Sound Investing Paul Merriman

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 podcast dedicated 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.comFor those interested learn more about his '2 Fund' solution: https://www.paulmerriman.com/2-funds-for-life-update-2023For those interested to learn more about his '4 Fund' solution: https://www.paulmerriman.com/4-fund-comboFor those interested in target date funds: https://www.paulmerriman.com/target-date-fundsFinally, 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.pdfPlease 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.

Paul and Chris cover several questions about the Best-in-Class ETF recommendations and selection process.


What's the overarching objective of the Best-in-Class ETF recommendations?*  What's the 6-step process described in your AAII Best-in-Class ETF Article?
Why is it sometimes worth paying another tenth of a percent or more for funds with more exposure to small or value?
Is AVUV's recent 6%/year return advantage over VBR expected and/or likely to continue?*  What did Avantis say are the market conditions that favor or disadvantage their approach?*  How should investors think of the risks of tilting away from the cap-weighted market indexes towards small and value?
Retail investors have a potential superpower versus institutional fund managers -- patience!
How many hours does it take Chris to update the Best-in-Class ETF recommendations?
JL Collins is a big proponent of the total market index.  How much is our Best-in-Class ETF recommendation for large-cap blend (AVUS) likely to outperform a total-market index fund such as VTI?
What happens when small-cap value becomes super popular?

Links: Best-in-Class ETF Bootcamp video and podcast

AAII article on Choosing Best-in-Class ETFsPortfolio configurator

Portfolio visualizer factor statistics, factor regression tool, and fund factor regressions.

Watch video here