Morningstar How-To with Paul and Chris

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 CapsIn 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 GuideTable NumbersQuilt ChartsHistorical Risk and Return TablesPortfolio ConfiguratorTimestamps:Note: Timestamps will vary on individual listening devices based on dynamic advertising run times.0:00 Intro to Paul Merriman and podcast topic0:57 Two-fund portfolio strategy3:55 Four-fund portfolio strategy explained5:31 Large cap performance concerns7:06 S&P 500 vs Total Market Index10:59 AI impact on large companies14:43 Market trends and historical performance20:41 International equity in portfolios25:26 ETFs vs index funds29:41 Non-US investor asset allocation38:41 Setting up kids financially43:57 Early investing importance48:37 Common investor mistakes50:25 Investing as business partnership52:51 Evolving financial education landscapeFor 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 the 15 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 [email protected].   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 [email protected]⁠  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