Paul Merriman Builds Your Million-Dollar Roadmap to Success (SB1623)

Summary

Podcast Summary: The Stacking Benjamins Show – "Paul Merriman Builds Your Million-Dollar Roadmap to Success" (SB1623)

Release Date: December 27, 2024
Hosts: Joe Saul-Sehy and OG
Guest: Paul Merriman
Podcast Network: StackingBenjamins.com | Cumulus Podcast Network

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1. Episode Overview

In this episode of The Stacking Benjamins Show, hosts Joe Saul-Sehy and OG engage in an insightful conversation with renowned financial expert Paul Merriman. The discussion revolves around building a million-dollar roadmap to financial success, delving into effective saving strategies, investment philosophies, and the intricacies of retirement planning. The episode is rich with expert advice, personal anecdotes, and actionable tips aimed at enhancing listeners' financial literacy and empowering them to make informed money decisions.

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2. Key Discussions and Insights

A. Non-Traded Real Estate Investment Trusts (REITs)

Timestamp: [11:06 – 18:09]

Discussion Points:

• Valuation Challenges: OG and Doug dissect an article by Bruce Kelly from Investment News questioning the true value of non-traded REITs. They highlight the volatility and lack of liquidity inherent in these investments, referencing historical issues like the 2008 credit crisis where valuations of non-traded REITs were vastly incongruent with their real market value.

• Horror Stories: The hosts recall specific cases such as C & L Lifestyle Properties and Inland Western, emphasizing the risks associated with steep commissions and unreliable valuations.

• Expert Opinions: Paul Merriman chimes in, advocating for transparency and caution when considering non-traded REITs. He underscores that while not inherently scams, these investments require thorough understanding and are often overshadowed by more liquid and transparent investment vehicles like equity real estate or REIT ETFs.

Notable Quote:

Doug [13:05]: "If you're adding real estate to a portfolio, you use an ETF or a mutual fund. Stay away from the non-traded stuff. I can't see how you would use a non-traded REIT at all."

B. SEC’s Plan to Enhance Stock Market Data Accessibility

Timestamp: [11:06 – 24:19]

Discussion Points:

• New Data Feeds: OG introduces a headline from The Wall Street Journal about the SEC’s approval of a plan to provide more detailed stock market data to the public. This initiative aims to democratize access to information traditionally reserved for professional traders and Wall Street firms.

• Implications for Investors: The hosts debate whether increased data transparency will significantly impact average investors’ ability to achieve their financial goals. They express skepticism, noting that while information is valuable, execution and strategic action are critical for financial success.

Notable Quote:

OG [22:27]: "If information was all that's required, we'd all be millionaires with six-pack abs."

C. In-Depth Interview with Paul Merriman

Timestamp: [26:28 – 55:22]

i. Personal Background and Frugality

Paul Merriman shares insights into his early life, emphasizing the importance of frugality and saving from a young age. He reflects on the balance between being financially disciplined and maintaining personal relationships, particularly with his non-frugal wife.

Notable Quote:

Paul Merriman [27:32]: "I was frugal because my wife is not. It set the foundation to build from."

ii. Savings Strategies and Early Investing

Paul advocates for starting to save early, illustrating the power of compound interest. He contrasts saving consistently over a lifetime versus delaying savings, highlighting the significant financial disparity that can result from early investment.

Notable Quote:

Paul Merriman [43:37]: "A dollar a day from the day a child is born. $365 a year for 65 years at 10% is about 1.8 million."

iii. Stocks vs. Bonds: Investment Preferences

Paul emphasizes the superiority of stocks over bonds for long-term investments. He discusses the limitations of bonds in outpacing inflation and the resilience of stocks in providing substantial returns over time.

Notable Quote:

Paul Merriman [44:06]: "Bonds average 5%, stocks average 10%. Every half a percent extra I can get for you will add over a million dollars over a lifetime."

iv. Diversification and Efficient Frontier

The conversation delves into the importance of diversification, with Paul highlighting that owning a broad array of stocks mitigates market risk better than concentrated portfolios. He references Dr. Bessembinder’s study, noting that only a small percentage of stocks outperform T-bills, reinforcing the need for diversification.

Notable Quote:

Paul Merriman [46:04]: "Diversification is truly the only free lunch on Wall Street."

v. Target Date Funds and Retirement Planning

Paul discusses the effectiveness of target date funds, citing studies that show accounts fully invested in target date funds outperform those that are not. He advocates for their simplicity and alignment with long-term retirement goals.

Notable Quote:

Paul Merriman [50:20]: "Target date funds are very similar to a pension fund... It amazes me how many young people do not understand the power of the target date fund."

vi. Paul Merriman’s New Book

Paul introduces his latest book, co-authored with Richard Buck, titled "12 Simple Ways to Supercharge Your Retirement". He outlines the book’s focus on actionable financial strategies that can lead to significant wealth accumulation over a lifetime.

Notable Quote:

Paul Merriman [39:53]: "Every one of these should mean an extra million dollars in your pocket over your lifetime."

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3. Listener Interaction and Q&A

Timestamp: [63:36 – 66:46]

Question from Listener Matt:

"Is there really any reason to rebalance? I mean, I do it, I've done it once, but for years and years I didn't do it because I just figured, what's the point?"

Hosts’ Response:

• Doug: Emphasizes the importance of rebalancing to maintain portfolio alignment with investment goals and risk tolerance. He suggests that rebalancing once a year is sufficient and helps in buying low and selling high.

• OG: Highlights Modern Portfolio Theory and the concept of the efficient frontier, explaining how rebalancing keeps investments on track to meet financial objectives with optimal risk.

Notable Quote:

Doug [65:45]: "Low and sell high. Easier said than done, but rebalancing will help that."

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4. Trivia Segment

Timestamp: [56:11 – 75:37]

The hosts engage listeners with a trivia question related to the anniversary of the Boston Tea Party:

Question:

"Since today is the anniversary of a huge tea party in Boston way back in 1773 when Joe's mom was born, am I right? It was a huge tea party. Huge. How huge was it? If we were throwing a tea party today and wanted it to be a success, in what country would we throw it? Which country drinks the most tea per capita?"

Answer:

Turkey is the leading country in tea consumption per capita, with nearly seven pounds per person annually.

Notable Quote:

Doug [62:32]: "Could have had that one."

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5. Key Takeaways

Timestamp: [68:39 – 69:35]

Joe’s Wrap-Up:

1. Action Over Information: Success isn't solely about having information; it's about taking actionable steps to improve your financial situation.
2. Leverage Million-Dollar Opportunities: Implementing Paul Merriman’s strategies can significantly enhance your financial portfolio.
3. Trust Expert Advice: Following proven financial strategies from seasoned experts like Paul Merriman can lead to substantial wealth accumulation.

Notable Quote:

Joe [69:11]: "I just did a little research on old Paul Merriman and you know what? My bad. Just go with his ideas. Guy probably knows what he's talking about."

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6. Conclusion

The episode concludes with the hosts expressing gratitude to Paul Merriman for his invaluable insights and encouraging listeners to explore his book for comprehensive retirement strategies. They emphasize the importance of financial literacy and proactive money management, reminding listeners to consult with financial advisors before making significant financial decisions.

Final Notable Quote:

Joe [71:14]: "Special thanks to Paul Merriman for joining Joe today to discuss his new book. We're talking 12 simple ways to supercharge your retirement."

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7. Additional Segments

• Advertisements: Skipped as per instructions.
• Casual Banter and Anecdotes: While present throughout the episode, these were condensed to focus on the core financial discussions and insights.
• Closing Remarks: Hosts wish listeners a Happy Hanukkah and tease upcoming episodes with more financial tips and surprises.

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8. Recommendations for Listeners

• Read Paul Merriman’s Book: "12 Simple Ways to Supercharge Your Retirement" offers actionable strategies that can potentially add significant wealth over a lifetime.
• Start Early and Save Consistently: Leveraging the power of compound interest by saving and investing early can lead to substantial financial growth.
• Diversify Investments: Spread investments across a broad range of stocks to mitigate risk and enhance returns.
• Utilize Target Date Funds: Simplify retirement planning by selecting appropriate target date funds that align with your retirement timeline and risk tolerance.
• Regularly Rebalance Portfolios: Maintain investment alignment with financial goals by rebalancing your portfolio annually or as needed.

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Final Note: This episode serves as a comprehensive guide for listeners aiming to build a robust financial roadmap, emphasizing the importance of informed decision-making, strategic saving, and diversified investing to achieve long-term financial success.

Transcript

[Joe Salcihai]

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[OG]

So so your dollar goes a long way.

[Joe Salcihai]

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[OG]

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[Doug]

All of them.

[Joe Salcihai]

Yeah, there's only one right answer to that.

[OG]

And Doug, exactly how much snow do they have in Northern Michigan today?

[Joe Salcihai]

Not enough. We need six feet more.

[OG]

Is that an answer? Every it doesn't matter how much.

[Joe Salcihai]

Doesn't matter how much we have.

[OG]

Should always have more.

[Joe Salcihai]

Yep.

[Doug]

Well, you know, feet of powder.

[OG]

Spoken like Al Pacino in Scarface by the way. Six more feet of powder. Making a lot of money.

[Doug]

Not. Not wrong.

[OG]

We are going through even numbered years and our favorite mentors from those years in 2020. I had a really tough time picking as I did yesterday for 2022. But you know what guys? The reason that I picked this mentor from 2020 is because lately we have shown the spotlight a lot on this, guys, I've talked increasingly about the efficient frontier and just trying a little bit to put a little science on your investments. Over and above, just vtsax, vtsax. And for people that don't know what I'm talking about, there is a part of the Internet that believes that you should just have one fun. And while I think that's a great place to start, I think it's actually a fantastic place to start. I think once you get to around $100,000, it's time to get a little more scientific and, oh, gee, I think we could probably even say the same thing about why somebody with less than $100,000 is using a target Day fund. That doesn't make a lot of sense. And also why somebody would use a robo advisor, which they're just starting out, doesn't make a lot of sense to me.

[Doug]

I mean, I think as your savings increase, then, you know, it makes more sense to diversify. But the biggest bang that you can have in terms of your savings and investing is to put more money away. You know, if you spend a lot of time and energy on diversifying and like, trying to. Trying to figure out the exact specific asset allocation, when you have $10,000, you might pick up an extra $50 of return or an extra $100 of return. Instead, focus on how you can put in an extra hundred dollars a month or an extra $5,000 this year, you have a much bigger return on that effort than the nickel and diming. And as your portfolio grows and yeah, it makes sense to, you know, add some 201 stuff here in terms of diversification and, you know, that sort of thing. But until then, I think just slam money into the market.

[OG]

Paul Merriman is a guy who has been an investor for a long time. He's managed millions and millions and millions of dollars of other people's money. Today, during his, quote, retirement, he's still super busy working money, raising money for his foundation. Still talks about money all the time. We caught up with him back in 2020 to talk about getting a little more scientific with your money, to grow it a little more quickly, but also very responsibly. This is from December 2020. We called it $5 million ideas. And here is our discussion with Paul Merriman and that episode of the Stacking Benjamin Show.

[Joe Salcihai]

Joe, are people gonna have to turn up the volume because your. Your voices are muffled from the masks you were wearing in 2020 during trying.

[OG]

To give each other Covid over zoom?

[Joe Salcihai]

Yeah, right.

[OG]

No, what people will have to remember is the. The code for 2020. The. The. The resounding theme song of 2020, which was. No, you're on mute. You're on mute.

[Joe Salcihai]

Oh, that's right.

[OG]

You're on mute. Yes. No, no. I want an Official Red Carbon Ice 200 Jet Range Manly rifle. You'll shoot your eye out, kid.

[Doug]

Merry Christmas.

[Joe Salcihai]

H. How. Live from Joe's mom's basement, it's the Stacking Benjamin Show. I'm Joe's mom's neighbor, Doug, and raise your hand if you'd like to be a millionaire. Raise your other hand if you'd like to be a multimillionaire. Wow, that's lots of hands still up there. Hey, Dave in Kentucky, put your hands back on the wheel. Come on, man. Hey, on today's episode, we've got you covered with five ideas that will make you $1 million over your lifetime to share. We're talking to a guy who's been there, done that. Paul Merriman plus Real estate has had a nice run. Should you look to non traded real estate in your portfolio. We'll share our thoughts on a recent headline early in the show. Later, we'll toss out the Haven lifeline to Matt, who has a question about rebalancing. Is rebalancing all it's cracked up to be? And I'll save the show with my thrilling trivia. And now, two guys who might finally adopt a multi million dollar idea. Joe and O J J J.

[OG]

So they said podcasting. Podcasting is a million dollar idea. Who knew? Almost nine years later.

[Doug]

Well, it was for the guy who created podcasting for us. For us low level podcasters. That's the difference. The podcasting, the podcaster.

[OG]

Oh, ambiguity. We got caught in the phraseology.

[Doug]

Maybe it's ghost.

[OG]

We should have come up with this. Hey, everybody. Welcome to create the podcast Don't Work in It for the Win podcast. I'm Jos. I'll see how I average money on Twitter. That was a difficult one. And today, Paul Merriman coming down to the basement. How about that, man? I see you've got the suit and tie on. You're all ready to meet Mr. Merriman.

[Doug]

Well, I just. It's more of like a. You know what, what do they call those things? Like you put underneath a sweater, like a dickie. It's like just basically from. It is a chest up.

[OG]

Just don't tell him that. Just don't let him know that I can't say that.

[Doug]

Hey, look at my. No. All right, I got it.

[OG]

I, I didn't mean that at all. I'm saying just don't let him know that it's not the full. The full thing.

[Doug]

Gotcha.

[OG]

Yes.

[Doug]

Yeah.

[Paul Merriman]

Yeah.

[Doug]

But it's like a zoom call thing, right. So you know you can be in your underwear. That's true.

[OG]

Knows he will be on the short.

[Doug]

Wave just like you are right now for.

[OG]

Well, if it's only awkward for you, then we're good.

[Doug]

So I don't mind.

[OG]

Great show today. Paul Merriman is here with. He's got 12 ideas that each if you do these over your lifetime and you're just beginning their million dollar ideas. Og we're going to try to get through five of them if we possibly can.

[Doug]

First we got five million dollars. I like it.

[OG]

Amazing. We got two great headlines though. First, so let's get this party started. Well, debt can really take a toll on you between minimum payments and interest rates. It's really stressful and I've been there stackers and at times it feels like you just can't get ahead. Well, Navy Federal Credit Union understands debt's a huge stressor and they're here to help. Navy Federal Credit Union has all the financial tools and resources you need to dominate debt. Here's what you do. Put together your strategy. One piece of a strategy might be to lower those interest rates as much as possible so you can sock even more toward those principal payments. Right? And right now, Navy Federal Credit Union is offering a 0% intro APR on credit card balance transfers for up to 12 months. Plus you can get 250 when you spend 2500 dollars in your first 90 days on a cash rewards or cash rewards plus credit card. Don't let that drag you down. Visit Navy federal.org to start dominating debt today. Navy Federal Credit Union. Our members are the mission. Navy Federal is insured by NCUA after the intro rate expires. Variable APRs are 15.15% to 18% based on creditworthiness. Rates are subject to change. ATM fees for cash advances are up to $1 at non Navy Federal ATMs. This episode is brought to you by Progressive Insurance. You chose to hit play on this podcast, Smart Choice. Progressive loves to help people make smart choices. That's why they offer a tool called Auto Quote Explorer that allows you to compare your Progressive car insurance quote with rates from other companies. So you save time on the research and can enjoy savings when you choose the best rate for you. Give it a try after this [e-mail] progressive casualty insurance company company and affiliates not available in all states or situations. Prices vary based on how you buy.

[Paul Merriman]

Hello, darlings. And now it's time for your favorite part of the show, our stacking Benjamin's Headlines.

[OG]

Our first headline comes to us from Investment News. And because we're going to be talking to people that are maybe new with investing later with Mr. Merriman, I thought we'd get a little in the weeds during our headlines because this is an area of investing we haven't talked about in a long time. This is written by Bruce Kelly over at Investment News. How much are non traded REITs really worth?

[Doug]

0.

[OG]

His his subtitle is Advisors don't like it when REIT Valuations Bounce all over the Place. Bruce says during the credit crisis of 2008, the bottom fell out of many non traded real estate, investment trust and financial advisors and custom that a REIT stated estimated value or what showed up on a client's account statement and the real value, what the REIT was worth on the street. At that exact point in time, those two numbers could be miles apart. Non traded REITs are illiquid securities, meaning that they're opaque and not priced daily by the market. Advisors sell them to investors looking for income and yield. In the past, non traded REITs carried steep commissions, but the industry's moved away from that compensation model for the past few years. But non trade to REIT valuations a decade or so ago were at times so shockingly incongruous from one day to the next that advisors and clients simply learned not to put any faith in them. Yep, and then it goes into some of the horror stories. C and L lifestyle properties, Inland Western, these were some big REITs. I remember these REITs.

[Doug]

Yeah, you do. Some of us are still dealing with the outcomes of these.

[OG]

C and L lifestyle properties launched in 2004, sold at $10 per share. C L's Reap board signed off on a valuation in 2015 at $5 and 20 cents a share, half of what they were selling that REIT for.

[Doug]

True. However, over that 10 year period or 11 year period, you did get dividends.

[OG]

Big, huge dividends for a little while.

[Doug]

Yeah, it was gigantic. Was like 7 or 8% a year and then you know, started trending down. So, you know, I'm not saying that it was even money by any stretch of the imagination, but on a per share basis. And I'm, I'm also not suggesting that this is like the get out of jail free card, right? Like, well, at least you didn't lose. At least you broke even like over a 10 year period. That's not the goal of an investment. I understand.

[OG]

Get the smoke and mirrors out. Get the smoke out.

[Doug]

Yeah, yeah, that's not what I'm trying to do here. But it may not be as bad as you think, just looking at the per share basis, considering there's so much income that came out of it. But if you tear that apart and you think about it, it has to have been that way. And what I mean by that is when you think about an investment, so you've got, you know, a tech company or you've got a manufacturing company, you've got some publicly traded company, right? And they make some profits. Do they give you all the profits every year as a distribution? No, they give you some portion of the profits or sometimes none of the profits. And what do they say? Hey, we made these profits, but we're not going to give those to the shareholders this year. We need to hang on to those because we're building a new factory or we need to invest in this new technology or we need to hire this workforce. I mean, look at Amazon, they make money hand over fist. I'm not sure that Amazon pays a dividend and if they do, it's not very high. Microsoft just paid their dividend last week or a week and a half ago. It's like 2%. They're making more money than 2%. So what do they do with the difference? They invest it. We take a REIT, on the other hand, especially early on, you know, 20 years ago or 15 years ago, with these non traded ones and you go, well, how is it paying? How can it be paying 7, 8, 9%? And you go, well, it must be. The only way it can be doing that is if it's somewhat cannibalizing itself or at least it's not taking some money and storing it away for later if there's not some good years, you know what I mean? Kind of that seven fat year, seven lean year type idea when they distribute all the cash every day or every year and go, here, we made this money, but here it is, you guys can have it all. There's nothing set aside for a rainy day. And then you go, okay, well I get it. It has to be kind of consuming itself along the way to be able to provide such high dividends.

[OG]

And then the market drops out 2007, 2008. And it is what it is.

[Doug]

Yeah, there's nothing left. You know, there's nothing in the coffers to pay out the sustainable dividends versus you look at Like a publicly traded company. And you go, well, even in the darkest moments, Microsoft still pays their dividend or Ford still pays their dividend. Well, maybe they don't.

[OG]

Or at the very least, if they're a really strong company, they can go buy things when they're down. Right. You'll see the strongest start to swallow the weak.

[Doug]

Yeah, yeah, you're exactly right. I mean they look at it from an opportunistic standpoint. But you know, hindsight's 20 20, we don't use any non traded REITs at all anymore for all of these reasons because it's impossible to value. And once these boards started putting random dollars assigned to like oh guess what, now it's worth $5.10. And here's the latest thing, so you think about like that happened five years ago. You're talking about here's the latest thing this year with COVID Yeah, we don't think we can accurately value these right now because of COVID So we're just going to not do it. That's the message from all these, that's.

[OG]

Actually further down in this piece is.

[Doug]

Yeah, now you can't give me any number. Like I get that the numbers are relatively BS along the way, but now there's no way to like, does Zillow not work at your house? Like I have at least a cursory knowledge what my house is worth.

[OG]

So people new to this game are wondering, want us to back the truck up OG and explain really what type of investment this is. So a REIT is a real estate investment trust. Like Bruce said it the when I was reading the piece here, that means they buy a bunch of properties, you buy those properties and most of the time it trades like a stock. However, there are a type of real estate investment trust. Generally what it has been in the past is before they take it public, as they're building it, what they used to do would be these REIT companies would trade the fact that it's going to be illiquid for a certain amount of time with you would help them kind of build the reit. So you would help them get all these properties and get it ready and then they would list it. And for people that were in on non traded REITs, the big event most of the time was getting listed, right? They would take it and they would get it listed and that's when you could get your money back. So you go into these, which were.

[Doug]

Great until the housing market took a gigantic crapola in 2007.

[OG]

Like every strategy, it worked until it didn't. And, and then, and, and so people knew, they knew that hey I'm probably, if they, if they got into it for the right reasons and you always found people that didn't understand what the hell they were doing because either they decided they didn't want to learn about them or they had advisors selling them for the wrong reasons, whatever it might be. If you were in it for the right reason, you knew that you were locked away for maybe six, seven, eight, nine, 10 years.

[Doug]

And that was, that was the pitch from the wholesalers, right? Was seven years and you'll be good.

[OG]

Yep. Just, just promise seven years. And a lot of the time they were out earlier, you know, people would be out in five years. So. But I just don't see any more, I don't see any more why, why I would put money in one of these vehicles. I think when it's opaque and I can't see the inner workings now and I don't know exactly where my money's going and what these properties are really worth. Don't get me wrong, there might be some great deals and I definitely don't think a non traded RE is a scam, but I definitely think you're gonna have to have a hella sales pitch to get me to put some money in a non traded REIT.

[Doug]

Well, let me give you a shot. So Mr. Salsy, and I'm just kidding, I just don't understand, especially today it's easy to look back and go well that was stupid. Well the things that we have access to and the information that we've access to and the history was a lot different 15 years ago than it is today. Right. So you made as good a decisions as you could with the information you had at the time. But if we're adding real estate to an investment portfolio, if you're adding real estate to an investment portfolio and you're, you know, you're a new investor or if you're a seasoned investor and you want to add real estate, I can't see how you don't do equity real estate and you get the equity volatility which is what you want, the appreciation, you still get some pretty decent dividends. I just looked up an iShares ETF that's a US REIT and it's paying 3% a year. So not only are you getting some appreciation, every appreciation opportunity I should say, which you didn't really have in the non traded stuff or at least you didn't have until that liquidity event that you were talking about. You still get some pretty decent dividends. 3% is not too shabby. And all of the downside of the non traded REIT is the illiquidity. And you eliminate that completely with a REIT or a mutual fund. So if you're adding real estate to a portfolio, you use an ETF for a mutual fund. Stay away from the non traded stuff. I can't see how you would use a non traded thing at all.

[OG]

I can't either. But I do want to stress, oh gee, not a scam by the way.

[Doug]

No, I mean unless it was Nicholas Scorsch, then he his was a scam, but it was more of an accounting issue.

[OG]

Yeah, the product type is not a scam. Like as an example, people hear junk bonds and maybe not so much anymore, but I remember around, you know, the late 90s when I talk about junk bonds, people go, oh, those are all a scam. No, no, no. Insider traders who went to jail in that market does not mean that junk bonds are a scam. It means there were bad people in that arena at the time. And certainly that can happen in any arena. Our second headline comes to us from a little publication called the Wall Street Journal. This came out mid to late last week. Securities and Exchange Commission approves a plan to bring more detailed stock market data to the public. So this is on the way og gonna happen. Alexander Osipovich wrote this piece. Alexander writes the securities and Exchange Commission approved a plan to beef up the public data feeds that broadcast stock prices to investors, broadening access to market information that exchanges sell to professional traders at a premium. Under the SEC's plan, detailed data showing supply and demand for stocks will be added to public feeds which are called securities information processors or SIPs. Wall street banks and electronic trading firms use such data to predict short term price movements and ensure that they get good prices when buying or selling stocks that's soon to be available toward people. Here's the thing. I can hear people high fiving themselves thinking about man, now all of a sudden I can get this stuff that banks get. Let me ask you this OG this gives the average investor more information. How many average investors are not getting to their financial goals because they don't have enough information available?

[Doug]

It's my favorite quote recently. If information was all that's required, we'd all be millionaires with six pack abs. Yeah, don't get me wrong, have all the information.

[OG]

Okay, this is cool. This is great. And I know people are gonna wow, now I'm gonna be successful. No, it's just like when the government passed the Myra. Remember the Myra, the personal IRA thing? And I remember me thinking walking into our recording session with this headline going, hey, this is going to be really cool. And you're like, is the reason people don't contribute is because we don't have enough places for them to contribute? Is. Is that why, like, finally this person who avoids talking about money all the time goes, oh, the Myra now, Now I'm gonna finally get invested? Sadly, not it. I can see though, OG you know, we have our Friday fintech segment. I can see some of these fintech companies going at this data. I can see some more of these active traders that you and I have talked about as active trading moves from some manager with a good idea to more systematized trading. I can see this incorporated in more of their portfolios in the future. This could potentially be exciting news for the actively traded fund.

[Doug]

But I think the pros already have all that information. Right? So this is more about, like, this is more about the individual investor.

[OG]

They charge premiums for it now though, so it strips away some of the cost.

[Doug]

Okay, yeah, I can see that.

[OG]

Yeah.

[Doug]

This isn't likely to radically alter the outcome of your financial plan.

[OG]

It is not, but it is, it is a cool headline. You and I will be able to now see if we want to. We'll be able to see data on how many people are on each side.

[Doug]

Of a trade, which is completely useless to most people. But we can look it up.

[OG]

We can. We have that now in our arsenal. I think that is probably takeaway number one. Very cool headline for the uber nerd.

[Paul Merriman]

Nerd.

[OG]

But means zero to whether you reach your financial goals or not. And then I think our second takeaway, non traded reit. Just don't know what they could do with the non traded reit. That would make me go, looks like a good idea today. I think maybe that's a type of investment OG that's. That might be an idea that's overshadowed OG by a lot of other places that might be more liquid, less opaque, easier place for you to justify putting your money there. Wow. Today's guest I'm super excited to talk to. This is a gentleman who is a rock star legend in the area of investing. Paul Merriman is a guy that I've been listening to his advice for a long time, man. When we started our podcast, we knew, of course, Paul Merriman Sound Investing. He has a whole series of books that he created after he retired. If you think about people who have been there and done that, when it comes to investing and people who have.

[Doug]

Who did he get the T shirt, though? He's been there and he's done that. But did he get the T shirt?

[OG]

We should ask him. We should totally ask him. I'll tell you, between the commitment he's had to living the lifestyle that he preaches about to now, his passion for making sure that financial literacy starts when people are at a young, young age. Super excited to talk to him. Let's say hello to a guy who's a mentor for many, including us, Paul Merman. And on my dad shortwave radio, it's a gentleman I've wanted to talk to for a long time. So I'm thrilled I'm able to now. Paul Merriman joins us. How are you?

[Paul Merriman]

You know, I'm so amazed that I finally got on your show.

[OG]

I bet.

[Paul Merriman]

I want to thank you. No kidding. No kidding. I have a friend who said he got on your show and you changed his life.

[OG]

Yeah. That's good.

[Paul Merriman]

My life changed.

[OG]

I am sending you the 10 bucks now, Mr. Merriman. I'm sending it right now. That's fantastic. But here's the thing I've always wondered about you. You've obviously had this long career. You did the stockbroker thing for a short while. You've done venture capital. You've helped people get their financial act together for a long time. It was there ever a time early on in your life when you weren't good with money or did you come out of the womb just with the ultimate money strategy?

[Paul Merriman]

You know, the part that I think I was good at and it is the basis of most successful investors, is I was frugal. I saved. I still have the $354 plus that I made when I was 11 years old.

[Doug]

Really?

[OG]

Really.

[Paul Merriman]

By the way, to be fair, that does not make you a good husband or a good father. Because being frugal isn't necessarily as nice a thing as being willing to let go, but it sure set the foundation to be able to build from.

[OG]

It's interesting because when I think of frugal people, you live in a part of the Pacific Northwest, which is a very high cost of living. So I think being frugal where you are versus being frugal in Texarkana, Texas, like mom is, is a little different thing. Paul.

[Paul Merriman]

Well, to be fair, when I said I was frugal, I think I said I was frugal because what happened was my wife, she is, is not frugal. And by the way, I'm not putting her down for enjoying money. But I have always been happier and solved any security problems I had as long as we weren't spending too much. And I've seen this when I was an investment advisor so many times there'd be the frugal one and the one that enjoyed spending and they really, they picked on each other and sometimes they weren't nice to each other. But I had to let go. I did. I really had to let go. And I'm glad I did. I'm glad I did most of the time.

[OG]

Well, how do you bridge that gap though? Is it just constant communication?

[Paul Merriman]

Well, I'll tell you what we did. And I learned this from being an investment advisor and I've been retired since 2012. I established an amount and first of all, I worked longer than I had to to, to accumulate more than I needed. And that was important because it meant I could take more out.

[OG]

Oh yeah.

[Paul Merriman]

And so at the first of each year, our budget is the 5% of the value of the portfolio. So that money comes out the first of the year. That's what we have to travel, to give, to do all the things that we want to do. That's our budget. And that gives me a sense of security. Now there's an interesting thing. I'm not sure that my wife actually figured this out, but when the market goes down, it means we take out less and that makes me feel good. When the market goes up, we take out more and that makes her feel good. In the meantime, we've created a phony budget of sorts that I have to sometimes fight during the year to stay in there. But that is kind of the way we've negotiated and it's worked quite well.

[OG]

Well, I think it works quite well in any marriage where based on the fact that you're happy taking less when the market goes down, she's happy taking more when the market goes up, the market goes up. I think the number over long periods is like 70% of the time. So she's happy 70% of the time, you're happy. 30, Paul.

[Paul Merriman]

That's right. And by the way, I love evidence based decision making. And if you look at the, the implications of a variable distribution, it leaves at the end of your life more money in your pocket and very often not guaranteed more money to spend. So it is a fascinating decision, the fixed distribution versus the variable distribution. I know we're talking to a lot of young people that may not be worried about distributions right now, but they will. And the more they know about this now, I think the better they're going to be able to aim their arrow in terms of getting to where they want to be.

[OG]

I know that you've been a fan of financial independence well before the fire movement began. I mean, financial independence didn't start with the fire movement. It's been a thing. How do you feel about when you talk about taking out money but still having enough left over when you hear about somebody trying to retire with a nest egg of 4, $400,000 at age 29, what is a guy like you think about that?

[Paul Merriman]

Well, it would make me very nervous because I've seen so many numbers and so I know so much history. I think that serves me well as a teacher. But it also makes me nervous as can be because I know how difficult things can be. I know, for example, recently small cap value hasn't lived up to people's expectations and that may have hurt people getting where they wanted to go. But how do we feel about 2000 through 2009 when the S&P 500 and the total market index basically lose about 1% a year for 10 years while you're living on it. And so they got a lot of mountains to climb. I am rooting for them. I try to do the best I can to show them what I think they should do to get there and stay there. But it's a risky business.

[OG]

Your new book, you co wrote another book here with Richard Buck. He said he didn't want to write another book with you, Paul.

[Paul Merriman]

He actually thought we had said it all. Can you believe that?

[OG]

You're like, but wait, there's more.

[Paul Merriman]

It is interesting as an investment advisor and when I sold the firm in 2012, we had about 1.6 billion under management. So we had worked really hard over 30 years to build that firm. The strategies were relatively complex. We used this strategy that had 10 different equity asset classes and the exact amount of fixed income and equity to meet the needs and the risk to all those things that a money manager is supposed to do. The problem is, is that when you get out on your own, it's different. Me trying to teach a do it yourselfer that they'll really do it compared to the person who maybe wanted to be a do it yourselfer but hired me to do it because they realized it's more difficult than a lot of people know. So it's been a whole new process for me. And really two people changed my life. One, John Bogle. I went into his office for 90 minutes in 2017.

[OG]

Did you really?

[Paul Merriman]

It was amazing. And I'd Heard he was kind of a gruff guy. He had come on our radio show for years.

[OG]

Sure, right.

[Paul Merriman]

But to be in his office was kind of intimidating. And particularly since we have some differences of opinion. And what I got a chance to do is to understand why he believed what he believed. And in fact, we had no difference of opinion. He just hadn't helped me see the light. And what he taught me in that 90 minutes was something that a guy named Chris Pedersen, who has developed this two funds for life you probably read about in the book. But John said, you cannot ask people to own 10 mutual funds and rebalance and have fixed income and do all of those things. It's too complex. You gotta make it simple. So my quest now is to make it simple, make it last, make it accomplish what the investor needs to make within the risk tolerance. All of that stuff is still there, but it's with two funds or three funds or four funds instead of a dozen funds. And it's a whole new venture for me because I had to rethink how investing works.

[OG]

So I get all excited because I know that's where we're going in this book. I sit down with it, preparing for today. I think, all right, we got Paul Merriman. We've got all this exciting stuff. We're going to have millions for retirement. This is going to start someplace sexy. And you start with the powerhouse idea of inflation. And I went, are you kidding? Are you kidding? Inflation, you start with. And yet you know that inflation is a much. I don't know if it's sexier, but it definitely is. Is the place to start. But why did you start off the book with inflation?

[Paul Merriman]

It's the biggest risk we have to face. In reality, it is the biggest bear market. People are so afraid of losing money and being in a bear market where it goes down 20%. Well, that's a temporary thing. And it's relatively easy to fix, theoretically, at least based on history. Inflation is silent. It's forever. Now, yeah, you could have deflation, but rarely in history have we had that. But yes, there have been periods of that. But we have to realize how important it is to make a return better than what you might think sounds like a good return, because a good return might be, in fact, no return. And I think about all these young people who do not want to take the risk of leaving bonds or something safe. And yet I know from all of history that bonds are not safe in the long run. They're safe in the short run. Stocks are the safe investment in the long Run. Now that is a difficult concept for a lot of people to focus on because they think so short term, they don't look at the long term return. What if you found out that the 40 year return for the, the S&P 500, the worst four years was a loss of just a little under 9%? That was the worst for that included a depression, you know, the war, I mean, all sorts of bad things that would have theoretically torn your portfolio apart. But over time, whereas bonds, they barely outstrip what inflation is. What's wrong is people today have only seen a lot of them low inflation. They don't, they don't know what it's like when you get in a period of time that you have high inflation. And it'll come, not in my lifetime maybe, but it will come to most of these young people who are thinking about the next 50 or 60 years.

[OG]

Didn't you, did you start your firm around 82?

[Paul Merriman]

83.

[OG]

83, yeah. So, I mean, talk about high inflation. Paul, you were right in the middle of high inflation.

[Paul Merriman]

And I remember a couple came in, they had all of their money in CDs and treasuries earning what, like 9 or 10? But yeah, yeah, it was high and it was more than stocks were doing. I mean, it was amazing, period. I remember I got five year CDs from the bank of Chicago that paid 16%.

[OG]

Holy cow.

[Paul Merriman]

Yeah. So these people could not understand, why should they take any risk when you can get that kind of money without taking any risk? And boy, there's just another example of recency bias. What's been happening recently is going to continue. There's no evidence the market ever is that easy. You just can't trust it to be that good to you. And those people ended up living through one of the biggest bear markets because they were expecting to be able to get 5 to 10% and they eventually, in those safe investments were getting under two and the cost of living was going up. Yeah, I want people to know, all of them. That's just a handful. It's a handful of things you need to know. Buffett says you only need to do a very few things right as long as you don't do too many things wrong. And the fact is, those 12 things, they really address most of the major forks in the road that every one of us are going to face. So we're going to go right or left by design or by default. I want you to go there by design.

[OG]

I don't want anybody listening to you. And I to think that we're skimming this book because there's so much meat here and people should definitely read. But I do want to go over just what the 12 things are that you address, because I think if people get the high level, I think we can help a lot of people. Whether they, whether they get the book or they don't get the book. We're going to help a bunch of people by addressing them. In fact, because usually I try to focus on one or two and really, Paul, I think that's doing people. This is one of the few interviews I've done where I feel like that's a disservice. We should really give people the high level and at the very least focus on these things because they're amazing. Your first one is save some money instead of spending it all. Yeah.

[Paul Merriman]

Let me set the groundwork here. As far as I'm concerned, every one of these should mean an extra million dollars in your pocket over your lifetime. Over your lifetime, including what you leave to others. That all counts in terms of the return. So when you look at the person who comes to that fork in the road, is there a million dollar difference between the person who spends and the person who saves? I mean, that's as slam dunk. It's as easy as it gets in knowing it's a million dollar decision. The problem is that a lot of people evidently aren't built for saving. And that's the toughest thing of all. And in fact, the thing that could stand in the way of the other things happening, unfortunately.

[OG]

How do you trick yourself? Just get it out of sight?

[Paul Merriman]

Oh, absolutely. I mean, we know that about 401k plans.

[OG]

Yeah.

[Paul Merriman]

That people say, oh, I couldn't, I couldn't live on taking less. So they didn't, they didn't opt in. Then when they had to opt out and they never had that money, they found out they could live on it. So yes, absolutely. Buffett says that too. He says, don't say what's left over after spending. Spend what's left over after saving. And that is the way it works.

[OG]

It's funny when you talk about that one thing that I did right and I have messed up a lot of stuff, but one thing I did right and I taught people was to save into your savings account first and then pull what you needed to spend out of that. So direct deposit to savings and disassociate the amount of money you make from the amount of money you spend. Because those are really two different things that I feel like we associate them way too much.

[Paul Merriman]

And we also have to realize that there's an industry, many industries now, that are built to do one thing, strip you of your money. And it's not that they're evil people. It's the capitalistic system. That's what we're supposed to be doing, get our hands in somebody else's pocket. You have to understand that you are fighting, in a sense, a monster. Not a monster in terms of being evil. But the fact is, there's a conflict of interest.

[OG]

Yeah.

[Paul Merriman]

The person selling you a car wants to sell you the most expensive car they can. And they don't stop and say, hey, oh, by the way, have you. Have you done your IRA this year?

[OG]

Right. To your point. I mean, I feel like we're right in the middle of shopping season, right? This, that December is this time when money's flying out of people's pockets and, as you know, is better than most people. These companies have these big meetings about how to get you to spend more, and yet people won't spend two hours a year thinking about their overall financial plan.

[Paul Merriman]

Yes.

[OG]

Yeah.

[Paul Merriman]

So saving, it's tough, but I know it's doable because people who aren't all that smart do a great job.

[OG]

And number two on your list is to start saving earlier rather than later. And I remember my 20s, Paul. It felt like there was no extra money.

[Paul Merriman]

Well, I know that. And that's why you have to start with the young people to get them to save 10%. And that is just something you do, and you do this for the rest of your life. This is not a system that, that, that encourages saving. 10%, but that's starting early. A dollar a day from the day a child is born. $365 a year for 65 years at 10% is about 1.8 million. Just wait until they're 10 to get started, and it'll be, I think, around 700 million. Just wait until they're 21 and it'll be around 300 million. I mean. 300,000.

[OG]

Yeah. 700,000. 300,000. Yeah.

[Paul Merriman]

Yeah.

[OG]

I was like. But I like your math. Hey, I could wait and have more money, Paul. That's good.

[Paul Merriman]

Well, it wasn't my major, so anyway, it's. Yeah, start early, start. In fact, help your kids start early. If you can help them start early. If nothing else, they've got to get that match and that 401k and then.

[OG]

Third on your list, invest your savings in stocks instead of bonds and cash. I think we actually talked about this one a little bit already.

[Paul Merriman]

Half a Percent. Every half a percent extra I can get for you will add over a million dollars over a lifetime. Let's just start with that understanding. Those are the numbers that assumes you invest $5,000 a year for 40 years. That's the underlying commitment of saving a million dollars for every half a percent. All right. Bonds average 5, stocks average 10. That's sounding like a 5% difference. If in fact every half a percent can add a million dollars. It seems like I got to multiply ten times a million dollars. And you know something? That turns out to be the kind of money we're talking about over time. That is the magic of compounding, particularly the more times you can compound. So that starting early along with the equity commitment, those are really powerful decisions.

[OG]

Do you use stocks synonymously with real estate or differently?

[Paul Merriman]

No, I don't look at real estate as a. Stocks are a passive investment.

[OG]

Yeah.

[Paul Merriman]

My wife and I have 10,000 stocks in our portfolio. So that if I'm at a party and somebody said, hey, how do you think about Google lately? I said, oh, you got it. It said, I'm doing well, thank you. Let's keep talking. But no, I really do believe that real estate, you got to pour money into its stocks. You make the investment once and it goes to work. Hopefully you do it again. But that's new money.

[OG]

Yeah.

[Paul Merriman]

Not a business.

[OG]

It's always been much more for me, too. I'm not a handy guy. I love set it and forget it, which I can do with the stock market.

[Paul Merriman]

Yep.

[OG]

Yep.

[Paul Merriman]

Particularly the way I think you believe and I believe.

[OG]

Agreed. Next. You said. And you mentioned this a second ago. So let's dive into why, though. You own a ton of different stocks and your very next chapter is invest in many stocks instead of a few.

[Paul Merriman]

Yes. And that is because diversification is truly the only free lunch, or almost the only free lunch on Wall Street. The expected rate of return of any single large growth stock is the average of all large growth stocks. I can't find an investor who buys individual stocks who agrees with that because they all think they have the best portfolio in town, but you can't. And the fact is, even the professionals, when you go out 15 years, only about 1 out of 10 or 1 out of 15 are able to beat the indexes themselves. So lots of stocks. That protects you from market risk. But here's something people didn't know and I didn't know until the last few years. Dr. Bessembinder did a study. Do stocks outperform T bills? Turns out 4% of stocks do. The other 96% of stocks have had the return of t bills, about 3% a year.

[OG]

Wow.

[Paul Merriman]

And that's a huge thing to know because that means, whoa, I better be focused on that one out of 25 of those companies that have that kind of impact. The problem is, by the time you find out about the impact, they're already big. And they've run a lot of their course about making people really, really rich. What the academics have concluded is that actually you will probably make more money over your lifetime owning lots and lots of stocks than a few. And all you have to do is to see how wide that difference can be is to look at all of the mutual funds that are what they call focus funds, where they only have 20 or 30 companies in the portfolio and their earnings are not consistent at all, and they're all over the place. And you could end up in a terrible one or you could turn end up in a bad one, but you don't want to end up in a bad one. The cost of doing the wrong thing is exorbitant.

[OG]

There are so many more of these. I mean, just every one of these, Paul, is powerful, but if you have to pick one of these that maybe gives me more millions than the rest, what's probably the biggest takeaway?

[Paul Merriman]

Well, other than the stocks versus bonds, that's a biggie. But target date funds actually pick up about nine of the 12. And the target date fund does something that most investors, except those that really enjoy getting in there and fighting with others to make the extra money. Target date funds are very similar to a pension fund where money was put aside for somebody for the rest of their career, and then at retirement, they got a check every month for the rest of their life. Target date funds are doing basically the same thing. They are matching your age, your number of years, theoretically, your risk tolerance with who you should be and where you're going, because you're picking the target date retirement date, like 2065 or 2060, and everything is done for you. You get it with index funds. If you do it right. You get it with low expenses. You get it with massive diversification. You get it with tax advantages. It is a huge decision. And it amazes me how many young people do not understand the power of the target date fund. And I'm going to give you two numbers that will, I think exhibit that. A study was done by Wharton, and They looked at 1.2 million accounts at Vanguard retirement accounts. They looked at accounts that had no target date funds in them. And some that had all target date funds and some. That had some target date funds. They looked at accounts from, I believe, 2003 through 2015. The accounts that had all target date funds outperformed as much as 2.3% a year.

[OG]

Wow.

[Paul Merriman]

Now we're talking about a half a percent change in your life. There is a slam dunk because the people who were smarter than target date funds in theory or didn't know about target date funds were off doing something else, like market timing, which they shouldn't be doing, et cetera. Now, how can it be that this very simple strategy that, by the way, doesn't just take you to retirement, it will take you through the rest of your life? And that's what I've talked to a lot of college kids who are going out and they're starting their first 401k. About 2% want to wheel and deal and the rest just want somebody to do it for them. Yeah, and that's the beauty. Very smart people who don't have. They have their hand in your pocket, but just a little teeny amount.

[OG]

Well, and that's what I wanted to say was that because fans of the show knows that we've had problems with a lot of the target date funds out there, Paul, which is because a lot of them aren't built like vanguards. And I'm glad you said, make sure it's one of these low fee funds, a Vanguard, a T. Rowe Price, one of those companies, because man, there are, as you know, some of those, some of these target day funds feel like all the crap that they couldn't sell turned into a salad of full of.

[Paul Merriman]

Junk at high expenses.

[OG]

Yeah, yeah.

[Paul Merriman]

I mean, it's just. And then the last half of the book is about how to turn a target date fund to supercharge it by adding one fund and a formula that you add that fund more when you're young and you can take more risk until you have absolutely none of that fund when you're retired? And it is. I did not develop that. Chris Pedersen developed it. It is exactly. I think what John Bogle, if he were here today, would put his stamp of approval on.

[OG]

That's so great. The book is called we're talking millions. 12 simple ways to supercharge your Retirement by Paul and by Richard Buck. You guys have worked together for a long, long time on a lot of stuff. It's great to see the dynamic duo back together. Paul, where does everybody get it?

[Paul Merriman]

Well, Amazon certainly a good place to get it if you're a teacher or a Student in an organized high school university. We're going to make a PDF available at no cost.

[OG]

Awesome.

[Paul Merriman]

In fact, the reason it's a PDF is because then I want those kids to email it to as many people as they know. Because I want a lot of people to get this information. And every penny goes into the foundation. I am a unpaid volunteer and have been since day one. It's the most psychic income I've ever had. It's been a ball. It has been a ball.

[OG]

I feel bad for you with these volunteer hours. You got to spend time with me in the basement, chat about this stuff.

[Paul Merriman]

I once lived in a luggage room while I was going to the University of Washington. Talk about frugal. I had to crawl under a pipe to get into that luggage room. Cost me 1250amonth. And that's because I shared it with another guy. Oh, my God.

[OG]

Yeah, yeah, yeah.

[Paul Merriman]

And he was an upperclassman, so I slept on the little float or whatever they call it, you know, an inner tube of sorts. But anyway.

[OG]

Yes, that explains a lot about your psychology right there, Mr. Merriman. No, I'm kidding. Thanks for hanging out with us, my friend. And by the way, guys, we're right in the middle of giving season. This is a fantastic gift for people. I mean, A, supporting the foundation. B, supporting people, you know, that are just starting out. So many people as, you know, start out chasing the Joneses. I've given talks at high schools. You've given way, way more talks than I have, Paul. And all the questions I usually get when I talk to young people are 50 different variations of how do I screw myself over with a lot of debt? Just put 50 other ways, and this is a much better place to be.

[Paul Merriman]

Well, we're going to change some lives. You're changing lives. And I'm trying to change lives. And the impact of our work is going to last long beyond us. That's my goal, and I think it's yours, too. So I wish you well. I really do. Joe.

[Joe Salcihai]

Hey, trivia fans, I'm your pal Joe's mom's neighbor, Doug. Now that we have five awesome million dollar ideas from Paul Merriman, you and I both know it's up to old Doug to give you the 41 1. Or maybe the 51 1. Or wait, is it the 401k? I don't know. Whatever. I know you're wondering about my take on these million dollar tips. I mean, he's Paul Merriman. But let's get real. If you take away Paul's money and expertise, experience and conciseness. We're basically the same guy. But before I let you in on my million dollar ideas, let's get to today's trivia question. Since today is the anniversary of a teacher party in Boston back in 1773, apparently it was a huge soiree. Let's talk tea. If I were having a really big tea party, which country would I want to have it in? That is which country drinks the most tea per capita? I'll be back with your answer faster than you can imagine what my million dollar ideas are gonna how high is the interest rate for the new Laurel.

[OG]

Road High Yield Savings Account?

[Paul Merriman]

This high.

[OG]

The air is really, really thin up here.

[Joe Salcihai]

The Laurel Road Very High Yield Savings.

[Doug]

Account Variable Annual Percentage Percentage Yield APY is subject to change at any time. No minimum balance required. Fees may reduce earnings on the account. For full terms and conditions, see LaurelRoad.com Savings Laurel Road is a brand of KeyBank member FDIC Many of you may.

[OG]

Remember that MetPro founder Angelo Poli is on our show a ton. And the reason we have Angelo back is because he is such an expert on the science of diet and exercise. And you may know or you may not know that a few years ago when I asked about metpro, they agreed to furnish me with a coach for a while named Jesse. And to this day I still work with Jesse because diet and exercise are such an important part of my regime and they should be, frankly of years too. In 2025 you want to achieve big things. You need some big health to go with that fat wallet that we're trying to help you create. The team at metpro has just helped me. They've helped thousands of individuals help perform their bodies by hacking their metabolism. If you're looking for a high touch experience working with a metabolic expert or you want access to the tools their industry leading coaches use, visit MetPro Co SB. You'll get a complimentary assessment like I had and then speak to their team to learn which option is best for you. Here's what I like Whenever I'm eating stuff that shouldn't go in my mouth whenever I'm avoiding working out, which is something that I aspire to always do. I think of Jesse and I think about I don't want to let myself down and Jesse's going to hold me accountable. We all need accountability coaches in our corner. But even better, Jesse's not just holding me accountable, she's holding me accountable to a more scientific approach. And if you haven't heard Angela Poly on our show, not only should you sign up for the assessment with MetPro, but you should also go back and listen because you'll hear the science. One of my favorite Angela poly lines. Everything works until it doesn't. All those fad diets work until they don't. And when they don't, the boomerang effect is pretty horrible. So to take advantage of this opportunity to get a complimentary assessment from MetPro, go to MetPro co. It's not.com, it's.com sb and you're going to get a complimentary metabolic profiling assessment. A one on one consultation with a Met pro coach like my coach Jesse to help you achieve your goals this year. Course results may vary. MetPro is not a medical organization. The service is not intended to treat any illness, disease or adverse medical condition.

[Joe Salcihai]

Hey there, Ryan Reynolds here. It's a new year and you know what that means. No, not the diet resolutions.

[OG]

A way for us all to try.

[Doug]

And do a little bit better than.

[OG]

We did last year. And my resolution, unlike big wireless, is.

[Joe Salcihai]

To not be a raging and raise.

[OG]

The price of wireless on you every chance I get. Give it a [e-mail] Switch $45 upfront payment required. Equivalent to $15 per month. New customers on first 3 month plan only.

[Doug]

Only taxes and fees.

[OG]

Extra Speed slower above 40 gigabytes on unlimited. See mintmobile.com for details.

[Joe Salcihai]

Yippee ki yay stackers. I'm your visionary trivia pal Joe's mom's neighbor Doug, and I'm roaring back with my million dollar ideas. You know people, sometimes they're just right in front of you.

[OG]

Check it first.

[Joe Salcihai]

You know how well a dude named J.D. roth has done building a brand called get rich slowly on the Internet? Why? Why the hell wouldn't you start a site called get rich fast? Isn't that way better? And speaking of online personalities, how about Ramit Sethi and his I will teach you to be rich. You don't have to reinvent the wheel. Start there, but create your own book called I will teach you how to be richer. It works. And last, David Bach has the latte factor. And you can see how that dude's living in Italy now. Well, if you like to move to someplace exotic like France or Peoria, create the mocchiotto factor. You got to admit it, macchiato is way better drink than latte because it sounds more exotic. It's just better because of the name. You can charge a lot more for that advice. So by my calculations. Let me see here. Carry the two and then, okay, with those three ideas alone, you've got now a cool 15 million bucks just sitting right there in your back pocket. But what if you had 15 million and the trivia answer? That would be grand. So let's get back to today's trivia. The question was, since today is the anniversary of a huge tea party in Boston way back in 1773 when Joe's mom was born, am I right? It was a huge tea party. Huge.

[OG]

How huge was it?

[Joe Salcihai]

This tea party was so huge that the waiter brought out a huge tea bill after. But if we were throwing a tea party today and wanted it to be a success, in what country would we throw it? While China wins the most tea battle, when it comes to most per person, it doesn't make the list. I'd actually throw the third best tea party in the country. Many of you may be thinking the UK at just over four and a quarter pounds of tea and second at nearly five pounds of tea per capita is Ireland. But the winning country, where people drink nearly seven pounds of tea is turkey. Get it right, maybe you can sell tea in Turkey. Go teabag them people. It'll make you rich. See ya.

[OG]

I don't think that means what he thinks it means. But also not the uk.

[Doug]

Yeah, I forgot about turkey. Could have had that one.

[OG]

Well, you did have turkey a couple weeks ago with your dinner. Big thanks to Paul Merriman. Isn't it amazing that I bet there's a bunch of people new to investing, hopefully that listen to today's advice from Paul, who went, wow, I can actually do all these things and they're actually pretty simple. And I just added $5 million to my pocket.

[Doug]

And if you're really feeling generous, you know, our finders fee generally only 10%.

[OG]

So I love it.

[Doug]

I think we're up to 10 or 12 listeners now. Five million a person, that's 50 million. 10% is 5 million for us. Everybody's a winner.

[OG]

What's a million between friends, too? I mean, now that you're going to have way more than enough. Hey, let's throw out the even lifeline and tackle some of life's most important questions. Let's throw out the even lifeline today to our new friend Matt. Say hi, Matt. Hello, Matt.

[Paul Merriman]

Hey. So is there really any reason to rebalance? I mean, I do it, I've done it once, but for years and years I didn't do it because I just.

[Joe Salcihai]

Figured, what's the point?

[OG]

As the S and P go up.

[Paul Merriman]

And down and the Russell and the international REIT, they just gyrate. You keep putting 20% of each one across the board. Rebalance themselves. Is there any point to it?

[OG]

Am I just bored? Probably all the above, Matt. Sounds like he called us from underwater, but I think we got the point of that one. Thanks for the question, Matt. And by the way, I did not see that coming.

[Doug]

Do we need to rebalance? Yeah, yeah, you do. Yeah, Matt, because of the exact same reason that you talked about. Now you may not need to do it as frequently or as much money if you're contributing money every single month, because your dollar cost averaging is kind of helping to smooth that out a little bit. But this is a great example of it this year. Small caps and international funds have gone gangbusters since the 1st of September and it's probably out of whack now. I don't think that you have to do it if you're within a point or two of what your target is. We use 20%. So if your target is to have 20% of your portfolio in small cap, and you're at 20 or 21 or 22 or 19 or 18 or 17 or 16, you know, or 23 or 24, like that's fine, that's just a normal fluctuation. But if you have some wild change where there's a big disparity, it's a built in way to buy low and sell high. You know, if you're started at 20% of a position and now it represents 30% of your position, one of two things has happened. Either that portion has grown faster than the rest of the portfolio, which means you're selling at a profit, or everything else has gone down so much so fast that you're buying, you know, you sell out of this thing that maybe even money or maybe lost a little bit of money, but it's still 30% of your portfolio. And now you're buying into the stuff that's cratered down. So yes, I do think you can do it now. I also think that once annually is more than adequate. So do it once a year. Do it on your birthday. Never think about it again.

[OG]

Hey, Matt, it's your birthday. Go rebalance. No, exactly. Yeah. It's funny because when you look at modern portfolio theory, Matt, there's this thing called the efficient frontier. And if you have your investments along the efficient frontier, that means historically you've gotten your goals with less risk than you would have any other way. So using that, whatever combination of asset classes are, are right there. So if you start off with what historically has gotten you to your goal. Staying on that line is is very important. And the further you get off that line, the more you miss opportunities when reversion to the mean happens. Which is, oh gee, exactly what you're saying, right? I mean, reverse the means could happen. The down stuff's going to come up, the up stuff's going to come down. And if you don't rebalance, you're going to find that you're riding the roller coaster more and more. Instead of, instead of buying low, buy.

[Doug]

Low and sell high. Easier said than done, but rebalancing will help that.

[OG]

Thanks for that question, Matt. We're going to throw Matt some swag his way. Gertrude's going to give him a code and he can go pick out a Haven Life Greatest Money show on Earth T shirt. And by the way, what a crazy circus of a show we had today. Non traded REITs Paul Merriman trivia about the Boston Tea Party kind of. And maybe some not so great ideas from Doug all in the same place. Just another day. Big thanks to everybody. Also, who's left us a review of of this Year podcast wherever you listen that helps new listeners know what they're getting into when they listen to Stacking Benjamins. Mom loves putting those on the refrigerator when they come in. Used to be more fun to put them on the refrigerator when we had people coming over pre Covid. But you know what? This too shall pass. She says she's pretty excited about returning to normal. Also want to say Happy Hanukkah. We're now nearing the end of Hanukkah, so if you celebrate Hanukkah, Happy Hanukkah to you. And I should say that if you are looking to kick off 2021 and make it a better year to celebrate the fact that 2020 is over, maybe upgrading your financial planning team is a number one on your list. Make sure you're early on the list of people OG's team talk to early next year. They have the wait list in place. Head to stackingbenjamins.com OG and when they reopen for new clients early next year, you can reserve your place now. Stacky benjamins.com forward/og. Don't go away because we've got a lot more fun coming up and some surprises coming up the last couple weeks of the year. All right, Doug, you've got it from here, man. What should we have learned today?

[Joe Salcihai]

So what should we have learned today? First, take a lesson from our headlines. Success isn't just about information. At some point you actually have to do something. What are you doing today to be better with your cash than yesterday? Stackers. Second, take a lesson from Paul Merriman. You have lots of million dollar opportunities at your disposal. Make sure to pick out the best ideas for you and take action. But the big takeaway.

[OG]

Ha.

[Joe Salcihai]

I just did a little researcherouski an old Paul Merryman and you know what? My bad ju just go with his ideas. Guy probably knows what he's talking about. Hey, Paul, if we add my three ideas to like your 12, we could have $15 million ideas. Paul, wait.

[OG]

Paul, come back.

[Joe Salcihai]

We can partner on this, man. It's gonna be awesome. Special thanks to Paul Merriman for joining Joe today to discuss his new book. We're talking 12 simple ways to supercharge your retirement. We'll have a link on our show notes page to get the books for someone you love. Plus, you can check out Paul's podcast Sound investing wherever you listen to Finer podcasts. Cast not like this one. This show is created by Joe Sal Sehei, produced by Taylor Stephens and engineered by the amazing Steve Stewart online. Visit us on Twitter benjaminscast or on our Facebook page. I'm Joe's mom's neighbor, Doug, and I really thought doing these credits completely naked would have been a lot more fun than it actually was. Aspect be Podcasts may receive payment on the show from sponsors and guests in the form of books, giveaway items, discounts, or other remunerations. That's a big word. There's no way you'd take advice from these dorks. But like Joe's mom always says, don't take advice from people you don't know. This show is for entertainment purposes only. And before making any financial decisions, consult with a real financial advisor. I'm serious, Paul. We could both be pretty wealthy working together, man, I'm telling ya. Well, I know you're already probably pretty wealthy, but wouldn't it be fun having old Doug as like your wealth buddy? Come on, let's do this.

[OG]

Paul, I've got three things to talk about today. I want to talk about this TV show on Netflix I just saw. But before we get to that, our friend Lee has a great meme from Funny or Die on here. Did you see the animal fact of the day yet, OG?

[Doug]

No.

[OG]

Orca offspring live with their parents for their entire lives. Just like my loser cousin Greg.

[Doug]

Nice. Nice. I like it.

[OG]

Ah, you hear that?

[Doug]

I do. That is sounds amazing.

[OG]

That's the sound of mom redoing the kitchen while we do this second thing. For Friday's episode. This is how fun it is making a podcast. Like all the little things that you think of. We, of course, with Doc G, we talked about scams being the. Because it was the anniversary of Bernie Madoff being arrested. By the way, Doc G lost horribly at trivia on your behalf. OG so you now are down by one coming into the last week. Paul is out of it. You're down by one. Friday's episode is the end of the.

[Doug]

All or nothing end of the season. We're sure hope I can get the actual right answer.

[OG]

We're. We're going to see what happens there. But we put together, of course, this episode for Friday and the name of the episode was a prince needs your help and the IRS is coming, right? Which are two of the big scams going on. Plus Vanguard's new Digital Advisor. An intro to what Vanguard's doing with their new Digital Advisor. Somehow the social media, when social media goes out, it abbreviated it to the picture that says scam alert. And the headline reads, an introduction to the newly released Vanguard Digital Advisor. It totally looks like we're calling Vanguard's product a scam, which I'm sure we get to deal with these PR people all the time. And they're super nice people. They make people available when we request. Hey, we want to talk to you about stuff. And I'm sure nothing Vanguard likes better than us with this big thing that says scam alert and Vanguard Digital. Brian Cannon was such a nice guy. I man. So we. We got to work to fix that last week. That was fun. Okay, the third thing. Andy from Derby, Vermont, always post fun things in the basement. And I always say Derby, Vermont, Andy, because I now know where it is. And I think it's pretty cool that I know where Andy lives. But Andy posted this meme that said, you know, when you say the word gullible really slowly, it sounds like you're saying orange. And I'll tell you.

[Doug]

Yeah, yeah, I was going to post. You know, it's not even in the.

[OG]

Dictionary on Friday morning. I saw this and I kept going, oh, gullible. No, it doesn't sound anything like it. Go. I must have done it eight times. Gullible. No, it doesn't sound like orange at all. The word gullible isn't. Oh, too funny.

[Doug]

Have you watched any of these? You know, the. The hot thing are like VR goggles, right?

[OG]

Yes.

[Doug]

Have you ever been on a VR? Like, had a VR experience?

[OG]

Only once. We did that thing a couple years ago where I was at the Fidelity booth at fincon, and I put it on. And your goals were like, a golf course, and you showed, like, how much money you have and what return you got, and it moved you further up and down this golf course with your goal being the hole at the end. So you could see that if you did these things. So If I save 6% versus if I save 10%. And it would. It would place you differently so you could make decisions while you're looking at the VR.

[Doug]

Okay, I was thinking about something way cooler. Like.

[Paul Merriman]

Like.

[Doug]

Like skydiving or something.

[OG]

No, I don't want to skydive virtual reality.

[Doug]

No. Or like, walking on the edge of the Empire States Building. Like, on the. On the edge of it.

[OG]

Have you seen that thing where they're in a. They're in, like, a hospital waiting room and they hand one of those to Grandma, And I don't remember what it was. I think it was a roller coaster. And she's on a roller coaster and just watching Grandma writhing around in this seat.

[Doug]

Well, that's the. So they got all these YouTube videos on, like, fails that I'm. I've got. I might be watching on my phone while you're not, you know, looking at me. And. And so there's all these ones where people are, like, you know, they're like, get the boxing game. And then they run and chase, and they, like, run and chase, like, the guy. And they just, like, beat the crap out of their TV or something like that. Or they're, like, trying to cross, like, a narrow chasm over, you know, the Grand Canyon or something is like tightrope. And so they're all, like, wobbly, even though they're just standing on the concrete. You know, they're like, literally standing there, and then they fall over and just, like, crash down. It's pretty comical if you want to type in VR fails and watch people beat the crap out of their kids or their spouses or their televisions or something like that with VR goggles on because they're. They think they're on a roller coaster or something like that.

[OG]

Here's something that's not a fail. It's actually been huge. A lot of people talking about this new show on Netflix the last several weeks, a show called the Queen's Gambit.

[Doug]

Men are going to come along and.

[Paul Merriman]

Want to teach you things.

[Doug]

Doesn't make them any smarter. You just let them blow by, and you go on ahead and do just.

[Paul Merriman]

One what and how. You feel like someday you're going to be all alone.

[OG]

So you need to figure out how.

[Paul Merriman]

To take care of yourself, tell the.

[OG]

Readers of life how it feels, and.

[Paul Merriman]

To be a girl among all those men. I don't mind it.

[OG]

Chess isn't always competitive. Chess can also be.

[Paul Merriman]

Beautiful.

[Doug]

You're an orphan, Beth.

[OG]

I'm fine. Being alone. I feel safe. In an entire world of just 64 squares, creativity and psychosis often go hand in hand.

[Doug]

Or for that matter, genius and madness.

[OG]

There's no player in the world as gifted as you are.

[Paul Merriman]

There is one player that scares me.

[Doug]

Who?

[Paul Merriman]

The Russian.

[OG]

And it's true og that the main character in the show is a woman whose mom is very brilliant and incredibly troubled. She has a mental illness. In fact, early on, in episode number one, you see a scene where Beth, the main character, her mom, is going to drive them both deliberately into a truck to kill both of them. This show deals with being alone, going to an orphanage. She becomes a pill abuser at an early age. She has fights with alcoholism at the same time. While she is a tennis prodigy. And in the 1960s, she's winning these. Did I say tennis prodigy? I did. She's a chess prodigy. Might be. Might be slightly different, but she's a chess prodigy. And she is moving through this manly man world at the time, nerdy manly man world of chess, beating all these people. And something that this show does really well is it sets up these matches which start in either episode two or episode three. When she shows up at this match and she's maybe, I don't remember how old, 13 or 14 years old, and she sits down across from this adult and the guy's kind of laughing at her. And the makers of the show do a great job of the cinematography because you see them at the beginning and everything's great. And without using many noises or using many indicators, except the look on their face, you can slowly see the noose tightening as she beats more and more and more people at chess. And that becomes half the fun of watching this series. As she sits down at this chessboard and as she works her way through all these talented people, she's always underestimated and she always wins. And during the same time that she's winning, she's also fighting these incredible inner demons with her own loneliness, her own alcoholism, and just extreme use of pills. And she thinks that using is the key to her success. When she uses, that's when she imagines the chessboard and all the things coming out. So over the course of seven episodes, she's working her way up to going against the Russians. And I'LL tell you, this was an incredibly dark show. Like this is. This is a way, way, way dark show. You can't watch this show with kids. There are so many adult themes. And yet for all the darkness in this show, which, which made me think, everybody's talking about this show so positively and I have to kind of get in the right mood before I even watch it because I know it's going to be just another hour of darkness as I go through it. We get to the final episode and my friend Joel Lars guard over at how to Money Podcast, I think put it, put it right. There's such a Disney ending at the end and I don't want to give away the end. But I will say what I didn't like about this was that there's all these deep dark problems, all these huge issues that people struggle with forever and it's all magically delicious at the end, right? Everything just kind of magically comes together, issues go away and life is great and ta da. And I don't want to spoil the ending too much, but the ending is really what I didn't like about this show. So while everybody's been raving about Queen's Gambit and how awesome it is, I'll say the characters seem right on most the way through it. I was into the story. It was too dark for me and the ending just didn't, didn't ring true. That said, the ride that you go on for the I think it's seven episodes. Great, great, great ride. So I don't know, thumb, thumb sideways on this one.

[Doug]

OG yeah, I've heard good things about it too, but now maybe not so much.

[OG]

Yeah, yeah, I. And maybe that's another problem too is I heard so many great things about it that I went in with these huge expectations. It is cool to see the reports. And we did this over on the Money with Friends podcast. This story, all the reports of chessboards now flying off the shelves, right. And people getting into this old cool game. So that part was neat. In fact, I saw that for season two, somebody made a meme of her playing against a Russian in season two and now they're playing Connect four. They just photoshopped that in the middle of them.

[Doug]

More fun to pick Connect four than Chess anyway, right?

[OG]

Another Photoshop was Operation because that that was during the 60s, but Queen's Gambit didn't love it.