Are you invested in the “Best-of-Class”?

From: "Sound Investing" <info@PROTECTED>
Subject: Are you invested in the “Best-of-Class”?
Date: April 13th 2017
April 13, 2017

“Tell me and I forget, show me and II remember, involve me and I learn.” – Ben Franklin

Dear Friends,

I recently received an email that knocked my socks off.

“I am semi-retired about age 48. I do taxes for my friends and family for free each year (about 15 clients) and I am using your website to teach people about investing. I make it mandatory to review peoples finances at the same time I do their returns and I use your website to educate and create savings plans.

Yesterday I was able have a great conversation about saving and investing with my son-in-law and realized just how much I value all the work you have done to get the younger investors on the right path early.

Like you said a few days ago, the people with the 7 figure portfolios are okay. We need to reach the young people, and you have provided me the tool to do that and your work has motivated me to focus on this.

I know you are doing this for free and I just wanted to tell you how much I appreciate your work and that you are making a difference in my world.”

My reply: “I really appreciate learning what you are doing to help your friends and families. It is exactly what I hoped would happen. Not only are you helping them, but you are also likely going to end up helping their children. As you know, I am taking steps to have someone carry on the mission after I am no longer able to help. While I think I should be able to continue the work for another 10 years, I know at my age that health is a big wildcard. I will find a way to use your example in the hopes that it will inspire others to help as you are.”

Upcoming Presentations

May 20, 9:45 a.m.-12:45 p.m.: Beyond Buffett: Value Investing, Asset Allocation and Fund Selection. American Association of Individual Investors, Puget Sound Chapter, Mercer Island Community & Event Center, 8236 SE 24th Street, Mercer Island, WA. Doors open at 9 a.m. My presentation will run 9:50 to 12:30 with two breaks. I will also make an extra presentation on robo advisors from 12:45 to 2 p.m.

I will be covering the latest research on the Ultimate Buy and Hold Strategy, Fine Tuning Your Asset Allocations and Distributions in retirement. I will also discuss the latest in robo advising, including our new Best In Class portfolios and a real breakthrough in Target Date Funds. 

I believe it will be a full house, so I encourage you to sign up and get your tickets early. More information in the next newsletter.

For those not living in the area, this is a beautiful time of year to visit the Pacific Northwest, and there is a lot going on in the area. Check out some of the fun things you could do in the afternoon after my morning presentation. One of my favorites would be the University Street Fair. 

Understanding Best-in-Class ETFs for the Ultimate Buy & Hold Portfolios at Motif Investing

Whether or not you are interested in funding investments at Motif, you can use our Best-in-Class portfolios offered there to build your own portfolios wherever you choose. After opening a free account, use this link to see all our Motif portfolios.

NEW ARTICLES! My invaluable co-creator of the Motif portfolios, Chris Pedersen, presents a great study and articles that should answer many of the questions you may have about Motif. See Best-in-Class ETFs for Ultimate Buy & Hold Portfolio and the Best-in-Class Recommended Portfolios.  

The Best Places in the World to Retire 

Since all our work about saving and investing is ultimately to ensure a financially-secure retirement, I thought those of you interested in finding a lower cost of living, without giving up lifestyle, might enjoy reading International Living’s The World’s Best Places to Retire 2017. Spoiler Alert: Mexico is number 1, and my beloved San Miguel de Allende, where my wife and I retain a vacation home, is mentioned along with several photos. If you’re interested in what I’ve written about San Miguel de Allende, click here.

No matter where and how you choose to spend your later years, my goal for you is that it is with more money, less risk and more peace of mind.

Below are Q&A’s.

To Your Success,


Questions & Answers

For more Q&A’s click here.
For more Q&A’s specific to Motif, click here.

Q:  I am moving roughly $10,000 from an American Fund Roth to Vanguard; with that small amount, should I break it down as it was – into 4 different types of mutual funds to diversify – or stay put with one until it grows more?
I am new to the podcast and new to Vanguard… after my financial advisor announced he is going to 1.6% management fee.

A: Glad you have found our information helpful. In the beginning you might want to use our ETF recommendations, as they have no minimum. Later you can move to mutual funds. The ETFs allow you to use asset classes AND their expense rations are lower than the Vanguard Investor Shares class mutual funds.

Q: Are willing to share the structure of you all value portfolio you use for DFA funds?

A: I don’t normally get into how my advisor approaches the application of DFA funds, but in this case there’s not many ways to change it. Here are the ticker symbols: DEMSX. DFEVX, DISVX, DFIVX, DFSVX. This is a small part of my portfolio. Most of my Buy and Hold portfolio is 50/50 equity and fixed income funds at DFA and Vanguard.

Q: Have you moved – or plan to move – your portfolio over to Motif

If not, I was wondering why not? I would also ask the same set of questions to Chris Pederson. Any insight would be appreciated as I am currently pondering this move with my retirement investments.

A: PAUL: I am opening a $50,000 account using our All Value Motif. It will mirror a portfolio I hold in a Roth IRA using DFA funds.  Other than that I will be keeping the rest of my buy and hold portfolio with my DFA advisor.  It is my belief that DFA still holds an advantage over ETFs in most of the equity asset classes my wife and I own. Plus, I am not a do-it-yourself investor and depend on my advisor to take care of all the investment details. I believe one should never take a risk (or pay an expense) for which there is not an expected premium.  I know having someone take care of my investments will work better than doing it myself.  

A: CHRIS: I'm not moving mine because I just spent a lot of time getting my assets aggregated at Schwab, and I prefer control over convenience while I'm evolving my portfolio allocations from discrete stocks to ETFs and mutual funds to align with your recommendations. Basically, I have too many moving parts.

Q:  A major cost of investing in stocks or ETFs is not the commission but rather the spread.  Does Motif provide executions that are as favorable as other brokerage platforms?

A: CHRIS: According to the Securities Exchange Commission, "brokers are legally required to seek the best execution reasonably available for their customers' orders," and there are audit and reporting steps to make sure this happens. In my experience trading Paul's Motifs, the bid-ask spread has been VERY NARROW Spreads are supposed to be largest at the beginning and end of the trading day, so it may help to avoid those times, especially when investing larger sums.

Why you should consider an all-value portfolio

Regular readers: I'm rolling out some brand new recommendations for long-term investors. ​more

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