Private School vs. Public School – Cost & Comparison

School costs for children are one of the most significant expenses for many middle-class families. Some parents pay thousands of dollars each year to send their kids to private schools, while others spend thousands in mortgage costs to buy homes in top-rated school districts.

A 2016 Brookings Institution analysis of 2010 and 2011 data found that housing near high-scoring public schools cost an average of $11,000 more per year than homes near low-scoring schools.

For parents who want the best possible education for their children, the choice between private school and public school is a tricky one. Both have their costs, but which is actually higher? And when you compare the benefits of private and public schools, are they enough to justify the costs?

Costs and Benefits of Private School

According to figures from the National Center for Education Statistics (NCES), there were 34,600 private elementary and secondary schools in the United States in the fall of 2015. About 5.8 million American children were enrolled in private schools that year — roughly 11% of all schoolchildren in the country.

The primary difference between private schools and public schools is that private schools don’t receive any funding from the government. That’s why they have to charge tuition. However, within this broad category, there are many different types of schools that vary widely in their costs and the education they provide.

Types of Private Schools

When you’re weighing the costs and benefits of private school, know that the type of school you choose significantly impacts your decision. There are many different kinds of private schools, and they differ greatly in their cost and approach to education.

For-Profit vs. Nonprofit

All private schools charge fees, but only some are for-profit businesses. Some are nonprofits run by religious organizations or private foundations. A nonprofit school is likely to have lower fees than a for-profit one.

Religious vs. Secular

According to the NCES, two-thirds of all private schools in the country are religious schools. About 20% are Catholic schools, 12% are conservative Christian schools, 9% are affiliated with another religion, and 26% are unaffiliated. In 2015, more than 75% of all private school students were in religious schools.

Religious schools fall into two categories. Some are true private schools, which get their funding from tuition fees. They provide a religious education, but they aren’t part of a church.

Others are parochial schools or parish schools. These are extensions of a local church and receive funding from it. They still charge fees, but they’re likely to be lower than the fees for other private schools.

Boarding Schools vs. Day Schools

Boarding schools provide food and lodging for their students in addition to education. At some schools, students live on campus during the week and go home on the weekends. At others, students live on campus throughout the school year and go home only for vacations. Faculty, staff, and their families often live on campus as well.

At day schools, children go to school each morning and come home in the afternoon, just as they do in public schools. These schools tend to be much cheaper than boarding schools because they don’t have all the extra costs of housing students.

Specialty Schools

Some private schools focus on providing a specific type of instruction. For instance, language immersion schools focus on teaching students a language other than English. Students take all or some of their classes in the foreign language.

Other private schools cater to students with different education requirements. These include students with disabilities, students on the autism spectrum, and students with various types of emotional and learning disorders. Teachers and staff are trained to handle these students’ specialized learning needs. That makes these schools more expensive than most.

Other private schools take their name from their general approach to education. For instance, Montessori schools focus on helping children explore and learn in their own way at their own pace. Waldorf schools are nonprofit schools that incorporate the arts into all subject areas.

Private School Costs

On average, the cost of private school tuition is s $12,350 per child, according to On top of that, parents can expect to pay an average of $3,700 for other costs, such as technology, books, supplies, field trips, sports, and school uniforms. That brings the total to $16,050 per year.

That’s a significant burden for a middle-class family. In 2019, the national median household income in the U.S. was $68,703, according to the U.S. Census Bureau. That means that a family making the median income would have to spend about 23% of its take-home pay to send just one child to private school and 46% for two children.

However, the cost of tuition varies significantly across the U.S. In Massachusetts, the average cost of private school tuition is $24,000 per year — about 27% of the state’s median household income. In Nebraska, it’s just $2,800, less than 4% of the median income. Thus, the affordability of private schools depends a lot on where you live.

The type of school also makes a difference. The average tuition cost for a private day school is $16,000 per year. Five-day boarding schools cost more than twice as much at $33,140. And seven-day boarding schools cost a whopping $37,590 per year.

The grade level affects the cost too. The average tuition for private elementary schools is $7,630 per year compared to $16,040 for private high schools.

Finally, religious affiliation is a significant factor in cost. Catholic schools tend to be much cheaper than other private schools, costing just $4,840 for elementary school and $11,240 for secondary school.

All these factors together add up to considerable differences in cost. A family with an average income would pay just 7% of its income to send a child to a Catholic elementary school but over 50% for a seven-day boarding school.

Private School Benefits

Although private schools are expensive, parents have many reasons for choosing to pay the cost. Private schools can offer many benefits for students, including:

Smaller Class Sizes for Younger Students

A small class allows teachers to give more attention to each student. In 2017-18, the average class size in private elementary schools was 16.7 students, according to the NCES. By contrast, in public primary schools, the average class size was 20.9 students.

Lower Student-to-Teacher Ratio

Aside from class size, private schools also tend to have fewer students in total for each teacher. According to the NCES, the average student-to-teacher ratio in private schools was 11.9 in 2015. For public schools, there were an average of 16.2 students per teacher.


Private schools are often safer environments than public ones. The NCES reports that gangs are less likely to be present in private schools than public ones. Private school students are also less likely to see hate-related graffiti at school, be called by a hate-related name, or experience bullying.


State law typically requires public schools to provide a curriculum that meets state standards. Private schools have more freedom to experiment. In addition to religious education, they’re more likely to offer courses in subjects like art or music.

Advanced Placement

Private high schools tend to offer a more comprehensive selection of advanced-placement (AP) courses than public high schools. Private schools across the U.S. offer an average of 11 AP courses, while the average for all schools is eight AP courses.

Test Scores

According to a 2006 NCES report, private school students do better on average than public school students in tests of reading and math ability. However, that partly reflects the fact that private school students tend to have wealthier, more educated parents.

After adjusting for students’ backgrounds, the differences in test scores are smaller, and in some cases, they disappear entirely. A 2018 study conducted at the University of Virginia found that when you adjust for background, private school students do no better at age 15 than public school students in or out of school.

College Preparation

There’s some evidence that private schools do a better job preparing students for college than public ones. The League of Christian Schools reports that students in both private and parochial schools do significantly better on the SAT than public school students. But that may also reflect differences in social class.

Costs and Benefits of Public School

The vast majority of U.S. children are enrolled in public schools. According to the NCES, public school enrollment in 2016 totaled 47.3 million, 94% of all students.

Like private schools, public schools vary widely across the U.S. Since public schools get most of their funding from local property taxes, the best schools tend to be in expensive areas. These schools can afford to spend more on the best teachers, equipment, and activities. Students in wealthier schools tend to get better grades and do better on tests.

Types of Public Schools

According to the NCES, 93% of America’s public schools are traditional public schools, which get their funding from tax dollars. Their teachers must meet state licensing standards, and their curricula are also regulated.

In most areas, students are assigned to a local public school based on where they live. But some cities, such as Boston, allow parents to choose among several nearby schools for their kids.

About 7% of public schools are charter schools. These schools still get their funding from tax dollars, but they operate outside the local public school system. That gives them more flexibility in choosing their curriculum. Many charter schools focus on a specific type of education, such as science or the arts.

Charter schools are on the rise, according to the NCES. The number of charter schools in the country rose from around 2,000 in 2001 to around 7,000 in 2016. The number of students attending them rose from 400,000 to 3 million.

Many parents choose charter schools for their kids because they think they offer a better education than the local public school. But that’s not the case on average. The average student-teacher ratio in charter schools is 17.8, compared to 16.1 in traditional public schools. And scores on reading and math tests for the two types of schools are nearly identical.

Some areas also have magnet schools. Like charter schools, they typically focus on a specific subject area, such as science, the arts, or language.

But unlike charter schools, magnet schools are part of the school system. They’re run by a school district or a group of districts and are open to all students in that district, no matter where they live. There are 4,340 magnet schools in the country educating over 3.5 million students, according to Magnet Schools of America.

Public School Costs

Although public schools don’t charge tuition, that doesn’t mean they’re cost-free. Parents are responsible for the cost of their kids’ school supplies, which nowadays means not just notebooks and pencils but also a home computer and printer. Students may also need supplies for extracurricular activities, such as sports uniforms or musical instruments.

But all these are costs private school parents must also pay. The most significant cost of sending your kids to a public school is the property taxes you pay to support the school system, though private school parents pay those too, as do those with no children. And even if you rent rather than own a home, you still pay property taxes indirectly. The property owner pays them and folds that cost into the rent amount.

Of course, you have to live somewhere, and you must pay property taxes no matter where that is. But good school districts usually have much more expensive homes. Living in one means you pay more for both property taxes and all the costs of homeownership.

To figure out the cost of a good public school, you must compare the cost of the neighborhoods associated with that school with the cost of nearby neighborhoods in other school districts. An excellent place to start is with Niche, a website that rates and compares U.S. school districts based on factors like test scores, graduation rates, health and safety ratings, and reviews.

Each year, Niche lists the 10 school districts it rates as the best in America. For 2021, the top school district on the list is the Adlai E. Stevenson High School District No. 125 in Lincolnshire, Illinois. According to Trulia, the average home value in that area is $513,369. With a 30-year fixed-rate mortgage at 2.89%, that works out to about $2,115 per month.

In nearby Buffalo Grove, Trulia says the typical home value is only $339,497, or $1,420 per month. That’s a difference of $8,340 per year. The NCES puts the average cost of private school tuition in Illinois at only $6,860, so for a family with one child, private school is cheaper than a top-notch public school.

But for a family with two children, the math looks different. Living in Lincolnshire would cost them only $8,340 extra per year, while private school for both kids would cost $13,720. That makes private school about 65% more expensive.

Of course, that’s only one school district. The relative costs of public and private schools in your area may be different. You can use Niche to find the best schools in your area, then use data from Trulia to see how much it costs to live in those school districts. Compare that to the cost for nearby districts, then compare the difference to the cost of private schools near you.

Public School Benefits

If you have two or more kids, living near a good public school is likely to cost less than paying for private school. But there are even more reasons to choose a public school for your kids.

Smaller Classes for Older Students

While private elementary schools offer smaller class sizes than public schools, the reverse is true for middle and high schools. In 2017-18, private secondary schools averaged 17.8 students per class, according to NCES data. But the NCES shows the average class size was only 16.6 in public middle schools and 16.3 in public high schools.

More Qualified Teachers

Some parents choose private schools because they assume their children will get a better education there. But if you want to ensure your kids have the most qualified teachers, it could make more sense to choose a public school.

According to the NCES, public schools typically pay their teachers more than private schools. That makes it easier for public schools to attract the most qualified teachers.

NCES data show that public schools have fewer teachers with less than three years of experience than private schools. They also have fewer teachers without a college degree and more teachers with graduate degrees.


For some parents, one perk of public schools is their diversity. According to NCES, 69% of private school students are white as compared to only half of public school students. Charter schools are the most diverse of all, with 33% white students, 32% Hispanic, 27% Black, and 8% of other races.

This greater diversity extends to the faculty as well. The NCES reports that only 3% of private school teachers are Black as compared to 7% of public school teachers and 10% of teachers in charter schools. Similarly, only 7% of private school teachers are Hispanic as compared to 9% of teachers in public schools and 16% in charter schools.

This greater diversity offers clear benefits for minority students. They’re likely to feel more at home and more supported in an environment where there are both students and teachers who look like them. According to the Center for Black Educator Development, having at least one Black teacher early on lowers a Black student’s chance of dropping out of school by 39%. And the National Coalition on School Diversity (NCSD) reports that students of color perform better in diverse schools than segregated ones and white students perform equally well.

But diversity has advantages for students of all races. According to the NCSD, attending a racially diverse school reduces prejudice and improves communication, critical thinking, and problem-solving skills.

Programs for Students With Disabilities

Children with disabilities, including physical, developmental, and learning disabilities, are often better off in public schools than private ones. Under the Individuals With Disabilities Education Act, public schools must provide education programs for students with disabilities and employ teachers trained to work with those students.

But private schools don’t have to provide for these students. Some schools simply don’t admit students who need certain special learning accommodations, and those that do usually don’t provide any special education programs.

A few private schools cater specifically to children with disabilities, but these cost even more than other private schools. According to Private School Review, tuition for private schools for kids with disabilities typically ranges from $50,000 to $68,000.

Extracurricular Activities

On average, public schools tend to be bigger than private schools. In 2015, the average private school had just 166 students, while the average public school had 526, according to the NCES.

This larger size gives public schools an advantage when it comes to extracurricular activities like sports, theater, debate clubs, and community service programs. A small school, even one with lots of resources, can’t support as many different programs because it just doesn’t have enough students to take part in them.

In general, if your child is interested in a particular sport or activity, a public school is more likely to offer a club or program to support it than a private school. The exception to this rule is private schools that specialize in specific activities, such as art or music.

Advanced Placement

Overall, private schools offer more advanced-placement courses on average than private schools. But that’s only an average. Many private schools don’t offer AP courses at all. A 2017 report by the Center for Public Education says 70% of public high schools offer at least one AP class compared to only 51% of private high schools.

Moreover, private school students who take AP classes don’t always perform better than their peers in public schools. For example, the New Jersey Education Association reported in 2020 that public school students in New Jersey got higher AP scores on average than private school students and were more likely to score high enough to qualify for college credit.

Final Word

When it comes to choosing between private and public schools, there’s no one-size-fits-all answer. Instead, you have to look at the details of your situation.

First, consider the costs. Look at prices for private schools in your area as well as housing costs in neighborhoods with good public schools. Remember that the more kids you have, the more bang you’ll get for your buck with a home in a good public school district.

Then, think about the benefits of both private and public schools. For instance, if you want a religious education for your kids, only a religious private school can provide it. A private school can also provide a lower student-to-teacher ratio and smaller class sizes for younger kids.

But public schools offer the benefits of better education for kids with disabilities, more diversity, and a wider range of extracurricular activities. Weigh the costs and benefits, and make the decision that’s best for you and your kids.

Also, you don’t have to stick with the same type of school for 12 years or more. If your local elementary school is great but the high school isn’t, you can send your kids to public school through grade six before moving them to a private school. That gives you the best of both worlds and saves you money on tuition as well.


Paul Merriman 4 Fund Portfolio – Guide to Asset Allocations, Pros & Cons

Paul Merriman is something of a legend on Wall Street. Not only was he the founder of a brokerage and investment advisory firm bearing his name, since his retirement he has continued to contribute to the market news and analysis site MarketWatch, acting as an educator to the financial industry.

Moreover, the famed financial advisor established the Merriman Financial Education Foundation in 2014, an organization dedicated to providing quality financial education to investors. He’s also the author of several books.

It only makes sense that investors would be interested in an investment portfolio Merriman designed, and one of his most popular is the 4 Fund Portfolio.

What Is the Paul Merriman 4 Fund Portfolio?

Merriman’s 4 Fund Portfolio was meant to provide the ultimate level of simplicity, built as a 4-fund combo, with each fund in the portfolio receiving equal allocation at 25%. Due to the buy-and-hold nature of the portfolio, it’s not only simple to set up, but extremely easy to manage.

Interestingly, the strategy is a 100% equity portfolio, which doesn’t take asset class diversification into account. As a result, it comes with elevated risk because there are no safe havens to limit the pain caused by a market correction or bear market.

Nonetheless, the portfolio is known to consistently outperform the S&P 500 by giving significant weight to investments that offer a significant risk premium (covered in more detail later). While it’s definitely not a one-size-fits-all portfolio strategy, it is an attractive option for younger investors and those who have a high tolerance for risk.

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Portfolio Asset Allocation

As mentioned above, the portfolio’s asset allocation is about as easy as it gets, with equal investments in four highly diversified funds. Here’s how the allocation breaks down:

  • 25% in the S&P 500. The first quarter of the portfolio is geared toward a large-cap tilted blend of U.S. stocks. One of the best ways to get this exposure is by investing in an S&P 500 index fund because it covers well over half of the United States’ total market cap.
  • 25% in Large-Cap Value. The portfolio calls for a fund that provides exposure to large-cap value stocks, ditching the concept of investing in large-cap growth and focusing on where long-term returns will likely be larger.
  • 25% in Small-Cap Value. The portfolio also contains a heavy allocation to small-cap value stocks.
  • 25% in Small-Cap Blend. The portfolio also gives exposure to small-cap blend stocks. This includes smaller stocks from various sectors that offer a mix growth, value, or income characteristics.

The Investment Thesis Behind the Portfolio

As with the Alexander Green Gone Fishin’ Portfolio, this portfolio is centered around factor investing, also simply known as factoring. Factoring takes index investing, or indexing, to the next level.

Instead of simply investing in a group of investment-grade funds that track specific market indexes, factor investors look for factors that pay a risk premium — higher potential gains in exchange for a higher level of risk.

There’s only one asset included in the 4 Fund Portfolio that doesn’t fall in line with factors that pay risk premiums: the S&P 500 index fund. This fund offers an important level of stability considering the lack of fixed-income investments in the strategy. Here are the factors behind the rest of the portfolio:

Large-Cap Value (The Value Factor)

The larger the company you invest in, the more stable it is likely to be, but that has nothing to do with the risk premium. The risk premium here is in the value factor.

Historically, large-cap value stocks are known to outperform large-cap growth stocks, and often by a wide margin. By avoiding the allure of growth stocks and investing in their value counterparts, you may be taking on the risk of investing in a company that’s undervalued for a reason, but this is offset by the potential that the undervaluation is coincidental and that significant gains are ahead.

Small-Cap Value (The Small-Cap and Value Factors)

Smaller companies aren’t quite as stable as larger companies, increasing the risk associated with investing in them. Investing in small companies with value characteristics comes with two key factors that produce risk premiums.

While larger, blue chip companies offer stability, they’ve already addressed a large portion of their audience, often being household names. Small companies typically haven’t done so, setting up for a long runway of growth ahead. So, that growth becomes a premium.

Also, as with their larger counterparts, small-cap companies that display value characteristics have historically outperformed small-cap growth companies. There’s an added premium in focusing on the value side of small-cap investing.

Small-Cap Blend (The Small-Cap Factor)

As described above, small companies may be more volatile, but they often have much more of a runway and larger opportunities for growth than larger companies. As a result, investing in small-caps pays a risk premium, generally resulting in more potential for gains than investing in larger companies.

Pros and Cons of the 4 Fund Portfolio

There’s no such thing as a portfolio that’s perfect for everyone. Any prebuilt portfolio comes with pros and cons to consider, and this particular portfolio is no different. The most exciting benefits and most significant drawbacks are as follows:

Portfolio Pros

Merriman isn’t just an expert, he’s an investing mogul. Over the years, he has reached a level of success in the market only matched by a minuscule percentage of investors. It’s only natural that following a portfolio of his design comes with its perks. Some of the most significant advantages include:

  1. Stellar Past Performance. Throughout history, a portfolio following Merriman’s strategy would have been a top performer all the way back to 1928. In the 91-year period from 1928 to 2019, the portfolio generated an average annual return of 11.8%, while the S&P 500’s return averaged at 9.9%. Who doesn’t like higher returns?
  2. Simplicity. This particular portfolio is one of the laziest in the “lazy portfolio” category. With only four assets included in the strategy, all of which given equal weight, there’s not much work to set up or maintain, making this a great option for the busy investor.
  3. Small-Cap-Tilted. Investors are often fans of portfolios that have a tilt toward small-cap assets. Once again, this points to the strong return potential of the portfolio because small companies have a long history of outperforming large companies.
  4. Value-Tilted. The portfolio also tilts heavily toward stocks with value characteristics. This also increases the potential returns of the portfolio because value stocks have a long history of outperforming their growth-centric counterparts.

Portfolio Cons

Although there are plenty of reasons to be excited about this portfolio strategy, there are some serious drawbacks that should be considered before employing it. Some of the most important include:

  1. A Single Asset Class. The portfolio involves investing in four different types of exchange-traded funds (ETFs), all focused on investments in equities. Most financial advisors will tell you that a portfolio made up of 100% equities doesn’t represent sound investing because it opens the door to substantial volatility risk.
  2. Risk Added to Risk. Factor investing is exciting because investors accept risk factors in exchange for a risk premium, or the potential to generate returns that outpace the market averages. On the other hand, the portfolio adds risk onto risk by investing in high-risk, high-return equities while completely avoiding safe-haven investments that could balance things out a bit.
  3. No International Holdings. The fact that Merriman left international stocks out of the equation is surprising. Emerging markets often outperform the domestic market, creating further growth potential. However, this portfolio doesn’t allocate a penny to international stocks.

Who Should Use This Portfolio Strategy?

If you’re looking for a one-size-fits-all portfolio strategy, you’ll be looking for quite a while, because there simply isn’t one. Every investor has a unique tolerance for risk, unique goals, and a specific time horizon.

While most investors can be categorized based on risk tolerance and their methods of working in the market, there’s no way to address the needs of everyone with a single portfolio strategy.

In the case of the 4 Fund strategy, it was designed for a very specific set of investors and is far too risky for most. The perfect candidate to use this portfolio strategy is:

  • Young. Investing experts often point to the fact that younger investors should be more willing to accept higher levels of risk, as long as the potential payoff is worth it. After all, they have their whole lives to recover should a correction or bear market take place. On the other hand, investors nearing retirement simply can’t absorb large drawdowns and should avoid this strategy at all costs.
  • Risk-Tolerant. There are few investing experts who would suggest the average investor of any age should consider a portfolio made 100% of equities. That’s a dangerous notion, and one only the most risk-tolerant investors should consider.
  • Busy. Even if you’re young with a healthy appetite for risk, this might not be the best option for you. Simplicity often comes at a cost, and taking more time to find even better-performing assets based on the level of risk in the portfolio is something worth considering. However, if you’re a busy investor who doesn’t have time to adequately research opportunities and maintain balance in a more complex portfolio, this may be the perfect fit.

How to Duplicate the 4 Fund Portfolio

If you’d like to give the portfolio a try, duplicating it is easy through the use of ETFs with low expense ratios. Also, even if the portfolio strategy isn’t a good fit for your investing style, you may be able to follow along the same lines of the strategy while making simple adjustments so it fits your needs.

Here are a few different ways to go about building your portfolio based on this strategy:

The Traditional 4 Fund Build

The portfolio can be duplicated relatively quickly using a group of four low-cost funds. Here’s how it’s done:

  • 25% in Vanguard S&P 500 ETF (VOO). The VOO fund offers exposure to a large-cap blend consisting of 500 of the largest companies in the U.S. by market cap. With an expense ratio of just 0.03%, it’s also one of the lowest-cost funds on the market.
  • 25% in Invesco S&P 500 Pure Value ETF (RPV). The RPV fund offers a diversified portfolio of large-cap value investments. To provide this exposure, the fund invests in S&P 500-listed companies that display value characteristics.
  • 25% in Vanguard Small-Cap Index Fund ETF (VB). The VB fund offers diversified exposure to domestic small-cap stocks that display value characteristics. These stocks are spread across a wide range of sectors and regions within the U.S.
  • 25% in Vanguard S&P Small-Cap 600 Value Index Fund ETF (VIOV). The VIOV fund gives investors access to a highly diversified group of small-cap domestic stocks that come with value characteristics. Like all other funds on this list, VIOV is heavily diversified across sectors and regions within the U.S.

Pro tip: You don’t have to build this portfolio in your brokerage account yourself. If you use M1 Finance, you can simply load the Paul Merriman’s 4 Fund Portfolio prebuilt expert pie to gain access to a curated allocation of securities that follows this strategy.

The 4 Fund Portfolio With an International Twist

One of the biggest problems some investors have with this portfolio strategy is the lack of international stocks. Historically, international stocks — particularly those in emerging markets — have performed overwhelmingly well, and avoiding investing in them is akin to leaving money on the table.

If you’d like to add a little international flavor to your portfolio, doing so is quite simple, but it will require expanding the fund count from four to six. Here’s how it works:

The first thing you’ll need to do is cut your investments in the VB and VOO funds in half, allocating 12.5% of your portfolio to these. Then add the two following international funds to your portfolio:

  • 12.5% in iShares MSCI Emerging Markets Small-Cap ETF (EEMS). With the EEMS fund, you can add international exposure that’s specifically focused on small-cap companies in emerging markets. With small-caps traditionally outperforming their large-cap peers and emerging markets known for generating compelling opportunities, this is a great way to gain exposure to the best of both worlds.
  • 12.5% in Vanguard Total International Stock Index Fund ETF (VXUS). The VXUS fund includes a diversified list of international stocks in both emerging and developed markets. The fund invests in a wide range of market caps, sectors, and regions, giving you widespread exposure to international markets.

Safe(r) Versions of the 4 Fund Portfolio

The traditional portfolio leaves you exposed to significant risk due to a lack of fixed-income allocation. To protect yourself from bear markets and corrections, it’s relatively easy to build a safer portfolio using the same concepts, but mixing in one extra fund to make it a five-fund portfolio.

To do so, reduce all holdings in the portfolio to 20%, which will result in 20% left for fixed-income investing. This 20% allocation can be invested in the Vanguard Long Term Treasury Index Fund ETF (VGLT).

The assets in the fund are protected by the full faith and security of the U.S. government. At the same time, the long-term nature of the Treasury debt securities the portfolio invests in makes them even more stable. These factors are important because 20% holdings in fixed-income is still a relatively light allocation, so it should be invested in the safest of safe-haven assets.

Another option for those looking to invest in a safer portfolio is to consider the Paul Merriman Ultimate Buy-and-Hold Portfolio, developed by the same financial expert behind the 4 Fund Portfolio strategy but inclusive of safer investment vehicles.

Maintain Balance in Your Portfolio

As with any investment portfolio, it’s important to maintain balance with this one.

Prebuilt portfolios are designed to balance risk by choosing assets for specific characteristics during specific market conditions. As time passes, the prices of every asset in your portfolio will change, some faster than others. As a result, equal exposure among four assets will fall out of line, with some assets over-allocated and some receiving too few of your investment dollars.

To combat this, investors should rebalance their portfolios regularly. As a lazy portfolio, this investment option doesn’t require weekly or monthly rebalancing, but it is important to take time to do so on a quarterly basis.

Final Word

While the 4 Fund Portfolio investing strategy is exciting, it’s also inherently risky. As a result, only young investors with a healthy appetite for risk should follow the portfolio in the traditional sense.

On the other hand, due to the limited number of funds involved in the portfolio, it’s very easy to customize to fit your needs. By mixing in a fixed-income asset or two, you can follow the same principles of the portfolio without exposing yourself to significant amounts of volatility.

As is always the case, before making an investment, it’s important to do your research and get an understanding of just what you’re buying and what it might mean for your portfolio.


NinjaTrader Review – The Ideal Platform for Active Technical Traders?

Financial market traders are always looking for a way to get a leg up on the competition in the stock market, whether that be better charting capabilities, more technical indicators, or faster ways to place trades.

Founded in 2003 with its headquarters in Denver, Colorado, NinjaTrader is an online trading platform that hits every one of these nails on the head. Designed for active traders who are interested in trading futures and forex, the platform is an intuitive trading system that gives its users an advantage in the battle between the bears and the bulls.

For those interested in trading stocks, options, and other assets, the platform has partnered with other popular online brokers including TD Ameritrade and Interactive Brokers, but you will need to connect your third-party brokerage account to make these trades.

Most of the features, including charting, active analysis, and live trading are free once you open a funded account. If you want to take advantage of the trading simulator, access is free even before you fund your account.

The platform also offers premium features including backtesting and automated trading for a monthly fee of $60 or a lifetime fee of $1,099.

Users with a lifetime subscription also receive access to Order Flow+, a service that gives you the ability to analyze trading activity using order flow. Order flow points to the number of orders waiting to be filled at a specific price level. This information gives traders powerful, real-time insight into where there’s resistance or support for the price of an asset.

Key Features

As a platform designed for active day traders, NinjaTrader is packed with features designed to help you simplify the process of trading while amplifying your profits. Some of the most impressive features that help to accomplish this goal include:

A Platform With Brokerage Options

The company is best known for its intuitive platform for active traders, but that’s not the only offering brought to the table here. The company also offers NinjaTrader Brokerage Services. When using the platform and accompanying in-house brokerage, you’ll gain access to the forex and futures trading markets.

If you’re not interested in futures trading or forex trading, you won’t be left in the dark. NinjaTrader has partnered with several brokers to make trading in equities possible, with the two most notable being TD Ameritrade and Interactive Brokers.

Moreover, forex and futures traders have the option either to use the company’s in-house brokerage or to work with third-party brokers like City Index and

When working with a third-party brokerage, your money will be held with the broker of your choice. When you make trades through the NinjaTrader platform, those trades will be executed within your linked third-party brokerage account.

Customizable Charting

Anyone who’s been successful at day trading will tell you that technical analysis is the foundation for any solid strategy. After all, short-term trading is based on the notion that the market repeats itself. By performing detailed technical market analysis, you’ll be able to find triggers that generally point to movement in one direction or another in the future.

If you’re going to take part in these types of activities, whether you’re trading stocks, forex, commodities, or any other financial assets, it’s important that you have access to tools that will increase your success rate with your trades.

When using the NinjaTrader platform, you’ll have access to some of the most intuitive trading tools available today. Using these tools, you’ll likely enjoy the user-friendly functionality, giving you the ability to change colors, add indicators, and add trend lines. The platform also offers drawing tools that give you the ability to define trend lines and entrance and exit opportunities.

Trading Data and Add-Ons

The data you use when trading can make the difference between gains and losses — a fact that’s especially true when it comes to active day trading. Because NinjaTrader was specifically designed for active traders, it only makes sense that you’ll have access to top-notch technology and data when using the platform.

NinjaTrader gives its traders access to multiple data providers, with CQG Continuum being the primary provider. If you’re more comfortable using Rithmic as your data provider, you’ll be delighted to know that Rithmic is supported as well.

When using the platform, you’ll automatically have access to the general data needed for successful trading. However, if you’d like to take advantage of full market depth data, you’ll be required to pay small additional fees.

For example, if you’d like full market depth data on the Chicago Mercantile Exchange (CME), you’ll pay $7 per month for the additional information. You can also decide to go with the CME bundle, which includes market data from multiple commodities exchanges including CME, CBOT, NYMEX, and COMEX for just $21 per month.

This data will prove to be overwhelmingly valuable, especially considering the fact that it can be used in conjunction with the Market Replay feature offered by NinjaTrader. This feature gives you the ability to play, pause, and rewind historical data, which enables backtesting and other trade-related research.

Order Flow+

Order Flow+ is only available to NinjaTrader members with lifetime licenses. However, the feature is an extremely compelling reason to sign up for life.

Order Flow+ is add-on trading software that makes it possible to analyze trading activity using the order flow surrounding the financial instruments you’re interested in. The feature includes order flow data, volume bars, and market depth data.

Order flow data is the rawest form of data you can access, providing a combination of actual contracts that have been bought and sold at a certain price and time and the interest of the buyers and sellers.

This is helpful because buyers and sellers ultimately are the reason for moving the market. When there are more buyers jumping in, the price of the financial instrument rises, and when more sellers are getting involved, prices fall.

Order Flow+ gives you the ability to quickly analyze this data, giving you the upper hand by providing information as to whether buyers or sellers are more interested in the asset you’re trading at the time of your trade.

Automated Trading

Due to advancements in technology, automation is becoming part of the daily routine for most Americans. Being one of the pioneers of trading technology, it only makes sense that NinjaTrader is bringing automation to the trading process.

Through the trading platform, you’ll be able to semi-automate or fully automate your trading strategies. You can also work with a NinjaScript programmer to design your own technical indicators and automated strategies.

However, it is worth mentioning that you must be a premium member in order to take advantage of the automated trading offered through the platform.

Trade Simulation

When you get started as a trader, you’ll find that some strategies perform better than others. Moreover, beginners are generally turned off by the risk associated with short-term trades.

The good news is that you don’t have to accept that risk before you learn the ropes.

One way to greatly reduce the risk you take on when you trade is to practice your strategies in a simulated trading environment before using them with real money at stake. By doing so, you’ll be able to pinpoint the most successful strategies and tweak your personal trading process to expand your profitability.

With the demo account offered by NinjaTrader, you’ll be able to practice trading in real time without risking your hard-earned money until you feel comfortable that your strategies are working.


NinjaTrader has become a leading platform and brokerage with well over a decade of exceptional service to its customers. Some of the most significant advantages you’ll enjoy when using the platform include:

  1. Technology. Through the years, NinjaTrader has proven its ability to incorporate market-leading technology in the trading process, leading to outsize returns for those who take advantage of the platform. The charting and trading tools on the platform are second to none, and if history is any indication, the company will continue to innovate in order to hold its position as a leader in trading technology.
  2. Third-Party Tools. With NinjaTrader’s NinjaScript, third-party developers are able to create apps and add-ons to improve the trading process for all. As a result of these capabilities, plenty of third-party developers have created compelling add-on offerings. When you use the platform, you’ll have access to thousands of third-party add-ons developed to help you achieve higher levels of profitability as you trade.
  3. Educational Materials. NinjaTrader offers a long list of educational materials designed to turn even the most novice traders into pros. Through the platform, you’ll have access to training articles and tutorials, daily webinars, and forums, all designed to give you the knowledge it takes to become a highly successful trader.
  4. Simulated Trading. Along the lines of education, trading simulation is yet another compelling tool traders have at their disposal using the NinjaTrader platform. Simulated trading benefits beginners, intermediate traders, and even experts by giving them a way to test, tweak, and perfect their strategy before risking their money in the market.
  5. Mobile App. NinjaTrader 8 and the legacy version, NinjaTrader7, are now available as a downloadable application on iPhone, Android, Mac, and Windows. The mobile app version of the platform is just as intuitive and user-friendly as you would expect if you’ve worked with the company’s desktop platform.
  6. Quality Customer Support. It’s important that you trust any financial service company you work with and that the company offers quality customer support. After all, when you have a question about your money, you want to make sure someone knowledgeable will be there to answer it. With NinjaTrader, you’ll have access to a world-class customer support team around the clock, whether you prefer to chat online or on the phone. The company also offers a help guide packed with answers to some of the most common questions traders have when working with a new platform.


There are plenty of reasons to be excited about the NinjaTrader brokerage and platform. At the same time, every rose has its thorns, and NinjaTrader is no exception. Some of the most significant disadvantages to consider before getting involved include:

  1. Little Fundamental Data. The NinjaTrader platform was developed as an intuitive platform for those taking part in the fast-paced world of active trading. Trading is a technical process that leaves little room for interpreting the fundamental data the average long-term investor would want to use when making investment decisions. Unfortunately, as a platform designed for active traders, there is little to nothing on the platform by way of fundamental data. If you use fundamental analysis in your trading process, you’ll need to access that data through a third party.
  2. Free Version Limitations. When using the free version of the platform, you’ll have access to compelling charting capabilities and the trading simulator. However, you’ll be missing out on Order Flow+, automated trading, and more detailed trading data if you don’t purchase a monthly or lifetime license.
  3. The NinjaTrader Brokerage Doesn’t Offer Access to Stocks. If you’re going to be trading forex or futures, the setup is a breeze because the NinjaTrader brokerage offers access to these assets. However, if you’re interested in trading stocks and other equities, or in trading options, you’ll have to take additional steps to get started by connecting the platform to a supported brokerage that offers the assets you’re interested in.

Final Word

As with most other top-notch financial services, NinjaTrader was designed for a specific audience and has done an amazing job at tailoring its platform accordingly. Geared toward those who are most active in the financial markets, the service offers access to some of the best technical tools in any trader’s toolbox.

At the same time, the company has made its platform somewhat open-source, inviting third-party developers to produce more tools that are ultimately designed to lead to increased profits for those who use them. Through this approach, NinjaTrader has grown to offer not only some of the most robust tools available on an in-house basis, but also a library of thousands of tools sourced throughout the trading community.

However, if you’re more interested in investing money in the stock market over the long term, you won’t fit into the company’s target audience. Due to its focus on active traders and providing all the tools necessary for profits in that space, the platform neglects many of the needs of buy-and-hold investors looking to stick with their investments for the long haul.

Nonetheless, if you’re looking for a platform that offers everything you’ll need to be successful as a short-term trader, NinjaTrader is one of the best online today.


Why You Should Save For Your Retirement Before For Your Kids’ College

Choosing where to put your savings is a question that does not have a simple answer that works for everyone. Deciding how much of your discretionary dollars to put towards retirement savings, college expenses, life insurance, an emergency fund and other buckets of money will vary depending on your unique financial situation. Here are a few arguments for prioritizing saving for retirement ahead of saving for your kids’ college expenses.

Saving as a part of your budget

The first thing that you will want to do is make sure that you’ve got a budget for your household expenses. Your budget can be simple or complex, but it’s important to have a written recording of your cash flow. Living within your means (spending less than you earn) is the number one indicator for a healthy financial situation.

Another great tip is to pay yourself first. Without a written budget, you tend to just save whatever money is leftover at the end of the month. But somehow, no matter how much money you make or how much you try to cut down on spending, there never seems to be very much left at the end of the month. If this has happened to you, transfer a set amount to a separate account right when you get paid. Many have found that when they do this, they have sufficient money to pay their expenses and are able to save more.

Saving for retirement

In addition to budgeting for your ongoing expenses, it’s a good idea to start saving for your future. Depending on where you are, you may have various medium and long-term savings goals. One common goal is saving for future retirement.

There are a variety of different vehicles for saving for retirement. With the decline in employers that offer defined-benefit pensions, a 401(k) plan is a common way to save for retirement. Many employers offer 401(k) plans, and many also offer matching funds as an incentive to contribute to them. Traditional and Roth Individual Retirement Accounts (IRAs) are another great way to save for retirement.

Saving for college

If you have children, you may also be concerned with the rising cost of higher education, and wanting to save for college. Higher education costs are currently rising higher than the rate of inflation, and more and more jobs require higher education. It’s only natural that parents want to do everything they can to help make college more manageable for their kids.

Like with retirement, there are a variety of different ways to save for college. One popular way is through what is called a 529 plan. States set these up as a way to save for college. Generally, you don’t have to be a resident of the state in question to participate in its 529 plan. Although it’s common for states to offer state tax breaks for contributing to their own 529 plan.

Another way to save for educational or other expenses is through UGMA/UTMA accounts. UGMA stands for the Uniform Gifts to Minors Act and UTMA stands for Uniform Transfers to Minors Act. The person that sets up the account (typically but not always a parent) is considered a “custodian.” They may transfer money into the account to benefit the minor, but the money is managed by the custodian.

Why you should save for your retirement first

While the exact way that you allocate your savings depends on your specific situation, here are a few suggestions for why you should save for your retirement first. 

The main reason is flexibility — you can always reallocate retirement money towards higher education. If you’ve contributed to a Roth IRA, you can withdraw your contributions tax and penalty-free at any time. While many early withdrawals receive a penalty, qualified education expenses are an exception. On the contrary, you can’t easily transfer money in 529 plans to retirement savings if you end up not needing it for educational expenses.

You find another reason when considering the alternatives. If you fully save for your own retirement but don’t save much for your children’s higher education expenses, there are several different options (loans, grants, scholarships) that may be available to help pay for college. It’s also possible that federal legislation may be passed that reduces the cost for some forms of higher education. 

On the other hand, if you save and pay for a significant portion of your children’s college expenses, but skimp on your own retirement savings, there will not be as many options available for you. Relying on Social Security alone is unlikely to be sufficient for many people’s retirement. Hopefully your kids got a great college education as they may be providing a good chunk of your support in your retirement!

While every situation is different, these can make for a compelling argument to focus on your own retirement saving first, and only THEN start saving for college expenses.

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