How much we need to retire is one of the most commonly asked questions. Ben discusses some studies that question many of the assumptions investors make regarding how much is enough.

How to Open a Roth IRA for Your Kids (and Should You)?

We have written a number of articles regarding Roths IRAs for kids.  Jim Dahle, The White Coat Investor, has a terrific report on the topic.  FYI, there is some disagreement whether you can use work at home as earned income as basis of a Roth contribution.  I have spoken with parents who pay their child to mow the lawn.  It is not part of their regular “household chores” they do to receive their  allowance, as an allowance does not qualify as earned income.  I suggest you speak to your accountant to make sure you document the earnings properly.  Of course, mowing a neighbors lawn would qualify as earned income.

This might help from Kiplinger’s:
— Can I open a Roth IRA for my child if I pay him an allowance to do chores around the house?

— We are paying our eldest daughter to teach weekly piano lessons to her two younger sisters. Can we keep a record of the money we have paid her and match that amount in a Roth IRA for her?

No to the first question, yes to the second.

How will investing be different in the future and 7 AAII Q&As

On July 22 Chris Pedersen spoke to the Orange County AAII Chapter.  This podcast, as well as one on ⁠8/9/23 (20 Q&As)⁠ and another on ⁠8/2/23 (16 Q&As)⁠ address questions that arose from the presentation.  This podcast covers a few more AAII questions plus other recent questions.

Topic 1:  What is the difference between investing today vs. 40 years ago?  And how  is  investing likely to be different in the future? 01:11

Topic 2:  Will the new Avantis All Equities Market Value ETF be a good substitute for your Worldwide All Value Portfolio?  7:00

Topic 3:  Do you recommend converting traditional IRA funds to a Roth IRA using the back door Roth IRA strategy?  Paul suggests reading:  ⁠https://www.thebalancemoney.com/when-does-a-backdoor-roth-ira-make-sense-4153803⁠  and various articles at The White Coat Investors:  ⁠https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/⁠.  14:30

Topic 4:  What is the most important table on your website?  Paul mentions tables at these pages:  ⁠https://paulmerriman.com/ultimate-buy-and-hold-strategy/⁠,  ⁠https://paulmerriman.com/portfolios-2023-updates/⁠ (most important), ⁠https://paulmerriman.com/fine-tuning-your-asset-allocation/⁠,  ⁠https://paulmerriman.com/fixed-contributions/⁠,  ⁠https://paulmerriman.com/fixed-distributions-2023/⁠ and ⁠https://paulmerriman.com/flexible-distributions-2023/⁠.  18:25

Topic 5:  Should a younger investor (20s, 30s, 40s) use TIPs as part of their fixed income or just stick to the Total Bond Market? 22:17

Topic 6:  Can you discuss your recommendations for the bond portion of a portfolio?  For example, how do you decide how much would go with the Worldwide 4 Fund Portfolio?   23:57

Topic 7:  Could there be a problem when small cap value funds get too large? 28:02

Better than Wellesley and Wellington? and 19 other questions

1.  How do you feel about using a balanced fund such as Vanguard Wellington in retirement? 01:44

2.  I subscribe to your mantra of index funds, keep costs low, buy and hold etc,  Is Merriman Wealth Management your company as well?  I ask because that company espouses buy and hold and market timing and charges “AUM” fees. 14:15

3.  I am a new retiree at 65 and have decided to use the “2 Funds for Life” target date fund with a 10% small cap value portfolio.  Do you recommend the 10% small cap value be split between U.S. and international small cap value funds?  23:30

4.  Is it too late for someone just entering retirement to change their investment portfolio to the ⁠10-Fund Merriman Ultimate Buy and Hold Portfolio⁠?   26:39

5.  What is your impression of a recent ⁠Vanguard study⁠ that showed a large percentage of investors over 85 with an asset allocation of 100% in stocks? 30:14

6  How about using a technology fund instead of a small cap value funds? 35:00

7.  What are some short term bonds funds you recommend?  Bonds funds discussed VSBSX, VMLTX and VSCSX 39:24

8.  I am 25 years old and have a high risk tolerance.  Would it be okay to be all small cap value and would it be okay to invest 10% of the portfolio in individual small cap value stocks? 41:06

9. I have been using the Merriman 10 fund portfolio for 10 years.  The annual rebalancing takes a lot of time.  Do you recommend I move to the worldwide 4 fund portfolio instead? 43:00

10. I am retired and just took a full distribution from my 401k and invested the cash in a Vanguard Rollover IRA.  I I use one of ⁠Merriman’s portfolios⁠ should I stage my investment over many months or invest it all immediately? 44:45

11.  I currently hold a large amount of cash and want to start investing.  Do you recommend a lump sum investment or dollar cost average over a few months? 48:25  ⁠

12.  Do you think the Avantis All Equity Markets Fund (AVGE) has enough small cap value to compete with the returns of your Worldwide 4 Fund Portfolio? 53:53

13.  How does the Avantis Small Cap Value ETF (AVUV) compare to the DFA Small Cap Value ETF (DFSX)? 56:46

14.  Do you recommend buying individual bonds instead of bond funds? 59:58

15.  Do you recommend moving to a target date fund with a later retirement to get more exposure to equities? 1:02:00

16.  What would happen if one of the Avantis funds closed?  ⁠Paul recommends reading this article⁠. 1:03:39

17.  I own VBR (Vanguard Small Cap Value ETF) in a taxable account.  Should I take the tax hit and move the investment in AVUV (Avantis Small Cap Value ETF)? 1:07:00

18.  What is your opinion of holding target date funds or a fund of funds during retirement? 1:10:33

19.  What is the range of Price to Earnings (P/E) ratio of large and small growth and value funds? 1:13:00

20.  I think I need a professional advisor to help me with my financial decisions.  Will the fees I pay be covered by higher returns? ⁠ Financial Advisor services⁠. 1:17:21

The 2 best Vanguard funds for retirees

It’s always hard to recommend something that will be “the best” for someone else. But today I’ll jump in and take this risk anyway.

If you’re a retiree who’s not especially knowledgeable about investing and you want a simple way to avoid running out of money, I’m not taking much risk by recommending Vanguard’s Wellington VWENX and Wellesley Income VWIAX funds.

I believe millions of retirees could benefit from having their portfolios in either of these funds – or in a 50/50 combination of them . . .

This is the worst investment advice I know — and you may be taking it

Lately I have been wondering how to do a better job of helping investors protect themselves from toxic sales pitches that pretend to be helpful advice — pitches that are really about generating income for the salesperson.

What I’m about to say is harsh, but I believe it: Wall Street has become addicted to all the money it can make from confused and uneducated investors.

Far too many investors don’t realize they are willingly helping Wall Street — and some people in the financial media — rob them of billions of dollars every year.

That’s right, billions. . .

Dear Paul,

I am living in Finland and a few weeks ago, while searching how to build a portfolio of ETFs to simplify my investment strategy for my small family portfolio,  I stumbled upon your website via an Australian blog .

What a fantastic work you and your team have been doing in laying out in plain terms the tenets of investing e.g in your book We’re talking millions!

I highly value your commitment  to promoting better awareness of personal finance and investing.

C.N.

I just wanted to let you know that it has been about a year now that I’ve discovered your videos on YouTube.

And I have learned so much on how to invest wisely.  I have always been diversified with multiple mutual funds but this year I took action to move to mostly index funds, and increased the large and small value in my portfolio.

I am doing my best to get my nephews who are just 21 years old, interested in your work, so when they have a 401(k) at their first full-time job, they will know how to invest.

I also have some young friends who are in their early 30s who I know save in a 401(k) at their jobs and I have shared your videos and books with them as well!

I just want to say I am glad found your foundation!  I wish I had discovered this 30 years ago

Thank you  to you and your team for sharing your knowledge. Everyone should watch your videos who wants to retire securely!

S.P