How to Money · Wednesday, July 15, 2026
Paul Merriman, influenced by Vanguard founder John Bogle, advocates for the 'Two Funds for Life' strategy, combining a target-date fund with a small-cap value fund. This approach aims to simplify investing while enhancing long-term returns by adding exposure to historically higher-performing small-cap value stocks. He believes this combination offers a more robust path to wealth accumulation than a target-date fund alone.
“So he really motivated us to look more carefully, how could we produce the same kind of returns at about the same risk, but only hold two funds instead of ten or in some cases three or four. But the bottom line is, is to make it simpler.”
“And that second investment is what's called a small cap value fund, and they've been studied going back to nineteen twenty eight. They make a three four percent better than the S and P five hundred hat more risk. I mean, this is not a gimme. You're going to pay be taking more risk with that small part of your portfolio, but it's a very small part of your portfolio.”