Live It Up Without Outliving Your Money!: Getting the Most From Your Investments in Retirement

Paul Merriman through his information-packed retirement workshops, fundadvice.com website, and Sound Investing Radio Show has helped thousands of investors get on the right track to realizing their investment and retirement objectives. Merriman has leveraged his 40 years of investment knowledge and educational efforts into a readable, easy-to-understand guide to risk-controlled retirement investing. Most investors have no clue as to what to do to become successful in the long run.

This book will help them get there. As Merriman has said, “Investing is a journey and you need a roadmap.” That is exactly what he provides. As Merriman points out investors need to become defensive investors and have a plan of action, otherwise they probably will not reach their goals. He urges investors to put their investments on automatic pilot. As a long-time investor, author and financial advisor, I couldn’t agree more.

Merriman first lays out the 14 basic elements of why investors fail to achieve their investment goals. He then covers the important topic of the psychology of investing, where most investors’ problems begin. He then reviews the importance of risk management, and provides eleven questions that every investor needs to answer to assess his/her risk tolerance. He discusses the difference between intelligent risk and emotional risk.

The heart of the book, chapters 6 through 9, reviews the components of the “perfect portfolio.” He builds each portfolio from the simple to the more diverse, resulting in a portfolio that has a higher return with less risk because of the diversification of assets classes and the use of international and domestic funds, value and growth funds, and small- and mid-cap funds. Merriman illustrates specific percentage allocations for each of the categories just mentioned. He progresses through five portfolio iterations, each time fine-tuning the portfolio and adding additional market segments. From a basic 60% equity/40% bond portfolio offering an annual return of 10.4%, and a standard deviation of 12.2 from January 1973 trough December 2004, he ends up with a portfolio of 10 different investment components which produced a return of 13% with a standard deviation of 11.7. That’s a higher return with less risk, a very desirable outcome.

In addition to the five generic portfolios mentioned above, Merriman provides readers with the “perfect portfolio” with different fund families including the exact funds to purchase and their component percentages in the Vanguard, Fidelity and Charles Schwab universe. He also includes the Dimensional Fund Advisor family, which offers funds through advisors only, as well as his own Merriman model portfolio with a mix of funds. He also provides two all-equity tax-managed portfolios.

Merriman points out the enemies of mutual fund investing – annual expenses and taxes – both resulting in lower returns. He also makes the case that variable annuities are a bad investment for most investors because of the high expenses. Unfortunately, Merriman does not mention the variable annuities that provide a guaranteed income benefit or a guaranteed return of principal, no matter how poorly the stock market performs. A more thorough explanation than the 2-3 pages provided, of the positive and negatives of annuities, is needed. Investors who owned these types of annuities during the market’s 2000-2003 bear market came out in good shape.

An entire chapter is devoted to how to take withdrawals for retirement, and the percentages to consider. He also provides common sense tips on how to select an investment advisor. The next to last chapter provides readers with a 20-point summary action plan to get started.

In conclusion, for investors who want to invest their hard-earned money on their own, this book provides a blueprint to achieve success, with all the steps necessary to build a solid, diversified portfolio. Merriman remains one of the top investing educators in the country, and has grown his money management firm to $700 million of assets under management. In summary, I highly recommend this book.

Rating: 5 / 5

Investing is like driving down a highway with the windshield blacked out and only the rear view mirror to guide you.

Paul Merriman’s Live It Up Without Outliving Your Money! is a comprehensive road map to a financially secure retirement. He shows how to determine how much money you’ll need to retire when you want, in the way that you want; how to establish how much your investment portfolio needs to be worth when you retire, and he shows you the kinds of investments that will give you the returns you need to reach your goals. Then he explains how to choose the right distribution plan to provide both the income you need in retirement and the peace of mind that you won’t run out of money.

You’ll learn how to construct and maintain a “perfect” portfolio tailored to your personal tolerance for risk, and how to organize your finances so you don’t have to spend a lot of time on them.

Based on Nobel Prize-winning research, Merriman’s investment strategies combine passively managed no-load asset class mutual funds to create low-cost, tax efficient portfolios with worldwide diversification. “What investors need most is a strategy with enough power in good times to generate positive returns, coupled with enough protection in bad times to keep them from bailing out in discouragement,” says Merriman. He discusses the psychology of successful investing and managing your emotions so you don’t sabotage your own plans.

Using many charts and graphs, he makes complex subjects easy to understand, and his passion and enthusiasm are motivating and inspiring.

There’s also a dedicated Live It Up! web site that includes fund recommendation updates and links to additional source material.

(http://www.paulmerriman.com)

Live It Up! is really a book everyone should read. Highly recommended.
Rating: 5 / 5

I found Merriman’s writing style easy to read. He does an excellent job of covering the basics of investing including asset allocation.

Merriman’s suggestion of holding 50% foreign stocks and 50% U.S. stocks was a little surprising to me. I was not expecting such a high allocation to foreign stocks. Vanguard, for example, suggests no more than 20% foreign stocks. Merriman makes a compelling case for holding 50% foreign stocks, but past performance of foreign stocks relative to U.S. stocks does not necessarily mean future performance will be the same.

Another surprise was no mention of REITs. For a book published in 2005, I expected to see at least a 10% allocation to U.S. REITs.

The last surprise was his recommendation of DFA funds compared to Vanguard funds. He tries to make the case the 1% of assets fee per year to a DFA advisor is more than offset by the superior performance of a DFA fund portofolio compared to a Vanguard portfolio. Most of the extra return is not due to lower DFA expense ratios, but the fact that DFA offers more asset class choices than Vanguard. I’m a big Vanguard fan, plus manage my own portfolio…..so I’m not sold on the DFA approach.

Over-all an excellent book.

I would suggest companion books to supplement this book including:

The Richest Man in Babylon

Bogle on Mutual Funds: New Perspectives for the Intelligent Investor

The Millionaire Next Door

The Four Pillars of Investing: Lessons for Building a Winning Portfolio

A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition

The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get On With Your Life

The Bogleheads’ Guide to Investing

Wealth: Grow It, Protect It, Spend It, and Share It

All About Asset Allocation.
Rating: 5 / 5

With all the fund choices available in my 401k, I was in a real quandry until I read this book. I had no idea that by combining specific “non-correlated” index funds, I could actually increase my investment returns and at the same time reduce volatility and risk. We’ve given my wife’s IRA a makeover and started my son off on the right foot with his new Roth IRA as well. The author does a nice job explaining how and why asset allocation works, and it was easy to find my own risk comfort zone in the tables provided. I recommend this book to anyone who has a 401k or an IRA.
Rating: 5 / 5

This book, written by a money manager with 40 years of experience in the field, makes it crystal clear how diversification using asset classes can increase your return while reducing risk. It offers fundamentally sound advice while rejecting the “get rich quick” mentality. If you want to sleep better when you retire, read this book.
Rating: 5 / 5