Rick Ferri: Core-4 Portfolios for Simplistic Success

About Fun With Annuities Episode #109

Rick Ferri is a fighter pilot, entrepreneur, visionary, 40-year husband, Boglehead leader, Rhode Island Ram, Former Marine, Investment Advice Expert, Financial Services Pioneer, CFA, MBA, fiduciary…and all-around good guy.

Rick is a pioneer in helping investors drive their investment costs even lower by “decoupling” advice from portfolio management and founded Ferri Investment Solutions as a leader in as-needed low-fee hourly advice financial planning.

He is the author of 7 books and created the incredibly popular Core-4 portfolios that offer six simple portfolio models that any individual investor can adopt.  By the way, that Core-4 site is there for you to use for free!  He is also the host of the “Bogleheads on Investing” podcast.  Frickin’ Financial Rock Star, not to mention a bad-ass former fighter pilot.

We jumped right into his Core-4 portfolios and what was the motivation for him to create the ridiculously good retirement resource for both individual investors and advisors.  We went over the five steps for Core-4 portfolio implementation in detail.

Step 1:  Select A Portfolio Strategy

Step 2:  Choose a Stock & Bond Mix

Step 3:  Select Your Funds

Step 4:  Analyze Your Selections

Step 5:  Invest Your Core-4 Portfolio

Sounds easy because it is.  Rick guides you through the process, and you are on your way to simplistic portfolio success.  With a former fighter pilot on your wing, Rick is just the person to help you with the needed discipline to make things happen and implement the plan.

I had to get Rick’s comment on Bitcoin, which was surprising and insightful. He followed that with his brutal take on market timing and interest rate timing. That answer is worth the podcast alone!

Enjoy this one!  I know I did.

"The idea is simplicity. Be simple, be low-cost, be consistent, stay the course, be tax-efficient." —  Rick Ferri.

Brief Bio on Co-host: Rick Ferri

Rick Ferri’s professional life has been an interesting public and private service mix. He is a US Marine Corps officer and fighter pilot now retired, a former stockbroker, adjunct college professor, a former low-fee advisory firm founder, and now an hourly-fee consultant who helps individual investors achieve their financial goals’ and advisers achieve their business goals.

Rick started his investment career in 1989 as a stockbroker at a large Wall Street firm. After a few years in the industry, he concluded the sales culture and high fees did not meet his ethical standards. Rick was determined to change how the system worked and became one of the first brokers to advocate using low-cost index funds in client portfolios.

In 1999, he left the brokerage industry and founded an advisory firm focused solely on low-cost investment principles. Clients held index funds and exchange-traded funds (ETFs) in their portfolios, and he set his firm’s fee at a revolutionary low 0.25% per annum. His company employed 20 people and managed over $1.5 billion in assets. Rick left the firm in 2016 after a private equity investor acquired control and changed the company’s focus.

Today, he is helping individual investors drive their investment costs even lower by “decoupling” advice from portfolio management. Ferri Investment Solutions provides as-needed hourly advice. This includes portfolio reviews, investment recommendations, and, when requested, a referral to an investment firm that will implement a portfolio for a low annual fee.

Rick continues to publish books and articles, speak on investment topics and is the host of the “Bogleheads on Investing” podcast. He also provides industry consulting to advisers and helps them grow their practices. The advice ranges from practice management to investing.

Last, he has the Core-4 Portfolios, a FREE website for public use. There are six simple portfolio models that any individual investor can adopt. Custom portfolio design is also provided for investors and advisers.

In this episode, The Annuity Man and Rick Ferri discuss:

• Outperforming 90% of investors
• Developing a simple portfolio
• Five ways to improve your portfolio
• Facing the risks

Key Takeaways:

• Investing is not as difficult as others would have you believe. The best way to invest is to keep things simple; the fewer moving parts, the better.
• Develop a simple portfolio that will hold four funds, two stock funds, and two bond funds. The bond funds have to be some fixed income type of allocation, while on the stock side, you do a stock market index fund and a total international fund.
• Are you going to be active or passive? Select a portfolio strategy. Determine whether you’re going to be aggressive or conservative and assess if you need a higher rate of return and if you can handle high volatility.
• In bad times, remember that “this too shall pass.” Investing doesn’t come without risk. Everything in life has risks. Even burying your money has a risk; inflation will eat away at its value. It’s better just to face the risk.

Fun With Annuities® Podcast is hosted by America’s Annuity Agent®, Stan Haithcock, The Annuity Man®. Hear brutal annuity facts with no sales pitches from the top independent agent in the country, licensed in all 50 states. Author of 7 books, Stan dives deep on all annuity types and strategies. It’s fun, learning the contractual truths on how annuities actually work and if they’ll fit your personal retirement lifestyle.

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