 Intro

00:08:12 M1 Genesis

00:12:51 Partial-Share ETF Trading

00:15:59 Who is M1 for?00:19:42 What's next?

00:22:44 Is M1 a robo-advisor?  

00:25:36 M1 Pies

00:29:38 Pies vs. TDFs00:34:32 Tax Efficiency

00:35:46 How safe is M1?

00:41:13 Fixed trade windows

00:48:07 Crossing orders

00:49:22 Competitive rates

00:51:29 Which ETFs?

00:53:19 Fees?

00:57:07 Multi-account rebalancing?

00:58:31 Entrepreneur's experienceDisclaimers:Content is not intended to provide personal tax or financial advice.
This information is intended to be used and must be used for information purposes only.
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.
Related to M1 Spend:
For informational purposes only and not a trade
recommendation. All product and company names
are trademarks or registered trademarks of their
respective holders. Use of them does not imply any
affiliation with or endorsement by them.

Paul mentions his upcoming presentation to the ⁠⁠L.A. Chapter of AAII⁠⁠ on November 16, 2024    10:30 to noon.

Chris Pedersen and Daryl Bahls join Paul to answer your questions.  Paul opens the podcast with a brief introduction of the team and notes how thankful he is for their commitment to helping others.

Paul mentions the huge moves small cap value funds made on November 6.  He follows that with a comparison of the 5 year returns of AVUV and  3 Vanguard small cap value funds (VBR, VIOV and VTWV).  AVUV compound rate of returns were 3 plus percent higher than the Vanguard funds.  Paul’s questions:  What caused the higher returns and are they likely to be similar in the future?

Chris responds with a lengthy discussion of the systematic approach that AVUV uses and Paul reads what AVUV says about their systematic approach.

Chris compares the DFA small cap value fund (DFSV) with AVUV.  Chris also talks about a relative ranking he wants add to his Best In Class recommendations next year.

Chris discusses the quality factor of AVUV vs. funds that build their small cap value portfolio using the Russell 2000 Small Cap Value Index.  He introduced a new term: rich minus weak ratio.Paul and Chris discuss the question:  Is AVUV and actively managed fund?

Question:  JL Collins recommends VTI (Total Market Index) and Warren Buffett recommends VOO (S&P 500).  Which do we recommend?  Chris notes the important differences between VTI and AVUS and suggests a likely extra .5% return from AVUS.

For those who want to own only total market funds, the group discusses the possibilities of replacing both VIT(U.S. Total Market)  and  VXUS (International Total Market) with total market indexes that favor slightly smaller companies with a slightly more value tilt.

Paul references Ben Carlson’s article about, ⁠⁠“Some Things I Don’t Believe About Investing.”⁠⁠ 

Chris, Daryl and Paul weigh in on things they don’t believe about investing.Chris ends with some important comments about how we are likely helping investors.

Watch video here.

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

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/

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 Merriman When 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.⁠

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

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 the15 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.

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 chriskpedersen@gmail.com.  

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.

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

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

david@huguenotfinancialplanning.com⁠ 

For those interested in the Boglehead Conference:

⁠https://boglecenter.net/2024conference/⁠

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? 21:54

Q4:  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.⁠ 29:37

Q7: 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

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.

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

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

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 hisAAII 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.

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.

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.

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.

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.

On June 8, 2024 Paul gave a 2 hour presentation to the Seattle Chapter of Choose FI.  The topics covered the 8 biggest investment decisions, plus a new piece on putting aside money for a newborn to 21 year old. 

Here is the video link. This podcast covers 10 unanswered questions from the presentation, plus 5 additional topics that guests listed as most important topics of the meeting.

Q&A:

1. How to find the best 3 year fixed annuity.  https://www.stantheannuityman.com/

2.  How to select the best target date fund.

3.  Why small cap value stocks make higher returns.

4.  When do Roth conversions make sense?  Link:  https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/

5.  What is your bottom line best portfolio without having to go through all the tables?

6.  Will Western Washington University offer financial literacy classes on their satellite campuses?

7.  What additional advice would you give to a 45 year old who wants to live on a 4% distribution for the rest of their life?

8.  What distribution advice would you have for a single person who is planning to retire before age 45?

9.  In creating your tables, how often do you rebalance the portfolios?

10.  Please explain the most important differences between an ETF and a regular mutual fund.  https://www.thebalancemoney.com/differences-between-mutual-funds-and-etfs-2466791https://www.investopedia.com/ask/answers/09/mutual-fund-etf.asp#:~:text=Both%20mutual%20funds%20and%20ETFs%20offer%20investors%20pooled,offer%20a%20wide%20selection%20of%20actively%20managed%20funds.

More topics from the June 8 presentation:

11.  What changes should I make in my portfolio when I retire?

12.  Are low expenses the biggest decision when investing in index funds?

13.  What are the most important steps I can take to get better returns?

14.  What are the biggest (most costly) mistakes investors make?

15.  Is investing in the Total Market Index or S&P 500 all you need to reach FI?

Mavis Tsai is a friend I have known for decades. Our paths crossed as I was teaching one of my free 3 or 6 hours workshop. 

In January she asked me to participate in her 5-day online event entitled,  "Confluence of Hearts: A Global Summit on True Self, Brave Connections, and a Love-Led World”  In the description of the event she noted: "Together, we will explore cutting-edge insights on reconnecting with our true selves and our fellow humans, dismantling antiquated societal structures, harnessing our passions and gifts, and co-creating a thriving future for generations to come by contributing our highest selves to the world.”

We have one thing in common.  We are both trying to help people get better—but in very different ways.

When she asked me to participate I begged off. 

Here is a paragraph from my attempt to graciously say no.

"I am trying to help people have a better financial future, and I’m willing to do it for free, but I’m not sure I fit the mold of the kind of speakers you are bringing together.  I’m an expert on investing by the numbers.  I want do-it-yourself investors to take the steps that will give them the highest probabilities of long term investment success.  Normally that means squeezing every ounce of emotion out of the process.”

Mavis knows I like lists so she gave me a list I couldn’t resist.

1. Your expertise in investment not only aligns with our summit's focus on creating a love-led world but is a crucial piece of it. Financial stability and wisdom empower individuals to live their true selves and make brave connections. By teaching attendees how to secure their financial future, you're offering them the freedom to pursue their passions and contribute meaningfully to society.

2. Our summit thrives on the diversity of thoughts and approaches. Your unique perspective on investing by the numbers adds an invaluable dimension to our discussions. It’s about balancing the heart and mind—your approach provides the stability and clarity needed to pursue one's true passions with less financial fear.

3. Contrary to taking the passion out of investing, your method encourages a highly disciplined form of passion. It's about being passionate about our goals and the systematic pursuit of those goals. This disciplined approach is a form of emotional intelligence that is highly relevant to our attendees' journey towards a love-led life.

4. Your willingness to contribute your highest self by educating others for free is the epitome of what this summit stands for. (Your interview will be for less than an hour :)). It’s about contributing to a thriving future by sharing our gifts. Your insights can help our audience make informed decisions that align with their values and long-term success.

5. Your concern about confusing your followers is understandable. Participating in this summit, however, is an opportunity to show the depth and versatility of your expertise. It’s a platform to demonstrate how financial wisdom is foundational to living a fulfilled, passion-driven life, bridging your work with broader life goals. I said yes and the conversation is entitled, 

"Balancing Hope and Reason: The Lifetime Path to Successful Investing.” 

I hope you enjoy it.

Watch the video here.

On May 18, 2024 Chris Pedersen made a presentation to the Houston Chapter of AAII.   At the end of the presentation Chris answered over 20 questions.  Those questions are on this podcast.  Here are the question topics:

1. Portfolio expectations compared to S&P 500?
2.  How would adding small cap value (SCV) help a retiree?
3.  How important is asset class location using 2 Funds for Life?
4.  Would a do it yourself target date portfolio be better than buying a target date fund?
5.  How do you expect interest rates to impact equity?
6.  How different are the Total Market Fund expected returns from the S&P 500?
7.  What are drawbacks by investing in SCV?
8.  What steps should we take to manage emotional risk?
9.  What is your opinion about combining TIPs with equities?
10.  Should you increase your equity holdings as the get older?
11.  Please comment of Christine Benz’s Bucket Portfolio?
12.. What SCV funds do you recommend?
13.  Are there other target date funds you recommend besides Vanguard?
14.  At age 60 what kind of return should I expect over the rest of my life?
15.  Do you recommend nudge  withdrawals over withdrawals from the whole portfolio?
16.  Why would more profitable small cap value funds do better than portfolios of less profitable companies?
17.  Do you recommend VT, the Vanguard Worldwide equity fund?

Inside the Investment Mind of Chris Pedersen with host Charles Rotblut.  Charles is  the editor of the AAII Journal, and a vice president and Chartered Financial Analyst at AAII

Q1:  What is the best way to get big positions in cash invested?  All at once or dollar cost average over time?

Q2:  How should target date fund investors choose the best date for their situation?

Q3:What are the pros and cons of backtesting historical performance?

Q4:  Why did you choose the drawings in your book “2 Funds for Life?”

Chris explains investing diversification with some analogous side trips to the worlds of food and nature. He starts by illustrating the importance of perspective, emphasizing the need for many decades of data in backtesting. Next, he covers the ingredients, or asset classes and styles, most investors will use to diversify. With the ingredients in hand, he explains what happens when we mix them, and how mixing ingredients that are substantially different can improve the return we get for any given level of risk. He then covers the real-world implications for accumulators and retirees and finishes off with some fine tuning tables and thoughts on the discipline needed to be a meaningfully-diversified investor. Here is Chris' pdf from his presentation Get a free copy of We're Talking Millions

Eleven months a year Dr. Robert  Pass produces a podcastdedicated to a review of the latest literature and thought leaders in pediatric cardiovascular care.  For the last 3 years Rob has finished his podcast series with a focus on personal finance. 

It has been an honor to work with Rob on these special podcasts for the last 3 years. This is his podcast from December 2023. 

To conclude 2023 we end with noted national authority on personal finance and investing, Mr. Paul Merriman.

Mr. Merriman reviews some basic ideas about asset allocation within a retirement plan such as a 403b, 401k or IRA with the goal of achieving the highest degree of return for level of risk.

He reviews the importance of diversification and also shares with us both a '2 fund' and '4 fund' approach to creating a low cost, efficient and diversified portfolio that has, historically, been associated with good long term returns.
Mr. Merriman's work can be seen at: paulmerriman.com
For those interested learn more about his '2 Fund' solution: https://www.paulmerriman.com/2-funds-for-life-update-2023
For those interested to learn more about his '4 Fund' solution: https://www.paulmerriman.com/4-fund-combo
For those interested in target date funds: https://www.paulmerriman.com/target-date-funds
Finally, for those who did not previously take advantage of Paul's free book, the following is a link to a free PDF of the book: https://irp.cdn-website.com/6b78c197/files/uploaded/Were-Talking-Millions.pdf
Please note: This episode is not intended to provide specific personal finance advice and is for entertainment purposes only. Please consider speaking with a trusted advisor before making any significant changes to your retirement assets.