Show Us Your Portfolio: Rick Ferri | The Benefits of a Simple Investing Approach

Our first few episodes of Show Us Your Portfolio looked at some thoughtful, evidence-based approaches to portfolio construction. But we also noticed after listening to them that many of the concepts we discussed might be too sophisticated for the average investor. Given that simplicity often works best in investing, we wanted to talk to someone about the benefits of using a less complex approach. And we couldn't think of anyone better to talk to about that than Rick Ferri. Rick is the President of the John C. Bogle Center for Financial Literacy, the host of the Bogleheads on Investing Podcast and a long-time advocate for low fee investing.

We discuss how Rick thinks about building his personal portfolio and his Core 4 approach to investing. We also discuss why all of us tend to overcomplicate our portfolios and what we can do to correct that.

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[gamboolman]

Thank you for this.
We used Rick to review our Portfolio and Philosophy before we retired - do recommend !
Simplicity is best

[edwardwilhelm]

Selling knowledge and not complexity, what a great bit

[translumination]

Thank you guys for putting this up. I always listen to Rick & I'm slowly coming to the last stage of simplifying my financial affairs.

[americarocks]

excellent interview. Thank you so much for having Rick on this show!

[Ladran_Sancho]

Ferri's books, at least the ones I have read, are excellent. I totally recommend them to the beginning investor.

[QuadTap]

i bookmarked this video as a requisite to rewatch if I'm tempted to make any change to my simple etf portfolio... also.. he looks great for his 70s wow!

[rgarri]

If you don’t need the money, invest for your kids!

[AK-kyou]

Rick looks quite a bit wiser from what I remember him looking like, If you know what I mean. Great podcast

[HepCatJack]

There are reasons I could see for an investor to have two funds that do the same thing. SPY and VOO are both S&P 500 index funds. The oldest SPY costs 0.095% in fees whereas VOO costs 0.030% in fees. So someone who has held SPY in a taxable account for years might not want to sell his SPY holdings to avoid the capital gains tax but may want to use his dividends to put it in VOO instead.

Another example: QQQ and BST have similar holdings QQQ is an NASDAQ 100 ETF with low management fee and low yield 0.66% whereas BST/BSTZ are CEF with similar holdings they have a higher management fee but pays a higher yield 8%/10% either by the occasional use of leverage or the use of options. When the market is bullish, the CEF tends to trade over their NAV, it makes more sense to buy the QQQ, when there is fear in the market, then it makes sense to purchase BST because you can often get a 10% to 20% discount on the holdings. If someone is holding their QQQ/BST or even BSTZ in a tax deferred account, then the funds could be moved from QQQ to the CEF of similar holdings BST/BSTZ with the best discount. When the CEF trades at a surplus to NAV, then it could be sold and QQQ bought with the money. If the account is taxable, then the dividends could purchase the CEF when discounted and QQQ when the CEF trade over NAV. This means the taxable account could have all three.

[AaronJCourtney]

Most people don't realize that these global equity index funds are weighted 60+% to US equities and have 15-18% allocated to the mag 7. That isn't global diversification IMO.

[fredatlas]

I can't help wondering why Vanguard UK has do many index funds, etfs in their lifestrategy and target retirement funds. I looked recently and some have 13 index funds, or funds and some etfs. Surely this is too much and couldn't it be increasing the underlying transaction costs of the funds and costs in general to run those funds. I think in the US Vanguard only has 4 index funds in their lifestrategy and target date retirement funds.

[auricgoldfinger]

Nice guy, but he’s not the heir apparent for Jack Bogle. Not the same horsepower. Plug his Core 4 portfolio into portfolio visualizer and it underperforms more than half the options

[steveng]

Bogle sold most of his stocks in 2000 because valuations were high and he thought bonds would beat stocks over the next decade. He had a 70-80% stocks allocation, and went down to 25-30%. Why? Because stocks had highly elevated Shiller price to earnings ratio of 40. Bonds performed as well as stocks from 2000 to 2020, if not better! The New York Times reports the S&P 500 averaged 5.4%/year during that period, while and investment grade bond index returned 5.2%/yr. This begs the ? What is the Shiller now- 37.10. Hmm something to think about my fellow investors.

[CharlesVaughn-bmgq]

TIPS lose value when interest rates go up. I found out the hard way. True, the interest rate increases but your principal declines like any bond or bond fund when rates go up. That’s hardly protection from higher interest rates.

[CharlesVaughn-bmgq]

Small caps have lagged for twenty years. I do have another twenty years.

[Bobventk]

Ricks misrepresentation of the equity premiums is…. Interesting.

[PorscheSpeedster-kznc]

Since you don’t need your portfolio investments as a pensioner, start giving your money to your kids now and take family vacations with them to maximize the experiences.

[CharlesVaughn-bmgq]

Fortunately I didn’t invest in a total foreign stock index fund. It has lagged the US for decades.

[Yahooforreal]

Is this Rick's portfolio or did I miss anything?
Vanguard Total Stock Market Index Fund - Symbol: VTSAX
Vanguard Total International Stock Index Fund - Symbol: VTIAX
Vanguard Real Estate Index Fund - Symbol: VGSLX
Vanguard Small-Cap Value Index Fund - Symbol: VISVX