Part 2- Strategic Planning for Investing in Every Stage of Life

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 [email protected] 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 [email protected].

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)

In this podcast Paul addresses the construction, returns and risks of the Sound Investing Portfolios. Table H1a lists the 9 Sound Investing Portfolios and includes percentages of each of the asset classes included in each portfolio.Table  H2a lists the risk and return data for each portfolio.  The table compares profitable  years, unprofitable years, decade returns and total return of a $10,000 investment. Table H3a lists the portfolios annual return for each year for the period 1970-2023. Paul encourages listeners to pose questions regarding the Sound Investing Portfolios.  Send questions to [email protected].  

Paul recommends new listeners listen to the previous podcast on ⁠Equities vs. Bonds⁠ prior to this podcast.  The purpose of this annual update is to remind investors of the power of equity asset class diversification.  Paul makes the case for the 10 equity asset class portfolio that he introduced over 25 years ago.  During the presentation he uses Tables A1a and A2a.  A1a shows the series of portfolios, starting with the S&P 500 on its own, and then the results of adding 9 other asset classes one at a time.  In A2a Paul reviews the Ultimate Buy and Hold results to 7 other portfolios that investors may select for better returns with fewer funds and similar volatility.  In both cases he shows the results with both annual and monthly rebalancing.  On the next podcast Paul will dig into the important differences of the risk and return for all  9 portfolios, including the S&P 500 as the single holding.

This podcast is the first in the series of 8 to 10 podcasts, videos and articles that will be found under Bootcamp and Best advice. In this podcast Paul discusses the biggest investment decision of an investor's lifetime:  Invest in stocks or bonds.  He reviews the  long term risk and return for both important asset classes.  In each case there is a set of 3 tables that reflect the returns from 1928 to 2023.  In Tables J1a and J2a he compares the annualized return for the entire period as well as for all the 15 and 40 year periods.  His discussion includes the impact of inflation as well as rebalancing.  He also encourages those who have not read  "We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement” to  download the free pdf.

Join Paul and Chris for this podcast/video they recorded. During the conversation Paul  mentions Chris’ free copy of  “2 Funds for Life”  and a fascinating interview with Professor Scott Cederburg on Rational Reminder.  Cederburg is an advocate for a lifetime portfolio of all equities.  The following are the topics and questions they discussed:   What does an investor do if a small cap value fund is not available in their 401(K)?  Does a small cap blend fund, that is available, have the same impact as small cap value? How do you choose between investing in a higher expense ratio ETF (say Avantis) compared to investing in a low expense ratio small cap value index fund?  Would the decision be as simple as going with the lower expense ratio fund?   How do taxes impact your recommendations whether the asset class is held in taxable or tax advantaged accounts?  Specifically, the S&P 500 fund that has little to no annual taxes vs small cap value which is less tax efficient. Are you tempted to invest in individual stocks or actively managed funds?   Since small cap value funds can have long periods of underperformance,  does that suggest  those approaching retirement should avoid small cap value funds? How did you react to the March 2020 Market Meltdown and other past major market declines?   Did you try to take advantage of the declines as a buying opportunity? What about combining 25% each small cap value and S&P 500 fund with  50%  target date fund?   What’s the best way to move from your present holdings to a 2 Funds for Life Portfolio? Where do I find information on how you make your selection of Best In Class ETFs?  Here is the page that has links to the articles, podcasts and video.  Plus here is a link to Chris’ AAII article on the topic.  I’m setting up a  50/50 small cap value/target date fund.  Would it help to add international small cap value? How about using two small cap value ETFs?  DFA and Avantis each have similar ETFs but different portfolios.   What is the status of Chris’ new white paper on 2 Funds for Life?