Which 2 or 10 million dollar decision is right for you? or How to build a $100 million retirement investing $500 a month.

Sound Investing

How much and what equity asset classes will investors choose for their portfolios? While this podcast is aimed at young investors, it also has implications for older investors who have a portion of their portfolio invested for younger heirs.

Daryl Bahls has produced two new tables that give us a long-term view of the implications of the proportion of your portfolio that is committed to equites and the selection of equity asset class.

One table titled, “Which 2 million dollar decision is right for you?” compares 6 different combinations of 90% bonds with 10% equities. The equity combinations include 5% and 10% positions in the S&P 500, small-cap blend and small-cap value. Compared to an all bond portfolio, the lifetime impact of adding these 10% equity positions ranges from 2 to 10 million dollars.

The second table, “Which 10 million dollar decision is right for you?” reflects the aggressive decision to invest in an all-equity portfolio with all or part of your portfolio. In other words, you may only put 20% of you portfolio in equities but that position is left to grow without rebalancing.

Paul suggests young investors think of investing as if you are starting a company that you want to grow over the long term.

The following tables are also referenced during the podcast: https://paulmerriman.com/wp-content/uploads/2021/06/2-4-fund-combo-2020.pdf

Table 9 in this series of tables found at https://paulmerriman.com/wp-content/uploads/2021/02/Fine-Tuning-Tables-50-50-2020.pdf

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