Paul discusses the huge changes in expenses that are due in part to the debate between the “Fiduciary Standard’ that investment advisors work under, and the “Suitability Standard” that brokers apply to their recommendations. While a mutual fund’s expense ratio is the most commonly discussed variable, it turns out there are other factors that may be even more important. Paul lifts hood on a couple of big funds to discover what some of those forces are doing to investor returns.
A 32-year-old investor wants to know why shouldn’t he put all his investments in small cap value? While agreeing with the young investor’s comments, Paul recalls the famous Mark Twain quote, “There are two times in a man’s life when he should not speculate: when he can’t afford it, and when he can.” So, is small cap value an investment or a speculation? Paul attempts to help this young investor answer that question.
The Hulbert Financial Digest last week announced it was shutting down after 36 years. Losing the only meaningful tracking of investment newsletters is sad indeed. In many ways Mark Hulbert’s Digest was like having the S.E.C. overseeing the mutual fund industry. Mark couldn’t find the bad apples, but he could alert readers to the newsletter’s real returns, as opposed to results that had nothing whatsoever to do with reality. Paul discusses the four big lessons Mark learned and what they could mean to how you construct your portfolio.
Everyone in the financial community knows that emotion-based decisions almost always hurt investors in the long run. This podcast of Chapter 7 from Paul’s book, Financial Fitness Forever, discusses 5 ways an investor can eliminate most of the dangerous outcomes of emotional decisions. It is read by Rich Buck, co-author of Financial Fitness Forever and Live it Up Without Outliving Your Money!
Rich and Paul have worked together on books and articles for over 20 years. Rich was a Seattle Times business reporter for 20 years, capping a 30-year journalism career that included eight years as a writer and editor for the Associated Press. He began working with Paul as senior editor of Merriman Inc. in 1993 and retired in the fall of 2011. He has kindly continued to donate his time and expertise to The Merriman Financial Education Foundation and as co-author our three “How To Invest” series books (available as free eBooks at paulmerriman.com) and weekly MarketWatch articles. This podcast completes the audio versions of five chapters from Financial Fitness Forever. They can be found, along with all podcasts, here.
In this audio version from Chapter 6 from Paul’s book, “Financial Fitness Forever,” he discusses the long-term impact of diversifying beyond large cap companies to include both U.S. and International small cap and value asset classes, as well as REITs and emerging markets. While he makes no promises about the future, the evidence from over 40 years of performance suggests the possibilities of doubling the long-term return for you and your heirs.
In “How much risk will you take?” Paul discusses the difficult topic of identifying and accepting the normal risk of investing. This audio chapter from his book, Financial Fitness Forever, also addresses the often overlooked risks of owning both stocks and bonds.
Paul reads from Financial Fitness Forever, “Will You Try to Beat the Market?”, which focuses on how trying to beat the market has had a terrible impact on investors’ returns. This Chapter 4 includes important studies, from DALBAR and Morningstar, suggesting that more than half of all investor returns are lost to bad personal behavior, like being influenced by natural feelings of fear and hope (some call greed). Much of Financial Fitness Forever is dedicated to Paul’s attempt to protect investors from their own unproductive behavior. The evidence in this chapter should help investors see how serious this problem can be. We hope you will share this podcast with friends and family who might have experienced this challenging behavior.
Among the many choices investors must make, the most important is who to turn to for trustworthy information, advice and help.
This podcast, adapted from a chapter in my book, “Financial Fitness Forever,” is the first in a series of articles to address the four most-important choices every investor faces.
The subsequent will address how to diversify, how to control risk, and whether or not to try to beat the market.
Investors who get right even one of these four choices will have a leg-up on the competition. Nail all four of them (it’s not really very hard), and you’ll be among the most successful investors of your generation.
I’ll finish the series with a fifth podcast on how to reduce your stress level while ensuring that all these things get done properly.
Paul compares the fixed distribution strategy he discussed in the last podcast with the flexible distribution strategy. Generally, the flexible strategy is for investors who have saved more than they need to meet the minimum financial needs in retirement. The key points to consider are: How much have you have saved for retirement? What combination of equities and fixed income investments do you hold? How much will you take out of your investments in retirement? How you take more when you need it can make millions of dollars in difference between how much you have to spend and how much you have to leave to others.
This podcast addresses Paul’s updated “Fine Tuning Your Asset Allocation” Table. This table is constructed to help investors determine the right balance of equity and fixed income funds. Paul discusses the risk and return of 11 different combinations of stocks and bonds. As investor expectations can lead to good or bad decisions, Paul tries to prepare investors for the likely over and underperformance these combinations will produce. He hopes that every investor will find the right balance to meet their need for return within their risk tolerance.
Paul discusses the Schwab, Fidelity and TD Ameritrade commission-free ETF offerings. He helps investors find the least expensive ETFs, as well as the firms that offer the best selection of asset classes. To help those following the “Turn $3,000 to $50 million” strategy, Paul reviews the small-cap value offerings of all three firms, plus Vanguard. He suggests reading the Vanguard article, as well as the latest on the other three.
On this short special podcast Paul addresses the difficult market decline that has many investors concerned the market is heading for a bigger sell off. If you are having serious concerns about what should be done next, he suggests you reread “22 things we should know about bear markets.” He also pleads with young investors to celebrate the opportunity to buy equities at a discount, and for older investors, to control the downside with the right amount of fixed income funds. http://paulmerriman.com/22-
Paul answers 20 questions. His goal is to answer each question in less than a minute. Here is a list of questions. Let’s see if he can keep his answers short!