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Rick Ferri Core Four Lazy Portfolio desc

May 7, 2025 | 401Ks

Rick Ferri Core Four: A Solid Lazy Portfolio for Retirement Investors

Investing for retirement can feel like a maze sometimes. You wonder, what’s the simplest way to build a portfolio that works for the long haul? Well, the Rick Ferri Core Four portfolio might just be one of those answers. It’s straightforward, it’s diversified, and it’s built for people who don’t want to spend their days glued to stock charts. Let’s take a look at what this portfolio is, why it makes sense for retirement accounts like 401(k)s or IRAs, and how it holds up for taxable accounts too.

Rick Ferri, the guy behind this portfolio, is a name you might have come across if you’ve poked around in the world of low-cost investing. He’s a former Marine, a CFA, and someone who’s been preaching the gospel of index funds for years. His philosophy? Keep it simple, keep costs low, and let the market do its thing over time. The Core Four portfolio is his way of saying, you don’t need a hundred funds to build wealth. Four will do just fine. Is it popular? Hard to say exactly, but you see it mentioned often enough in forums like Bogleheads, where folks who love simple investing hang out.

Rick Ferri Core Four Holdings

Here’s what the Core Four portfolio looks like:

  • VTSMX (US Stocks): 30.0%
  • VGTSX (International Stocks): 24.0%
  • VGSIX (REITs): 6.0%
  • VBMFX (Bonds): 40.0%

This mix covers a lot of ground. You’ve got US stocks, international stocks, real estate through REITs, and bonds. It’s like a balanced meal, you know? Each part serves a purpose. The US stocks (VTSMX) give you exposure to the broad American market, everything from Apple to small-cap companies nobody’s heard of. International stocks (VGTSX) add some global flavor, which is nice because the US doesn’t always lead the pack. REITs (VGSIX) are there for real estate, which can zig when stocks zag. And bonds (VBMFX)? They’re the anchor, keeping things steady when markets get choppy.

But does it cover everything? Well, it hits the major assets: US stocks, international stocks, bonds. REITs are a bonus, adding a bit of diversification since real estate doesn’t always move in lockstep with stocks. What’s missing? No emerging market stocks, no small-cap stocks as a standalone, no commodities or gold. If you’re thinking about inflation hedges like gold, you might look at something like the Harry Browne Permanent Portfolio. That one includes gold to protect against inflation, which can eat away at returns over time. The Core Four skips that, which might be a drawback if you’re worried about rising prices. On the other hand, it keeps things simpler.

Risk-wise, this portfolio is moderate. The 40% in bonds gives it some cushion, but with 60% in stocks and REITs, it’s not exactly a sleepy conservative portfolio either. It’s suited for someone who’s okay with some ups and downs but doesn’t want to ride the full rollercoaster of an all-stock portfolio. If you’re younger, maybe in your 30s or 40s, this could work well for a 401(k) or IRA. If you’re closer to retirement, you might want to tilt it safer, maybe bump up the bonds. How do you know what’s right? A tool like MyPlanIQ’s Asset Allocation Calculator can help you figure out your risk tolerance. Answer a few questions, and it’ll tell you how much to put in stocks versus bonds.

Using the Core Four in a 401(k) or IRA

So, how do you actually use this portfolio in a 401(k) or IRA? First, check what funds your 401(k) offers. Most plans have something close to VTSMX, like an S&P 500 index fund or a total stock market fund. For international stocks, look for a broad international index fund. REITs might be trickier—some 401(k)s don’t offer them. If that’s the case, you could map REITs to US stocks, since they’re somewhat correlated. For bonds, find a total bond market fund or a core bond fund. If your 401(k) doesn’t have index funds, look for diversified active funds with low expense ratios. You can check diversification and fees on a site like Morningstar.com. The rule of thumb? Stick to index funds for stocks, and for bonds, go for core bond funds or high-quality actively managed ones (see fixed income investments for more).

In an IRA, it’s easier. You can usually buy the exact ETFs or mutual funds, like Vanguard’s VTI (for VTSMX) or BND (for VBMFX). If you want to tweak the portfolio for risk, it’s simple. Say you’re more cautious, you might go 50% bonds, 25% US stocks, 20% international stocks, 5% REITs. More aggressive? Maybe 40% US stocks, 30% international, 10% REITs, 20% bonds. The key is to match your risk tolerance, which you can gauge with that calculator we mentioned.

One thing stands out about the Core Four: it’s simple but not simplistic. Four funds, and you’re covering most of the bases. That 6% in REITs is a nice touch, giving you a slice of real estate without needing to buy properties. But the lack of emerging markets or commodities? It’s a trade-off. You’re betting on the big, broad markets to carry you through. Historically, that’s worked out, but no portfolio is bulletproof.

Core Four in Taxable Accounts

Now, what about taxable brokerage accounts? The Core Four shines here because it’s built on index funds, which are tax-efficient. Index funds like VTSMX or VGTSX don’t trade stocks often, so they generate fewer capital gains. ETFs like VTI or VXUS are even better for taxable accounts since they’re structured to minimize taxes. The buy-and-hold nature of this portfolio also helps. You’re not flipping funds every year, so you’re not triggering taxes constantly. Could you do tax-loss harvesting? Sure. If one fund dips, you could sell it, book the loss for tax purposes, and buy a similar fund (like swapping VTI for SCHB). Just be careful about wash-sale rules. But honestly, the Core Four is already tax-friendly because it’s so hands-off.

One catch with taxable accounts is the REITs. VGSIX generates dividends that aren’t always tax-advantaged, so you might take a small tax hit there. If that bothers you, you could skip REITs in a taxable account and stick with the other three funds. But for most people, that 6% allocation won’t move the needle much tax-wise.

Final Thoughts

The Rick Ferri Core Four is one of those portfolios that feels like a warm blanket. It’s not flashy, it’s not trying to beat the market, but it gets the job done. For 401(k) or IRA investors, it’s a solid starting point, especially if you’re new to investing or just want something you can set and forget. In taxable accounts, it’s efficient, though you might tweak it slightly for taxes. Is it perfect? No portfolio is. If inflation spikes or emerging markets take off, you might wish you had a bit more exposure. But then again, chasing every possibility is how you end up with a portfolio that’s too complicated to manage.

Maybe you’re wondering, will this portfolio hold up for the next 20 years? Nobody knows for sure. Markets are funny like that. But looking back, simple, diversified portfolios like this one have done pretty well over long periods. They’re like the tortoise in the race, slow and steady. And in investing, that’s often enough. What do you think, is simple better for you? Or are you tempted to add a little spice to the mix?