15 Money Resolutions You Can Actually Stick to in the New Year

A lot of people consider New Year’s resolutions a joke. After all, around 80% of them fail by February. But setting goals and sticking to them is an important first step in achieving your personal and financial dreams. The trick is to keep them reasonable so you can attain short-term success and move on to your next set of goals.

This is just one of many strategies that can help nearly everyone improve their financial situation, bringing them closer to achieving their money-related goals.

So, if saving more and spending less is on your 2022 to-do list, we’re here to help. These 15 financial resolutions are not only attainable, but they can likely put you in a better financial position when you reach them. Win-win!

1. Implementing the 30-day Rule for Purchases

The 30-day rule is a simple strategy that has the power to help you control your spending and otherwise make the right financial choices for you. Essentially, if you feel the urge to buy something that’s non-essential, whether it’s in a store or online, the rule says: Stop. Leave the store. Click away from the site.

A great next step is to write down what you wanted to buy, along with where it can be found, and its price. Date the document and then mark on your calendar when 30 days will have passed. If you still want the item and you have the money, it may be OK to buy it. If not, you’ve saved that money for something else you really will want.

2. Trying a 30-day Money Challenge

Sometimes giving yourself a short-term goal can be a great way to motivate yourself to start exercising, eat healthier or even spend less and save more. After all, it’s just 30 days! Who can’t do a thing for 30 days, right?

But here’s what can make this approach so effective: You have to change your habits in order to reach your short-term goal. By the time you achieve whatever that 30-day goal is, you will have changed your saving and spending patterns and may be prepared to increase it to 60- or even 90-days. Maybe even a lifetime!

3. Creating a Budget and Sticking to It

Creating a budget allows you to look and see exactly what you’re spending your money on, where you’re spending too much, and where you could be saving more. It can also help ensure you stay well within your means and put aside more for the future. Creating a budget doesn’t have to be difficult.

Start by gathering all your financial documents, including all of your monthly bills. Next, create a list of all of your monthly financial needs like rent, groceries, bills, and other expenses such as an entertainment budget. Finally, compare it to your income stream, review, and adjust from there. For more information, check out How to Make a Monthly Budget.

4. Automating Your Payments

From your credit card bills to rent, student loans to your heating bill, almost all of your bills can now be automated.

Just make sure you pick a date each month that works for you (say, a day or two after you know you’ll receive a check) to better ensure you have enough funds to cover the costs. This way, you can set it and forget it.

5. Building an Emergency Fund

We know, the idea of building an emergency fund can feel wildly daunting. However, you’ll probably be extremely happy you have it if you ever need it. For a reasonable emergency fund savings goal, you can calculate and aim to save three to six months worth of your expenses. (This is where your budget should come in handy).

Try to set aside a little each month into this fund until you hit your target. This way, if you have an unexpected emergency — say your car breaks down or you lose your job — you will have a cushion to fall back on.

6. Attempting to Pay Off Your Credit Card — in Full — Every Month

Credit cards are notoriously difficult to pay off thanks to compounding interest . If you can, try and pay off your credit card debt, then stay within your budget so you can pay your balance off in full each month.

This could help raise your credit score and can give you more peace of mind knowing that you don’t have any looming debt hanging over your head.

Check out these calculators, which can help you see exactly what the path to paying off your credit cards, student loans and other debts may look like.

7. Putting More Toward Your Student Loans

Being able to finally pay off your student loans is a great feeling. Help accelerate that process by adding just a few dollars to your student loan repayment each month. Even $20 can help you pay off the interest and principal of your student loan that much faster. (And hey, you can even automate this payment, too.)

8. Checking Your Credit Report More Often

You are your own best friend when it comes to credit monitoring. Credit scores play a huge role in borrowing and lending. If you go to buy a home, a car, take out a loan, or even to refinance, chances are your credit score will play a role in the approval process.

By checking your credit score often (this is different from pulling your credit report ) you can stay on top of any changes or discrepancies, and make decisions to improve your score in the future.

9. Considering a Mortgage Refinance

Homeowners often look to refinance their mortgage when it could benefit them in some way, like with a lower monthly payment. Refinancing is the process of paying off a mortgage loan with new financing, ideally at a lower rate or with some other, more favorable, set of terms.

Check out these seven signs to refinance your mortgage to see if this could be the right move for you.

10. Getting Your Full 401(k) Employer Match

Does your employer offer a 401(k) match? Not all companies offer this benefit, and some have prerequisites for participating in the match, such as a minimum required contribution or a cap up to a certain amount. But if they do and you aren’t taking advantage of it, you’re leaving free money sitting on the table.

You can learn more here about how 401(k) matches work.

11. Taking a Finance Course

If you’re really looking to take your financial know-how to the next level, try enrolling in a financial education course. Through one of these courses you have an opportunity to learn everything from budgeting and saving, to investing and financial family planning.

Many of these courses are offered for free on the internet, meaning you don’t even have to get off the couch to help improve your financial future.

12. Considering a Side Hustle

Having a side hustle is all the rage, and for good reason. It’s an excellent way to supplement your income so you can save more, pay off debt, grow an emergency fund, or just use it as fun money to live your life.

Best of all, there’s a side hustle for everyone. If you like talking to new people, maybe driving with a ride-sharing service is for you. If you’re creative, freelancing on websites like TaskRabbit with your graphic design, photography, writing, or other creative talents can also bring in some cash.

13. Asking for a Promotion or Raise

If you’ve been with the same company for more than a year, it’s time to think about asking for either a promotion or a raise. The best way to do this is to go in prepared . Start by gathering documentation of all the good things you’ve done in your job over the last year and be prepared to discuss how they’ve helped the company’s bottom line.

Next, take a look at what others are making in your same field by searching websites like Glassdoor and PayScale to find comparable data. Finally, be prepared for a bit of pushback and get ready to negotiate what you really want.

14. Figuring Out if You Need Some Assistance

Sometimes our finances can get away from us, whether through unemployment, underemployment, or unexpected expenses that create debt. Knowing when you should ask for help in these circumstances is important. Whether you need to ask friends or family for a loan, take out a personal loan, refinance some of your debt at a lower interest rate, or even file for bankruptcy, it’s important to remember there is no shame in doing these things.

15. Adding 1% More to Your Retirement Account

If you’re already putting money into a 401(k) or an online individual retirement account, that’s wonderful news. Now, do you think you can add just 1% more of your income to that account? Odds are you can, and those savings can seriously add up.

For example, NerdWallet crunched the numbers and found that if a person is making $40,000 a year and puts away 6% of their paycheck starting at age 22, they could save $551,199 by the time they reach a retirement age of 67.

Not bad. But, if that same person increases their retirement allocation by 1% a year to a maximum of 20%, they’d be able to save a whopping $1,364,292, accounting for a $813,093 difference. The calculations above assume a 6% annual return.1

The Takeaway

If you have a steady income and aren’t living beyond your means, these ideas should help you get a handle on your money so you can start saving more in the new year.

For some extra support, SoFi Money can help you earn up to 15% cash back on your purchases that you can put toward your savings goals. From auto-save to bill-pay, having a solid cash management account that keeps you alert of your finances can help keep you in good standing throughout the new year.

Want to get a better grasp of your money this year? See how SoFi Money can help you reach your financial goals.

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Source: sofi.com

How Exactly Do You Stress-Test Your Financial Plan?

If you’ve been investing for some time, you most likely have a plan in place. Of course, these plans will vary depending on your specific goals, age and risk tolerance. But the essential consideration is that some sort of attainable goal, as well as a plan on how to reach that goal, is common to most investors.

Along with that, however, comes a fatal flaw that is seen far too often: These plans are made in a vacuum. You may think, if I continue earning my current salary, putting 10% in savings, and investing another 25%, then everything will turn out fine. Unfortunately, nothing happens in a vacuum — least of all in the world of investing.

The fact is that the circumstances in which you made your plan will most certainly change. Income can fluctuate (either expectedly or unexpectedly), interest rates change, inflation rises or drops, economies experience recessions, and industries crash.

This means that our immediate cash needs and the risks associated with certain investments can significantly fluctuate, too. The way they impact our long-term financial plan is vital.

None of us can predict how the future will unfold. However, we can approximate what would happen to our portfolio if some of those initial factors were to change. The basic idea isn’t too complicated: If your primary source of income sharply decreases, will your limited savings require you to liquidate long-term investments to generate short-term cash flow, thereby throwing your entire retirement plan off course?

These are the occurrences we wish to avoid — and stress-testing our financial plan helps us do just that.

In practice, this process requires a vast amount of knowledge and expertise. Most investors turn to financial advisers to help with such a task. Whether you’re seeking to conduct this yourself, or plan to turn to a trusted adviser, the following will provide a head-start either way.

Stress-Testing Your Portfolio: Considerations

The first and most crucial aspect of a stress test is to start with a budget. Calculating your budget will allow you to forecast cash needs over time.

Understanding your cash needs — which are specific to your income, financial goals and lifestyle — allows you to recognize the most important aspect of successfully managing a financial plan over time: Your goal isn’t just about growing your assets; it’s about managing liquidity.

Life happens — and we all eventually run into unexpected cash needs. The last thing you want to do in such a situation is liquidate a long-term investment to satisfy short-term cash flow needs. This will not only divert your long-term financial plan, but you’ll likely incur added immediate expenses through capital gains taxes.

When most investors think of their financial plan, they think long-term. And that’s great — but everyone needs to be prepared for a rainy day in the immediate future. The key to finding this balance between a long-term vision and the immediate future boils down to liquidity management, which all starts with defining a budget.

If your budget isn’t clearly defined, then you’ve already botched your stress-test.

So, once you nail down a budget and projected cash flow, the focus then shifts to your portfolio. This is where things get a little tricky. Most portfolios are built using tools that only professional money managers can access. This is why it’s always best to utilize a financial adviser.

Above all, there are two primary concepts at play in your stress-test: asset appreciation and after-tax cash flow expectations. This is very similar to the strategies behind many large endowment fund managers — but just on a micro-scale.

In action, this typically involves examining risk-ratios to calculate expected returns and volatility from modern portfolio theory. The obvious goal is to maintain the lowest risk ratio for the highest expected value. A key component is maintaining balance between risk and reward, and one way in which this is done is through the Sharpe Ratio.

To put it simply, the Sharpe Ratio adjusts the expected return of an investment based on its risk. Let’s say Jerome and Sarah are both traveling from point A to point B. Jerome takes his car, averaging a modest 45 mph. Sarah takes her motorcycle, averaging 75 mph. Of course, Sarah reaches point B first. But — she also incurred much more risk than Jerome — despite the fact that they both reached the same destination.

Was the risk that Sarah took worth the benefit of arriving early? Of course, the level of risk you’re willing to assume will vary based on your unique situation, but this is the sort of insight that the Sharpe Ratio aims to illuminate.

Then, there are some stressors that need to be thrown into the mix. The most important of which should be a loss of primary income. Many experts suggest having three to six months of your salary readily accessible as cash in a savings or brokerage account. All too often however, this simply isn’t enough. More conservative savers aim for a figure closer to 12 months. Again, we see how starting with a budget — to determine monthly expenses and manage short-term cash flow needs — plays a crucial role.

For most people, the end goal of this entire process is adequately preparing for your retirement — so that you can indeed retire on time. For various reasons, the average age of retirement continues to rise, particularly for men and entrepreneurs over the age of 65. Making the choice to continue working is one thing, but feeling obligated to maintain an income stream is another. Stress-testing your portfolio will help you gain a better understanding of your preparedness to life’s curveballs — and will hopefully help you sleep better at night.

Of course, the steps above are fairly easy to understand in theory, but are much more difficult to execute in practice. Building a budget, measuring risk and assessing expected value are difficult tasks. While they are not necessarily impossible to perform on your own, the above framework — at the very least — should be used as a template when selecting a financial adviser.

One way in which financial advisers test different scenarios — and their subsequent impact on portfolios — is through the Monte Carlo Simulation.

Monte Carlo Simulations

Dwight Eisenhower once said, “Plans are nothing, planning is everything.” While the first part of that sentence might be too harsh, one is forced to agree that the actual planning is more important than the plan. Plans depend on circumstances, and circumstances change, but the ability to adapt — and construct a plan — is valuable at all times.

Monte Carlo simulations work by taking a financial plan and simulating how it would fare under different conditions; the most important of which are changes to your income and expenses, savings, your life expectancy, and expected returns from long-term investments.

Some of these factors are under your control — income, expenses and expected returns due to asset allocation largely depend on you. However, market conditions such as inflation, your investment horizon and many other factors do not. So, in order to get a result, the Monte Carlo method assigns a random value to those uncertain factors. The simulation is then run thousands of times to get a probability distribution.

If this sounds complicated, there’s no need to worry. Even if you’re an experienced investor, this is a topic that requires professional experience in the field. The fact is, even if the software used to run stress-tests were available to the general public (which it isn’t), you would still be left with the trouble of deciphering the results of the test and putting them to use.

Final Thoughts

It’s an arduous task to stress-test a financial plan on your own. Leveraging a professional is the most popular path here. You can, however, do some prep work yourself to better understand the process and select a financial adviser you trust. Most of those preparations will revolve around budgeting and making contingency plans for yourself — think of them as your own prelude to a stress-test.

Founder, Lakeview Capital

Tim Fries is co-founder of Protective Technologies Capital, an investment firm focused on helping owners of industrial technology businesses manage succession planning and ownership transitions. He is also co-founder of the financial education site The Tokenist. Previously, Tim was a member of the Global Industrial Solutions investment team at Baird Capital, a Chicago-based lower-middle market private equity firm.

Source: kiplinger.com

SmartAsset Talks to the Couple Behind MarkandLaurenG.com

AJ Smith, CEPF® AJ Smith is an award-winning journalist and personal finance expert with more than a decade of experience in television, radio, newspapers, magazines and online content. She has appeared on CNN, The Weather Channel, Wall Street Journal Radio and ABC News Radio. Her work has appeared on websites including MarketWatch, Huffington Post, Yahoo Finance and Credit.com. She is a contributor for Forbes. The SmartAsset VP of Content and Financial Education has degrees from Princeton University and Mississippi State University. AJ was named an honoree of the 2018 Women in Media awards in the Corporate Champions category. She is a member of the Society for Advancing Business Editing and Writing and a Certified Educator in Personal Finance® (CEPF®). AJ and her husband also write and illustrate educational children’s books.

Source: smartasset.com

It’s Never Too Late for a Family Meeting – Here’s How to Do Them Well

Jane and John, who are parents to four adult children, have amassed substantial wealth during their careers. To experience the joy of seeing their children enjoy some of this wealth – and to take advantage of the current high federal estate tax exemption amounts – which could potentially be reduced – they would like to give away some of it during their lifetime.  However, they are concerned that their children and spouses might not be ready to handle the responsibilities of receiving large monetary gifts that could change their lives. 

Though well-intentioned, will the gifts become burdensome to their children? How can Jane and John ensure that their children and their families will be good receivers and stewards of their inheritance? While Jane and John may be hypothetical clients, their challenge is a common one.

Wealth education, or even the basics of money, is not part of the curriculum in most public schools.  If parents don’t take on that responsibility, young adults often leave home with little to no knowledge about the fundamentals of money management, such as banking, debt, saving and investing. There are many reasons these conversations aren’t had at home, especially for families of substantial wealth. Some parents feel that sharing information about their wealth would demotivate children and make them “trust fund babies,” while to others it is a reminder of their own mortality. Perhaps parents never had the conversation with their own parents growing up, so they find it a difficult and awkward subject to broach. Avoiding the subject seems like the easier and more pleasant path to take.

Regardless of how much wealth a family has, wealth education is crucial to overall financial education, preparing for the future, and to becoming a good steward of an inheritance. For parents who haven’t had conversations early, it’s not too late.

Family meetings are a thoughtful and effective way of bringing members of a family together with a goal of facilitating communication and education. They allow for sharing family stories, communicating values, setting goals to help ensure transparency, and helping members across generations understand their roles around stewardship and wealth.

How do you have an effective family meeting, one that its members not only value, but also look forward to?

  • Do some prep work. As an important first step, the hosts of the meeting should spend time with each participating family member to help them understand the reason for the meeting and learn more about what their expectations are. There should be a desire and commitment from the participants to invest time and effort to make family meetings successful.
  • Plan ahead. Setting a clear agenda that defines the purpose and goals of each meeting and sharing this agenda with participants before the meeting are a key to its success. Choose a neutral location that makes everyone comfortable and encourages participation.  Carving out part of a day during a family trip or while at a family vacation home are examples of neutral locations where families tend to be at ease.
  • Break the ice. Allow time for a fun ice-breaker activity to put people at ease. This could be an activity or a question (“What does the family business mean to you?” “What money messages did you receive, and what message would you like to pass on to your own children?”) that all family members answer.
  • Set aside time for learning. Include an educational component in the agenda, such as an introduction to investing, estate planning, budgeting and saving, or philanthropy.
  • Have a “parking lot.” Document subjects brought up that might need to be addressed in a future meeting. This shows members that everyone’s participation and input is valuable and that while a subject might not fit into the present agenda, it will be included in a future meeting.
  • Include a facilitator. Consider including a trusted adviser to facilitate the meeting. Having a facilitator present who is experienced in working with families of wealth can help with managing the agenda, offering a different perspective, calming emotions and making sure everyone is heard and understood.
  • Follow up. Include some “homework” and schedule the next meeting to set expectations about continuing to bring the family together. 

Correctly facilitated, family meetings can be a safe place for members across generations to communicate effectively and learn about stewardship. The goal is that the family unit will continue to flourish even after the first generation has handed over the reins to the next.

So, what happened to Jane and John? They sought the help of their adviser, who spent time upfront understanding their goals and getting to know their children and their spouses. They planned their first family meeting. During that meeting, the parents shared their story and communicated details about their values, goals and expectations.  Over the next few years, the family met several times and talked about a variety of topics. The children learned more about investing and opened their own investment accounts, to which the parents made gifts. They talked about estate planning and created their own estate plans. 

Following a meeting on philanthropy, the parents created a Donor Advised Fund so that the children could come together, recommend gifts to the charities of their choice and make joint decisions about charitable giving. These planned meetings brought the family together, nurtured relationships and strengthened the family unit. They came to understand their responsibilities as stewards of the wealth created by their parents and gained more confidence to build lasting wealth for the generations to come.   

Senior Family Wealth Adviser, The Colony Group

As a Senior Wealth Adviser at The Colony Group, Indrika Arnold provides clients with financial planning services while helping the firm develop and refine Family Office services. She is a financial professional with 15 years of experience. Indrika serves ultra-high net worth individuals and families, and she focuses on all areas of planning. She has a particular interest in helping to prepare the next generation to be responsible stewards of their inherited wealth.

Source: kiplinger.com

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.

Source: moneycrashers.com

MetLife Auto Insurance Review

MetLife is perhaps best known for providing life insurance, but auto insurance is also available, and we found with our proprietary SimpleScore that this insurance carrier has a lot to offer.

With a 4 out of 5 in claims satisfaction, and a 5 out of 5 with coverage options, MetLife is more than competitive. However, it doesn’t rank well with accessibility, scoring only a 3 out of 5.

In this MetLife car insurance review, we’ll walk through the insurance provider’s strengths and weaknesses, how it compares to its competitors and how it fares in our SimpleScore model.

Our methodology

When looking at MetLife’s features, we study how it scores on our SimpleScore model in discounts, coverage options, customer satisfaction, accessibility and support. We also look at MeLife auto insurance reviews and its competitors through the lens of leading reviewers such as J.D. Power and Consumer Reports.

J.D. Power, for example, studies purchase experience satisfaction as well as claims satisfaction, while Consumer Reports looks at features like premiums, claims, service and policy reviews.

Great for claims satisfaction – MetLife

MetLife provided life insurance to Civil War soldiers, and has been going strong since. It performs well in claims satisfaction, according to Consumer Reports, with a 4 out of 5, although service and policy review were each a 3 out of 5.

J.D. Power Rating


AM Best Rating


Standard & Poor’s



4 / 5.0

SimpleScore MetLife 4

Discounts 2

Coverage 5

Customer Satisfaction 3

Accessibility 5

  • Established American company
  • Seeks to remain competitive
  • Good coverage options
  • Poor customer satisfaction
  • Not the cheapest rates
In this article

MetLife car insurance at a glance

In business Since 1868
States served 50
Best for New car owners
Not for People who place a high value on customer service
Standout features Deductible savings benefit
Gap coverage
New car replacement
Custom sound system coverage
No deductible for glass repairs
Special car parts replacement
Usage-based insurance
Available bundles Home, auto, life and health

[ Read: What’s the Average Cost of Car Insurance in the US? ]

What we like about MetLife auto insurance

Beyond basic auto insurance

MetLife offers unique extras most other auto insurance companies don’t have. Gap coverage and custom sound systems are allowed under its policies. MetLife also offers to reimburse legal fees if you are sued after an accident.

Rideshare drivers get coverage

Uber and Lyft drivers are covered while working. Many people make extra money or their main living offering rideshares. MetLife is one of the only auto insurance companies to offer rideshare insurance.

Things to consider

MetLife encourages high credit score

MetLife auto insurance consistently offers the best prices to the customers with the highest credit scores and brand new cars. Only when a customer comes has a 600 credit score range or higher does MetLife come close to auto insurance titan Geico for a reasonable premium.

MetLife Auto Insurance vs. the competition

Great for low cost – Progressive

Low prices and gap coverage make Progressive a contender against MetLife.

J.D. Power Rating


AM Best Rating


Standard & Poor’s



4.2 / 5.0

SimpleScore Progressive 4.2

Discounts 4

Coverage Options 5

Customer Satisfaction 4

Accessibility 4

This provider turned out to have the lowest quote, and it’s known for its consistently affordable pricing. Like MetLife, Progressive offers gap coverage, which is a nice option to have if you still have a lease or loan on your vehicle. Its customer satisfaction ratings aren’t stellar, but it outperformed MetLife in most regions.

Great for safety-driving rewards – Allstate

Plenty of discounts and safe driving rewards make Progressive a good choice for safety-savvy drivers.

J.D. Power Rating


AM Best Rating


Standard & Poor’s



4.4 / 5.0

SimpleScore Allstate 4.4

Discounts 3

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

It has the most extensive list of discounts of any company on this list, but despite that, Allstate was my most expensive quote. Allstate may be a good choice for you if you’re looking to be rewarded for your safe driving. It offers extras like a vanishing deductible and Safe Driving Bonus Check that you won’t find with most insurers. It also has a claim satisfaction guarantee, which will give you a refund if you’re dissatisfied with the way your claim was handled.

Great for customer satisfaction – State Farm

The largest of U.S. auto insurance providers, State Farm is available throughout the country, and has more than 19,000 independent agents at your disposal.

J.D. Power Rating


AM Best Rating


Standard & Poor’s



4.6 / 5.0

SimpleScore State Farm 4.6

Affordability 4

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

This is one of the best insurance providers in the industry in terms of customer satisfaction. State Farm’s rates may not be as low as some of the companies on this list, but they’re generally reasonable. There aren’t as many optional coverages to choose from, but if you’re looking for a standard auto insurance policy to cover all the basics, State Farm is hard to beat.

Great for savings on premiums – GEICO

Geico’s low rates and excellent discounts can help you save even more on your premium.

J.D. Power Rating


AM Best Rating


Standard & Poor’s



4.8 / 5.0

SimpleScore GEICO 4.8

Discounts 5

Coverage Options 5

Customer Satisfaction 4

Accessibility 5

This is another company known for its low rates, so it’s a good choice for anyone on a budget. It also has a ton of vehicle and driver discounts, which could help you save even more. In terms of customer service, Geico received mixed reviews, but it still outscored many of its competitors, including MetLife, Geico and Allstate.

[ Read: Best Car Insurance Companies ]

MetLife auto insurance rates 

MetLife Insurance strives to provide quality auto insurance at an affordable rate. Its customer service is available 24/7 to answer questions and its online and mobile tools give you convenient access to your policy wherever you go.

You won’t know how much your auto insurance is going to cost you until you get a quote. Insurance premiums are personalized for you, taking factors like your age, driving record, vehicle and address into account. While all insurers look at the same information, every company weighs it slightly differently, which is why you end up with such variance in quote prices.

You should compare quotes from several companies before making a purchase, but don’t choose a company based on price alone. Make sure you go with a company that’s financially stable and is known for efficient claims handling. This is worth paying a little extra because it’ll save you a lot of stress when you need to file a claim.

MetLife goes beyond the basic auto insurance coverages to offer extras, like custom sound system and gap coverage, that are hard to find elsewhere. It also offers new car replacement for vehicles less than a year old and glass repairs without a deductible. If you get sued as a result of an auto accident, MetLife will even pay your legal fees.

[ Read: Best Cheap Car Insurance Companies ]

MetLife’s auto insurance coverage 

  • Gap coverage: This coverage pays the balance of your lease or loan if your vehicle is totaled in an accident. Most insurers only pay the actual value of your car, which may not be enough to cover what you owe. If you have a lease or loan on your vehicle, you may want to consider adding gap coverage to your policy.
  • Coverage for rideshare drivers: MetLife offers auto insurance to Lyft and Uber drivers, filling in the missing gaps left by traditional auto insurance to ensure these drivers are protected while working.
  • Legal defense coverage: If you’re sued in connection with a car accident, MetLife will pay for your legal defense and reimburse you up to $200 per day for lost wages.
  • Custom sound system coverage: If you have a custom sound system installed in your vehicle, you can purchase additional coverage to protect this. Most insurers we looked at in our MetLife car insurance reviews don’t offer this option, so if it’s something you’re interested in, MetLife is worth a closer look.
  • Protection against identity theft: MetLife is one of few auto insurers to offer optional identity theft protection coverage. This pays for lost wages, legal fees and other expenses associated with restoring a stolen identity.
  • Major parts replacement: MetLife will replace major vehicle parts — such as tires, batteries and brakes — with new ones, regardless of their current condition. Most companies only pay the actual value, which after factoring in depreciation may not cover the total cost of a new part. With MetLife, you won’t have this problem.
  • New car replacement: If your car is less than a year old and has less than 15,000 miles, you qualify for new car replacement. If your vehicle is totaled, MetLife will pay to get it replaced without factoring in depreciation.
  • No deductible on glass repairs: If a rock flies up and chips your windshield, you can get it fixed without paying a deductible. This coverage comes standard with its auto insurance policies.
  • Help if your car breaks down: MetLife offers roadside assistance and towing and labor coverage as optional add-ons to assist you if your car breaks down. And if your vehicle is going to be in the shop for a while, MetLife can also help you cover the cost of renting a vehicle in the meantime.

MetLife auto insurance discounts

Compared to most auto insurers, MetLife insurance doesn’t offer many ways to save. There are a few basic discounts, like multi-policy and claim-free discounts, but it’s missing other common options, like anti-theft devices and automatic payment discounts. Here are some discounts MetLife does offer.

Savings for good drivers 

Every year you don’t have an accident, MetLife will lower your collision and comprehensive deductible by $50, up to a maximum benefit of $250. This is half of the savings that most companies with vanishing deductible offer. However, the majority of insurers don’t provide this benefit to begin with, so it’s still something to be happy about.

Association discounts

MetLife offers excellent rates to members of its partner associations, including companies that offer MetLife insurance as an employee benefit.

Bundle discounts

MetLife offers bundles when you have more than one vehicle to insure, as well as when you stick with it for other coverage (such as home insurance, life insurance, renters insurance or health insurance).

Good student discounts

MetLife provides discounts to students who maintain a B average or higher. To qualify for this discount all you need to do is just send in a copy of your grades.

Group insurance discounts

You can get an average of 10 percent off or more if you own a business with business-owned vehicles.

[Read: Low Income Car Insurance]

How to submit an auto insurance claim with MetLife

You can call 1-800-854-6011 year-round, day or night, and an agent will walk you through your claim process.

MetLife auto insurance online and mobile app 

MetLife offers three mobile apps for Android and iOS devices that allow you to view your policy documents and pay your bill. If that’s not enough, a customer service agent is always just a click away.

  • MetLife App: The flagship app from MetLife allows you to manage every aspect of your MetLife policy all in one place. Users can upload information for auto claims, access information related to their dental plans and find a vision provider near them.
  • MyJourney: MetLife’s MyJourney program helps you drive more safely while providing you savings in the process. Upon signing up, you receive a one-time enrollment discount of up to 10%, and after renewing, can receive an adjusted discount of up to 30% based on your safe driving score. This score is calculated by the app, which runs in the background on your phone and highlights areas where your driving habits can improve to help make you a safer driver. The app is currently available in Connecticut, Delaware, Iowa, Maine, Minnesota, Michigan, North Dakota, New Jersey, Utah and Wisconsin.
  • MetLife Infinity App: MetLife Infinity is a powerful app to help you capture and securely store photos, videos, audio and important documents in one place. The app allows you to upload photos and videos and share them with family and friends at key milestones now or at any time in the future. The app is also handy for digital cloud-based storage of important documents such as birth certificates, passports and everything in between.

MetLife auto and home, health and life

MetLife covers virtually all of your insurance needs, including auto, home, health, life and personal liability.

  • MetLife home insurance: MetLife’s home insurance has guaranteed replacement cost coverage, impressive financial strength, basic coverage, identity theft coverage and scheduled personal property insurance. It also offers a few discounts such as home safety features, bundling and group discounts.
  • MetLife renters insurance: Renters insurance doesn’t cover the building you live in but your possessions. Electronics, jewelry, significant collections, furniture and other prized collections are covered and customized to your needs. In case of a fire, vandalism or other disasters, it can be an incredible help. MetLife offers some excellent add-ons.
  • MetLife health insurance: MetLife offers High High Deductible Health Plans (HDHP) best suited for those in good health with no dependents. There is also the Preferred Provider Organization Plans (PPO), which is best for those with existing health conditions or dependents. Much like any other policy with this company, it can customize it to your needs.
  • MetLife life insurance: MetLife offers life insurance coverage through workplaces, so you’ll find them through your employer. It offers term life insurance and permanent life insurance. It even has a feature called MetLife Advantages, which offers workplaces benefits that include grief counseling, travel assistance and will preparation, to name a few.

MetLife in the news

  • A former senior vice president of MetLife was sued for gender discrimination. According to Reuters, Mona Moazzaz, the ex-chief administration officer, filed a federal lawsuit in May of 2019 offering ample evidence of the alleged exclusionary, often prejudiced corporate nature of MetLife. 
  • MarketWatch reported in August of 2020 that MetLife’s profits fell again in the second quarter. Wall Street expected a better report on earnings. 
  • Business Wire announced on August 20, 2020, that MetLife is partnering with Barnum Financial, a wealth management company. The partnership will help them provide financial education to workplaces all over the United States.

We welcome your feedback on this article and would love to hear about your experience with the car insurance companies we recommend. Contact us at [email protected] with comments or questions.

Source: thesimpledollar.com