How not to get cheated

“I love the podcasts, the site, and all of the helpful research that you share.  Thank you for being a candid, trusted resource.” — Will C. In This Edition Good News to Share20 Minutes to Double Your Lifetime Spending PowerWays Investors Get CheatedChecklist: End of Life PlanningQ&A with Chris PedersenPersonal Stories Dear Friends, Life can be full […]

The post How not to get cheated appeared first on Paul Merriman.

“I love the podcasts, the site, and all of the helpful research that you share.  Thank you for being a candid, trusted resource.” — Will C.

In This Edition

Good News to Share
20 Minutes to Double Your Lifetime Spending Power
Ways Investors Get Cheated
Checklist: End of Life Planning
Q&A with Chris Pedersen
Personal Stories

Dear Friends,

Life can be full of routines, obligations, challenges and setbacks, but I trust we each also have happy moments that we anticipate, and when they arrive we are thrilled. Such was the case for my wife and me last week when our first granddaughter was born. She was two weeks late but showed up large and healthy and we are looking forward to spending time with this little darling. I think, what a difficult world she faces… but I suspect that’s what my parents thought when I was born in 1943.

Stay tuned for a special lifetime investment article as my granddaughter will have a chance to watch a few dollars grow to a lot more over 100 years. She smiled when I told her $100 over 100 years at 12% would grow to over $8,000,000. I don’t read lips well but I think she whispered, “Small-cap value, Gramps.”

Meanwhile, I am excited about the future for you who are staying the course of your sound investing strategies. As we head toward year’s end, we will update you with more about our 10th Anniversary reflections and our Foundation’s plans to continue supporting you in making the most-informed decisions in your best interest  in the years ahead.

I also received more news last week that made me feel proud. Merriman Wealth Management, the firm I started in 1983, was named one of the top 50 Registered Investment Advisory (RIA) firms in the country by Forbes magazine and Shook Research. This attests to the values and culture we established almost 40 years ago of commitment to quality client relations and pursuit of excellence from an investment/financial planning perspective. Congratulations to the entire Merriman Wealth Management team!

 And finally, in even more good news, today I will address an association of engineering students at Rutgers University. This keen group of students are eager to understand the data we present and make investing choices for a lifetime. I would love to have more opportunities of this sort.  

I am pleased with what we have accomplished in the first 10 years of our Foundation educational outreach AND I believe the best is yet to come. If you have ideas about how we can extend our outreach to help more “students,” please email me: paul@PROTECTED and include your phone number so I can follow up on your ideas. I will do my best to respond promptly.

Chris Petersen Explains ‘20 Minutes to Double Your Lifetime Spending Power’

Want to learn about how to radically maximize your 401k? Chris explains the principles and details he wrote about in the October “AAII Journal” cover story, “Double Your Lifetime Purchasing Power in 20 Minutes.” Watch the video or tune into the podcast. 

Here is the article: Double Your Lifetime Purchasing Power in 20 Minutes by Chris Pedersen

Taking advantage of your workplace retirement plan can make a big difference in your end balance and spending capacity OVER THE REST OF YOUR LIFE

Between now and January, millions of Americans will make pivotal financial decisions as they enroll in or adjust their retirement plans. Among other things, they’ll decide how to save, invest and automate. How impactful are these choices? More than you might think. Even the “20-minute” solution of accepting the most common employer defaults could double an investor’s lifetime spending power.

Those defaults typically start with small automatic paycheck deductions invested in a target-date fund. Then, they are scaled up over time until total savings rates, including company matches, are 10% or more of the employee’s salary. Slightly more complex approaches that shift 10% to 20% of the retirement savings to a small-cap value fund have historically done even better. And these approaches aren’t just relevant to the young; they can also improve portfolio safe-withdrawal rates in retirement. [To Continue Reading, click here and then enter your email on the AAII page to gain full access to this excellent article…]

Ways Investors Get Cheated

In this “Morningstar” article, “What Investors Should Know About Behavioral Tricks,” writer Sarah Newcomb examines the many and sinister ways that behavioral science uses product design to manipulate investors. I think you will find this interesting.

You’ll learn how a “nudge,” a small change to a choice environment that lightly prods a consumer toward behaviors that are personally or socially beneficial, has a more nefarious side called “sludge,” as coined and illuminated in his the book of the same name by Cass Sunstein. “Sludge,” Newcomb writes, “is part of a larger class of nefarious product and service design methods known as dark patterns… design features engineered to coerce users into doing something they would otherwise prefer not to do.”

“In September 2022, the Federal Trade Commission reported a rise in sophisticated dark patterns designed to trick consumers into buying products and giving away their personal information. The report, entitled ”Bringing Dark Patterns to Light,” describes four major types of dark patterns to watch out for.” [Read the article here.]

Checklist: End of Life Planning

Being a long-term investor, you understand the importance of planning, which is a huge step ahead of most people. Yet it’s one thing to plan for financial wellbeing in retirement and even our legacy to others, and another to prepare for the fact of our eventual demise. Without this list, a surviving partner and family may spend weeks trying to figure out what they need to know. As uncomfortable as it might be, it is a responsible action that will give you, and your loved ones, peace of mind.

This checklist, courtesy of Merriman Wealth Management, is a great tool I highly recommend for everyone to fill in and review periodically.ww Download the Checklist here.

Q&A by Chris Pedersen

Q:  Have you looked at the tax loss harvesting M1 Finance does?  How important is it?  

A:  We aren’t tax experts and haven’t spent any time analyzing this. Something worth considering, though, is that tax loss harvesting lowers short-term taxes and increases future gains taxes since they will be paid on a new lower cost basis. If they are inherited, and there’s still a step up in basis, that gain tax is avoided. If you need to sell and realize the gain before you die, I’m not sure it makes much of a difference. You’d have to run the specific numbers to know.

Q:  Huge fan of your work! I had a quick question about Large Cap Value funds. I was wondering why you haven’t you included the Avantis Large Cap Value ETF in your Best-in-Class listing? It seems like AVLV would be a good compromise with an expense ratio of only  0.15%. I know you are a fan of their other offerings such as small-cap value and emerging markets so what am I missing? 

A:  I’ll be running the numbers again soon, and you’re right that VTV and AVLV will be in the mix. I think any of the three could be “best” for a particular investor depending on their priorities and perspective. The one I pick to be “best” will depend on expected returns and returns per unit of risk.

Personal Story

 “You said, ‘Our biggest challenge is getting those who like our work to pass it on. What could we do to encourage you to pass it along?’  I think you’re doing it.  I’ve heard, possibly from you on a podcast, that when the student is ready, the teacher will appear.  I don’t remember how I first found your work, but there’s a decent chance it was from one of your guest appearances on another personal finance podcast, at a time when I was searching for a better mousetrap. Your surprise call in early 2017 was a kindness I will always remember, and a story I tell to friends and family suspicious of your motives.  Spreading the word about your life-changing work is the least I can do. Thank you.” — Ted N.

My response to this sound investor, and to each of you who share a story about the value our work brings to your life is, Thank you!  I truly appreciate your efforts to share our work with others.  As I have noted recently, there are people who want very little from us and those focused on wanting a lot.  The ones that want little are not likely to be with us for long, but the people who want a lot will hopefully be long-term “friends.”  I suspect your desire to know more led you to us in the first place.  Thanks for sticking around, Paul

If you’d like to share a story, which I love to read and my team and I greatly appreciate, please write to me at: info@PROTECTED

Helping you build a better financial future,
Paul

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The post How not to get cheated appeared first on Paul Merriman.