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As Paul turned 83 last week, he recorded this podcast in his studio office surrounded by piles of articles and notes for future recordings and a good deal of gratitude. He says this may be his favorite podcast he's ever made. He starts with the two biggest paydays of his life. The first was December 31, 2012, the day he sold his part of the firm he'd started in 1983 and walked into retirement with a promise to his wife that he'd never work for money again. The second happened in the last 48 hours, and not a dollar changed hands. He also has a word of caution for anyone who credits him for what their portfolio has done. Then an epiphany. After reading a recent Adam Grossman piece in HumbleDollar, Paul began to question whether John Bogle's "stay the course" really belongs as the number one rule for being a successful long-term investor. He took the question to ChatGPT, shares the whole conversation, and comes away with a new rule number one, plus a line he thinks an 18-year-old might still remember at 65. The third topic is bonds. Paul has been reading a lot of negative commentary about them lately, so he goes back to Table B1 and walks through 56 years of history: how many losing years the S&P 500 had since 1970, how many the short-to-intermediate bond portfolio had, what the worst 12 months and worst 60 months looked like, and why he and his wife hold the mix they do at 83. He also explains why long-term bonds are not the answer, and what the numbers since 1928 say about the premium you get for their extra risk. LINKS Market Risks by Adam M. Grossman, HumbleDollar

In this special office-hours session, Albert and I answer the questions teachers have been sending in across our four NGPF classroom sessions — more than 500 educators strong. We move fast and cover a lot of ground: 1. How a young person can open a first investment account (and why $1 is all it takes to start at Fidelity) 02:362. My favorite books on saving, investing and index funds 10:583. The best free websites and videos for teachers and students 12:514. How to make inflation real in the classroom — yes, the bubble-gum story 19:195. Why asset classes like small-cap value and large-cap growth behave so differently 25:156. A live walk-through of Morningstar’s style boxes and the chart function 34:457. Advice for reaching first-generation and lower-income students 47:248. What would be the job to suggest to a middle schooler to get them more interested in math and economics? Whether you teach this material or you’re just getting started yourself, I think you’ll find something here you can put to use. Watch video

WATCH THE VIDEO This is the fourth of five presentations I recorded for Next Gen Personal Finance (NGPF.org) and am sharing with Sound Investing listeners. I titled this one “The $5 Million Payoff for a Financially Literate High School Graduate” — but I could have called it the $42 million payoff, and by the end you’ll see the math that makes it believable. I walk through the single biggest decision of all (stocks vs. bonds), 100 years of market history, why the first five years of investing matter most, and how low costs, low taxes, and automation turn small savings into a fortune over a lifetime. FREE BOOK THIS WEEKSpending Your Way to Wealth (see Appendix E)https://investorship.com/wp-content/uploads/2023/10/SYWTW.pdf TABLES AND RESEARCHhttps://www.paulmerriman.com/data-tables [email protected] (put “NGPF” in the subject line) Join us next week for the final session: Financial Literacy Office Hours with Paul Merriman.

Harry Markowitz called diversification "the only free lunch in finance." In this session, part of Paul's series for Next Gen Personal Finance educators, Paul Merriman explains what that means in practice, and why a well-diversified portfolio can help investors stay the course through good markets and bad. Paul covers the history and math behind diversification, from Don Quixote's "don't put all your eggs in one basket" to Warren Buffett, Charlie Munger, and Sir John Templeton. He explains the three kinds of risk investors face (company, market, and asset class), and shows how the "lost decade" of 2000–2009 hit S&P 500 investors hard while more diversified portfolios kept growing. You'll also hear: How adding small "baby steps" of large cap value, small cap, and REITs added about 1% a year to returns since 1970Why the two-fund strategy (half S&P 500, half small cap value) may be less risky than it looksWhat a young investor putting away as little as $1,000 a year could build over a lifetimeA simple "ultimate buy and hold" for hands-off investors: a target date fund plus a slice of small cap valuePlus, Paul shares a free book from market historian Bill Bernstein. Watch on YouTube: youtu.be/MDqaIojI8TE Free book: If You Can: How Millennials Can Get Rich Slowly Tables and research: paulmerriman.com/data-tables Send your questions to Paul at [email protected] (include "NGPF" in the subject line)

Watch the video here. This is the second of five presentations Paul recorded for Next Generation Personal Finance (NGPF.org), whose free curriculum reaches some 150,000 teachers. The sessions weren't open to the public, but NGPF has allowed Paul to share each one with Sound Investing listeners. The subject is index funds, and Paul starts where the story starts: John Bogle, 1976, and a fund launch that nearly got cancelled before it opened. From there he looks at what the evidence actually says about active management over 20 years, why most investors never hear about the costs that quietly come out of their returns, and what happens to a fund that doesn't perform. He also introduces the non-traditional index funds from Dimensional and Avantis that he believes give young investors their best opportunity, and closes with stories from the 90 minutes he spent in Jack Bogle's office. CHAPTERS00:00 Introduction02:44 What is an index fund?04:38 John Bogle and the first index fund08:50 Active vs. passive: beat the market or be the market10:52 The SPIVA report14:53 Quartiles and the 20-year picture19:49 How long do mutual funds survive?22:05 Asset class and style drift25:14 The tax cost of active management28:51 Bogle on costs and the hidden drags on return35:18 Myths about index funds38:28 Beating the S&P 500 with index funds42:35 Traditional vs. non-traditional index funds49:06 Dimensional and Avantis50:23 The number one reason to use index funds55:46 Stories from meeting Jack Bogle59:25 Wrap-up NGPF: ngpf.org

WATCH THE VIDEO Want to build a multi-million-dollar retirement portfolio without gambling on single stocks? This is the first session of the four-part series I recorded for the teachers of Next Gen Personal Finance — and I’m sharing it here with you. In it, I break down the timeless principles, the math and the market history every long-term investor needs to know. WHAT YOU’LL LEARN IN THIS EPISODE • The Math of Compounding [01:43] — how finding an extra 0.5% to 1% in returns — or starting just five years earlier — can add millions to your lifetime wealth. • The Power of Starting Early [09:48] — why your initial investment years build your foundation, and how both bull and bear markets work in favor of young, disciplined savers. • Budgeting Strategy [19:43] — applying the “Pay Yourself First” rule and the 50/30/20 framework to establish sustainable saving habits. • Stocks vs. Bonds [22:44] — understanding why stocks are low-risk for long-term growth, while bonds carry inflation risk over decades. • Market Diversification [30:08] — why 4% of companies generate nearly all stock-market gains, and how owning total-market index funds ensures you don’t miss out on them. • Equity Asset Classes [37:59] — comparing large-cap blend, large-cap value, small-cap blend and small-cap value to reduce volatility and boost returns. • Target-Date Funds [49:38] — why automated, age-tailored allocation helps investors stay the course and avoid emotional mistakes. Tune in to discover how staying the course, keeping expenses low, and letting history guide your strategy can transform your financial future. Join us next week for The #1 Reason to Invest in Index Funds.

Paul opens with news of a new opportunity to reach young investors: a five-part series for Next Generation Personal Finance (NGPF.org), available to some 150,000 teachers who use NGPF's free curriculum. Topics include the math and history of investing, the case for index funds, the inside story on diversification, the $5 million payoff for a financially literate high school graduate, and a teacher Q&A session. Each presentation will be shared with Sound Investing listeners the following week. Then Paul turns to two listener questions that go to the heart of how people actually experience the market. The first asks whether broad diversification really produces the best returns, or whether a more focused portfolio would do better. He walks through the Bessembinder research showing that roughly 4% of companies drove most of the market's long-term return, Fama and French data on small cap value going back almost 100 years, and Vanguard's own real time returns since 1998 comparing $10,000 invested in the S&P 500, mid cap, small cap blend and small cap value asset classes. The second is a letter from an investor who put his first real savings, earned at $7 an hour, into Fidelity Magellan in 1985, lost 30% on Black Monday in October 1987, and pulled everything out. Forty years later he still fears the next crash and asks whether Paul's Ultimate Buy and Hold portfolio could leave him waking up with half his money gone. Paul closes with a story about five 24-year-old engineers he met on Bainbridge Island, and an offer to anyone who can gather a group that would benefit from a conversation about investing. LINKS Fine-Tuning Your Asset Allocation tables NGPF: ngpf.org

WATCH THE VIDEO It was a pleasure to be invited back on System Trader with Jack Lempart. Here is a list of the main topics we covered: CHAPTERS 0:53 • My own biggest mistake 3:15 • Why “the stock market is a casino” is exactly backwards 6:48 • “I don’t have enough money to start” — what $100 a month actually becomes 9:33 • A $20 bet with my 13-year-old grandson 13:04 • How much intelligence does successful investing really require? 15:31 • The Mensa Investment Club: buy low, sell lower 16:24 • Three books for the psychological hurdles 17:38 • “It’s a bad time to invest right now” — the myth that never dies 20:00 • Why a falling market is the best thing that can happen to a young investor 24:21 • Can a star manager do it for you? SPIVA and Bill Miller 30:21 • An ETF is only a wrapper — how do you grade what’s inside it? 33:01 • Traditional vs. non-traditional index funds 35:49 • Home bias: half U.S., half international, and the lost decade 44:04 • Cap-weighted vs. asset-class weighted funds 46:26 • Finding your right level of risk before the market tests you 55:20 • Is the small-cap value premium dead? 62:52 • Financial literacy in high school — and who’s teaching on TikTok 64:21 • Where the biggest premium comes from: size, value, quality and momentum 69:29 • The one thing to do tomorrow morning: control what you can, then automate

Paul and Chris reflect on Paul’s recent discussion with Rick Ferri. Paul adds information he wished he’d included, and Chris reacts to Paul and Rick’s positions. Together, they discuss the behavioral, trust, and performance benefits and trade-offs of seeking meaningful diversification by adding Small-Cap Value to a portfolio. CHAPTERS 00:00:00 – Intro00:02:50 – Chris’ 30k Foot View00:06:16 – Mid-caps?00:10:40 – Tot. Mkt. vs. S&P 50000:20:15 – Trust and Change00:25:45 – Table G1b00:28:50 – VT vs. AVGE00:42:20 – Dollar-Cost-Averaging00:52:00 – Paul’s Grandson’s Question00:53:08 – Gold funds00:59:40 – Travel plans01:02:20 – Outro Watch the video on YouTube Table G1b — Fine Tuning Table: S&P 500 vs. US Small Cap Value

Watch the video here. Paul sits down with Rick Ferri — not for a debate, but for the kind of honest conversation two people can only have after spending their careers chasing the same goal from different directions. Rick makes the case against tilting: the small cap premium largely disappeared once the research went public around 1980, and he believes value stopped working around 2006. Paul counters with Table G1b, which shows the results of blending small cap value and the S&P 500 in 10% increments from 1970 through 2025 — returns alongside the worst drawdowns each combination had to survive. Then Rick does something unexpected — he crosses to Paul's side of the table and builds a strong argument for small cap value, framing it as a way to capture the return of private companies that represent half of the economy. Where they land is less about who's right than what it costs to be wrong. If you go down the factor road, Rick says, it's a lifetime commitment — not three years. Also covered: lump sum versus dollar cost averaging, what an hourly advisor can do to help do-it-yourself investors implement their new portfolio, the new Trump accounts for newborns, and why VT may not be your best choice in a taxable account. Both Paul and Rick will be at the Bogleheads Conference, November 13–15 at Green Valley Ranch Resort and Spa in Henderson, NV, near Las Vegas. Registration: boglecenter.net/2026conference Table G1b — Fine Tuning Table: S&P 500 vs. US Small Cap Value: View the table Stay tuned for next week's podcast, a discussion with Chris Pedersen about this interview with Rick.

This Friday I'm sitting down with my friend Rick Ferri for a debate that I think matters a great deal, even though — or maybe because — Rick and I agree on almost everything. We both believe in diversification, low costs, index funds, ignoring predictions, and staying the course. Where we part ways is what happens after that. Rick's case is that you should simply own the whole market. A total stock market index fund gives you thousands of companies at an extraordinarily low cost, and adding complexity rarely pays. My case is that the academic research — Fama, French, and decades of market history — shows that greater exposure to small and value companies may raise long-term expected returns. Rick calls that factor tilting. I call it better diversification. He'll argue I'm not adding diversification at all, just changing the weights, and he's right that this is exactly what we're doing. The question is whether it's worth doing. We also take on a second question that gets far too little attention: if you do want small and value exposure, where should you get it? Vanguard, Fidelity, DFA or Avantis — traditional indexing or systematic portfolio management? Differences that look trivial today can compound into very large ones over 40 or 50 years. Neither of us is trying to win. Rick may be right. I may be right. Ask us again in 50 years. What I hope you take away is the process — examining evidence, understanding the alternatives, admitting what nobody knows, and committing to a strategy you can stick with. Because every strategy disappoints you eventually, and what you do in that moment matters more than which one you chose. The podcast and video of my conversation with Rick will be available Wednesday, August 19, 2026. If you have any questions for Rick, send them to [email protected].

Paul returns from three days at the Garrett Planning Network retreat with a lesson that has almost nothing to do with investments — and everything to do with getting your money's worth from professional advice. Garrett advisors work by the hour, a business model Paul believes eliminates the conflicts of interest built into assets-under-management relationships. For $1,000 to $8,000, he's convinced most families can get extraordinary value from five to ten hours with a thoughtful, trained hourly planner. But there's a catch: the value of those hours depends almost entirely on your willingness to tell the truth. Inspired by a Seth Godin observation — people lie in focus groups, on surveys, and to themselves — Paul explains why the most valuable planning meeting isn't the one where you look financially successful. It's the one where you're completely honest. Paul and his wife are putting this to the test with an hourly planner of their own, and he'll report back in the weeks ahead. Next, Paul shares a private conversation with his longtime friend Rick Ferri, who challenged an idea Paul has taught for decades: that small cap value, large cap value, and international are equity asset classes at all. Rick argues there's only one equity asset class — the total market — and everything else is a segment or style. Paul takes the challenge seriously, does some digging, and explains why the answer matters far more than a debate over definitions. How you think about asset classes shapes the portfolio you'll live with for the next 60 or 70 years. Finally, Paul digs into AVGE, the Avantis globally diversified all-equity ETF, and how it compares to Vanguard's total market approach (VT and VTI). He walks through the meaningful differences: 70/30 U.S./international at Avantis versus 60/40 at Vanguard, and substantially larger positions in mid cap value, small cap value, and small cap blend. He looks at what those tilts have meant historically — including Vanguard's own mid cap value fund turning $10,000 into roughly $160,000 versus $102,000 for the S&P 500 — and why he believes the extra 0.17% in expenses may be money well spent. For investors who don't want to go all-in, Paul offers simple combinations, like a third VT, a third AVGE, and a third AVUV. CHAPTERS 00:00 – Introduction: three topics from the Garrett retreat01:56 – Why hourly advisors have fewer conflicts of interest05:52 – The catch: your willingness to tell the truth06:38 – Seth Godin: "People lie... and they lie to themselves"08:04 – What planners can't fix if they don't know about it13:00 – Paul's debate with Rick Ferri: what is an equity asset class?18:05 – Why the definition shapes your lifetime portfolio21:34 – AVGE vs. VT: U.S./international balance23:07 – Comparing value, blend, and growth exposure25:00 – Mid cap and small cap: what history shows30:15 – Expense ratios and what you're paying for31:35 – Simple combinations: VT + AVGE + AVUV33:15 – Stay the course: closing thoughts Learn more about the Garrett Planning Network

Paul discusses his upcoming trip to Minneapolis to address almost 100 hourly financial planners at the Garrett Planning Network annual retreat — then shows, in real time, how he uses AI alongside the Truth Tellers. This example is prompted by a Ben Felix video arguing that most people save without knowing their real “why.” Paul asked ChatGPT to explore the question and shares the full AI response, which includes the six steps to creating your “why” — from “dream before you calculate” to purpose → plan → portfolio. In the second part of this podcast he responds to the many listeners who have asked: build the worldwide all-value portfolio with five Avantis ETFs, or simply buy AVGV, a single ETF that owns the same ETFs but in different percentages? Over three years, AVGV compounded at 21.1% (up 77.4%), while the five-fund do-it-yourself version compounded at 22.2% (up 82.6%) with no rebalancing. Doing the work likely earns a better return — but a Morningstar study suggests most investors do better buying the single ETF, because it takes care of all the rebalancing and overcomes the tendency to chase returns as money is added. Paul would appreciate your feedback on this podcast: [email protected]. LINKS• Ben Felix video on investor myths• Morningstar “Mind the Gap 2025” study• Garrett Planning Network — find an hourly advisor• Meet the Truth Tellers

The hardest part of investing isn't choosing funds — it's building a set of beliefs strong enough to keep you disciplined when the market, the news, and your own emotions all conspire to pull you off course. In this episode, Paul sets aside the usual fine-tuning tables and turns to one of his favorite books, Ben Carlson's Risk and Reward. Table by table, Ben makes the same point in a dozen different ways: the bad stuff is normal, it's happened before, and it will happen again. The goal isn't to avoid it — it's to expect it, so you can stay the course. Along the way, Paul walks through: • The 10 worst days, months, and years in market history — and how the market behaved 1, 5, and 10 years later• Why bonds turn a 43% stock loss into something far gentler, and why a simple 60/40 has never had a losing 20-year period• How stocks actually perform before, during, and after a recession (the average is a gain)• The "dead cat bounces" of 2000–2002 and why three years of false hope wear investors down• What a century of international returns says about putting all your eggs in one basket• The most quietly important number in investing: the market's average daily return of 0.03% — a lifetime of baby steps The theme underneath it all: future returns will likely look a lot like the past. We simply have no way to know the sequence — and that's exactly why realistic expectations, low costs, and broad diversification matter more than any forecast. The biggest enemy of the investor, as the data keeps showing, isn't the market. It's the investor. BRINGING FINANCIAL FREEDOM TO NEW AUDIENCES Last week I spent more than three hours with 89 graduating nurses at Texas A&M University, exploring one life-changing idea: how a handful of smart financial decisions can add millions of dollars to your lifetime financial security. Many of you asked to see what these presentations look like, so we're making this one available to watch (link below). LINKS • Ben Carlson, Risk and Reward (Foundation earns when you use this link)• Texas A&M nursing school presentation (3+ hour video)• Texas A&M student feedback• Mike Piper, Social Security Made Simple / other titles• Personal Finance in Your 20s & 30s For Dummies• Free books from Paul Merriman• Boot Camp series & tables

A longtime listener wrote in after watching a Ben Felix video making the point that factor investing may not beat the S&P 500 by the end of an investor’s lifetime — and could even do worse. His question was simple: is factor investing really worth the effort? Paul’s answer turned out to be two answers, so he’s splitting it into two episodes. This week is about the thinking. Next week is about the evidence — including new data Daryl Bahls just sent over. Paul also tries something new: using AI to canvas the writings of the Truth Tellers and surface what they would say about this exact question. What emerges is a point they all agree on — good decisions do not guarantee good outcomes, and bad decisions sometimes produce wonderful ones. Bill Bernstein, Larry Swedroe, Ben Felix, Mike Piper, Christine Benz, Rob Berger, Jim Dahle and Jack Bogle each frame the same distinction: expected returns are not realized returns, and probability is not certainty. Investing is one long series of forks in the road — save or spend, stocks or bonds, index or active, buy-and-hold or market timing — and none of them come with a guarantee. What they come with is a probability. The job is to choose thoughtfully, accept the uncertainty, and have the courage to stay the course while the evidence still supports the plan. LINKS• Meet the Truth Tellers: paulmerriman.com/truth-tellers