The Core 4 Portfolio
The Core 4 Portfolio, developed by Rick Ferri, is one of my favorite model portfolios for young accumulators & DIY investors due to its simplicity, diversification, and low cost.
**This is for informational purposes only and should not be considered investment advice. This model portfolio and its components may or may not be a good fit for your unique financial situation. Consult with a financial professional before implementing any investment strategy.**
Core 4 Asset Allocation:
48% Domestic Stocks
24% International Stocks
20% Intermediate Bonds
8% REITs
The Core 4 Portfolio is for investors who want to eliminate high fees and complexity.
Rick states, "Simple investing is a virtue – the ultimate in portfolio sophistication. A few low-cost, broadly diversified index funds or ETFs held in a portfolio will beat complex strategies almost every time. Why waste your time and money on complexity? Be simple and be rewarded."
The Core 4 investments are selected based on the following characteristics:
All have an economic purpose that is fundamentally different from each other.
All produce regular cash-flow from interest, dividends or rents.
The historic correlations between asset classes have resulted in a diversification benefit.
All asset classes can be purchased using a very-low cost index fund or ETF.
The performance of the Core 4 Portfolio over the last 30 years speaks for itself:
Annualized return of 8.1%, which would have grown $100,000 into $1.1mill.
Safe withdrawal rate of 7.3% and perpetual withdrawal rate of 5.3%.
Diversification benefits including a low 15% correlation between US stocks & bonds, as well as only 63% correlation between US Stocks & REITs.
If you would like to discuss portfolio construction further, click Book A Meeting.
