"Economists when faced with a conflict between theory and evidence, discard the theory. Stockbrokers discard the evidence." Andrew Smithers and Stephen Wright, Valuing Wall Street

In This Edition
The Randomness of Life
Chris Pedersen Does it Again
Latest Youtube
Latest Podcast
Testimonial

First cup of coffee in hand I open up my computer each morning with the intent to start my day with a shot of Ben Carlson and Seth Godin. It is rare that I read the title and move on. This morning I got a double dose of one of my favorite topics: The randomness of life!

Here is Ben’s take:

It starts: "At the Berkshire Hathaway shareholder meeting in 1997, Warren Buffett laid out the following scenario-
Imagine you’ve been granted the extraordinary power of determining the economic rules of society 24 hours before being born. Those rules will last many generations.

The one caveat is you don’t know the circumstances you’ll be born into.

You can’t choose your gender, race, level of intelligence, physical attributes or where you will be born. It could be the United States or it could be Afghanistan. Your family might be rich or poor. You could be healthy as an ox or have physical limitations.

What kind of society would you build?” Read More.

And in “Seeing the lottery”: "Seth starts, "At least the Powerball tells the truth.

In a state run lottery, the deal is very simple: You pay your money, you take your chances. The government randomly chooses a winner and the winner gets a big prize and everyone else gets nothing.

But there are lotteries all around us, hidden in plain sight.” Read More

Chris Pedersen Does it Again

I think I, or should I say we, won the lottery when Chris joined Daryl and me in building the educational library of investment information for our readers, listeners and viewers. I think Chris’ work has changed the lives of a lot of investors. Of course we won’t be able to make the final judgment for decades but all my experience leads me to believe his recommendations are some of the best in the industry.

Last year we helped Western Washington University put together a sampling of the work of many of our Truth Tellers. Western wanted to introduce their alums to the new Financial Literacy Program my wife and I (and our Foundation) are supporting now and in the future. In fact, whatever my IRA is worth when I die will go to the Program.

Chris was willing, as always, to help. In this case he recorded a special video on 2 Funds for Life. Here is the link to this 30 minute video. I hope you will pass it along to others in your family.

Thanks Chris!

Target-Date Funds as Wealth Multipliers

Are target date funds the ultimate retirement solution — or can you do better?

In this detailed and educational video, we explore how Target Date Funds (TDFs) work, what makes them so popular in 401(k) plans, and how they function as wealth multipliers through your working years and into retirement.

What you’ll learn in this presentation:

How TDFs automatically adjust your allocation from growth to income
Historical returns, volatility, and safe withdrawal rates from 1928 to today
Why target date funds are well-suited for most investors — especially beginners
How to enhance long-term results using the 2 Funds for Life strategy
The benefits of combining a target date fund with U.S. small cap value
How different allocations (90/10, 80/20, 50/50) affect long-term wealth, risk, and legacy
Whether you're a new investor or preparing for retirement, this video presents an evidence-based framework to build a portfolio that aligns with your goals, risk tolerance, and time horizon.

Chapters
00:00 Introduction to Target Date Funds
01:12 Vanguard Glide Path Example (VFIFX 2050 Fund)
03:48 Understanding Risk and Return by Age
05:32 Historical Performance of Target Date Allocations
08:15 Retirement Income and Spending Power
10:22 Lifetime Wealth Scenario with the S&P 500
13:20 The Impact of Inflation on Returns
15:02 Introducing the 2 Funds for Life Strategy
17:42 Comparing 10%, 20%, and 50% Allocations to Small Cap Value
21:10 Which Portfolio Delivers the Best Balance of Return and Risk?
22:45 Using the Portfolio Configurator
23:50 Final Thoughts and How to Get Started

Latest MarketWatch- How to retire with more money and greater peace of mind

Want to live it up in retirement and keep your peace of mind? And without worrying that you might run out of money?

If your answers are yes, read on. I’ll show you several ways to accomplish all that.

This is part of a series of articles I call Investor Boot Camp 2025. We’re going over the most important lessons you could likely get from a good financial adviser.

There’s one crucial element that’s up to you, a key that will unlock everything I’m going to describe here: Saving more than “just enough” before you retire.

To put the following strategy to work, you’ll need to be able to adjust your spending level to reflect what’s going on in the market. When things are going well, you get to spend more. When things are not going so well, you’ll need to tighten your belt a bit. Read Article

Latest Podcast- Small cap value still the best , bonds and 2 funds for life Q&A

In this episode, Paul Merriman shares insights into upcoming events, including his presentation at the Garrett Planning Network Retreat, as well as his reflections on asset allocation, government bond strategies, and the benefits of various portfolios for different life stages.

Tune in for a deep dive into how different funds and asset classes perform over the long term, and how to optimize your investment strategy, regardless of age or risk tolerance.

Key Topics Covered:

1. Long-Term Returns Comparison

Paul compares two small-cap value funds: the Vanguard Small Cap Value Fund (VSIAX) and the DFA Small Cap Value Fund (DFFVX). To find long-term returns for these funds, Paul uses Morningstar’s chart function, which allows users to view the maximum (MAX) historical data for any given fund, helping to compare the performance of these funds since their inception

2. Best Asset Allocation for Retirees

The best asset allocation for retirees typically depends on individual factors, such as risk tolerance and life expectancy. Generally, Paul suggests a moderate equity allocation of 40-60% in stocks, with the rest in fixed income, for retirees who have enough saved up to comfortably fund their retirement .

3. Asset Allocation for an 83-Year-Old Retiree

For an 83-year-old retiree, Paul discusses a more conservative portfolio with two-thirds in bonds and one-third in equities. This conservative approach, which mirrors the allocation in Vanguard’s target-date funds, aligns well with retirees who are less reliant on aggressive growth but still need some equity exposure to combat inflation .

4. Why Use Three Government Bond Funds?

Paul advocates for a diversified bond strategy that includes TIPS (Treasury Inflation-Protected Securities), short-term government bonds, and intermediate-term government bonds. This combination offers a balance of safety, growth potential, and reduced volatility compared to using just one bond fund, and provides a more stable return over time.

5. How the Worldwide 4 Fund Portfolio Works

The Worldwide 4 Fund Portfolio is structured with 25% in large-cap blend (U.S), 25% in large-cap value (INTL), 25% in small-cap blend (INTL), and 25% in small-cap value (U.S.), giving you a diversified mix of U.S. and international equities. This approach optimizes for both size and value, ensuring a balanced exposure to market growth, volatility, and global investment opportunities.

6. Should a 26-Year-Old Use the 2 Funds for Life Portfolio

Yes, a 26-year-old could benefit from the 2 Funds for Life Portfolio, which typically includes the A TARGET DATE FUND and a small-cap value fund. This strategy allows young investors to focus on equity growth, benefiting from the long-term appreciation potential of small-cap value stocks while minimizing risks associated with bonds at an early stage

7. Managing the 2 Funds for Life Portfolio with S&P 500 & Small-Cap Value

For someone using only the S&P 500 and small-cap value fund, Paul suggests a flexible allocation approach. You might start with a 50/50 split, or adjust according to your risk tolerance. The small-cap value fund tends to be more volatile but offers higher returns over time, while the S&P 500 provides more stability with lower volatility .

8. Can There Be a 3 Funds for Life Portfolio?

Yes, a 3 Funds for Life portfolio could include the S&P 500, large-cap value, and small-cap value. Paul suggests mixing these three equity asset classes to achieve a balanced portfolio that offers growth potential without overexposing yourself to risk. ⁠

Resources:

⁠1928-2024 Quilt Chart (K1a)⁠⁠

⁠⁠Sound Investing Table (H2a)⁠⁠

Chris Pedersen’s 2 Funds for Life table⁠⁠

Testimonial

My husband, Russell and I started listening back around 2010-11. Among the podcast, the website, and his books, Paul has quite literally changed our whole outlook and our lives! Can’t ever thank you enough, Paul.

Small cap value still the best , bonds and 2 funds for life Q&A

Target-Date Funds as Wealth Multipliers

How to retire with more money and greater peace of mind

In This Edition The Randomness of LifeChris Pedersen Does it AgainLatest YoutubeLatest PodcastTestimonial

In This Edition
The Randomness of Life
Chris Pedersen Does it Again
Latest Youtube
Latest Podcast
Testimonial