Now Free: “Financial Fitness Forever 2016”

October 13, 2016

Dear Friends,

I’m excited to offer you the 2.5-hour video I recently made for the Washington State Society of CPAs, titled “Financial Fitness Forever 2016,” absolutely free. To make it so everyone can benefit from it, I’ve purchased the rights… and now you can view it – and share it with your family and friends – for free.

To accompany the video, we’ve made available both the PowerPoint slideshow and a .pdf so you can download, follow along, and get the most out of the presentation.

However, if you’d like to watch it with the slides automatically synched with the topics as presented – a technology I don’t own and can’t offer – you can purchase the original here for $10. (from which the Merriman Financial Education Foundation receives approximately $3).

I hope you’ll take advantage of this free presentation and let me know what you think. I am thrilled to have received this comment:

Wow – I just finished watching your Financial Fitness Forever 2016 video presentation for the first time. Much there I will enjoy reviewing again together with the materials. At the risk of going overboard with superlatives, this is surely one of the finest overviews of sound investing fundamentals available in such a concise presentation. And the fact that you’ve offered the presentation on-line to the public at no charge is an amazing gift.” – Steve C.

I hope you will forward the presentation to others that might find the information useful.

Introducing Social Security Expert Andy Landis

In addition to financial fluency expert, Joline Godfrey, who contributed an article featured in our last newsletter, I am pleased to introduce you to Andy Landis, one of the nation’s foremost authorities on Social Security and Medicare. Andy is a regular contributor on and an old friend who has spent the last 30+ years as an author, speaker, and consultant. His latest book is Social Security: The Inside Story. I heartily recommend his book.

Solved: Social Security’s Top Ten Mysteries

Social Security is America’s largest source of retirement income.  But most of us have little idea how it works.  Worse yet, misinformation causes poor retirement decisions.  Here are straight facts about Social Security’s top ten mysteries.

First, some background. Social Security is paycheck insurance, paid for by workers and employers. Only workers and their families benefit from it. It insures against loss of work income due to retirement (or age), disability, or death. It has an annual Cost of Living Adjustment (COLA) equal to the inflation rate, to protect your long-term buying power. Continue reading…

20 Things You Need To Know About Investing

A couple of months ago I had the pleasure of being interviewed by Michael Port, in what I believe is one of the best interviews of my career. Michael is an author, actor, speaker, small-business marketing consultant, and public speaking teacher. He is not a financial expert but, as you will learn, he has taken the time to understand how the investing process works.

In these two podcasts, Part I and Part II, Michael and I discuss dozens of important topics including: the essentials of successful investing, how salespeople hurt investors, what a fiduciary is and how you know you have a good one, why investors make less than they should, the possibility of making 12%, what asset classes produce the best returns, how much investors need to save before they retire, rebalancing, my $3000 to $50 million strategy and lots more. For those who enjoy Michael’s interview style, check out this link for a list of topics.

Following the podcasts, Michael received this from one of his listeners and forwarded it to me:  “I just listened to the longest podcast I have ever listened to in my life… and it was phenomenal. Your conversation with Mr. Merriman reminded me of why I used to invest the way I did; so much information and solid data on sound investing. Thank you for that!” – Jeff VM

Join Me for Two Upcoming Live Presentations!

Nov. 3rd – Bainbridge Island Community Foundation

“10 Simple Steps to Improve Your Investing Confidence and Build a Better Retirement Plan.” Bainbridge Island Museum of Art Auditorium, 6:30-8:30 p.m. Free and open to the public. To register, click here.

Nov. 7th – Eastern Michigan AAII
“Financial Fitness Forever: 5 Steps to More Money, Less Risk and More Peace of Mind.”  Troy Community Center, 6:30-9:00 p.m. You can read more about here. To register, please note the registration form on the brochure. I’ll be there when the doors open at 6:30 and would like to talk with my readers and listeners to get feedback on what I can do to make my work more helpful. While you can register and pay at the door, I suggest doing so in advance so you are sure to get in (and save $5).

Questions & Answers

The next “Ask Me Anything” session will take place Oct. 26 at 1:00 p.m. EST. You may leave your questions anytime beforehand and/or participate live by clicking here. Below are a few Q&As from the September session.

To your success,


Q: Do you think it’s possible that the whole small cap value craze is just the result of data mining and back-testing? I recently read a book called “The Little Book of Market Myths”. There is a chapter on the illusion of small cap value always being better and outperforming other asset classes. The author explains that value and small cap is not permanently better – it’s just an asset class that rotates and trades leadership with others; and when an asset class like small cap value does better, it’s because sentiment was higher for a certain period of time but says nothing about the future. Of course we don’t know the future, but is there a reason it should do better in the future? Is it possible that now, with so many people piling up money in small cap value, it won’t go up as much? With the secret out, do you think we will see the same return in small cap value as in the past?

A: I could write a book in response to your questions. Let’s start with one unquestionable fact. No single asset class guarantees a better return. If you look at the period from 1860 to 1928, stocks were much more profitable than bonds. If you add the years 1929-1933, to the study, it turns out bonds were better than stocks (1860 to 1933).

In “Live It Up Without Outliving Your Money” I compared the 1, 5, 10, 15, 20 and 25-year returns of stocks vs. bonds, large cap stocks vs. small and value vs. growth.

I won’t bore you with all the numbers but over all the 20 and 25-year periods, stocks made more than bonds in 100% of the periods. At 10 years, stocks made more than bonds in 86% of the periods.

Over all 25-year periods small cap beat large cap 89% of the time.  Over 10 year periods small cap only did better than large 64% of the periods.

The value class was the most dependable with all 20 and 25 year periods doing better than growth stocks. And in the 10-year periods, value was better than growth 89% of the cases.

In theory everything about the past is hypothetical, so none of it can be trusted in the future. That would even include the ability of the U.S. Government to meet their financial obligations. But here is what I believe: I think equities will do better than bonds in the long run so, at age 72, I have half of my money in equity funds. If you are in the early years of the investing process, I think you should be 100% in equities.

In the equities portion of my portfolio I have approximately 10% each of 10 major asset classes that have very good long-term returns. I’m not betting the farm on any one of them and I am not expecting anyone to know which ones are the best to own today or over the next year. I rebalance approximately once a year so last year’s heroes can be the source of adding money to the asset classes that recently under performed.

Q: My employer terminated our pension plan, so what would be the best way to invest – Lump Sum or Annuity? I have 10 years to retirement.

A: If you were my client (when I was still an advisor) I would want to know about your experience as an investor and what you need the investment or annuity to provide. Here are some questions I would ask:

  1. Do you have a history of making good investment decisions?
  2. Do you have a strong feeling about passive vs. active management?
  3. If you ask others for advice, are you experienced enough to know whether their advice is in your best interest or theirs?
  4. What happened in the past? Did you get into the market after a big gain? Did you get out after you were exposed to large losses?
  5. Have you saved enough so if you lost a substantial amount that it would not impact your lifestyle in retirement?
  6. Do you know the expected losses you are likely to experience with a balanced portfolio of stock and bond funds?
  7. If you decide to go with the annuity I am assuming the company has found low-cost annuities to fund your IRA. If not, please contact Vanguard, USAA and Stan the Annuity Man for quotes. By the way, Stan probably puts out the best free information on annuities I have read. It can be a business of thieves so please be careful.

I hope you will spend time with an advisor who does not have any products to sell you. This is a decision that will have a big impact on your future – both financial and emotional.

Q: Index funds will get you a slightly better return, but do you think there is any merit to using an actively-managed fund that has a slightly less return but half the drawdown? We all know index funds will beat most actively-managed funds over long periods of time, but there is a critical aspect that is always left out: volatility and drawdown.

A: There is little evidence that actively managed funds provide the protection you suggest. Here is an article by Larry Swedroe, one of the most trusted writers in the industry. It is a must-read for anyone believing their fund is going to protect investors from the next bear market.

I believe most investors should create a balanced portfolio, with enough fixed-income to keep the losses within the investor’s loss limits. Check out this article for my take on the risk of different combinations of stocks and bonds.

Q: If your timing portfolio gives you about the same return as buy-and-hold but half the volatility, why not put all your money in the trend-following system?

A: When I was an advisor I had clients with all of their investments under timing and others with all their investments in a buy-and-hold portfolio. In each case I tried to determine which approach was most likely to be acceptable for the long term. As I’ve often written, most investors don’t have the ability to live with all of the challenges of timing. For more, read “Why Market Timing Doesn’t Work

I found a lot of investors were most comfortable with a combination of both strategies. Let’s start with the assumptions that, ignoring taxes (buy-and-hold is more tax efficient) and the unit of return per unit of risk is very similar for both strategies. In my own case, my 70% equity/30% fixed-income timing portfolio has almost the same standard deviation and return as a 50/50 equity/bond buy-and-hold portfolio. The advantage of having both strategies is they tend to do well at different times. Buy-and-hold is likely to perform the best during rising markets, and timing is likely to perform the best during declining markets. The combination of both strategies can give an investor a source of hope in almost any market environment.

With both strategies at work within a broadly diversified portfolio of asset classes, along with the defenses of fixed income in the buy-and-hold portfolio and using an exit strategy in the timing portfolio, it is possible an investor will have the confidence to stay the course in all markets.


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Most millionaires and billionaires wouldn’t dream of navigating today’s world without getting professional top-notch financial advice.






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