One of the biggest mistakes investors make is not to diversify sufficiently to virtually eliminate stock or company risk. Paul reads part of two important articles. In “Speculating versus investing: The buying of individual stocks,” Larry Swedroe discusses the reasons owning individual stocks is an approach that requires taking more risk without an additional return. He also lists the reasons investors find it compelling to take this additional return, even though the expected return could be far less than simply owning an index fund. In a related topic, Paul reads from Jeremy Siegel”s 1998 “Valuing growth stocks: Revisiting the Nifty Fifty.” This fascinating article tracks some of the “best stocks” in the world over a 25-year period. He then compares the returns of the Nifty Fifty with the S&P 500, large cap value, small cap blend and small cap value.
how to invest
In this first of a 10-part CD series produced for the PBS Show, “Financial Fitness After 50” (2012), Paul discusses how to identify an advisor who will provide all the services you need to ensure you maximize the advantage of working with a professional. He’ll also show you how to tell if the advisor is working in your best interest or in his /her own.
Over the last 3 years the S&P 500 has been the best performer of all the asset classes, as shown in the table of returns at http://paulmerriman.com/
For 10 years, Paul had a weekly “Outrage of the Week” on his Seattle radio show. He says it was never a problem finding something that made him hopping mad. In this podcast, Paul explains his recent outrage about one of America’s most trusted insurance companies giving their employees the shaft. He also answers questions from his listeners and readers at paulmerriman.com (Note to listeners: there are 12 Q&A’s mentioned on the podcast, but one was removed in order to better address it in a future Q&A).
1. As a first time investor afraid of losing money in the market, can you recommend a book to read and what can you say that will help me take the high risk of stocks?
2. Why don’t you create a portfolio of ETFs that can select from all available ETFs?
3. How can I get you to update your 401(k) for my company?
4. Now that Fideliity has lowered their fees on ETFs, should I move from Vanguard to Fidelity?
5. How can I get my company to add index funds to the 401(k) choices?
6. How about using some of the best performing REITs rather than index funds?
7. How are ETF portfolios changed as the companies change size or value/growth characteristics?
8. What do you do with proceeds from a RMD that you don’t need to live on?
9. What would you do to make my portfolio better?
10. What do you think of The Mutual Fund Store?
11. Should I use the Four Fund Solution or The Ultimate Buy and Hold Portfolio for the equities part of my 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.
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.
In this podcast Paul discusses the historical returns of the S&P 500, large cap value, small cap blend and small cap value. He knows many investors live with the belief they will find an actively managed that will outperform his favorite of the four, small cap value. Three of the most famous investors of all time, Peter Lynch, Bill Miller and Warren Buffet had records that few will ever match. What are the odds these great investors will do it again? But you may find small cap value did almost as well as the three did during the peak of their careers.
Paul presents the many financial education resources at paulmerriman.com to help investors improve their financial future. Learn about free access to a library of Marketwatch.com articles, podcasts, free books, and free recommendations for mutua
The # 1 article on Marketwatch.com last week was entitled, “New doomsday poll: 99.9% risk of 2014 crash.” This warning is a compilation of scary predictions about the losses investors are about to experience. What scares a lot of readers is the names of the “experts” are well known and very convinced of their positions. Paul warns investors that listening to this kind of advice can be very costly, even life changing. He shares how he deals with the possibility that these gurus might be right, and even predicts when the next big bear market is likely to come.
In this installment of the series, “Overcoming Three Hurdles to Saving and Investing for the Beginning Investor”, Stacycontinues to look at the hurdle, “I lack the money”, and recounts one of Paul’s experiences where he suggested saving a dollar a day. Stacy includes a 1-page download and suggests that regularly saving a little bit over a long time can help create a brighter financial future
In this podcast Paul discusses what he wrote about REITs in 2007 and reconfirms his recommendation to hold this asset class in our tax deferred portfolios.
Most of Paul’s podcasts are based on facts but in this podcast he shares 30 plus minutes of the feelings he has about retiring to San Miguel de Allende, Mexico. Paul, and his wife, Zan, fell in love with San Miguel within 24 hours of landing in Mexico. The trip started as an attempt to find a little sun and see something besides the ocean cities of Mexico. The trip ended 10 days later with the decision to buy a home and eventually retire, at least part of the year, in San Miguel. In this rambling podcast Paul discusses the lifestyle, the beauty, the relationship and the costs of living in San Miguel.
In this sixth podcast in his series, Stacy continues addressing hurdle #2, “I lack the money”, and suggests that by making rather than receiving interest payments, many people find themselves making someone else rich rather than themselves. Stacy cites data that shows while many people’s debt load is forcing them to make financial sacrifices, many of America’s millionaires became wealthy by living below their means and shying away from debt. Stacy offers steps to begin overcoming hurdle #2 and have more money at the end of the month to save and invest.
This podcast was motivated by an email exchange in which Paul tries to motivate an investor to consider a simple change that might add almost 1/2 percent a year. The response to his suggestion is one of the biggest challenges educators and advisors have: "You are probably right but I'm happy where I am." Paul's concern is that most investors don't really understand the impact of the 1/2 percent difference.
While many people think budgets are a good idea, many people struggle in realizing their financial goals. In this podcast, Stacy Gary acknowledges that budgets require discipline and offers a framework for keeping the big picture things in focus when approaching budgeting. Download accompanying pdf below.