Sound Investing

In this week’s Sound Investing episode, Paul Merriman answers a wide-ranging set of listener questions — from choosing ETFs and building portfolios to managing risk in retirement and investing wisely at every age.
One of the biggest takeaways? There is no universally “best” ETF or portfolio. The right answer depends on your goals, risk tolerance, time horizon, and — just as importantly — your ability to stick with a strategy during difficult markets.
Here are some of the highlights from the episode:
What’s the “best ETF”?
Paul explains that for simple exposure (like the S&P 500), the lowest-cost option often wins. But once you move into areas like small-cap value or factor investing, fund construction and index methodology matter far more than expense ratios alone.
Single-fund vs. DIY portfolios
Paul compares all-in-one solutions like AVGV (Avantis All-World Value ETF) with building the same asset classes yourself. While a DIY approach can sometimes produce higher returns, it also requires discipline and comfort with tracking and rebalancing multiple funds.
Portfolios for different stages of life
Younger investors (30s): Paul favors all-equity portfolios for long time horizons, assuming the investor can tolerate volatility.

Pre-retirees and retirees: The focus shifts to managing downside risk, withdrawal rates, and behavioral comfort — not maximizing returns at all costs.

Retirement withdrawals and sequence risk
Using historical examples starting in 1970, Paul shows how withdrawal rates (4%, 5%, 6%) and portfolio composition can mean the difference between ending with millions — or running out of money entirely.
Mutual funds vs. ETFs
ETFs have become more tax-efficient, more flexible, and easier to trade — making them ideal for the smaller, diversified portfolios Sound Investing now recommends.
How to self-manage a portfolio
Paul walks through how to:
Choose equity asset classes

Use best-in-class ETF recommendations

Rebalance intelligently

Invest weekly without overcomplicating the process

Resources mentioned in the episode:
Sound Investing Boot Camp
https://paulmerriman.com/bootcamp/

Ultimate Buy & Hold Portfolio
https://paulmerriman.com/ultimate-buy-and-hold-portfolio/

2025 Sound Investing Portfolios
https://paulmerriman.com/sound-investing-portfolios/

Avantis Investors & AVGV
https://www.avantisinvestors.com/

Morningstar Fund Comparison Tools
https://www.morningstar.com/

Ben Felix (Canadian investing insights)
https://www.pwlcapital.com/profile/benjamin-felix/

REIT background and tax considerations
https://en.wikipedia.org/wiki/Real_estate_investment_trust

Paul closes the episode with a reminder that diversification means always owning some underperformers — and that’s not a flaw, it’s the price of long-term success.
Thanks for listening, and we’ll see you next week.

For first-time listeners, welcome! In this opening episode of the year, Paul Merriman—founder of the Merriman Financial Education Foundation—looks back at 2025 to uncover what the markets taught us and how those lessons can help do-it-yourself investors make better decisions going forward.
Despite endless predictions about what markets should do, Paul reminds us that his role isn’t to forecast the future—but to help investors understand risk, return, and how to build portfolios they can truly stick with.
In this episode, Paul explores:
A surprising result from the “Magnificent Seven” stocks

Why diversification mattered more than ever in 2025

How different equity asset classes really performed

What 56 years of data (1970–2026) tells us about staying the course

Why portfolio structure matters far more than chasing winners

Two very different—but valid—approaches to fixed income investing

If you want perspective instead of predictions—and data instead of hype—this episode is a powerful way to start the year.

The following are Dr. Pass’ note to his podcast:
This week we end 2025 with a Pediheart tradition - an episode on personal finance for medical professionals with noted authority on index investing and personal finance, Mr. Paul Merriman.
Paul is a retired investment advisor who now has a popular podcast "Sound Investing" and website in which he offers advice on investing for 'do it yourself' investors. In this week's episode, the 5th of his visits to Pediheart, Mr. Merriman discusses 'factor investing' via index-like ETF's and funds.
He also reviews who he believes might benefit from a financial advisor, what sort of advisor most should seek out and why he believes that many do not need one if they can 'stay the course'.
Resources mentioned in today's podcast are below. Wishing all a happy and healthy new year in 2026. 
Paul's website:
https://www.paulmerriman.com/#gsc.tab=0
'Best In Class' ETF's:
https://www.paulmerriman.com/Best-in-Class-ETF-Recommendations2025#gsc.tab=0
Sound Investing 'Quilt Charts':
https://irp.cdn-website.com/6b78c197/files/uploaded/(K)_Quilt_Charts_(1928-2024)_-_2024_Returns_(1).pdf
DFA 'Turn Out The Noise':
https://www.dimensional.com/film
As a reminder, all of the information provided in this week's episode should be considered entertainment and all financial decisions should be vetted with professionals or knowledgeable and trusted friends/family.

In this episode, Paul shares the thinking behind what he believes may be one of the most important projects of his career—a project guided by a single goal:
That every investor who follows our work will know how to invest for the rest of their life.
To explain why that goal matters, Paul walks through the forks in the road every investor eventually faces—from betting on individual companies to owning entire markets, from chasing excitement to embracing simplicity.
Drawing on real experiences, including private investments that went to zero and one that unexpectedly turned into millions, Paul explains why diversification beats prediction, how a simple portfolio decision may quietly add about 1% a year over time, and why many academics draw a clear line between investing and speculation.
This episode isn’t about chasing returns.
It’s about building a plan you can live with—through good markets and bad—for the rest of your life.
If you’re looking for clarity, discipline, and a framework that helps you stay the course, this conversation is a powerful place to start.
Next week, I’ll be reviewing what we learned in 2025—and what those lessons may mean for 2026 and beyond.
Thank you, and happy holidays to you and your family.

Compounding Project Podcast – Episode 36
In Episode 36 of The Compounding Project Podcast, legendary investing educator Paul Merriman shares timeless insights on long-term investing, the power of compounding, and how everyday investors can build lasting wealth.
Paul explains why starting early is one of the most important financial decisions you can make, how compound growth works quietly over decades, and why low-cost index funds remain the foundation of successful investing strategies.
This episode dives deep into portfolio diversification, the hidden impact of investment fees, and the role of small-cap value investing in improving long-term returns. Paul also offers practical, evidence-based guidance for young investors, parents, late starters, and anyone seeking financial independence through disciplined investing.
Whether you’re new to investing or refining an existing portfolio, this conversation delivers actionable lessons on building wealth the smart way.
Starting early and staying consistent matters more than market timing or stock picking.

Low-cost index funds and diversification are the most reliable tools for long-term wealth building.

Small-cap value investing and minimizing fees can significantly increase lifetime investment returns.

Your Money and Your Brain

The Psychology of Money

Thinking, Fast & Slow

Spending Your Way to Wealth

Watch the full episode for expert insights on investing, compounding, and financial freedom.

Follow Paul Merriman On Social Media: ⤵︎📷 Instagram: /   / paulamerriman2012  📱 YouTube: /    / @paulmerrimansoundinvesting  To Know More,Follow Sathish Gajula On Social Media: ⤵︎ 📷 Instagram: /   / compoundingproject  📱 YouTube: /    / @compoundingproject  

Timestamps:
00:00 Episode Trailer
02:00 Intro to Wealth and Index Funds
03:20 The Million Dollar Decision
07:04 Investing Tips for Young Parents
12:47 Saving When Money Feels Tight
15:35 Stocks vs Bonds
19:58 Rethinking Stock Market Risk
24:36 Why Investing Is Easier Today
27:06 How Fees Hurt Returns
29:08 When Bonds Make Sense
32:56 Investing Across Generations
34:58 Portfolios by Age
35:52 Starting Late in Investing
41:05 Defensive Investing Basics
42:10 Why Stocks Matter Most
43:04 Beating the S&P 500
48:09 Market Returns Explained
51:22 Why Diversification Matters
54:49 Fees and Long-Term Returns
58:28 Small Cap Value vs Total Market
01:03:25 Equal-Weight S&P 500
01:08:36 Handling Market Volatility
01:11:05 Picking Small Cap Value Funds
01:12:50 Trust in Investing
01:16:42 Hotseat Questions