Sound Investing Paul Merriman

So, you've chosen to be a buy-and-hold investor following one of Paul's Sound Investing portfolios.  Now, the question is, what to buy?  It's time to become a knowledgeable shopper.

Chris Pedersen describes the attributes that make an ETF or mutual fund more or less suited to implementing the portfolios we've discussed. 

He then shows how to use Morningstar and Portfolio Visualizer to evaluate funds and points to the Best-in-Class recommended funds he's chosen.

Finally, he demonstrates how the Portfolio Configurator can compare different fund family implementations and calculate the needed percentages of different funds for your personal portfolio choices.  

Along the way, we learn that, like Warren Buffet, he has a thing for Diet Coke.

Resources:

AAII Article describing his Best-in-Class ETF selection process- 

Video link to section of prior video showing more detail of the factor analysis he uses- Time mark- 46:00

Best-in-Class ETF's article 

Best-in-Class ETFs

Portfolio Configurator

Chris Pedersen shows how to automate investing with simple 2-fund portfolios.  He discusses how target-date funds work and how to combine them with small-cap value funds to achieve results similar to more complicated portfolios.  He highlights the 2 Funds for Life fine-tuning table in the Portfolio Configurator and shows how it can be used to set expectations based on different allocations.

He also shows how 2 Funds for Life approaches can be compared to Sound Investing portfolios using the Configurator.  Finally, he takes advantage of Paul's absence to praise Paul's example and highlight the importance of non-financial investments.

Resources mentioned:https://lookerstudio.google.com/u/0/reporting/a941a5d4-0929-45ea-b22e-3bb82dc334ff/page/p_zy32acuhdd?s=hqmha3-AK5k



Watch the video here.

In this podcast Paul addresses the advantage of using a Flexible Distribution strategy.  He starts by mentioning the earlier podcasts that focused on the Sound Investing Portfolios, Fine Tuning Your Asset Allocation Tables and Fixed Distribution Tables D1.4, D1.5, D9.4 and D9.5.He then focuses on  Flexible Distribution  Tables F1.4, F1.5, F1.6, F9.5 and F9.6.The following are links for listeners who want to review all the Fine Tuning Tables, all the Fixed Distribution Tables and all the Flexible Distribution Tables.

⁠9 Fine Tuning Your Asset Allocation Tables

S&P 500 (⁠Table B1⁠)

U.S. 2-Fund (50/50 S&P and Small Cap Value) (⁠Table B9⁠)

Fixed Distribution Tables

Flexible Distribution Tables

For questions on Flexible Distributions please send to paul@paulmerriman.com or  post the questions in the comments section of the Flexible Distribution video. (link)

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 11 tables  to address the questions above.  It is recommended the viewer print out the PDF of the tables 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 below or email paul@paulmerriman.com.

In segment #5 of the 2024 Book Camp Series Paul applies all of the first 4 segments lessons to putting the portfolios to work by making a regular monthly investment into several of the Sound Investing Portfolios. For those coming to the series for the first time Paul suggests listening to the first 4 segments.



#1 Stocks vs. Bonds: The $10 Million Decision

#2 The Ultimate Buy and Hold Portfolio 2024 Update

#3 Sound Investing Portfolios: 2024 Update

#4 Fine Tuning Asset Allocation 2024 UpdateIn his presentation Paul references Tables J1a, A1a, H2a, B1, B9, C1 and C9. The purpose of the podcast is to familiarize investors with how to use and compare the rest of the Fixed Contribution Tables. This link takes investors to the rest of the C tables.

In the previous three podcasts we have addressed the long term decision between investing in stocks vs. bonds, what equity asset classes you might use in building your equity portfolio and how to combine the different equity asset classes to build the best portfolio for your different investments.

The purpose of each of the Boot Camp Series is to address some of the most important investment decisions.  In this podcast I discuss the question of how much fixed income an investor should  hold in their portfolio.

There are 9  Fine Tuning Your Asset Allocation Tables.  Each one assumes the use of one of the nine Sound Investment equity portfolios.  Paul focuses on two of them and expects that those who are interested will be able to view the rest of the tables on their own.

The two tables use the S&P 500 (Table B1) and the U.S. 2-Fund (50/50 S&P and Small Cap Value) (Table B9).  Each of these tables represents the annual returns of  11 combinations of equities and bonds.  The goal is for investors to find the combination of equities and bonds for their risk limits and and return expectations.



Paul will be monitoring the YouTube video and will respond to questions there.

Disclosures

Data Disclosure Notice - Funds (1970-Present)

Data Disclosure Notice - Indexes (1928-Present)