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How will investing be different in the future and 7 AAII Q&As
On July 22 Chris Pedersen spoke to the Orange County AAII Chapter. This podcast, as well as one on 8/9/23 (20 Q&As) and another on 8/2/23 (16 Q&As) address questions that arose from the presentation. This podcast covers a few more AAII questions plus other recent questions.
Topic 1: What is the difference between investing today vs. 40 years ago? And how is investing likely to be different in the future? 01:11
Topic 2: Will the new Avantis All Equities Market Value ETF be a good substitute for your Worldwide All Value Portfolio? 7:00
Topic 3: Do you recommend converting traditional IRA funds to a Roth IRA using the back door Roth IRA strategy? Paul suggests reading: https://www.thebalancemoney.com/when-does-a-backdoor-roth-ira-make-sense-4153803 and various articles at The White Coat Investors: https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/. 14:30
Topic 4: What is the most important table on your website? Paul mentions tables at these pages: https://paulmerriman.com/ultimate-buy-and-hold-strategy/, https://paulmerriman.com/portfolios-2023-updates/ (most important), https://paulmerriman.com/fine-tuning-your-asset-allocation/, https://paulmerriman.com/fixed-contributions/, https://paulmerriman.com/fixed-distributions-2023/ and https://paulmerriman.com/flexible-distributions-2023/. 18:25
Topic 5: Should a younger investor (20s, 30s, 40s) use TIPs as part of their fixed income or just stick to the Total Bond Market? 22:17
Topic 6: Can you discuss your recommendations for the bond portion of a portfolio? For example, how do you decide how much would go with the Worldwide 4 Fund Portfolio? 23:57
Topic 7: Could there be a problem when small cap value funds get too large? 28:02
Better than Wellesley and Wellington? and 19 other questions
1. How do you feel about using a balanced fund such as Vanguard Wellington in retirement? 01:44
2. I subscribe to your mantra of index funds, keep costs low, buy and hold etc, Is Merriman Wealth Management your company as well? I ask because that company espouses buy and hold and market timing and charges “AUM” fees. 14:15
3. I am a new retiree at 65 and have decided to use the “2 Funds for Life” target date fund with a 10% small cap value portfolio. Do you recommend the 10% small cap value be split between U.S. and international small cap value funds? 23:30
4. Is it too late for someone just entering retirement to change their investment portfolio to the 10-Fund Merriman Ultimate Buy and Hold Portfolio? 26:39
5. What is your impression of a recent Vanguard study that showed a large percentage of investors over 85 with an asset allocation of 100% in stocks? 30:14
6 How about using a technology fund instead of a small cap value funds? 35:00
7. What are some short term bonds funds you recommend? Bonds funds discussed VSBSX, VMLTX and VSCSX 39:24
8. I am 25 years old and have a high risk tolerance. Would it be okay to be all small cap value and would it be okay to invest 10% of the portfolio in individual small cap value stocks? 41:06
9. I have been using the Merriman 10 fund portfolio for 10 years. The annual rebalancing takes a lot of time. Do you recommend I move to the worldwide 4 fund portfolio instead? 43:00
10. I am retired and just took a full distribution from my 401k and invested the cash in a Vanguard Rollover IRA. I I use one of Merriman’s portfolios should I stage my investment over many months or invest it all immediately? 44:45
11. I currently hold a large amount of cash and want to start investing. Do you recommend a lump sum investment or dollar cost average over a few months? 48:25
12. Do you think the Avantis All Equity Markets Fund (AVGE) has enough small cap value to compete with the returns of your Worldwide 4 Fund Portfolio? 53:53
13. How does the Avantis Small Cap Value ETF (AVUV) compare to the DFA Small Cap Value ETF (DFSX)? 56:46
14. Do you recommend buying individual bonds instead of bond funds? 59:58
15. Do you recommend moving to a target date fund with a later retirement to get more exposure to equities? 1:02:00
16. What would happen if one of the Avantis funds closed? Paul recommends reading this article. 1:03:39
17. I own VBR (Vanguard Small Cap Value ETF) in a taxable account. Should I take the tax hit and move the investment in AVUV (Avantis Small Cap Value ETF)? 1:07:00
18. What is your opinion of holding target date funds or a fund of funds during retirement? 1:10:33
19. What is the range of Price to Earnings (P/E) ratio of large and small growth and value funds? 1:13:00
20. I think I need a professional advisor to help me with my financial decisions. Will the fees I pay be covered by higher returns? Financial Advisor services. 1:17:21
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3. I am a 79 year old retiree who wants to use your 2 Funds for Life strategy. How do you recommend I put my portfolio together?
4. How would I establish an expected rate of return for the U.S. 4 Fund Portfolio?
5. I’m a young investor with a Worldwide All Value Portfolio. As I age should I start to transition to a lower risk equity portfolio?
6. The Avantis funds use a quality factor to produce better returns. Why don’t all small cap value funds use the quality factor in their selection of companies?
7. How have real returns of equity asset classes compared to theoretical returns?
8. I want to carefully build my portfolio to work within my risk limits. My challenge is to decide what period of time represents the kind of losses I’m willing to accept. If I use the information starting in 1928 or in 1970 the loss exposure is very different. Which period should an investor use to match their asset allocation to their risk tolerance?
9. Chris, Daryl and Paul discuss the long term implications of the risk and return of a 60% equity and 40% bonds using a combination of equal percentages of the S&P 500 and small cap value.
During the presentation Daryl and Chris reference a new 
