Sound Investing – Détails, épisodes et analyse

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 chriskpedersen@gmail.com.  

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. 

Paul, Daryl, and Chris are together again to discuss what they each think are the best single charts or graphs to help people understand investing and make good decisions.

Paul starts by asking Chris and Daryl how much we can rely on the past to predict the future.

Paul follows that with a deep dive into his choice for the most important chart -- the quilt chart.

Daryl follows up with his choice -- a discussion of the tell-tale chart.Chris finishes with his choice: a discussion of the 2 Funds for Life Fine Tuning Table.

Tables referrenced-

Table J1b- Equity Index Returns: 1-yr Periods (1928-2023) 

⁠Table K1a⁠- 4 US Asset Class Indexes & 4 Fund Combo Relative Return Ranking (1928-2023) 

⁠Table K2a⁠ Asset Classes & 4 Fund Combo (1928-2023) - Return Rank Frequency 

⁠Table K1b⁠ S&P 500 & US SCV Relative Return Rank Comparison (1928-2023) 

⁠Table K8a⁠ Sound Investing Port. Returns: 10 Yr Periods (1928-2023) 

⁠Table K6a⁠ Sound Investing Portfolios, S&P 500 & US SCV Relative Return Ranking (1928-2023) 

⁠Table K7a ⁠ Sound Investing Portfolios, S&P 500 & US SCV (1928-2023) - Return Rank Frequency 

Watch video here.

Chris Pedersen, Director of Research for The Merriman Financial Education Foundation, joins Paul Merriman to explain and elaborate on his ideas and tables published as the cover story in the AAII Journal(October 2022), titled, “Double Your Lifetime Purchasing Power in 20 Minutes.”

As Chris states in this broadcast, the article particularly pertains to people doing open enrollment, especially if they have an employer-provided 401k program. “For those who invest in defaults of the 401k programs, most typical across the industry, and do that for 40 years of their career, and then do fixed 4% withdrawals in retirement, and you look at all the cash flows in and cash flows out, and the standard investment, which is a target date fund, and then you adjust for inflation and you ask, ‘What was the impact on how much they have to spend over a lifetime?’ It doubles their spending power, even adjusting for inflation, just by investing in a target date fund, which is kind of unbelievable.”

Read Chris’ article at: https://www.aaii.com/journal/article/21644-double-your-lifetime-purchasing-power-in-20-minutes

You may be asked to enter your name and email for full access. You can join AAII (American Association of Individual Investors) risk-free for a month or become a member for a small fee. The AAII is an independent nonprofit corporation formed in 1978 for the purpose of assisting individuals in becoming effective managers of their own assets through programs of education, information and research.

Podcast listeners should know there is a slideshow available on the YouTube video version.

Call To Action!

Here are a few simple ways to support the financial education work of The Merriman Financial Education Foundation, a registered 501(c)3. In so doing you help better the lives of individuals, families and communities, creating more opportunities for all.

1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
4. Follow us on Facebook, Twitter and LinkedIn
5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and  2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.

Support our mission by making a tax-deductible donation to the Foundation.

Thank you!

The focus of most of the work we do at The Merriman Financial Education Foundation is to help investors put together portfolios that we believe will produce higher rates of return per unit of risk. In this podcast we look at the math of making more money, as well as specific decisions that are likely to lead to better returns.  

The podcast references our following Tables: Fine Tuning Your Asset Allocation, Sound Investing Portfolios and Fixed Distributions and Flexible Distribution.  The math portion of the podcast focuses on the impact of small increases in return, along with small increases in annual investments and a lifetime of accumulating, distributing and passing money to others. The discussion covers the tables in this PDF.

Leaving the simple math, Paul uses historical returns to compare hypothetical returns and the choices investors must make. Everyone of these choices is likely a million dollar decision:

• Save vs. spend
• Start saving early vs. waiting
• Selecting stocks vs. bonds
• Select a few vs. many companies
• Choose the S&P vs. other equity asset classes
• Choose the S&P vs. combinations of equity asset classes
• Add 10% more equity
• Taxable vs. tax-deferred
• Tax-deferred vs. tax free
• Load vs. no-load
• Index funds vs. actively managed funds
• Buy and hold vs. market timing
• Target date funds vs. do it yourself
• Target date funds plus small cap value
• Gifting one million dollars with $365 vs. major gift at death
• The make or break decision of distributions

Paul Merriman, Chris Pedersen and Daryl Bahls each share his studies and comments about rebalancing a portfolio—how often, how much change before rebalancing, and when does it make sense not to rebalance? They also answer listener/viewer questions and Paul makes a special offer for a free chapter from Larry Swedroe’s book, Your Complete Guide to a Successful & Secure Retirement. (See details in ‘Links’ below).

Q&A

Which asset classes should be in taxable accounts and which in tax-advantaged accounts? 
To answer this oft-asked question, Paul recommends Larry Swedroe’s book, Your Complete Guide to a Successful & Secure Retirement and encourages investors to read Chapter 10 from the book, “The Asset Location Decision." See “Links” below for details to buy the book and access the free chapter.

“Is there a rebalancing bonus?”
Chris answers this question and illustrates his answer with the chart, “Is There a Rebalancing Bonus? … Not Much.”  See this chart and others mentioned below.

“I want to help my 36-year-old daughter establish a retirement portfolio. What do you think of using Vanguard Life Strategy Moderate Growth Fund (VSMGX)?”
Chris answers by suggesting a better answer may be a Target Date Fund and shows the Vanguard Target Date Fund Glidepath. See this and other charts and tables mentioned here.

“Can I expect to invest in the funds you recommend today and hold them for the rest of my life?”  Daryl’s answer is yes, using our 4-Fund portfolio. He shows why by comparing the Total Market Index funds to our “No-Nonsense Portfolios” in Table 1a: “No-Nonsense Portfolios for Sound Investing: Equity Asset Allocation” and Table 2a.1, which shows “Comparison Data,” drawing special attention to our U.S. Only 4-Fund Portfolio over the Total Market Index and S&P 500. 

Daryl also offers a third Table, “No-Nonsense Portfolio Performance Rankings by Decade (1970-2021). See these and all charts and tables mentioned here.

MORE LINKS

Rebalancing: The implications of adding a small amount of small-cap value to a Total Market Index portfolio. See this Table.

You can get your copy of Larry Swedroe’s book, Your Complete Guide to a Successful & Secure Retirement at: https://amzn.to/3gb3noz. If you purchase via our link, it may result in our Foundation receiving a small commission that supports our financial education outreach at no additional cost to you.

Read this FREE chapter from Larry’s book, “The Asset Location Decision,”  courtesy of Mr. Swedroe and publisher Harriman House.

In this presentation to the Boston Bogleheads® Chapter (Sept. 12, 2022), Paul presents the “10 most important new lessons learned by The Merriman Financial Education Foundation.” The foundation is celebrating its 10-year anniversary of helping the DIY investor make sound investment decisions for a lifetime and become the best advisor to the most important investor on earth…you!  Paul also gives an overview of the 12-million-dollar decisions covered in his book, We’re Talking Millions: 12 Simple Ways to Supercharge Your Retirement.

Stay tuned to about 1:20 for some great questions:
•  Does Total Market Index or S&P 500 approximate your 4-Fund approach and which has better returns?
•  Are there target date funds that approximate the 4-funds in the equity portion?
•  How do you approach international funds in the 4-fund approach?
•  What is it about small-cap value companies that gives a premium?
•  Can you define ‘value’?
•  Is there an advantage to the 4-fund strategy if you’re retired, with a 15-year horizon?
• Which of your Best-in-Class ETF recommendations should I follow?
• Regarding equities and taxable accounts versus tax-advantage accounts, do you mirror the 4-fund across both types accounts and will I have a large tax liability in the taxable account?

Watch the slideshow

About The John C. Bogle Center for Financial Literacy (https://boglecenter.net/):
It is a non-profit organization dedicated to improving financial literacy. The Center’s mission is to expand the legacy of John C. Bogle, the founder of Vanguard, by promoting the principles of successful investing and financial well-being through education and community. Bogleheads® is a registered trademark of the John C. Bogle Center for Financial Literacy.

The Center envisions a world of well-informed, capable, and empowered investors. Community outreach is achieved through the Bogleheads forum, wiki, and blog, as well as in-person and virtual Bogleheads chapters worldwide.

Inspired by a conversation with George Sisti, Paul's good friend and trusted Truth Teller, Paul makes the case that successful investing is 99.9% defense. (See article referenced below). The good news is: almost every one of these defensive steps are easily applied to managing a portfolio. And once you set the process in motion, it should be relatively easy to stay the course. Of all the defensive steps we should be able to control personally, there is one hurdle for investors that often leads to serious, and likely costly mistakes: maintaining the commitment to buy-and-hold in bear markets! While buy-and-hold sounded realistic when the portfolio was established, the experience of losing 30% (average bear market loss) is a difficult pill to swallow.  Human nature is shouting, “Don’t be a patsy! Why sit there and watch your life savings disappear without a fight or flight to safety?” Paul discusses the best ways he knows to help control the temptation to cut your losses.

See Mentioned Link: The 12 Best Retirement Investing Lessons:  https://paulmerriman.com/the-12-best-retirement-investing-lessons/

George Sisti,CFP™, is a certified Financial Planner™ practitioner and the founder of On Course Financial Planning, a fee-only Registered Investment Advisor firm.

https://oncoursefp.com/

You can read more by and about George at: https://paulmerriman.com/george-sisti-certified-financial-planner/

Call To Action!

Here are a few simple ways to support the financial education work of The Merriman Financial Education Foundation, a registered 501(c)3. In so doing you help better the lives of individuals, families and communities, creating more opportunities for all.

1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
4. Follow us on Facebook, Twitter and LinkedIn
5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and  2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.

Support our mission by making a tax-deductible donation to the Foundation.

Thank you!

In this interview with Ken Roberts, host of Ken’s Bulls and Bears Report, a weekly radio show in Reno, NV, Paul addresses questions and more:

1. Should investors believe the “experts” predictions of catastrophic future returns for the stock market?

2. What are the most important investment decisions that people have to make?

3. What are the biggest financial mistakes that retirees make?

4. What are the new tools your Foundation has developed to help people invest in equity funds?

5. What is the one asset class that every stock investor should own?

6. Is it really possible to invest successfully with just two funds?

7. Are there really 150 model portfolios that are performing well?

8. What are those 7 factors investors should be focused on in building their retirement portfolios?

9. How can the combo of S&P 500 and Small Cap Value be less risky than the S&P 500 itself?

10. What are your thoughts about the bear market we are in, and is this one of the worst bear markets ever?

11. Should people include cryptocurrencies in their portfolio?

Call To Action!

Here are a few simple ways to support the financial education work of The Merriman Financial Education Foundation, a registered 501(c)3. In so doing you help better the lives of individuals, families and communities, creating more opportunities for all.

1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
4. Follow us on Facebook, Twitter and LinkedIn
5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and  2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.
6. Support our mission by making a tax-deductible donation to the Foundation.

Thank you!

Paul is interviewed by Jordon Grumet, MD., aka “Doc G,” personal finance expert, hospice doctor and host of the “Earn and Invest” podcast. They discuss Paul’s “7 Biggest Investment Decisions” and more, as Paul addresses these questions:

• Do investment strategies change over time?
• Is there a place for stock picking?
• How important is dividend investing?
• What are the best equity asset classes?
• How much does an additional 0.5% return matter?
• What is a modern “simple portfolio” and what is the premium?
• How much should you invest in each asset class?
• How much in equities vs. fixed income?
• How much to take in retirement distributions?
• How much to take out of retirement investments?
• How to select a lifetime glide path?
• All matters referenced in this podcast can be found at https://paulmerriman.com

Paul recommends Jordon Grumet’s new book, Taking Stock: A Hospice Doctor's Advice on Financial Independence, Building Wealth, and Living a Regret-Free Life

Call To Action!

Here are a few simple ways to support the financial education work of The Merriman Financial Education Foundation, a registered 501(c)3. In so doing you help better the lives of individuals, families and communities, creating more opportunities for all.

1. Subscribe to our weekly “Sound Investing” podcast, available on your favorite listening platforms and leave a review. Tell us what you think!
2. Subscribe to our YouTube Channel, and hit the thumbs up, subscribe, leave a comment and share the link with your social media and friends.
3. Use our M1 Finance affiliate link to set up a brokerage account and use our portfolio suggestions. If you fund your account with a minimum of $1,000, our foundation will receive a one-time affiliate fee —at no cost to you—which helps support our financial education projects.
4. Follow us on Facebook, Twitter and LinkedIn
5. Buy our latest books, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement and  2 Funds for Life: A quest for simple & effective investing strategies; all the profits help support our work.

Support our mission by making a tax-deductible donation to the Foundation.