"Not investing is a surefire way to fail to accumulate the wealth necessary to ensure a sound financial future. Compound interest is a miracle. Time is your friend. Give yourself all the time that you possible can."
John Bogle - The Little Book of Common Sense Investing

In This Edition
Bogleheads Conference
Bogleheads Tables
Latest Marketwatch
Latest Podcast
Testimonial

As you open this newsletter I will likely be on the way or at the annual Bogleheads Conference in Minneapolis. I am thrilled to have the opportunity to speak to the group and I am excited to see many of our Truth Tellers present their latest research. Plus, several of you have let me know that you are going to be at the Conference. I hope to talk with each one of you.

Jim Dahle, from The White Coat Investor, will interview me on the topic of Factor Investing. While I don’t refer to our recommendations in terms of factor investing, that’s what the academic community has labeled it.

If you’re not sure how to invest, it’s as easy as picking two funds.

While I only have 30 minutes to address the Bogleheads, we have put together a list of MOST of the studies we have shared regarding asset class or factor investing. Please note there are some tables that we have not previously released. (Check out the Quilt Charts)

Equity Index Returns

These two tables look at four different equity asset classes as well as three different bond maturities for the period 1928-2023. These tables make it very clear that bonds are safe for the short term but it’s stocks that are clearly best for the long term.

Quilt Charts
The main 4 color quilt chart is amazing as it shows the annual returns of all 4 of the major U.S. equity asset classes, as well as a single portfolio of 25% each of the four equity asset classes.. I have included additional tables that I thought you might find of interest.

Return Rankings of Equity Index Funds
These 5 tables compare the return differences of 6 different indices for U.S.large cap growth, small cap growth, small cap growth, small cap blend and small cap value. These tables (produced by Avantis Funds) make it clear how important it is to be in the “right” asset class fund.

Historical Range of Return for 4 Equity Portfolios
These four tables show the range of returns for the S&P 500, small cap value index, the combination of small cap value and the S&P 500 as well as a combination of 25% positions in the S&P 500, large cap value, small cap blend, and small cap value. The return ranges are shown for 11 periods from one to 40 year periods.

Ultimate Buy and Hold Strategy 50/50 U.S. International allocation
For over 25 years we have been updating out Ultimate Buy and Hold Strategy. The purpose of this study is to introduce investors to the long term impact of 10 different equity asset classes. According to many academics these 10 equity asset classes have a high probability of producing long term returns that are equal to or higher than the S&P 500. It is from this group of equity asset classes that we find the components for our Sound Investing Portfolios. This Table uses a 50/50 U.S./International allocation.

Ultimate Buy and Hold Strategy 70/30 U.S. International allocation
For over 25 years we have been updating our Ultimate Buy and Hold Strategy. The purpose of this study is to introduce investors to the long term impact of 10 different equity asset classes. According to many academics these 10 equity asset classes have a high probability of producing long term returns that are equal to or higher than the S&P 500. It is from this group of equity asset classes that we find the components for our Sound Investing Portfolios. This Table uses a 70/30 U.S./International allocation.

Fine Tuning Tables: Combination of U.S./International Equity Asset Allocation is 50% U.S./50% International
The Fine Tuning Tables are designed to give investors some historical perspective for the annual returns of each of the equity portfolios we recommend. In each table you will find the all equity return for the specific combination of equity asset classes plus the returns of combining the equities with fixed income securities. Please note that at the bottom of each column of returns is a list of the worst 6, 12, 36 and 60 month losses, as well as the biggest decline without regard to time. These risk and return events will hopefully give investors a sense of the volatility they will experience in the future.

Fine Tuning Tables- Combination of U.S./International equity asset classes is 70% U.S./30% International
The Fine Tuning Tables are designed to give investors some historical perspective for the annual returns of each of the equity portfolios we recommend. In each table you will find the all equity return for the specific combination of equity asset classes plus the returns of combining the equities with fixed income securities. Please note that at the bottom of each column of returns is a list of the worst 6, 12, 36 and 60 month losses, as well as the biggest decline without regard to time. These risk and return events will hopefully give investors a sense of the volatility they will experience in the future.

Fixed Contribution Tables
The Fixed Contribution Tables assume the returns of the Fine Tuning Tables so an investor can see the impact of investing in them over a long period of time. The assumption is the investor started with an investment of $1,000 ($83.33 a month) and increased that amount by 3% each year. $1,000 was used as the starting investment so it is easy to adjust to whatever an investor can afford. This group of Tables assumes the use of a 50% U.S. and 30% International equity asset allocation.

Fixed Distribution Tables
The table in this pdf assumes the first year's distribution is 3, 4, 5, or 6 percent. The tables then reflect an annual distribution increase based on the previous year's inflation. The portfolios in these tables assume a 50% U.S. and 50% International equity allocation and include the full range of equity/fixed income allocations.

Fixed Distribution Tables
These Fixed Distribution Tables use the 70% U.S. and 30% International equity allocations along with the wide variety of fixed income combinations.

Flexible Distributions
The second common distribution strategy is normally referred to as flexible or variable. These tables show the distributions of 3, 4, 5 and 6 percent based on the ending balance of the previous year. This strategy is often used by investors who have “more than enough” and don’t have to consider inflation. These portfolios use a 50/50 U.S./International allocation.

Flexible Distributions
These tables assume the equity portion of the portfolios used a 70/30 U.S./International allocation.

Tell-Tale Charts
These are very important graphs for those considering adding small cap value to their portfolio. A close review of these historical returns should give a serious heads up regarding the very long periods of small cap value underperformance. I think young investors should pay particular attention to slide 4 as it demonstrates the huge difference in return between a lump sum and dollar cost average investment.

Sound Investing Portfolio Returns (1970-2023)

These tables show the year by year returns, the decade returns, the results in the losing years and the results in the profitable.years for all 9 portfolios. This set of returns assumes a 50/50 balance of U.S./International equity funds.

Sound Investing Portfolio Returns (1970-2023)

This set of returns assume a 70/30 balance of U.S./International equity funds.

2 Funds for Life Fine Tuning Table

The following is a table Chris Pedersen (author of 2 funds for life) has produced to show the combination of a target date fund with different percentages of small cap value.

Data Disclosure 1928-2023
This data disclosure covers the tables that track the 1928-2023 returns and risk factors.

Data Disclosure 1970-2023

This data disclosure covers the tables that track the Sound Investing Portfolios from 1970-2023.

Latest MarketWatch - If you’re not sure how to invest, it’s as easy as picking two funds.

Young investors of any age can do just fine with only two funds for their entire life.

This idea isn’t new or exclusive to me. And yet the ultrasimple plan I’ll outline here is more sophisticated than many others you’ll find. It’s based on sound research, nearly 100 years of history and a heathy serving of common sense. As a bonus, it’s easy to understand and easy to implement.

This is the ninth and final installment in a series of articles that I have been calling boot camp for investors 2024. Read Article.

Latest Podcast- Lessons for Bogleheads

I had an amazing conversation with David Baughier on the Forget About Money podcast!

We discussed my 12 One-Million Dollar Ideas for building wealth, the power of starting early, and why index funds are a game-changer for long-term investing.

We also covered the importance of diversification, the benefits of small-cap value stocks, and why sticking with a buy-and-hold strategy beats trying to time the market.

Whether you're new to investing or looking to refine your retirement plan, this episode has actionable tips to help you secure your financial future. Give it a listen—you won’t want to miss it!

Testimonial

"Merriman and his band of merry men have changed my life. Thank you so much to the whole team. PS: Chris, I would love to be half the teacher you are some day." @noveltyrobot

Lessons for Bogleheads

The Best 3 Charts We Recommend

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In This EditionBogleheads ConferenceBogleheads TablesLatest MarketwatchLatest PodcastTestimonial

In This Edition
Bogleheads Conference
Bogleheads Tables
Latest Marketwatch
Latest Podcast
Testimonial

Boglehead's Rock!!!