Excess Returns Show Us Your Portfolio: Rick Ferri
Aug 18, 2022
Rick Ferri, President of the John C. Bogle Center for Financial Literacy, shares his insights on simplifying investing. He discusses his Core Four investment strategy, emphasizing a balanced mix of stocks, bonds, real estate, and small-cap value. Ferri explains why many investors complicate their portfolios and offers strategies to embrace simplicity for better long-term success. The conversation also touches on the psychological factors affecting our relationship with money and how a straightforward approach can lead to sustainable financial growth.
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Pilot Precision Shaped His Investing
- Rick connects his precision as a carrier fighter pilot to verifying instruments and seeking truth in markets.
- He used that mindset to pursue the CFA and rigorous study to distinguish truth from noise on Wall Street.
Prefer Simple Indexing
- Keep portfolios extremely simple: a total stock market fund, total international, and a couple of bond funds suffice for most investors.
- Simple indexing will likely outperform the majority of active investors and reduce taxes, fees, and behavioral mistakes.
Complexity As Advisor Job Security
- Advisors often add complexity to portfolios to justify their fees and preserve perceived job security.
- A shift to fee models based on advice rather than AUM lets advisors recommend genuinely simple portfolios.
