Sound Investing

Aloha from Oahu! I recorded this one from our hotel room in Hawaii, where my wife and I came to celebrate our two birthdays — three days apart, if not the same year. I promised Zan I’d only work from four to seven each morning on this trip, and this was the one podcast I wasn’t willing to miss.

It kicks off something I’ve wanted to do for a long time: an honest, practical look at one of the biggest forks in the road a do-it-yourself investor ever faces — whether to manage your money yourself or hire someone to help, and if you hire help, what kind.

This first episode is the view from 30,000 feet. Over the coming weeks and months I’ll dig much deeper, including interviews with organizations like Hello Nectarine, NAPFA and the Garrett Planning Network.

In this episode:

07:29 — Why every investor is really starting a business, and why “hiring” index funds and ETFs is step one
15:29 — Why the future you’re paying an advisor to predict is one they can’t predict any better than you can
27:40 — The difference between commission salespeople, assets-under-management (AUM) advisors, and hourly or flat-fee planners
36:25 — The conflict of interest almost no one talks about, and why it reaches all the way to the day an advisory firm is sold
47:10 — How a $5 million investor paying 0.8% ($40,000 a year) might get the same help from an hourly or flat-fee planner for $8,000–$12,000
54:34 — Whether you’re a few years from retirement, already there, or just want to make this decision with your eyes open, I think you’ll find something useful
54:53 — Why I recently paid $3,400 to test an hourly advisor myself, and why I’m glad I did

This is the first of at least two or three episodes on this topic. I’d love your feedback and your questions for the ones ahead — email me at paul@paulmerriman.com.

As Paul turned 83 last week, he recorded this podcast in his studio office surrounded by piles of articles and notes for future recordings and a good deal of gratitude. He says this may be his favorite podcast he's ever made.

He starts with the two biggest paydays of his life. The first was December 31, 2012, the day he sold his part of the firm he'd started in 1983 and walked into retirement with a promise to his wife that he'd never work for money again. The second happened in the last 48 hours, and not a dollar changed hands. He also has a word of caution for anyone who credits him for what their portfolio has done.

Then an epiphany. After reading a recent Adam Grossman piece in HumbleDollar, Paul began to question whether John Bogle's "stay the course" really belongs as the number one rule for being a successful long-term investor. He took the question to ChatGPT, shares the whole conversation, and comes away with a new rule number one, plus a line he thinks an 18-year-old might still remember at 65.

The third topic is bonds. Paul has been reading a lot of negative commentary about them lately, so he goes back to Table B1 and walks through 56 years of history: how many losing years the S&P 500 had since 1970, how many the short-to-intermediate bond portfolio had, what the worst 12 months and worst 60 months looked like, and why he and his wife hold the mix they do at 83. He also explains why long-term bonds are not the answer, and what the numbers since 1928 say about the premium you get for their extra risk.

LINKS

Market Risks by Adam M. Grossman, HumbleDollar

In this special office-hours session, Albert and I answer the questions teachers have been sending in across our four NGPF classroom sessions — more than 500 educators strong.

We move fast and cover a lot of ground:

1. How a young person can open a first investment account (and why $1 is all it takes to start at Fidelity) 02:36
2. My favorite books on saving, investing and index funds 10:58
3. The best free websites and videos for teachers and students 12:51
4. How to make inflation real in the classroom — yes, the bubble-gum story 19:19
5. Why asset classes like small-cap value and large-cap growth behave so differently 25:15
6. A live walk-through of Morningstar’s style boxes and the chart function 34:45
7. Advice for reaching first-generation and lower-income students 47:24
8. What would be the job to suggest to a middle schooler to get them more interested in math and economics?

Whether you teach this material or you’re just getting started yourself, I think you’ll find something here you can put to use.

Watch video

WATCH THE VIDEO

This is the fourth of five presentations I recorded for Next Gen Personal Finance (NGPF.org) and am sharing with Sound Investing listeners.

I titled this one “The $5 Million Payoff for a Financially Literate High School Graduate” — but I could have called it the $42 million payoff, and by the end you’ll see the math that makes it believable. I walk through the single biggest decision of all (stocks vs. bonds), 100 years of market history, why the first five years of investing matter most, and how low costs, low taxes, and automation turn small savings into a fortune over a lifetime.

FREE BOOK THIS WEEK
Spending Your Way to Wealth (see Appendix E)
https://investorship.com/wp-content/uploads/2023/10/SYWTW.pdf

TABLES AND RESEARCH
https://www.paulmerriman.com/data-tables

QUESTIONS
paul@paulmerriman.com (put “NGPF” in the subject line)

Join us next week for the final session: Financial Literacy Office Hours with Paul Merriman.

Harry Markowitz called diversification "the only free lunch in finance." In this session, part of Paul's series for Next Gen Personal Finance educators, Paul Merriman explains what that means in practice, and why a well-diversified portfolio can help investors stay the course through good markets and bad.

Paul covers the history and math behind diversification, from Don Quixote's "don't put all your eggs in one basket" to Warren Buffett, Charlie Munger, and Sir John Templeton. He explains the three kinds of risk investors face (company, market, and asset class), and shows how the "lost decade" of 2000–2009 hit S&P 500 investors hard while more diversified portfolios kept growing.

You'll also hear:

• How adding small "baby steps" of large cap value, small cap, and REITs added about 1% a year to returns since 1970
• Why the two-fund strategy (half S&P 500, half small cap value) may be less risky than it looks
• What a young investor putting away as little as $1,000 a year could build over a lifetime
• A simple "ultimate buy and hold" for hands-off investors: a target date fund plus a slice of small cap value

Plus, Paul shares a free book from market historian Bill Bernstein.

Watch on YouTube: https://youtu.be/MDqaIojI8TE

Free book: If You Can: How Millennials Can Get Rich Slowly

Tables and research: https://www.paulmerriman.com/data-tables

Send your questions to Paul at paul@paulmerriman.com (include "NGPF" in the subject line)

Watch the video here.

This is the second of five presentations Paul recorded for Next Generation Personal Finance (NGPF.org), whose free curriculum reaches some 150,000 teachers. The sessions weren't open to the public, but NGPF has allowed Paul to share each one with Sound Investing listeners.

The subject is index funds, and Paul starts where the story starts: John Bogle, 1976, and a fund launch that nearly got cancelled before it opened.

From there he looks at what the evidence actually says about active management over 20 years, why most investors never hear about the costs that quietly come out of their returns, and what happens to a fund that doesn't perform. He also introduces the non-traditional index funds from Dimensional and Avantis that he believes give young investors their best opportunity, and closes with stories from the 90 minutes he spent in Jack Bogle's office.

CHAPTERS
00:00 Introduction
02:44 What is an index fund?
04:38 John Bogle and the first index fund
08:50 Active vs. passive: beat the market or be the market
10:52 The SPIVA report
14:53 Quartiles and the 20-year picture
19:49 How long do mutual funds survive?
22:05 Asset class and style drift
25:14 The tax cost of active management
28:51 Bogle on costs and the hidden drags on return
35:18 Myths about index funds
38:28 Beating the S&P 500 with index funds
42:35 Traditional vs. non-traditional index funds
49:06 Dimensional and Avantis
50:23 The number one reason to use index funds
55:46 Stories from meeting Jack Bogle
59:25 Wrap-up

NGPF: https://ngpf.org/

WATCH THE VIDEO

Want to build a multi-million-dollar retirement portfolio without gambling on single stocks? This is the first session of the four-part series I recorded for the teachers of Next Gen Personal Finance — and I’m sharing it here with you. In it, I break down the timeless principles, the math and the market history every long-term investor needs to know.

WHAT YOU’LL LEARN IN THIS EPISODE
• The Math of Compounding [01:43] — how finding an extra 0.5% to 1% in returns — or starting just five years earlier — can add millions to your lifetime wealth.
• The Power of Starting Early [09:48] — why your initial investment years build your foundation, and how both bull and bear markets work in favor of young, disciplined savers.
• Budgeting Strategy [19:43] — applying the “Pay Yourself First” rule and the 50/30/20 framework to establish sustainable saving habits.
• Stocks vs. Bonds [22:44] — understanding why stocks are low-risk for long-term growth, while bonds carry inflation risk over decades.
• Market Diversification [30:08] — why 4% of companies generate nearly all stock-market gains, and how owning total-market index funds ensures you don’t miss out on them.
• Equity Asset Classes [37:59] — comparing large-cap blend, large-cap value, small-cap blend and small-cap value to reduce volatility and boost returns.
• Target-Date Funds [49:38] — why automated, age-tailored allocation helps investors stay the course and avoid emotional mistakes.

Tune in to discover how staying the course, keeping expenses low, and letting history guide your strategy can transform your financial future.

Join us next week for The #1 Reason to Invest in Index Funds.

Paul opens with news of a new opportunity to reach young investors: a five-part series for Next Generation Personal Finance (NGPF.org), available to some 150,000 teachers who use NGPF's free curriculum. Topics include the math and history of investing, the case for index funds, the inside story on diversification, the $5 million payoff for a financially literate high school graduate, and a teacher Q&A session. Each presentation will be shared with Sound Investing listeners the following week.

Then Paul turns to two listener questions that go to the heart of how people actually experience the market.

The first asks whether broad diversification really produces the best returns, or whether a more focused portfolio would do better. He walks through the Bessembinder research showing that roughly 4% of companies drove most of the market's long-term return, Fama and French data on small cap value going back almost 100 years, and Vanguard's own real time returns since 1998 comparing $10,000 invested in the S&P 500, mid cap, small cap blend and small cap value asset classes.

The second is a letter from an investor who put his first real savings, earned at $7 an hour, into Fidelity Magellan in 1985, lost 30% on Black Monday in October 1987, and pulled everything out. Forty years later he still fears the next crash and asks whether Paul's Ultimate Buy and Hold portfolio could leave him waking up with half his money gone.

Paul closes with a story about five 24-year-old engineers he met on Bainbridge Island, and an offer to anyone who can gather a group that would benefit from a conversation about investing.

LINKS

Fine-Tuning Your Asset Allocation tables

NGPF: https://ngpf.org/

WATCH THE VIDEO
It was a pleasure to be invited back on System Trader with Jack Lempart. Here is a list of the main topics we covered:

CHAPTERS
0:53 • My own biggest mistake
3:15 • Why “the stock market is a casino” is exactly backwards
6:48 • “I don’t have enough money to start” — what $100 a month actually becomes
9:33 • A $20 bet with my 13-year-old grandson
13:04 • How much intelligence does successful investing really require?
15:31 • The Mensa Investment Club: buy low, sell lower
16:24 • Three books for the psychological hurdles
17:38 • “It’s a bad time to invest right now” — the myth that never dies
20:00 • Why a falling market is the best thing that can happen to a young investor
24:21 • Can a star manager do it for you? SPIVA and Bill Miller
30:21 • An ETF is only a wrapper — how do you grade what’s inside it?
33:01 • Traditional vs. non-traditional index funds
35:49 • Home bias: half U.S., half international, and the lost decade
44:04 • Cap-weighted vs. asset-class weighted funds
46:26 • Finding your right level of risk before the market tests you
55:20 • Is the small-cap value premium dead?
62:52 • Financial literacy in high school — and who’s teaching on TikTok
64:21 • Where the biggest premium comes from: size, value, quality and momentum
69:29 • The one thing to do tomorrow morning: control what you can, then automate

Paul and Chris reflect on Paul’s recent discussion with Rick Ferri. Paul adds information he wished he’d included, and Chris reacts to Paul and Rick’s positions. Together, they discuss the behavioral, trust, and performance benefits and trade-offs of seeking meaningful diversification by adding Small-Cap Value to a portfolio.

CHAPTERS

00:00:00 – Intro
00:02:50 – Chris’ 30k Foot View
00:06:16 – Mid-caps?
00:10:40 – Tot. Mkt. vs. S&P 500
00:20:15 – Trust and Change
00:25:45 – Table G1b
00:28:50 – VT vs. AVGE
00:42:20 – Dollar-Cost-Averaging
00:52:00 – Paul’s Grandson’s Question
00:53:08 – Gold funds
00:59:40 – Travel plans
01:02:20 – Outro

Watch the video on YouTube

Table G1b — Fine Tuning Table: S&P 500 vs. US Small Cap Value

Watch the video here.

Paul sits down with Rick Ferri — not for a debate, but for the kind of honest conversation two people can only have after spending their careers chasing the same goal from different directions.

Rick makes the case against tilting: the small cap premium largely disappeared once the research went public around 1980, and he believes value stopped working around 2006. Paul counters with Table G1b, which shows the results of blending small cap value and the S&P 500 in 10% increments from 1970 through 2025 — returns alongside the worst drawdowns each combination had to survive. Then Rick does something unexpected — he crosses to Paul's side of the table and builds a strong argument for small cap value, framing it as a way to capture the return of private companies that represent half of the economy.

Where they land is less about who's right than what it costs to be wrong. If you go down the factor road, Rick says, it's a lifetime commitment — not three years.

Also covered: lump sum versus dollar cost averaging, what an hourly advisor can do to help do-it-yourself investors implement their new portfolio, the new Trump accounts for newborns, and why VT may not be your best choice in a taxable account.

Both Paul and Rick will be at the Bogleheads Conference, November 13–15 at Green Valley Ranch Resort and Spa in Henderson, NV, near Las Vegas. Registration: https://boglecenter.net/2026conference/

Table G1b — Fine Tuning Table: S&P 500 vs. US Small Cap Value: View the table

Stay tuned for next week's podcast, a discussion with Chris Pedersen about this interview with Rick.

This Friday I'm sitting down with my friend Rick Ferri for a debate that I think matters a great deal, even though — or maybe because — Rick and I agree on almost everything. We both believe in diversification, low costs, index funds, ignoring predictions, and staying the course. Where we part ways is what happens after that.

Rick's case is that you should simply own the whole market. A total stock market index fund gives you thousands of companies at an extraordinarily low cost, and adding complexity rarely pays. My case is that the academic research — Fama, French, and decades of market history — shows that greater exposure to small and value companies may raise long-term expected returns. Rick calls that factor tilting. I call it better diversification. He'll argue I'm not adding diversification at all, just changing the weights, and he's right that this is exactly what we're doing. The question is whether it's worth doing.

We also take on a second question that gets far too little attention: if you do want small and value exposure, where should you get it? Vanguard, Fidelity, DFA or Avantis — traditional indexing or systematic portfolio management? Differences that look trivial today can compound into very large ones over 40 or 50 years.

Neither of us is trying to win. Rick may be right. I may be right. Ask us again in 50 years. What I hope you take away is the process — examining evidence, understanding the alternatives, admitting what nobody knows, and committing to a strategy you can stick with. Because every strategy disappoints you eventually, and what you do in that moment matters more than which one you chose.

The podcast and video of my conversation with Rick will be available Wednesday, August 19, 2026. If you have any questions for Rick, send them to Paul@paulmerriman.com.

Paul returns from three days at the Garrett Planning Network retreat with a lesson that has almost nothing to do with investments — and everything to do with getting your money's worth from professional advice.

Garrett advisors work by the hour, a business model Paul believes eliminates the conflicts of interest built into assets-under-management relationships. For $1,000 to $8,000, he's convinced most families can get extraordinary value from five to ten hours with a thoughtful, trained hourly planner. But there's a catch: the value of those hours depends almost entirely on your willingness to tell the truth. Inspired by a Seth Godin observation — people lie in focus groups, on surveys, and to themselves — Paul explains why the most valuable planning meeting isn't the one where you look financially successful. It's the one where you're completely honest. Paul and his wife are putting this to the test with an hourly planner of their own, and he'll report back in the weeks ahead.

Next, Paul shares a private conversation with his longtime friend Rick Ferri, who challenged an idea Paul has taught for decades: that small cap value, large cap value, and international are equity asset classes at all. Rick argues there's only one equity asset class — the total market — and everything else is a segment or style. Paul takes the challenge seriously, does some digging, and explains why the answer matters far more than a debate over definitions. How you think about asset classes shapes the portfolio you'll live with for the next 60 or 70 years.

Finally, Paul digs into AVGE, the Avantis globally diversified all-equity ETF, and how it compares to Vanguard's total market approach (VT and VTI). He walks through the meaningful differences: 70/30 U.S./international at Avantis versus 60/40 at Vanguard, and substantially larger positions in mid cap value, small cap value, and small cap blend. He looks at what those tilts have meant historically — including Vanguard's own mid cap value fund turning $10,000 into roughly $160,000 versus $102,000 for the S&P 500 — and why he believes the extra 0.17% in expenses may be money well spent. For investors who don't want to go all-in, Paul offers simple combinations, like a third VT, a third AVGE, and a third AVUV.

CHAPTERS

00:00 – Introduction: three topics from the Garrett retreat
01:56 – Why hourly advisors have fewer conflicts of interest
05:52 – The catch: your willingness to tell the truth
06:38 – Seth Godin: "People lie... and they lie to themselves"
08:04 – What planners can't fix if they don't know about it
13:00 – Paul's debate with Rick Ferri: what is an equity asset class?
18:05 – Why the definition shapes your lifetime portfolio
21:34 – AVGE vs. VT: U.S./international balance
23:07 – Comparing value, blend, and growth exposure
25:00 – Mid cap and small cap: what history shows
30:15 – Expense ratios and what you're paying for
31:35 – Simple combinations: VT + AVGE + AVUV
33:15 – Stay the course: closing thoughts

Learn more about the Garrett Planning Network

Paul discusses his upcoming trip to Minneapolis to address almost 100 hourly financial planners at the Garrett Planning Network annual retreat — then shows, in real time, how he uses AI alongside the Truth Tellers. This example is prompted by a Ben Felix video arguing that most people save without knowing their real “why.” Paul asked ChatGPT to explore the question and shares the full AI response, which includes the six steps to creating your “why” — from “dream before you calculate” to purpose → plan → portfolio.

In the second part of this podcast he responds to the many listeners who have asked: build the worldwide all-value portfolio with five Avantis ETFs, or simply buy AVGV, a single ETF that owns the same ETFs but in different percentages? Over three years, AVGV compounded at 21.1% (up 77.4%), while the five-fund do-it-yourself version compounded at 22.2% (up 82.6%) with no rebalancing. Doing the work likely earns a better return — but a Morningstar study suggests most investors do better buying the single ETF, because it takes care of all the rebalancing and overcomes the tendency to chase returns as money is added.

Paul would appreciate your feedback on this podcast: paul@paulmerriman.com.

LINKS
• Ben Felix video on investor myths
• Morningstar “Mind the Gap 2025” study
• Garrett Planning Network — find an hourly advisor
• Meet the Truth Tellers

The hardest part of investing isn't choosing funds — it's building a set of beliefs strong enough to keep you disciplined when the market, the news, and your own emotions all conspire to pull you off course.

In this episode, Paul sets aside the usual fine-tuning tables and turns to one of his favorite books, Ben Carlson's Risk and Reward. Table by table, Ben makes the same point in a dozen different ways: the bad stuff is normal, it's happened before, and it will happen again. The goal isn't to avoid it — it's to expect it, so you can stay the course.

Along the way, Paul walks through:

• The 10 worst days, months, and years in market history — and how the market behaved 1, 5, and 10 years later
• Why bonds turn a 43% stock loss into something far gentler, and why a simple 60/40 has never had a losing 20-year period
• How stocks actually perform before, during, and after a recession (the average is a gain)
• The "dead cat bounces" of 2000–2002 and why three years of false hope wear investors down
• What a century of international returns says about putting all your eggs in one basket
• The most quietly important number in investing: the market's average daily return of 0.03% — a lifetime of baby steps

The theme underneath it all: future returns will likely look a lot like the past. We simply have no way to know the sequence — and that's exactly why realistic expectations, low costs, and broad diversification matter more than any forecast.

The biggest enemy of the investor, as the data keeps showing, isn't the market. It's the investor.

BRINGING FINANCIAL FREEDOM TO NEW AUDIENCES

Last week I spent more than three hours with 89 graduating nurses at Texas A&M University, exploring one life-changing idea: how a handful of smart financial decisions can add millions of dollars to your lifetime financial security. Many of you asked to see what these presentations look like, so we're making this one available to watch (link below).

LINKS

• Ben Carlson, Risk and Reward (Foundation earns when you use this link)
• Texas A&M nursing school presentation (3+ hour video)
• Texas A&M student feedback
• Mike Piper, Social Security Made Simple / other titles
• Personal Finance in Your 20s & 30s For Dummies
• Free books from Paul Merriman
• Boot Camp series & tables

A longtime listener wrote in after watching a Ben Felix video making the point that factor investing may not beat the S&P 500 by the end of an investor’s lifetime — and could even do worse. His question was simple: is factor investing really worth the effort?

Paul’s answer turned out to be two answers, so he’s splitting it into two episodes. This week is about the thinking. Next week is about the evidence — including new data Daryl Bahls just sent over.

Paul also tries something new: using AI to canvas the writings of the Truth Tellers and surface what they would say about this exact question. What emerges is a point they all agree on — good decisions do not guarantee good outcomes, and bad decisions sometimes produce wonderful ones. Bill Bernstein, Larry Swedroe, Ben Felix, Mike Piper, Christine Benz, Rob Berger, Jim Dahle and Jack Bogle each frame the same distinction: expected returns are not realized returns, and probability is not certainty.

Investing is one long series of forks in the road — save or spend, stocks or bonds, index or active, buy-and-hold or market timing — and none of them come with a guarantee. What they come with is a probability. The job is to choose thoughtfully, accept the uncertainty, and have the courage to stay the course while the evidence still supports the plan.

LINKS
• Meet the Truth Tellers: https://www.paulmerriman.com/truth-tellers

Paul returns from a two-week Baltic cruise refreshed and ready to dig into the numbers. He opens with a 12-month performance review of the recommended portfolios at Avantis, DFA and Vanguard — Avantis averaged 31.1% across the 10 equity asset classes in the Ultimate Buy and Hold, versus 27.7% at DFA and 26% at Vanguard — and explains why the non-traditional index funds keep outperforming traditional cap-weighted indexes.

Paul also revisits Ben Carlson’s look at the ARK Innovation ETF (ARKK), which grew to $30 billion under management before falling 65% while the S&P 500 gained more than 60% — a costly lesson in performance chasing, with an estimated $7.5 billion in shareholder losses.

Then Paul answers 12 listener questions, with a special deep dive into table G1B — 56 years of S&P 500 vs. small cap value returns, one year at a time, plus every combination in 10% increments.

QUESTIONS COVERED
1. Funds that match the international and U.S. small cap value asset classes 17:18
2. Keep investments at Fidelity or move to Vanguard? 18:51
3. Is the Vanguard money market fund a good long-term emergency fund? 20:19
4. Pairing the S&P 500 with small cap value — the G1B fine-tuning table 21:46
5. Why the Four Fund worldwide portfolio uses U.S. small cap value only 31:17
6. Should geopolitical tension make you cash out? 33:57
7. Why has small cap value historically produced higher returns? 36:47
8. Can you get rich from investing? The Rule of 72 and $100 a month 41:51
9. Is the all-value worldwide portfolio better than the other strategies? (Table H2) 44:03
10. Where to find the 10 Fund portfolio allocations 48:39
11. Paul’s take on DFA’s micro cap fund (DFMC) 49:16
12. Lump sum or dollar cost average when switching funds in a Roth? 51:57

LINKS
• Table H2 — Sound Investing Portfolios Comparison (Worldwide All Value)
• Table H1a — Sound Investing Portfolios Asset Allocations
• Fine-Tuning Table G1B — S&P 500 vs. Small Cap Value
• Fine-Tuning Table G1C — S&P 500 vs. SCV, 2025 Returns
• Best-in-Class ETF Recommendations

I joined my longtime friend Tom Cock for a special edition of Talking Real Money — a wide-ranging conversation about the evolution of indexing, the proposed changes to the S&P 500, and why investors should understand both the strengths and limitations of traditional index funds. I explain why firms like Dimensional Fund Advisors and Avantis Investors use a more flexible, evidence-based approach than traditional indexing, and how academic research has reshaped portfolio construction over the past several decades.

We also explore lessons from market history, including the importance of understanding major bear markets, determining appropriate risk levels, and building portfolios that align with your personal goals rather than chasing maximum returns. I share insights from the latest Dimensional Matrix Book and explain why I believe studying 100 years of market data helps investors stay disciplined during inevitable downturns.

Finally, I introduce a simple but powerful strategy for helping newborns and young children build substantial retirement wealth through small annual investments that can compound over many decades.

CHAPTERS
0:11 Special guest Paul Merriman joins Talking Real Money
0:55 Long friendship and investing partnership between Tom and Paul
1:20 S&P 500 rule changes and earlier inclusion of major IPOs like SpaceX
2:07 Historical examples of S&P 500 additions and omissions
2:35 Microsoft’s delayed entry into the S&P 500
2:56 NVIDIA replacing Enron in 2001
3:29 How index rule changes can affect future returns and volatility
4:08 Why indexing remains the preferred strategy for most investors
5:16 Traditional versus non-traditional index funds
6:37 How Avantis and Dimensional incorporate factors beyond company size
8:05 Why factor-based investing differs from traditional indexing
9:02 Problems with rigid index reconstitution schedules
10:16 Momentum, flexibility, and portfolio management advantages
11:22 Introduction to Dimensional’s annual Matrix Book
11:53 Using market history rather than forecasts to guide investing decisions
13:09 Lessons from past bubbles, crashes, and lost decades
14:20 Why Paul trusts academic research more than Wall Street forecasts
15:14 The case for small-cap value investing
15:49 Clarifying Paul’s allocation to small companies
16:53 Investing for heirs, charities, and future generations
18:10 Remembering investor panic during the 2008 financial crisis
19:18 Determining an appropriate risk level for retirement portfolios
20:43 Different investor goals: beating the market, maximizing returns, or minimizing risk
21:28 Peace of mind versus maximum growth
21:55 Helping young people build retirement wealth early
22:54 The $365-per-year retirement funding concept
24:09 Final thoughts and appreciation between Tom and Paul

Questions? Comments? Click!

Paul Merriman joins host Roben Farzad on Full Disclosure for a rare conversation alongside Ben Carlson, director of institutional asset management at Ritholtz Wealth and author of the new book Risk and Reward: How to Handle Market Volatility and Build Long-Term Wealth. Roben called it a “truth teller tandem” — the first time these two have sat down together — and the result is an hour of warm, candid, data-grounded talk about how individual investors can actually succeed.

The conversation opens with a great question: does a century of S&P 500 history mean anything when index funds didn’t even exist for most of it? Paul explains why those long-run numbers still matter — not as a promise of the next ten years, but as a guide to the full range of what markets can do. From there, Paul and Ben trace just how far investing has come since Paul entered the business in 1966: the death of the 8.5% sales load, the arrival of IRAs and 401(k)s, fractional shares, and commission-free trading. As Ben puts it, the barriers to entry have been bulldozed, and today’s investor has a better shot at strong net returns than ever before.

But more choices bring more temptation. Paul and Ben dig into diversification as a risk-management tool — why a tilt toward small-cap value and a meaningful allocation to international stocks can pay off over a lifetime, even when the S&P 500 is dominating the headlines. They revisit the lost decade of 2000–2009, the lessons of Japan’s 1989 peak, and the hard discipline of rebalancing into the pain when an asset class is out of favor.

They also get practical about the things keeping investors up at night: inflation as one of the biggest risks most people underestimate, the real trade-offs in today’s bond market and long-duration Treasuries, and an honest look at the FIRE movement — including why meaning, longevity, and a 30- or 40-year retirement complicate the dream of retiring early. Throughout, Paul shares his own story, including why, at 82 and with more than he needs, he still holds half his portfolio in equities because of a caution he’s carried since his twenties.

Ben closes with the thought that may stay with you longest: the most important thing an investor can understand is not the market — it’s themselves. Knowing which mistake you’d regret more, and what you can truly live with, is the foundation everything else is built on.

Watch video here.

I recently sat down with Steve Chen on his Boldin Your Money podcast for a wide-ranging conversation about evidence-based investing — and why it matters more than ever in a world of speculation, hype, and constant financial noise. We covered my early days as a stockbroker in the 1960s, the psychology that trips investors up in downturns, how low-cost index funds transformed personal finance, factor investing and small-cap value, and why younger investors are being pulled toward gambling-like behavior through apps, crypto, and prediction markets. Whether you're just starting out or planning for retirement, I think you'll find it time well spent.

KEY TOPICS DISCUSSED
• The difference between investing and speculation
• Why staying the course is emotionally difficult
• Wall Street incentives and investor behavior
• The origins of index fund investing
• Factor investing and small-cap value explained
• Why diversification matters long term
• Rebalancing strategies and portfolio management
• Financial literacy and generational investing habits
• Why gambling behavior is becoming normalized
• How AI tools like ChatGPT and Claude are changing education
• The psychology behind successful long-term investors

TIMESTAMPS
00:00 Introduction
02:55 Paul Merriman's start in investing
05:20 Wall Street incentives and conflicts of interest
08:35 Why investing is harder than it looks
12:25 Investing vs speculation
15:40 Why people panic during market crashes
17:30 The psychology of staying the course
19:10 Generational wealth and financial literacy
23:40 The case for index funds
28:45 Factor investing explained
32:30 The four-fund portfolio strategy
36:00 Rebalancing and long-term returns
38:00 ChatGPT, Claude, and financial education
42:15 Market valuations and investor behavior
45:30 Building wealth intentionally
49:00 Gambling culture and modern investing
51:45 Teaching financial literacy to younger generations
54:00 Final thoughts on long-term investing

RESOURCES MENTIONED
Paul Merriman Foundation: https://www.paulmerriman.com/
Try the Boldin Planner for free: https://go.boldin.com/podcasttep110

Watch Video here- https://youtu.be/y_i5wrr_tfM