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The Simple Story About 2 Funds for Life
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- เผยแพร่เมื่อ 19 ส.ค. 2024
- This week Chris Pedersen is joined by Paul and Daryl in a video review and update of how he created his "2 Funds for Life” and how it can be used to build a successful lifetime portfolio with just a target date fund and a small cap value fund.
For the accompanying podcast Paul decided to discusses ways a parent or grandparent might explain 2 Funds for Life to a young adult. In the discussion Paul suggests using the following tables to make a handful of important decisions.
Tables 1-4 from his Follow the Math comments-
Table 1- paulmerriman.c...
Table 2- paulmerriman.c...
Table 3- paulmerriman.c...
Table 4- paulmerriman.c...
Equity Index Returns (1928-2022) to compare the returns of major equity asset classes- paulmerriman.c...
Table B13 to show what happens when you combine a small amount of small cap value with a mostly bond portfolio - paulmerriman.c...
Table B14A to show the impact of combining a small amount small cap value with a large cap blend fund - paulmerriman.c...
The goal is to help a young investor understand a target date fund as a good way to build a long term investment portfolio that will allow them to retire with enough for life.
The second goal is to show a young investor how a small amount of a small cap value fund, along with a target date fund, will likely help build an investment portfolio that will allow them to retire with almost twice as much annual income and leave much more to their heirs.
For the parent or grandparent it will be helpful to watch the videos on Fixed and Flexible Distributions.
This information is intended to be used and must be used for information purposes only.
We are not investment or tax advisors, and this should not be considered advice. It is very important to do your own analysis before making any investment or employing any tax strategy. You should consider your own personal circumstances and speak with professional advisors before making any investment.
The information we present is based on our own research and opinions. We believe the information presented herein to be true and accurate at the time of publication but do not guarantee the accuracy of every statement, nor guarantee that the information will not change in the future.
It is important that you independently research any information that you wish to rely upon, whether for the purpose of making an investment or tax decision, or otherwise. No content on the website (paulmerriman.com) or related sites, nor any content in our newsletters, email, or related content, constitutes, nor should be understood as constituting, a recommendation to engage in any of the investment strategies we present.
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We’re Talking Millions - 12 Simple Ways To Supercharge Your Retirement
2-Funds for Life: a quest for simple and effective investing strategies
Grandparents are very underrated. But with social media and youtube there can be genetically unrelated grandparents who guide us :). Thanks Paul!
As usual great. Thanks for the good work and comments. I appreciate all the work / research you three put into your presentations. Your team's ability to teach these topics in layman's terms is so helpful!
Chris is the Mr Rogers of Investment.😂
paul, chris and daryl- a wonderful conversation. thanks for the effort and sharing. can you be more specific as to the fixed income side of the TDFs? are Treasuries preferred to corporate bonds? and what about bond duration? thank you in advance for any additional thoughts. BIG thumbs up.
We recommend a mix of intermediate-term and short-term treasuries plus TIPs for the fixed-income portion of investor portfolios because they are safer and less like stocks. Target-date funds tend to own the total bond market. You can backtest 50|50 portfolios of the total US stock market and total US bond market or the Merriman fixed income allocation using Vanguard ETFs at Portfolio Visualizer. The difference in CAGRs since November 2012 is < 0.1 %/year, but the worst drawdown was 3% greater using total US bonds.
@@chriskpedersen thank you for taking the time to respond. i VERY much appreciate the efforts that you, daryl and paul offer us folks who are about to head into semi/full retirement. thumbs up.
and please notice and be careful, there are bots making unhelpful comments. ymmv
It is hilarious that they talk about day trading using a high fee advisor. Like, um, do they know Paul is all about index funds with low fees? He also wrote a book called “Get Smart or Get Screwed” about the perils of high cost advisors.😂
Is there an age that a target date fund isn't prudent? 65-70 yrs old, planned retirement 2yrs?
Target-date funds are built to fit the needs of some hypothetically average investor. If the 65-70-year-old investor fits the mold, the TDF is more likely to be prudent for them. If the investor has dramatically undersaved, or oversaved, or has a wildly different risk capacity or tolerance than the hypothetical average the TDF is designed for, then it's less likely to be prudent for them.
🤘🏻
Making money is an action. Keeping money is behavior. Growing money is knowledge..
@@grumpyoldjeff I just sent him a message now. With all the recommendations I've seen here, I'll definitely give it a try
I am 72. I will be retiring in January 2024. My wife & I have SS benefits that exceed our annual expenses. In addition, we have annuities (FIA w/Income Riders) and a Reverse Mortgage w/Line of Credit that will produce $100K in annual income. In addition to these income streams, we have $507,000 in Vanguard. Currently it is 100% in Equities...since I have substituted annuities for bonds. I am using VTI and VXUS, 75/25. (These funds are evenly divided between Taxable, Tax Deferred, and Tax Free buckets.) Do you still recommend I put my Vanguard funds into the 2 Fund Strategy? Would it really benefit me?