50 Facts Every Investor Should Know

Here is the link.

by Paul Merriman

Support information to accompany Video and Audio-Only recordings of “50 Facts Every Investor Should Know”

#1 – American Funds graph for the long-term addition of .5% and 1%: http://cdn.source-media-micro.psdops.com/20/bb/948ea1ca45b3a48841a02d763d14/why-active-investing-matters.pdf

This article discusses the impact of adding .5% a year over the lifetime of saving, investing and living off the money  https://paulmerriman.com/opinion-a-half-percent-can-change-retirement/

#2 – 10 can’t-fail lessons of diversification https://paulmerriman.com/10-cant-fail-lessons-diversification/

#3 – 10 things every investor should know about asset classes  https://paulmerriman.com/10-things-every-investor-should-know-about-asset-classes/

#5 – Understanding performance: The S&P 500 Index https://paulmerriman.com/understanding-performance-sp-500-index/

#6 – Looking for action? Try large cap value stocks

https://paulmerriman.com/looking-action-try-large-cap-value-stocks/

#7 – How to make money with small cap stocks https://paulmerriman.com/make-money-small-cap-stocks/

#8 – Three articles on investing in small cap value

This four-fund combo wallops the S&P 500
https://paulmerriman.com/?s=4+fund+wallops

When it pays to go all-in on small cap value

https://paulmerriman.com/pays-go-small-cap-value/

Small-cap value is the gold ring of investing

https://paulmerriman.com/small-cap-value-gold-ring-investing/

#9 – Why REITs belong in your retirement portfolio  https://paulmerriman.com/reits-belong-retirement-portfolio/

10 things you need to know about REITs

https://paulmerriman.com/10-things-need-know-reits/

#10 – 6 reasons you should invest internationally

 https://paulmerriman.com/six-reasons-invest-internationally/

It’s a small world after all: International small cap value

https://paulmerriman.com/small-world-international-small-cap-value/

Own the best companies in the world

https://paulmerriman.com/best-companies-world/

Foreign big cap big cap value stocks outshine U.S. counterparts

https://paulmerriman.com/foreign-big-cap-value-stocks-outshine-u-s-counterparts/

How international small-caps spice up a retirement portfolio

https://paulmerriman.com/international-small-caps-spice-retirement-portfolio/

#11 – Tap into emerging profits from emerging markets https://paulmerriman.com/tap-emerging-profits-emerging-markets/

#12 – The ultimate buy and hold strategy

https://paulmerriman.com/ultimate-buy-hold-strategy-2016/

#13 – Why you should consider an all-value portfolio http://www.marketwatch.com/story/why-you-should-consider-an-all-value-portfolio-2017-03-29

Fine tuning your asset allocation 2017

https://paulmerriman.com/fine-tuning-tables-2017/

#15 – 22 things you should know about bear markets https://paulmerriman.com/22-things-know-bear-markets/

#16 –30 reasons to fall in love with index funds

https://paulmerriman.com/30-reasons-fall-love-index-funds/

#20 – 4 things you might know about index funds

https://paulmerriman.com/4-things-might-not-know-index-funds/

10 ways index funds can save your retirement

https://paulmerriman.com/10-ways-index-funds-can-save-retirement/?pfstyle=wp

13 ways index mutual funds and ETFs rule

https://paulmerriman.com/13-reasons-index-mutual-funds-etfs-rule/

#25 – How to double your target date funds return in a single move 

https://paulmerriman.com/double-target-date-retirement-funds-return-single-move/

#29 – Inflation turns every investor into a loser

https://paulmerriman.com/inflation-turns-every-investor-loser/

#30 – Get smart or get screwed:  How to select the best and get the most out of your financial advisor. This free e-book includes 80 reasons not to do business with a commission-based advisor

https://paulmerriman.com/2014-new-site/wp-content/uploads/2013/03/get-smart-or-get-screwed-how-to-select-the-best-and-get-the-most-from-your-financial-advisor1.pdf

#31 – Who should retirement investors trust?

 https://paulmerriman.com/who-retirement-investors-trust/

Should investors trust Wall Steet, Main Street or University Street?

http://www.marketwatch.com/story/should-investors-trust-wall-street-main-street-or-university-street-2016-03-16

#33 – 6 things you should know about rebalancing

https://paulmerriman.com/6-things-you-should-know-about-rebalancing/

Why rebalancing could be a huge mistake

https://paulmerriman.com/why-rebalancing-huge-mistake/

#34 – How retirement investors hurt themselves

http://www.marketwatch.com/story/how-retirement-investors-hurt-themselves-2014-05-07

#36 – The social and psychological risks of investing

https://paulmerriman.com/emotional-psychological-risks-investing/

#43 – Dieters can teach investors

https://paulmerriman.com/dieters-can-teach-investors/

#45 – Sample of work by recommended writers:

Larry Swedroe 

http://www.etf.com/contributors/larry-swedroe

Allan Roth

http://blog.aarp.org/2015/11/09/play-the-odds-when-investing/

Jason Zweig

http://jasonzweig.com/and-now-for-something-on-index-funds/

Mark Hebener

https://www.ifa.com/articles/

#46 – Don’t discount the impact of luck on your portfolio

https://paulmerriman.com/dont-discount-impact-luck-portfolio/

#50 – The best investment advice ever

https://paulmerriman.com/the-best-investment-advice-ever/

Investing Myths

Here is the link. 

Paul  discusses 15 investment myths that can cost investors a lot of money, with Ken Roberts, host of ‘Ken’s Bulls and Bears’,  The myths include:

1.  Investing is just another form of gambling.
2.  You don’t lose money if you don’t sell.
3.  You should sell your losers and let your winners run.
4.  Almost nobody beats the S&P 500.
5.  Morningstar 5-star funds are the best in the industry.
6.  I’ll have plenty of time to save for retirement if I start by the time I’m 40.
7.  A million dollars is enough to retire.
8.  You don’t need international funds.
9.  Market timing is more risky than buy and hold.
10.  Market timing keeps investors from losing money in a bear market.
11.  Ten years of performance is a meaningful track record.
12.  A mutual fund manager will take steps to protect against a bear market.
13.  Stock brokers recommend the best investments they know.
14.  Brokers and investment advisors are a big waste of money.

Moving to action: Twelve numbers to change your life excerpted from "Financial Fitness Forever"

Here is the link.


It has taken a lot of work to get to that number. But now we can see that you have a shot at meeting your goal if you invest prudently and keep your expenses under control.

Nobody can tell you what investment returns will be over the next 10 years, so there is no guarantee of anything. You’ll find a table of long-term returns in Appendix B, part of an article that looks at levels of risk and return going back to 1970 for portfolios with various combinations of stocks and bonds. Though this table is only a very approximate guide to the future, I think it encouraging in your situation.

From 1970 through 2010, a relatively low-risk portfolio with 60 percent in properly diversified stock funds and 40 percent in bond funds achieved an annualized return of 10.6 percent – definitely higher than the 8.1 percent you need

Even if we assume that over the next 12 years such a portfolio would achieve two full percentage points less than that, or 8.6 percent, that would still be above what you need. Having 60 percent of your portfolio in stock funds unquestionably subjects you to some risk, and you should carefully consider this. In the 41 years we just examined, that 60 percent equity portfolio had a worst-12-months loss of 33.5 percent. That would be a significant setback for you, and if it occurred just before or just after you retired, you would have to modify your expectations.

Over the last four decades, if you had invested 40 percent of your money in a welldiversified group of stock funds and the other 60 percent in bond funds, your greatest 12-month loss would have been 23.1 percent. A 40 percent equity portfolio represents a much more conservative approach than you are now taking. And the good news is that, over that same period, your annualized return in such a portfolio would have been 9.4 percent – higher than you need.

Is this the beginning of the end for big tech as we know it?

Here is the link.

Habits and Attitudes of Successful Investors

Here is the link.

How To Invest In Today’s Market

Here is the link.

Paul Merriman Sound Investing For Every Stage of Life

Here is the website.

I like the pod cast, and the speech is slow and easy for me to follow.

Paul Merriman

Paul A. Merriman is committed to educating people of all ages to get the most from their retirement investments. Founder of Merriman LLC, an investment advisory firm in Seattle, WA. he is author of numerous books on investing for retirement: “Financial Fitness Forever,” “Live It Up Without Outliving Your Money,” and the 2012 “How To Invest” series: “First Time Investor: Grow and Protect Your Money” “Get Smart or Get Screwed: How to Select the Best and Get the Most from Your Financial Advisor” and “101 Investment Decisions Guaranteed to Change Your Financial Future“. The series is available for free immediate download at his website. Paul’s weekly podcast, “Sound Investing,” was recognized by Money magazine as the best Money Podcast in 2008. He also writes, with Rich Buck, weekly articles for MarketWatch‘s “Retirementor” column. His mutual fund and ETF portfolio and 401(k) plan recommendations are also available free at paulmerriman.com.

10 more things you need to know about the Ultimate Buy and Hold Strategy

Here is the podcast web page.

Case study: Last IRA CD transfer from New York community bank to Ameritrade.com

June 2, 2019

Introduction

It is time for me to file an external transfer from NYCB bank to Ameritrade.com. I got the statement back in 2007 and then I found my account number. Last month Ameritrade tried to transfer the account but the number was not correct, I got the statement from NYCB, somehow one of the account numbers is not correct.

Case study

I need to push myself to get organized, and also push myself to learn more about correction and volatility.

I like to close another account and say good bye to NYCB. I still remembered that I had so many memory with Amtrust bank branch in the city of Boca Raton, later the bank is changed to NYCB.

Vanguard's economic and investment outlook - 2016

I like to spend 30 minutes to read the outlook - 2016 in next week. Here is the link.

When a correction becomes a bear–and what to do about it

Here is the link.

Bear markets have generally taken longer to reach bottom and longer to recover:

• The average time from the start of a bear market to its bottom was 373 days. The fastest decline was 60 days; the slowest was 926 days.
• average time from a bear market trough to recovery was 798 days. The fastest recovery was 85 days, the slowest 1,928 days.

Global stock prices (January 1, 1980—January 22, 2016)

	Number	Average return	Average time from peak to trough	Average time from trough to recovery
Correction	12	-13.7%	87 days	121 days
Bear market	7	-33.4%	373 days	798 days

Note: Vanguard analysis based on the MSCI World Index from January 1, 1980, through December 31, 1987, and the MSCI All Country World Index thereafter. Both indexes are denominated in U.S. dollars. Our count of corrections excludes corrections that turned into a bear market. We count corrections that occur after a bear market has recovered from its trough even if stock prices haven't yet reached their previous peak.

10 more things you need to know about the Ultimate Buy and Hold Strategy

Here is the link.

Fine tuning your asset allocation: 2010 Update

Here is 8 page article related to asset allocation. I like to read the article and spend 30 minutes first.

Until 2008, the worst-case scenarios shown in this table came from the bear markets of 1973-74 and 2000-2002. Now, most of the worst periods involve 2008 and early 2009. The U.S. stock market, measured by the Standard & Poor’s 500 Index, suffered a decline of 37 percent in 2008, the worst calendar year since 1931 (when it lost 43.3 percent).

Over 30 years, an investment of $1,000 would grow to $32,342 at the 12.4 return, vs. only $16,980 at 9.9 percent.

 They include a worst-calendar-year loss of 41.6 percent in 2008 and a worst-12-months loss of 51.1 percent (March 2008 through February 2009). There was also a one-month loss of 23.4 percent! Not many investors can be sure they’ll keep their cool in the face of losses like that.

How Much Risk Do You Need to Take?

Here is the link.

Merriman assumes that the equity portion of each portfolio is split equally between the S&P 500 and international stocks, and the fixed income side is half intermediate-term, 30% short-term and 20% inflation-protected Treasuries. They also deduct a 1% management fee and assume the portfolio is rebalanced monthly. Here’s a summary of the results:

	Annualized return	Standard deviation	Worst 12 months	Worst 60 months
100% fixed income	6.9%	4.6%	-4.8%	14.1%
10% equities	7.5%	4.6%	-5.3%	14.3%
20% equities	8.2%	5.1%	-11.6%	10.1%
30% equities	8.8%	5.9%	-17.5%	5.9%
40% equities	9.4%	6.9%	-23.1%	1.6%
50–50	9.9%	8.2%	-28.5%	-2.7%
60% equities	10.5%	9.5%	-33.5%	-7.0%
70% equities	11.0%	10.8%	-38.3%	-11.3%
80% equities	11.5%	12.2%	-42.8%	-15.5%
90% equities	11.9%	13.7%	-47.1%	-19.7%
100% equities	12.4%	15.1%	-51.1%	-23.9%

Podcast 11: Fighting Evil With Index Funds

June 2, 2019

Here is the podcast web page.

Here’s some context from a research brief prepared by Vanguard Canada. It looked at the 36-year period from 1980 through the end of 2015 and found the following:

• During this period, there were 12 corrections (generally considered to be a 10% decline from peak to trough), or about one every three years. The average correction was –13.7%. It took an average of about three months for the market to bottom out, and about four months to recover.
  .
• Since 1980, there have been seven bear markets (defined as a peak-to-trough decline of at least 20%), or about one every five years. The average loss during these bear markets was –33.4%. On average, it took just over a year for prices to touch bottom, and about 26 months for them to recover.

Take profits here and keep some powder dry: Morgan Stanley's top strategist

Here is the link.

Case study: Par 401 K positions - June 2 2019

June 2, 2019

Introduction

It is my personal finance research. I like to learn when to rebalance my portfolio. I have Par 401 K and I did build a portfolio less than two months ago, now the balance is $200 lower. Should I rebalance the portfolio?

Case study

I have to think about if I should rebalance my portfolio on my Par 401K.

June 2, 2019

I look up my folder, and here is the portfolio I setup in April 30, 2019, just one month ago.

Here are the difference based on asset type. I need to think about when to rebalance the portfolio. It is free to rebalance.

Here are a few blogs related to my Par 401K starting from 2007.

Case study: 401 K Ameritrade two orders placed June 2 2019

June 2, 2019

Introduction

It is my personal finance research. I decide to go for balanced portfolio, 60% stock, 40% bond, and I like to set up the portfolio by myself.

Case study

I spent time to place two orders today. I need to set up a portfolio similar to the one I studied in the blog. I like the research work shown in the article, and I understand that it is much cheap for me to balance myself, since I am a frugal person and I like to learn how to control my emotion, rebalance the portfolio and do it by myself.

Here is the snapshot of my two orders.

Case study: build my own balanced portfolio or using Vanguard one

June 2, 2019

Introduction

It is my personal finance research. What I like to do is to invest $50,000 dollars on questrade.com, TFSA account. What I like to do is to set up my own balance portfolio $44,000 dollars and $6000 dollars on VBAL ETF.

Case study

I compare the cost of ETF, VBAL is around 0.22% whereas VFV has 0.08% MER, VDU has 0.20%, VAB has 0.08%, so my portfolio will have 0.10% MER. So I calculate the cost of every year, the difference is 0.12%.

If I purchase $10,000 dollars VBAL instead of building my own portfolio, then the cost of MER extra is $120.00 dollars. For my case, I have $50,000 dollars, I have to pay $600 dollars extra for MER.

I like to build a portfolio by myself, and also compare the performance with VBAL with a small amount $6,000 dollars.

Follow up 

Dec. 11, 2019 9:52 PM
$10,000 dollars for 0.12% MER will be $12 dollars, not $120 dollars. So $50,000 dollars with 0.12% MER will be $60.00 dollars, not $600 dollars.

Canadian couch potato: Model portfolios: Individual ETFs

June 2, 2019

Introduction

It is so exciting to learn model portfolios from Canadian couch potato. Here is the pdf link.

A copy of portfolios

I like to copy and paste here as well. So I can constantly review the portfolio and figure out basics things.

MODEL PORTFOLIOS The following model portfolios can help you get started as a Couch Potato investor.

Here is the article.

How Much Are You Paying For US Dollars?

This is very interesting topic. I like to read the article and also write down highlights of my learning.

Here is the article.

Cost Versus Convenience in “ex Canada” ETFs

Here is the link.

Investing Why Jane shouldn’t cash out on stock crash fears Escape volatility with a laddered GIC for cash

Here is the article.

I like to learn the topic called "Escape volatility with a laddered GIC for cash".

Once you’re relying on your portfolio for cash flow, a portion of it should be in safe, stable investments so you don’t have to be concerned about every dip in the stock market. Here’s a simplified example to illustrate.

Whether you sell stocks or bonds to do this depends on how the markets behaved over the previous year: if equities went up, you’d trim your holdings back to your 50% target. If they went down, you’d sell some of your bond ETF to top them up. With a few easy transactions, your portfolio will be rebalanced and you’ll be all set to enjoy another year of uninterrupted retirement income.

Sign up Reddit

June 2, 2019

Introduction

It is my personal finance research. I found out that I need to sign up on reddit.com. Here is the post I read.

My first upvote

Well we don't buy GIC's for the rates - we do it for the portfolio stability. So that if his 95% equity portfolio drops 50% or more (which is a very real possibility), then the GIC's will limit the overall damage.

(mostly RBC stock)

Shudder. Give this podcast a read/listen: https://canadiancouchpotato.com/2018/09/28/podcast-19-the-big-tradeoff/

"between May 2007 and February 2009, Royal Bank stock lost over half its value, falling from $60 to less than $30 per share." Could happen again easily if we have another recession.

would that be bad advice in terms of decumulation and taxation?

Again I don't know his entire financial situation so I have no idea. Are all his investments inside his RRSP? Does he have TFSAs or taxable investments too? Is he married and what does his partner's investments look like?

You could start him off by giving him copies of the books Millionaire Teacher by Andrew Hallam. And this one https://www.moneysense.ca/save/retirement/retirement-income-for-life/

He should seek a fee for service financial planner and get a real financial plan done up.

Canadian coach potato

Here is the website. I like to read more content from the website.

Podcast 19: The Big Tradeoff

Here is the link.

For the interview segment, I’m joined by Larry Bates, a former investment banker who has become an outspoken advocate for Canadian investors. Larry is the author of a new book called Beat the Bank, which lays out a strategy he calls Simply Successful Investing, with a focus on education, long-term thinking and low costs.

A few years ago, Larry created the T-REX score, a way of measuring the portion of an investor’s long-term gains that are lost to compounding fees. For example, assuming an annual return of 5% over 25 years, an MER of 1.5% would eat up 43% of your total gains. Drop that fee to 0.25% and you’d lose just 8% over the same time period. Use the T-REX calculator on Larry’s site to run the numbers for yourself.

Even diversified dividend ETFs were slaughtered during the crisis: the iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ) holds only Canadian stocks with a history of rising dividends: it lost about 44% of its value in the six months following September 2008. In the US, the Vanguard Dividend Appreciation ETF (VIG) also lost about 40% over the same period.

Dividend-paying stocks are wonderful, and they’re likely to be appropriate for just about any portfolio (as part of broadly diversified index funds, of course). But we need to let go of the idea that they are “low risk,” and that they’re a suitable alternative to GICs and bonds for income-focused retirees.

A guide to having retirement income for life

Here is the link.

Case study: How to play with market using Vanguard All-in-one ETF

June 2, 2019

Introduction

It is my personal finance research. I have to push myself to get into the market and then I like to enjoy the benefit of passive income through the investment. I have less than $30,000 US dollar 401 K and IRA to manage, and also $50,000 Canadian dollars for me to invest as well.

Case study

I like to play the game of Vanguard ETF, as I learn this weekend, 60% stock and 40% bond is good to invest since it is analyzed by 2007 - 2010 including a big recession in 2008. One of idea is to purchase VBAL ETF with stock 60% and bond 40%.

I also can purchase VBAL, and if there is a recession, then I can sell VBAL, and then purchase VGRO.

Growth ETF Portfolio (VGRO)

Here is the link.

Vanguard’s One-Fund Solution

Here is the link.