Rank #1: What you probably don’t know about Paul Merriman
In this interview with financial advisor Joshua J. Sheats, of Radical Personal Finance, Paul speaks of his early ventures on Wall Street and in manufacturing, what it was like to build an advisory firm in the 1980s, his life’s challenges, and the goals, affirmations and philosophies that continue to motivate his work with the financial education foundation he started upon retirement in 2012.
Rank #2: Lessons learned at AAII Conference
The AAII (American Association of Individual Investors) Conference was a treasure trove of investment history and advice for amateur investors. In fact, Paul felt a lot of the information should be meaningful to professionals as well. Paul was impressed with the presentations from Meb Faber, Larry Swedroe, Dr. Craig Israelsen and Mark Hulbert. The one thing that all four experts agree on is that investors’ emotions are their biggest enemies. After listening to all these experts Paul is now convinced what he believes is the biggest decision investors make—and most aren’t making it!
Rank #3: 10 things you should know about small cap value
Small cap value continues to be an asset class that Paul recommends for all investors. Of course, for retired investors it may be a very small part as their position in equities is low. For first-time investors following Paul and Chris’ target date fund recommendations, the super-charged asset class may take up the entire portfolio. Most investors will be surprised to learn that small cap value is low risk compared to the conservative S&P 500. In this discussion Paul references this study by Chris Pedersen, Resilency: How Fast Do Different Asset Classes Recover?
Rank #4: 10 Q&A for investors trying to do the right thing
From first-time investors to those on the verge of retiring with millions of dollars in savings, Paul’s answers to questions from our listeners and readers contain something of interest for every investor.
1. How different is the new secret strategy from what you are recommending now?
2. Why would anyone want to take the risk of investing in the market at these levels?
3. Do you have specific fund recommendations for your World Wide Equity Portfolio?
4. What are the most important variables that help you select the best in each equity category?
5. Where can I get a combination of high quality tax advice along with investment advice?
6. Why don’t you offer portfolios using the Vanguard Admiral Funds?
7. Why do you have a tax-managed fund inside of a tax-deferred portfolio?
8. Where can I find out about all the tax implications of mutual funds?
10. Some of your return numbers don’t add up. Can you explain why one return is 50% less than another for exactly the same investment?
Rank #5: 12 Answers to Investor Questions
Paul answers 12 questions from his readers and listeners concerning REITS, bonds, gold, investment risks, portfolio management, asset class allocation and emerging markets:
1. Is it a good idea to own both U.S. and international REITs? 5:45
2. Should REIT percentages change if we buy real estate? 8:55
3. How much should we invest in bonds now? 10:40
4. When should we start investing in bonds?
5. When we invest in bonds what asset classes should we sell to buy the bonds? 16:05
6. Should we have commodities, gold or other sectors in the portfolio? 19:10
7. Do you think investors really understand the risk they are taking? 21:30
8. If you were managing our portfolio, what asset classes would you invest less in and what asset classes would you invest more in? 24:15
9. Why do U.S. investors tend to favor domestic funds? Is there any data that shows “home bias” is common? 36:10
10. Are investors getting sufficient international exposure by investing in large multinational corporations? 42:43
11. What is the appropriate allocation of domestic, international and emerging market funds? 44:40
12. What are the risks of investing in international and emerging markets? 49:30
Rank #6: The ultimate distribution strategy: 2018 update
Paul’s favorite distribution strateg Each year Paul updates his favorite distribution strategy. In this discussion listeners will want to have copies of distribution tables 3 and 12. These tables reflect a 5% initial distribution plus annual increases for inflation. Tables 17 and 16 also start with a $50,000 distribution, but the distribution is determined by taking 5% of the previous year’s ending value. The discussion includes 12 defensive steps that Paul and his wife apply to their investments.
At the end of the podcast Paul answers several common questions about this strategy:Is it reasonable to take out 6% a year?Is it reasonable to expect future returns to be similar?If returns will be different, what returns should be assumed for planning purposes?
Rank #7: 2018 Update of Paul’s “Ultimate Buy-and-Hold” Portfolio
For many years Paul and Rich have updated the Ultimate Buy-and-Hold Portfolio, and have posted the updates for 2018. This podcast is a step-by-step discussion of building a portfolio of 10 major equity asset classes. We want to make very clear how much impact each of these asset classes has on the long-term return of the portfolio, as well as the standard deviation (volatility). For more on the topic, here are links to two new articles and the table referenced in the podcast.
Rank #8: A huge reason to invest in small-cap value
For many years I’ve sung the praises of small-cap value for all investors. Of course, that would be a relatively small percentage for retirees and a lot for first-time investors. I have used this table of 1-, 15- and 40-year returns for large-cap blend, large-cap value, small-cap blend and small-cap value so investors can easily compare the best and worst of times for these asset classes.
Jeff Mattice, one of our readers, took a very interesting approach to comparing these asset classes. In this Table, he uses 8 periods, from 1 to 40 years, to compare a single accomplishment: What percentage of the time was each asset class number one for each period of time? I think most of you are also interested in how investments do in the worst of time. Jeff did the same analysis but focused on the percentage of time each asset class produced the worst returns. Join me and find out why I think this is the way it will likely be in the future.
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Rank #9: Understanding the 2 Funds for Life strategy
Join Paul as he discusses:
• Why adding a second mutual fund, or ETF, to a basic target date fund will likely result in extra returns
• How to use 2 Funds for Life in the U.S. government’s Thrift Savings Plan (TSP)
• How a small difference in returns could have a huge impact in retirement
• The impact of using mid-cap instead of small-cap value
• How to use the strategy at Schwab instead of Vanguard
• How often to rebalance the 2-Fund strategy
Rank #10: The three greatest investment products – Part I
This is the first of a three-part series, laying the foundation for the upcoming “2 Fund for Life” strategy. In this podcast, Paul discusses the mutual fund, index fund and target date fund, which have been responsible for some of the greatest wealth building for the average investor. In the case of the mutual fund and the index fund, Paul talks about the advantages and disadvantages of each. In the case of the target date fund, he focuses on the advantages. The next in the series (in two weeks) will cover the advantages and disadvantages of the target date fund.
Rank #11: 2 Funds For Life
A simple strategy to maximize your retirement investments
In this podcast, Paul Merriman and Chris Pedersen – who spent most of the last two years developing the “2 Funds for Life” strategy – discuss the rationale, research, details and benefits to easily implement this simple strategy.
The discussion includes a quick review of the “Three greatest investment products” (podcast and article including mutual funds, index funds and target date funds, with a special emphasis on the reasons TDFs don’t give investors the best options and the best returns. Chris explains the steps he took to research the possible ways to simplify the investment process without giving up the extra returns the portfolios should produce. His focus was to understand the risk (worst case for losses) and the high/low and average returns expected for 9 different combinations compared to the risks and returns of holding only a traditional target date fund. Listeners and viewers will see a group of very simple strategies that can add 25% to 100% more to the traditional target date fund. While the “2 Funds for Life” strategies are more risky, most investors will likely be comfortable with the additional risk.
Please note: This presentation reviews a lot of numbers and the most effective way to review the information is to watch the video that includes all the tables. For those who listen to the podcast, Paul and Chris, have tried to highlight the most important results. Paul suggests those who listen to the podcast will better understand the recommendations if they also read the in-depth article by Chris.
To access graphs, articles and other links referenced in this podcast, click here.
To view this presentation as a video, click here.
Rank #12: Is it time to get more conservative? And 9 more interesting questions…
On November 18, 2017, Paul spoke to 170 investors. Some were clients of Merriman Wealth Management and others followers of Paul’s online educational efforts. The following 10 questions were left to answer in a special podcast.
1. This bull market duration is unusually long. Is it time to get more conservative?
2. Is the next bear market imminent?
3. What can you tell us about DST’s (Delaware Statutory Trusts) used in a 1031 exchange)?
4. Is the recent market move due to the deregulation of our industries and tougher trade policies?
5. What do you think of Schwab Intelligent Portfolio?
6. For a 25 year old, what is the best online source of information on investing?
7. Do the results of the Bessembinder study include the dividends companies made?
8. What do you think of Bitcoin?
9. Since index funds do not experience permanent loss, is there some other measure that captures permanent loss as with individual companies?
10 .We have two grandsons ages 5 & 7 being home-schooled. They visit us one day a week. How can we teach them about investing?
Rank #13: Best mutual fund and best “safe” withdrawal rate, plus 8 Q&A’s
Paul discusses George Sisti’s comments about the best mutual fund, best “safe” withdrawal rate, and why “working harder” doesn’t seem to help investors. And he answers questions from readers and listeners.
1. What do you think of the new Fidelity zero-fee mutual funds?
2. Why are bonds losing money?
3. Which do you recommend: Vanguard or Schwab?
4. Which do you recommend: Vanguard or Fidelity International Fund?
5. Should I increase my exposure to stocks?
6. Do you make recommendations for Canadian investors?
7. Do you have current returns for using moving average systems to time the stock market?
8. Are CDs better than bond funds in a rising interest rate market?
Rank #14: Paul’s best investment advice for first time investors
In this special podcast, Paul discusses his list of “A Dozen Million-Dollar Decisions.” This advice for college students was recorded this week for students at Western Washington University, Paul’s alma mater and where The Merriman Financial Education Foundation funds the development and presentation of Personal Investing 216, an accredited course since 2014. The 12 Decisions include: saving vs. spending, stocks vs. bonds, degrees of diversification, taxes, expenses, target date funds, and more
For young investors to better understand equities (stocks) and fixed income (bonds), see these Tables Here also are some sites that appeal to young investors trying to deal with the realities of student debt and transitioning to the “real world” while maintaining a budget that leaves room for some saving:
Rank #15: Investing for Life: Dr. Jim Dahle of White Coat Investing interviews Paul Merriman
In this interview with Jim Dahle, M.D., Paul covers about a wide range of investment topics, from getting started to retirement planning and distributions. This is an excellent introduction to Paul’s work, including buy-and-hold, market timing, bonds, Bogleheads, the work of the Merriman Financial Educational Foundation, DFA and portfolio management, Do-It-Yourselfers, and much more. While Jim, practicing physician and blogger, focuses on helping physicians, most of his information applies to all investors. Paul encourages his readers/listeners to read the introduction to Jim and his commitment to helping others.
Rank #16: Fine Tuning Your Asset Allocation with the S&P 500 2018 update
Most of our annual Fine Tuning articles and podcasts have covered all of the major asset classes. This year we dedicate an article and podcast to just the S&P 500 and bonds. The S&P 500 Index represents the biggest public holding in the U.S. and maybe the world, roughly 80% of the value of all U.S. publicly-held companies. We advocate only about 10% of our equity portfolio held specifically in the S&P 500, with the balance spread among many other asset classes. So, while it is not the major part of our recommended portfolio, it is the benchmark against which most mutual fund returns are compared. For this reason, I think it is useful to be knowledgeable about this substantial asset class. Please link to the S&P 500 Fine Tuning Table so you can follow along with my comments and important lessons to be learned from this table.
Rank #17: Best-in-Class ETF Portfolio Recommendations: 2019 Update
In this special podcast Paul interviews Chris Pedersen about the 2019 changes to the Best-In-Class ETF Portfolio recommendations. This will be helpful to those who want to understand the details of how Chris made the decisions to select the best in each asset class, changing many from the previous year. The discussion includes comparing the long-term results of these recommendations vs. Vanguard ETFs, as well as DFA mutual funds.
• To read the article and tables supporting Chris’ decision-making process, click here His article also answers many of the most commonly asked questions regarding our Best-In-Class recommendations.
• Click here to see the newly recommended ETF Portfolios.
• To implement these portfolios using M1 Finance commission-free services, Click here.
Rank #18: Explaining the Ultimate Buy-and-Hold Portfolio
To read insights from this interview from ChooseFI.com, click here.
Rank #19: Big news- SPIVA and DALBAR reports are out!
Paul discusses two reports from his annual “must read” list: SPIVA and DALBAR. The SPIVA report makes the strongest statistical case for index funds over actively-managed funds. The DALBAR “Quantitative Analysis of Investor Behavior 2018 Report” (no link, as investors have to buy the report) makes the case that the combination of active management by mutual funds and active management by investors leads to greatly reduced returns. Paul quotes from his favorite financial newsletter, George Sisti’s “On Course,” and uses data from Morningstar to highlight the huge tax costs of using actively-managed funds.
Paul also answers these questions:
• Is it okay to use intermediate bonds in a rising interest rate environment?
• Is it appropriate to have a 50/50 stocks and bond All-Value portfolio in retirement?
Rank #20: Are you better off investing in bonds or stocks paying dividends?
1. If I need income from my investments, am I better off investing in stocks paying a good dividend rather than bonds? 1:45
2. Is a 60% stocks/40% bonds balanced fund better than a target date fund? 11:35
3. How does VBIAX (Vanguard Balanced Fund) compare to the 2 Funds for Life Strategy? 22:28
4. If I use M1, will the bid-ask spread cost of trading ETFs eat into my profits? 29:10
5. Will there be duplicate holdings if I use your ETF or mutual fund recommendations? 32:45
6. What is your favorite large-cap value ETF? 34:18
7. Why do you need so many ETF holdings in your best-in-class portfolio? 35:35
8. What are all the fees you have to pay if you use the M1 platform? 37:12
9. Where on your website do I find the symbols for all the ETFs you recommend in Portfolio #8? 40:45
10. How have listeners motivated young investors to learn the lessons from your website? 41:45