All of Dave’s teachings are to keep things simple for people that never learned to handle money. It’s one size fits all, which is good because if it’s too complicated people won’t save for retirement at all. What Dave really wants is for people to just invest in something besides depreciating garbage they can’t afford to begin with.
But if a caller starts recommending index funds and ETFs you can see how quickly he will shut them down. He likes the revenue from class A going to himself.
@@travis1240 yes his smart vest pros give me a commission for the people he brings them (the 12% he claims would be realistic if there were NO FEES taken out before the investing starts).
In my opinion getting out of debt is the important thing , my wife and I paid off $122,000 of debt. Now we can invest any way we want and we do take Dave’s advice in investing but if I want to something differently in addition to Dave’s investing I CAN b/c we are DEBT FREEEEEEEEEEEE!!!!!!
You're 100% correct. Debt free is the way to go. We paid off our mortgage in 2000 (shaved 5 years off by adding a little extra to the principal). We pay credit card bills in full each month, and we buy used cars cash only.
focusing solely debt means that you start saving late, and the late saver never catches the early saver. Why would you dump money into something that is only a 4% IR when you could utilize the market and get an easy 7-8% return?
@@sholtan2288 according gunderlach we will see a recession from this 300 percent high and may be 10 to 15 years before we ever reach where we are at today. So why would Dave ramsey have you eat ric and beans and live your youth poor working 3 jobs so you can save and put your money in the stock market at the top of the bull run, Because dave ramsey doesnt pay attention to stocks or where market is he just picks top mutual funds then presto 12 percent return per year for rest of your life.
CB FIT Runner that would be unprecedented in the entire history of the market. People have said that every year during the run up of the market since the last crash. If you would’ve kept your money on the sidelines you would’ve missed incredible returns. I don’t base much on the so-called “experts”. Buy and hold for the long term and recessions won’t matter.
For starters, the difference between 10% and 12% is HUGE. Over 30 years it works out to a difference of something like an extra 30% more or less. The problem I have with your test is you filtered it out to only show funds that performed in the top 95 percentile. Then out of that you further picked the top 3. So what you proved is even if you lucked out and out of 66,000 funds managed to luckily pick the 3 very best ones you STILL would have only ended up with 10%. What would those returns woud have been if you didn't pick the absolutely best performers? What was the mean average of those three categories? Since the top 3 best only outperformed the S&P500 by about 1.5% over the test period I'd be willing to bet on average, the vast majority of combinations underperformed the overall market.
Don't get me wrong, I like Dave Ramsey. The problem he takes so much flack for this is because hes wrong. Its been proven over and over you are almost better skipping all the fees, all the bs advisors, and invest in index funds.
Let's not forget about survivorship bias which wasn't even mentioned . Ramsey is good for anyone that has hair on fire crisis type finances and that is it . Stick with index funds . Set it and forget it .
The difference between you and Dave is he keeps it simpler. He's concise and to the point. All your graphs and visuals after a while are exhausting because the average person has a very shallow attention span. Too much info is just as bad as none at all. Make it short, usually 8 minutes or less. Hit your points hard, and the consumer will do it or not.
Very classy way of breaking down Dave’s investing strategy. He is a Icon in his industry. Love your channel. Been watching you for a year now. Great informative videos.
Great honest review. Dave first gets you out of debt. He then constantly says with regards to investing "if I am half wrong". He gives people help and hope. The critics are wearing tinfoil hats.
You did an excellent job of presenting facts in a non-argumentative, constructive, and transparent way. This video alone (the first of yours I’ve seen) inspired me to subscribe and follow your content. I learned financial basics through Larry Burkett many years ago, and find that Dave follows many of the same processes, but no one is above the math! People don’t like Dave telling them it’s their own fault when they’ve mismanaged their assets... such is the new millennium. I see no need to defend or accuse him, as you demonstrate here it’s close enough. The point is that if you save and invest, that alone will make more difference than any other factor. One or two percent, give or take, won’t matter on the money you never invested.
Only thing is that Dave doesn’t mention these funds. So the average person might pick 99% of those mutual funds that underperformed with high fees. For someone who wants to keep it simple, I can just go with S&P index fund which each of the major brokerage has.
Well done. Thank you sir. I found several mutual funds that since inception have returned a bit over 12-percent and they are over 30 years old. I like that you took the time to dig through the categories.
He is being more conservative. There are new funds in the last 10 years that have very conservative investment strategies that are transparent. If you are able to ascertain their level of quality you can easily beat 12% but have to have a risk vs reward strategy.
Because the S&P is a curated list of the top performing companies, right? As opposed to other curated lists that have to do with best guesses of how they will perform? If you keep it simple, like you say, and just invest in the S&P then you don’t need a broker, is that right?
Came across this video I’m doing research learning all about stocks and the terminologies that come with the investing world and I appreciate and love this video. I think people like you and Ramsey are amazing giving this information that we would never get as we were all coming up and learning in school and now it’s right at our fingertips. There is truly no excuse why people today or not driving with information being out here. I am already 33 but it’s never too late to start learning. This video is two years old but I found it and I am now a subscriber so thanks. It’s a shame that this was never taught in public schools growing up and that’s because it was for the rich to stay rich and not have competition.
Good video, but I think this highlights exactly why Dave's advice is spotty more than demonstrate that he deserves a pass. You picked THE BEST mutual funds and even those didn't hit his 12% mark. I would have preferred to see how some of the median funds performed over the same period.
Since we're looking at a 20 year horizon, wouldn't it have been prudent to go back 20 years ago and find the funds that would have met the criteria and see what their performance would be today.?
Best thing ever happened to me from a financial stand point is clicking on this guy named Dave Ramsey on youtube! My wife and i are baby step 6 and finale debt(home) will be paid off in about 4 years! We have more money saved up that we never thought was possible. Good video you have here and thanks!
The fact is you picked the best performing mutual funds out of 66,000 and it did slightly better than just the S&P500. I don't believe the reward of picking the right mutual fund out weighs the risk of picking the wrong one.
Yes. Faulty analysis aside, he proved that trying to beat the market using managed funds is a fool's errand. You'd have to get supremely lucky, picking one of three out of 66,000 funds correctly thirty years ago.
Here's what I think you're missing: Since these are actively managed funds, cherry picking the funds that had good historical returns is misleading. You're right that someone COULD HAVE picked those funds 20 years ago, but the odds are that a given person would have picked within the 82 percent of funds that didn't beat the market in that time period. Likewise looking forward, there's an 82 percent chance that the active funds you pick today will underperform the market over the next 20 years, AND you're paying higher expenses and fees.
I completely agree with this nature of observation, and am glad to find that someone posed it. (I will quickly amend, though, that fund-returns are calculated net of fees - so, the latter cost would not be additional to index-underperforming returns.)
Is that random picking or researched? Can you answer my question below. I don't have a lot of knowledge in finance. I've had these accts for 20-30 yrs. I don't have 20 yrs for market to come back
Correct. The analysis is intellectually retrograde. To complete the analysis he just did, he has to wait 15-20 years for the results. Or, as you say, he could have gone back 20 years, picked the best performing funds to that time, then see how they fared through today. I'd bet many of them crashed and burned and got closed out.
His filters are only for funds that are still active . This does not include funds that were closed that performed horribly . This is a classic case of survivorship bias .
Not going to lie I’ve started seeing your channel grow with subs and views and I’m very glad, because you definitely deserve them for everything you do. For the wisdom, teachings, and care you put into all the videos it’s amazing 😊👍
You were one of the first channels I found when I started seeking investment advice about a year ago. Unfortuntely I didn't sub and I couldn't find your channel again. Found it through a nondescript link on a new Chris Hogan video. Glad I found your channel again!
Does something escapes me or: 1) Survivor bias isn't addressed at all. I'm no Ramsey expert, but I've heard him repeat that you don't have to be that smart to identify a good fund, yet only a handful of them - carefully selected after the fact - can beat a broad large cap index like the S&P 500. 2) There is a word about it by the end of the video, but there is no risk performance adjustment. That's ironic, because Dave Ramsey seems adamant on factoring in risk (and rightfully so).
Are the dividends just paid out, or are they reinvested? Makes a huge difference. I listened and heard you say "total returns including dividends", but that isn't clear on "reinvested or paid out".
Dave's baby steps do work as for getting out of debt but I do agree I've always thought his investments were very vague. I get hes not going to say his specific investments but this break down is more realistic. I'm not ready for this but doing research and gearing up for when the pandemic ends. Great channel. Subbed. Keep up the good work.
I love Dave Ramsey. He provides a great public service. I don't judge him on the 12%, even though I think it is high. He is trying to get people excited about investing. However, I would never use a "Smart Investor Pro" to buy loaded mutual funds and additionally pay for financial planning. Dave most likely gets a commission cut on each of these funds sold as well as a 'finders fee' when people use these services. It would be interesting to know what standards he has for these Smart Investor Pros beyond making their payments to Papa Dave on time in cash!
Dave helps you get out of debt so you can start making him some money. Money doesn’t make itself. How else is he going to pay for his nice toys without dipping into his investments. Assuming he buys all his toys in cash as well.
When I used to work for UPS at first I tried just basic investment through 401K . A year later I decided to follow my husband's advice to listen to Dave Ramsey and took notes on how to invest, called the investment department and requested the change based on the notes I took after listening to Dave Ramsey's video... at the end of the year I was blown away with the huge positive difference in return. So based on my own personal experience, utilizing Dave Ramsey's suggestions put me in a much better financial situation. Just came across this channel and look forward to get vital financial advise as well.
The long term return on the market is 9%, including dividends. The reason Dave Ramsey and many others have exceeded 9% in the last 20 years is because of 0% or near 0% interest rates. This has had two effects. First, people have invested an inordinate percentage of their money in the market because alternatives such as CDs have terrible returns. The increased demand for stocks has driven up prices. Second, companies have used cheap money to do buybacks, which also drives up prices. Prices are no longer tied to fundamentals.
Dave Ramsey was the first financial “guru” that I listened too and he really got me intrigued with personal finance in general! However now that I am learning more and more I realized his advice is mainly used as a wake up call to the people who never even bothered to worry about money management. Without him however I do not think I would be majoring in Finance!
I think the problem people have with Dave Ramsey is that he never says what actual funds he's talking about and it seems everything he recommends is something he has a financial interest in. In general his idea of growth mutual funds is fine but so is simply buying an index fund that he is so dead set against
if you’re just starting, it may not be a bad idea to begin with an ETF since it gives you such broad exposure out of the gates, but remember that you can buy multiple funds to build a portfolio that fits you, I've put in quite an effort into vanguard and ARK ETF my portfolio has grown over 270% this year just hit the 7 figure mark...
@@benharrop6157 There are plenty of options out there if you're looking for the best ETF for beginners, but Vanguard and ark funds stand out among the competition....
@@benharrop6157 I don't ,i've been working with someone who changed my idea about the stock industry and how ETF's work ..I invest with the guidance of Nancy Jane Gluck, I came across her on an investment webinar, just search her name online to know more about her. She has a website, you can reach her from there..cheers
you're comparing the best performer(s) of the last 20 years to the S&P 500... what you should have done is chosen the best performer leading up to 20 years ago, and then seen what their performance was like leading up to now. those're the funds Dave would be steering you towards. odds are, you would not have chosen the best performer(s). so these mutual funds, at their best, can eek out a win over 20 years... if you happened to have picked exactly the right one(s) (four!), and never deviated from your devotion to them. if you want to reward Dave with your patronage to his affiliates, do it. if you want great performance with low risk of choosing wrong, pick a low cost mutual index fund.
This was a great video! The only other thing to mention would be adjustments for inflation which I don’t think you mentioned. We definitely don’t touch 12% when factoring for inflation. GREAT JOB! 👍🏻😎
Ariel Acosta you are right. I didn’t think I was indicating only mutual funds are prone to inflation since ALL are. Thanks for making the clarification known. Yes, sitting your cash in the bank is the WORST. Thanks for adding to the conversation. 👍🏻😎
Loved the breakdown.Been curious what funds he talked about, but I understand the due to legal and non-fiduciary reasons, he can't personally tell you his exact portfolio investments. but this video definitely helps. I'm investing the way he teaches, however I started during the worst year (2022) so I am far from seeing those numbers on my ROI, even though all my funds personally are up for YTD >15%. Loved your channel, definitely subscribing.
If you continue to invest through those low ROI periods, you are buying low, which is exactly what you want to do. Just make sure they have good fundamentals, so they go up when the turnaround finally happens. I saw my IRA sit at around $170k for the longest time in 2020 - 2022. Last October things finally popped and those purchases I made when COVID hit look pretty smart., now.
An incredible amount of work to try to prove something that could be instantly proved or disproved by Ramsey himself, if he would just be open and honest.
Great video. It showed that 10%+ returns are reasonable to expect, but at the same time also shows that using a SP500 index will provide some top level returns with no fees and no risk of under-performance. Personally I own index and non-index and shyed far away from front load funds.
Dave Ramsey always says to people if you save for from age 27 to 67, in a Roth IRA you'll end up with 5 to 6 million dollars and if I'm half wrong, 2 to 3 million. The stock market has returned around 7 percent since ww II. I think that's what he means. He's trying to get you excited about investing.
I agree totally. I have guys who I've worked with now for over 20 years, and they've not saved a penny towards retirement. If someone can excite you about looking forward to investing and putting back so you can have something for your future......how is that wrong.
kenpo1203 5 to 6 million? Did you forget there’s a cap to Roth contributions? Even if you’re half wrong, you would still need a starting principal of $50k + maxing out the Roth every year for 40 years break 2 mil at age 67. Idk any 27 year old with a spare $50k and an extra $500/month...
Caleb Buchta young nurses have that kind of money. I work with a girl below 30 years old who put 30% down from her own savings on a 350K house and bought her 40K Lexus cash. She only spends 1 paycheck a month and saves the other. She has 6 digits in savings + puts 18%:month in 4O1K. Of course she has no kids. Anyway, my point is there are 24 year old savers out there.
What a terrific video for a newbie like me. That was extremely informative and it was exactly the complement or supplement that I needed to the Dave Ramsey information! 👍🏻👍🏻👍🏻
Dave is a huge contributor in my ability to pay off my Lowes grill in 1 month instead of 3. I was able to do a Weber 310 debt free scream because of that man, and for that....I'll always be grateful.
utseay I am a DR girl but I have a big respect on on Dustin as well. Dave is giving away advice for free on how to manage your money get out of debt and Dustin does manage investment so its ok to like both of them haha
1.) Are they guaranteed to continue to out perform? The managers have got to closing in on retirement. 2.) So how did the funds early adopters choose the funds at inception. You know, the ones who really got to experience the growth? You cherry picked the best and got maybe 1-2% extra ... not 12% If I have to choose between survivor's bias or an average return with lower risk . . . I'll choose the later.
no they're not guaranteed to outperform. But neither are indexes guaranteed to represent market averages. None other than Jack Bogle predicted indexes could lose their advantage if they came to dominate the market. Michael Burry, Carl Icahn, Jeff Gunslach and Robert Shiller (among others) have raised possible red flags about passive indexing
@@harrisonwintergreen1147 not when the percent of trades from index funds is only 5% of market volume. Indexers don’t set prices yet, not even close, because 95% of prices are determined by active traders. I also believe humans are opportunistic in trying to find mispricings which will squash market inefficiencies.
I dont care which one Is better. AS LONG AS I INVEST AND I CAN MAKE COMPOUNDED INTEREST from it Im all in. Many people benefit from various types of investing
Vanguard Total stock market index fund. All you need to start. However do a little research and find out what mutual funds are and what you can expect by investing in them.
Pick an aggressive fund that roughly tracks the S&P 500 but is a lot more volatile. Invest periodically, putting more in when the fund is down below the S&P 500. Put less in when it’s performing above The S&P 500. Do that over a long period of many years.
obviously if you pick the 5% best performing funds over the last 20yrs in any group the numbers look good, best as they love telling us past performance may not be an indicator of future performance
Doesn't this analysis fall short because of survivor ship bias and look ahead bias? You filtered out funds based on performance, but the top performing funds of the past 20 years won't necessarily be the top performing funds over the next 20.
+...And Jam Tracks For All Maybe WW3 will start tomorrow but that does not mean you cannot achieve 12% maybe it will only be 10% but then again it does not mean you cannot achieve 12%.
Been awhile since anyone commented, but I think it’s easy to see how Dave had gotten the return he did. The high growth mutual funds consistently perform better coming out of a recession or downturn...... Invest more of your money in the downturns, and you can hit Ramsey’s 12% number or higher. He does say his mutual funds produced x. You can be in the same mutual funds as someone else and have different returns if you are doubling down at the right times.
I think his message is more about getting out of debt. His 4 fund advice is for simple strategies, and I haven't found anyone else that gives strategies as simple as he does.
2 problems: 1. How do you choose the "best performing funds" ahead of time? 2. Those funds seem to have made much of their money during the really quite extraordinary last few years. What evidence is there that this level of return (thanks in no small part to government influence coupled to low inflation) will continue for the next 20 years and not just revert to mean?
Great video and information. I think Dave Ramsey is very common sense minded and I have done all of his baby steps in the past 5 years. IT WORKS! Your data share was very helpful. Thank you.
What people dont think about dave Ramsey is that he gives you the tools to get out of debts to max retiremet and kids collegue funds ..most people these days are in debt and cant max their retirement accounts. But ETF's aso work ..if you know how to choose them.
I appreciate how you research & approach putting info out to us. And also appreciate that you are respectful of others while having a good time running the numbers!
What you said about invest for your goals is similar to Dave teaching not to invest in anything you don’t understand regardless of who suggested it including him. I liked the video. I have learned a ton from Dave. His teachings have allowed me to look at other sources and think for myself so I will continue to listen. I like that he doesn’t tell which funds he is in as it compels me to learn for myself and not just follow. Also it takes away the ability to blame him for results one way or another. People will still blame but lose legitimacy in doing so. Thanks for the video
I’ve got a Vanguard 3 fund portfolio in my Roth IRA and I am quite happy with it. Minimum costs mean that money goes into my pocket, and not a broker’s.
Why not look at these funds, AIVSX(Investment Company of America) 1/1/1934 Inception date, Avg for almost 86 years 12.1% ; AGTHX(Growth Fund of America) 12/1/1973 Inception date; avg. 13.35% ; ANCFX(Fundamental Investors) 8/1/'1978 Inception date, Avg 12.38% ; and there are other funds in the American Funds lineup that have had significant performances over the S&P 500 over its life time. I don't know that you missed anything, you just did not see some items that have hads great performances.
Good video. Dave has mentioned American funds several times that it's this one fund that's been returning 12% since the 1930s, most point to AIVSX as the fund he's referring too. I am curious with international funds being stagnant for the past 15yrs I wonder what would happen if you re-ran without international? Ramsey has lamented about possibly not recommending international funds but ultimately concluded to stay the course. Also of interest, this is directly from his website "When Dave says you can expect to make a 12% return on your investments, he’s using a real number that’s based on the historical average annual return of the S&P 500." And I have to call BS on that...when Dave talks about 12% he always mentions picking funds with long track records that consistently beat the market aka not index funds.
I like Ramsey's work, but also feel that he is overdoing it the 12% thing. Now is 9-10% close enough to 12%? Not in my world, especially when one could assume that taking 8% annually from portfolio for retirement is ok (bad advice IMO). But I still like the rest of what he is teaching.
The only common things that I can think of that might outperform this set up are real estate (which depends upon how good you are at buying and managing it) and picking individual stocks (probably much riskier than the mutual funds, and again depends upon your personal ability to pick them well) Therefore, it would be very hard to compare those two things. Anyone can buy an S&P fund, or follow Dave's fairly simple advice and hold them (or keep buying them) for decades. It does not take personal skill or diligence.
@@jamisojo the people he has helped are the simple minded ones. Everything he says I was already doing on my own . Because it made sense. Expect for paying smallest to highest account when it comes to debt. I always pay highest to lowest.
Love the video.....one thing we don’t know is how many funds Ramsey has, the frequency at which he buys, or exactly how he comes up with his 12%. He’s also stated about funds beating the market on AVERAGE, not every singe year. One thing I’ve gathered in a few years watching Dave, he doesn’t give all the clues required to solve his puzzle!
Womderful analysis. The weak point appears to be the assumption that someone 20 years ago could pick the funds that would be top performers out of tens of thousands of “also ran” funds. That is a little bit like saying that picking Tesla, Apple, Facebook etc 20 years ago would have made you rich by now. It implies precognition which none of us have. If I had picked the right horse at the track every week, I would be rich now too. No one is likely to pick a fund today that will be the top performer 20 years from now. Suggestion: Can you run the analysis with the average of the funds since this is what the average return will be? I.e. a more typical return scenario.
The YCharts screener you are using does not evaluate a point in time decision. You are selecting from current funds that are still in existence after multiple decades. Therefore, all of the ones that were previously closed or merged are missing. They were part of the opportunity set 20 + years ago, and many were top performers until their style came out of favor, assets bled out, and the fund closed. This happened all throughout the tech bubble, and more often than people think. It's always interesting to look at the SPIVA persistence dashboard in addition to the standard scorecard. It allows you to see the changes in fund leadership. So, are the funds that are top performers in one period top performers in 3 and 5 years? The data is emphatically no. they also give information as to how many funds fail and merge. Besides that, I really appreciate the format walking people through some illustrations I get them thinking about how to reality check some of the mass-produced advice put out by the industry.
ETFs (many of them) have a problem of not actually having the amount of stock on hand for the amounts invested (per customer). If you take the advice from many of the top investors (Buffet, Munger, Bogle, etc.) they have all advised against ETF investment for a few reasons including the one that I have laid out above. In the end, the difference of outcome between funds, is not simply fees.
Dave has really sparked my interest in the whole concept of financial literacy and I have to give him credit for that- I first got turned onto him when I searched on UA-cam “401k loan” after an in law said she was going to take our a 401k loan to pay off a car loan- I was pretty sure that was a poor idea but figured I’d do some research to be sure. Needless to say I stumbled on a video of Dave screaming how dumb that was and I’ve been hooked ever since. In the last 2.5 years I’ve listened to every Dave Ramsey podcast for the last 4 year time period, every episode of Stacking Benjamins and every episode of Paula Pant’s “Afford Anything”. My takeaway is that the average investor who is savvy and well educated on investing would probably be well served in putting 100% of their money in VTSAX or SP500, or maybe 70% in VTSAX and 30% in a total world stock market ex US. And anyone who has studied passive indexing and geeked out to Bogle speeches for hours would likely think I’m not terribly far off one way or the other. We can argue over the merits of international vs US allocation, equities vs bond allocation, mitigating sequence of return risk, ideal emergency fund amount, safe withdrawal rate, pay off mortgage or invest, etc etc but for the most part it’s splitting hairs. If nothing I wrote makes a lick of sense to you or you’ve fallen asleep while reading it then just get a smartvestor and save as much money as you can after paying off debt- you’ll do just fine.
Dave's advice is time proven and true. Because of his advice I had extra money laid back at a time when I desperately needed it. I also have a great financial advisor. Her view on investing is not really different than Dave's.
Uhh yeah the numbers don’t lie Dave’s investing advice is flat out wrong. He wins you over by getting out of debt and that’s great but investing wise the facts are the facts
My opinion its all about attitude behavior.. i use a professional and check on it monthly and yearly... wish i found you sooner jazz wealth my favorite financial advisors always honest advice
Good work! Your result matches what matches what makes sense. I've always thought Dave's advice was good for pre-retirement investors where volatility is second to ease of investment.
I do like Dave Ramsey but I like index funds. I agree with Dave about bond funds. I disagree with him on the SBA loans during this crisis. He said don’t take the money but I don’t think he understands the PPP payment protection. your company uses the money to keep workers in place for ten weeks the loan is forgiven. Over all Dave does a good job.
Well I invest through my job (which is a state job so I'm in my state's investment system) and have limited options in investing. But I do follow Dave's advice. 25% in low, mid and high cap, then 25% in international. Right now my rate of return is around 25%. Now that's just 2 years in but I'm happy with the results so far.
People don't criticize Dave because he says 12% is possible.They criticize him because he teaches that past performance IS a predictor of future returns and it's super easy to pick them. Let's travel 30 years back in time and look at every fund in existence and their return over the previous 30 years. Fund A : 11% Fund B : 4% Fund C : 0% Fund D : -5% With Dave's approach you simply pick Fund A because it had 15% over the last 30 years so it's likely to continue. Now, today, 30 years later let's look at the results: Fund A: No longer exists. Bankrupt. Fund B: 5% Fund C: No longer exists. Bankrupt. Fund D: 11.9% Now, the day you did this video you search all possible funds in existence and you get 2 results: Fund B: 8% Fund D: 19% Your conclusion: "See, it's possible to get 11.9% so Dave Ramsey is close enough. Had you picked D you would have got 11.9% over the last 30 years." The problem is no one would have picked it 30 years ago and the results are flawed by survivorship bias. You results of 65k funds does not include the thousands that went bankrupt. Plenty of research has been done to prove it's virtually impossible for funds to beat the market over a long period of time. It's something like 1% and as John Bogle says "Don't try to find the needle in the haystack, just buy the haystack."
I would like to point out that when Ramsey refers to 12% return, he is referring to an average return, not an annualized return. You can find that in a footnote on his website somewhere. So his target annualized returns are probably about in line with the market or slightly better. I think most of these fund mixes would meet what he is striving for.
Lots of funds use average rather than annualized returns. Look at fidelity. FSCSX has averaged 19% over the last decade and FBGRX has averaged 15%. Why is Ramsey the whipping boy for repeating data from all the big investing firms?
That's like saying it isn't wrong to say someone is six feet tall rather than five-feet-ten-inches, because the person measuring decided to use his own literal feet, which happened to be of a certain size.
What a great breakdown! Couldn’t see what the funds were though. Any chance in sharing them in the video notes or in a response on the comments on what they were?
Doesn't Dave Ramsey also suggest using an ELP? If so, then wouldn't it be prudent to include the ELPs fees on top of the portfolio returns? Wouldn't that show true returns after ALL fees vs market returns?
One suggestion would be to balance the distribution on a regular basis -vs- buy and hold the entire time, keeping the value of each category roughly 25% throughout the holding period.
He's said before that he invests in one that is over 80 years old, how many are that old? I invest in one that's 85+ so I kinda assumed it's the same one
Everytime he mentions 12% return m. fund in videos I've seen, I comment: Which one? Name one! No one has an answer. Thank you sir, that was very much appreciated.👍🏻
Like the scanner you're using! What's the name of it? Most people have no idea, all you have to do is look, there are plenty of funds that beat the s&p. its only a hand full. everyone jumped on the low fee wagon scared to pay a fee but there are funds that earn well above 12% over 30yrs after taxes and fees, many of those funds are closed to new investors or have a 6 or 7 figure minimum investment. many new investors with $1000, end up getting a index lol. those funds with low fees only earn 5 or 6% after fees and taxes. thats too conservative if you're 30yrs old. if you're 60 now, you have no business in aggressive growth funds. lol
I use a couch potato investment strategy. 50% in the total bond market and 50% in the total stock. I use vanguard index funds. I enjoy the smooth ride that bonds give. I can sleep well at night and get a big enough return. I first learned about this strategy from Scott Burns in Dallas.
I am a little torn, I agree..he does a great service and has helped millions of people. But, laughing off a shortfall of 1.2 - 1.8% per annum is not a small issue. Type in 12 v 10.5% in to a compounding calculator for 30 years. When you do so, someone is going to end up with 30% less money (not under 10% like the one year rate of return might hint) at the end of the rainbow. Taking his irrational expectations of the market could fool someone in to thinking they could plan on working less years than required to save.
All of Dave’s teachings are to keep things simple for people that never learned to handle money. It’s one size fits all, which is good because if it’s too complicated people won’t save for retirement at all. What Dave really wants is for people to just invest in something besides depreciating garbage they can’t afford to begin with.
But if a caller starts recommending index funds and ETFs you can see how quickly he will shut them down. He likes the revenue from class A going to himself.
@@travis1240 yes his smart vest pros give me a commission for the people he brings them (the 12% he claims would be realistic if there were NO FEES taken out before the investing starts).
He should suggest any type of mutual funds like sp500 and stuff
Very true!
Absolutely agree 100%
In my opinion getting out of debt is the important thing , my wife and I paid off $122,000 of debt. Now we can invest any way we want and we do take Dave’s advice in investing but if I want to something differently in addition to Dave’s investing I CAN b/c we are DEBT FREEEEEEEEEEEE!!!!!!
You're 100% correct. Debt free is the way to go. We paid off our mortgage in 2000 (shaved 5 years
off by adding a little extra to the
principal). We pay credit card bills
in full each month, and we buy used cars cash only.
focusing solely debt means that you start saving late, and the late saver never catches the early saver. Why would you dump money into something that is only a 4% IR when you could utilize the market and get an easy 7-8% return?
@@sholtan2288 according gunderlach we will see a recession from this 300 percent high and may be 10 to 15 years before we ever reach where we are at today. So why would Dave ramsey have you eat ric and beans and live your youth poor working 3 jobs so you can save and put your money in the stock market at the top of the bull run, Because dave ramsey doesnt pay attention to stocks or where market is he just picks top mutual funds then presto 12 percent return per year for rest of your life.
Dave says its not rocket science
CB FIT Runner that would be unprecedented in the entire history of the market. People have said that every year during the run up of the market since the last crash. If you would’ve kept your money on the sidelines you would’ve missed incredible returns. I don’t base much on the so-called “experts”. Buy and hold for the long term and recessions won’t matter.
For starters, the difference between 10% and 12% is HUGE. Over 30 years it works out to a difference of something like an extra 30% more or less. The problem I have with your test is you filtered it out to only show funds that performed in the top 95 percentile. Then out of that you further picked the top 3. So what you proved is even if you lucked out and out of 66,000 funds managed to luckily pick the 3 very best ones you STILL would have only ended up with 10%. What would those returns woud have been if you didn't pick the absolutely best performers? What was the mean average of those three categories? Since the top 3 best only outperformed the S&P500 by about 1.5% over the test period I'd be willing to bet on average, the vast majority of combinations underperformed the overall market.
Don't get me wrong, I like Dave Ramsey. The problem he takes so much flack for this is because hes wrong. Its been proven over and over you are almost better skipping all the fees, all the bs advisors, and invest in index funds.
Let's not forget about survivorship bias which wasn't even mentioned . Ramsey is good for anyone that has hair on fire crisis type finances and that is it . Stick with index funds . Set it and forget it .
The more I watch your channel the more I am impressed with your approach and how you are respectful to all levels of investors and other advisors.
The difference between you and Dave is he keeps it simpler. He's concise and to the point. All your graphs and visuals after a while are exhausting because the average person has a very shallow attention span. Too much info is just as bad as none at all. Make it short, usually 8 minutes or less. Hit your points hard, and the consumer will do it or not.
So basically, what you're saying is that Dave Ramsey is for people with ADHD?
@@AK-47ISTHEWAY Yep, and 93% of the American public.
Very classy way of breaking down Dave’s investing strategy. He is a Icon in his industry. Love your channel. Been watching you for a year now. Great informative videos.
@kingofallcrypto haterade
@kingofallcrypto the amount of FREE advice Ramsey gives is insane. Check him out before throwing shade.
Great honest review. Dave first gets you out of debt. He then constantly says with regards to investing "if I am half wrong". He gives people help and hope. The critics are wearing tinfoil hats.
Thanks for sharing Jew
You did an excellent job of presenting facts in a non-argumentative, constructive, and transparent way. This video alone (the first of yours I’ve seen) inspired me to subscribe and follow your content. I learned financial basics through Larry Burkett many years ago, and find that Dave follows many of the same processes, but no one is above the math! People don’t like Dave telling them it’s their own fault when they’ve mismanaged their assets... such is the new millennium. I see no need to defend or accuse him, as you demonstrate here it’s close enough. The point is that if you save and invest, that alone will make more difference than any other factor. One or two percent, give or take, won’t matter on the money you never invested.
I agree 👍👍👍
Only thing is that Dave doesn’t mention these funds. So the average person might pick 99% of those mutual funds that underperformed with high fees. For someone who wants to keep it simple, I can just go with S&P index fund which each of the major brokerage has.
Well done. Thank you sir. I found several mutual funds that since inception have returned a bit over 12-percent and they are over 30 years old. I like that you took the time to dig through the categories.
He is being more conservative. There are new funds in the last 10 years that have very conservative investment strategies that are transparent. If you are able to ascertain their level of quality you can easily beat 12% but have to have a risk vs reward strategy.
I like listening to Dave Ramsey, but don't really follow his investing advice. Prefer to go Vanguarding instead. I do like Dave's lifestyle advice.
Scott are you investing in index ? If you don't mind sharing.Thank you
Scott McMullen
Dave's lifestyle is a luxurious lol but he can actually afford it.
@@beatakrawczyk6079 Yes, I do.
@@XxChuyoxX I agree; what I meant was his lifestyle advice to live carefully within your means and avoid taking on debt.
@Scott McMullen. Thank you Scott. I am new to this and just learning about it. Want to invest with Vanguard
S&P seems to be a good go to, forget all the BS and just keep buying every major drop
Because the S&P is a curated list of the top performing companies, right? As opposed to other curated lists that have to do with best guesses of how they will perform?
If you keep it simple, like you say, and just invest in the S&P then you don’t need a broker, is that right?
Came across this video I’m doing research learning all about stocks and the terminologies that come with the investing world and I appreciate and love this video. I think people like you and Ramsey are amazing giving this information that we would never get as we were all coming up and learning in school and now it’s right at our fingertips. There is truly no excuse why people today or not driving with information being out here. I am already 33 but it’s never too late to start learning. This video is two years old but I found it and I am now a subscriber so thanks. It’s a shame that this was never taught in public schools growing up and that’s because it was for the rich to stay rich and not have competition.
Good video, but I think this highlights exactly why Dave's advice is spotty more than demonstrate that he deserves a pass. You picked THE BEST mutual funds and even those didn't hit his 12% mark. I would have preferred to see how some of the median funds performed over the same period.
Exactly, the chances of someone picking a top mutual fund is near zero .
@@Truthfinder1you could actually quantify the odds. They would be more than zero. But I get your point.
Since we're looking at a 20 year horizon, wouldn't it have been prudent to go back 20 years ago and find the funds that would have met the criteria and see what their performance would be today.?
Finally!!!
I been waiting for this video for a long time now....
Dave and Dustin follower right here!
Jeremy is pretty awesome too.
Best thing ever happened to me from a financial stand point is clicking on this guy named Dave Ramsey on youtube! My wife and i are baby step 6 and finale debt(home) will be paid off in about 4 years! We have more money saved up that we never thought was possible. Good video you have here and thanks!
"This guy" lol glad you like us more though and thanks for watching!
The fact is you picked the best performing mutual funds out of 66,000 and it did slightly better than just the S&P500. I don't believe the reward of picking the right mutual fund out weighs the risk of picking the wrong one.
Yes. Faulty analysis aside, he proved that trying to beat the market using managed funds is a fool's errand. You'd have to get supremely lucky, picking one of three out of 66,000 funds correctly thirty years ago.
what software are you using to find all these mutual funds? I really like the breakdown and filters available.
It looks like Microsoft Excel.
It's all available on Morningstar. It's an impartial 3rd party which reports the #'s and doesn't try to sell you anything.
important point, no way to tell if the fund that performed the best in the last will outperform in the future.
Can you share the study on a Google Sheet so we can play around with it? That would be awesome!
Here's what I think you're missing: Since these are actively managed funds, cherry picking the funds that had good historical returns is misleading. You're right that someone COULD HAVE picked those funds 20 years ago, but the odds are that a given person would have picked within the 82 percent of funds that didn't beat the market in that time period. Likewise looking forward, there's an 82 percent chance that the active funds you pick today will underperform the market over the next 20 years, AND you're paying higher expenses and fees.
I completely agree with this nature of observation, and am glad to find that someone posed it. (I will quickly amend, though, that fund-returns are calculated net of fees - so, the latter cost would not be additional to index-underperforming returns.)
Is that random picking or researched? Can you answer my question below. I don't have a lot of knowledge in finance. I've had these accts for 20-30 yrs. I don't have 20 yrs for market to come back
Correct. The analysis is intellectually retrograde. To complete the analysis he just did, he has to wait 15-20 years for the results. Or, as you say, he could have gone back 20 years, picked the best performing funds to that time, then see how they fared through today. I'd bet many of them crashed and burned and got closed out.
His filters are only for funds that are still active . This does not include funds that were closed that performed horribly . This is a classic case of survivorship bias .
Not going to lie I’ve started seeing your channel grow with subs and views and I’m very glad, because you definitely deserve them for everything you do. For the wisdom, teachings, and care you put into all the videos it’s amazing 😊👍
You were one of the first channels I found when I started seeking investment advice about a year ago. Unfortuntely I didn't sub and I couldn't find your channel again. Found it through a nondescript link on a new Chris Hogan video. Glad I found your channel again!
Does something escapes me or: 1) Survivor bias isn't addressed at all. I'm no Ramsey expert, but I've heard him repeat that you don't have to be that smart to identify a good fund, yet only a handful of them - carefully selected after the fact - can beat a broad large cap index like the S&P 500. 2) There is a word about it by the end of the video, but there is no risk performance adjustment. That's ironic, because Dave Ramsey seems adamant on factoring in risk (and rightfully so).
Are the dividends just paid out, or are they reinvested? Makes a huge difference. I listened and heard you say "total returns including dividends", but that isn't clear on "reinvested or paid out".
if it's inside a retirement account it is to be assumed that it's reinvested.
Dave's baby steps do work as for getting out of debt but I do agree I've always thought his investments were very vague. I get hes not going to say his specific investments but this break down is more realistic. I'm not ready for this but doing research and gearing up for when the pandemic ends. Great channel. Subbed. Keep up the good work.
I love Dave Ramsey. He provides a great public service. I don't judge him on the 12%, even though I think it is high. He is trying to get people excited about investing. However, I would never use a "Smart Investor Pro" to buy loaded mutual funds and additionally pay for financial planning. Dave most likely gets a commission cut on each of these funds sold as well as a 'finders fee' when people use these services. It would be interesting to know what standards he has for these Smart Investor Pros beyond making their payments to Papa Dave on time in cash!
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Dave helps you get out of debt so you can start making him some money. Money doesn’t make itself. How else is he going to pay for his nice toys without dipping into his investments. Assuming he buys all his toys in cash as well.
He is a 🤡🤡🤡
When I used to work for UPS at first I tried just basic investment through 401K . A year later I decided to follow my husband's advice to listen to Dave Ramsey and took notes on how to invest, called the investment department and requested the change based on the notes I took after listening to Dave Ramsey's video... at the end of the year I was blown away with the huge positive difference in return. So based on my own personal experience, utilizing Dave Ramsey's suggestions put me in a much better financial situation.
Just came across this channel and look forward to get vital financial advise as well.
Outstanding work Dustin. I hope Dave sees this!
The long term return on the market is 9%, including dividends. The reason Dave Ramsey and many others have exceeded 9% in the last 20 years is because of 0% or near 0% interest rates. This has had two effects. First, people have invested an inordinate percentage of their money in the market because alternatives such as CDs have terrible returns. The increased demand for stocks has driven up prices. Second, companies have used cheap money to do buybacks, which also drives up prices. Prices are no longer tied to fundamentals.
Dave Ramsey was the first financial “guru” that I listened too and he really got me intrigued with personal finance in general! However now that I am learning more and more I realized his advice is mainly used as a wake up call to the people who never even bothered to worry about money management. Without him however I do not think I would be majoring in Finance!
I think the problem people have with Dave Ramsey is that he never says what actual funds he's talking about and it seems everything he recommends is something he has a financial interest in. In general his idea of growth mutual funds is fine but so is simply buying an index fund that he is so dead set against
if you’re just starting, it may not be a bad idea to begin with an ETF since it gives you such broad exposure out of the gates, but remember that you can buy multiple funds to build a portfolio that fits you, I've put in quite an effort into vanguard and ARK ETF my portfolio has grown over 270% this year just hit the 7 figure mark...
I’m new to all this, which is the best ETF
Wow this is really impressive...congrats on your success
@@benharrop6157 There are plenty of options out there if you're looking for the best ETF for beginners, but Vanguard and ark funds stand out among the competition....
@@jakehart9346 I said I was going to get into active funds this yr but haven't really wrapped my head around it...do you do this on your own ?
@@benharrop6157 I don't ,i've been working with someone who changed my idea about the stock industry and how ETF's work ..I invest with the guidance of Nancy Jane Gluck, I came across her on an investment webinar, just search her name online to know more about her. She has a website, you can reach her from there..cheers
you're comparing the best performer(s) of the last 20 years to the S&P 500... what you should have done is chosen the best performer leading up to 20 years ago, and then seen what their performance was like leading up to now. those're the funds Dave would be steering you towards.
odds are, you would not have chosen the best performer(s). so these mutual funds, at their best, can eek out a win over 20 years... if you happened to have picked exactly the right one(s) (four!), and never deviated from your devotion to them.
if you want to reward Dave with your patronage to his affiliates, do it. if you want great performance with low risk of choosing wrong, pick a low cost mutual index fund.
This was a great video! The only other thing to mention would be adjustments for inflation which I don’t think you mentioned. We definitely don’t touch 12% when factoring for inflation. GREAT JOB! 👍🏻😎
Ariel Acosta you are right. I didn’t think I was indicating only mutual funds are prone to inflation since ALL are. Thanks for making the clarification known. Yes, sitting your cash in the bank is the WORST. Thanks for adding to the conversation. 👍🏻😎
Loved the breakdown.Been curious what funds he talked about, but I understand the due to legal and non-fiduciary reasons, he can't personally tell you his exact portfolio investments. but this video definitely helps. I'm investing the way he teaches, however I started during the worst year (2022) so I am far from seeing those numbers on my ROI, even though all my funds personally are up for YTD >15%. Loved your channel, definitely subscribing.
If you continue to invest through those low ROI periods, you are buying low, which is exactly what you want to do. Just make sure they have good fundamentals, so they go up when the turnaround finally happens. I saw my IRA sit at around $170k for the longest time in 2020 - 2022. Last October things finally popped and those purchases I made when COVID hit look pretty smart., now.
An incredible amount of work to try to prove something that could be instantly proved or disproved by Ramsey himself, if he would just be open and honest.
Great video.
It showed that 10%+ returns are reasonable to expect, but at the same time also shows that using a SP500 index will provide some top level returns with no fees and no risk of under-performance.
Personally I own index and non-index and shyed far away from front load funds.
Dave Ramsey always says to people if you save for from age 27 to 67, in a Roth IRA you'll end up with 5 to 6 million dollars and if I'm half wrong, 2 to 3 million. The stock market has returned around 7 percent since ww II. I think that's what he means. He's trying to get you excited about investing.
I agree totally. I have guys who I've worked with now for over 20 years, and they've not saved a penny towards retirement. If someone can excite you about looking forward to investing and putting back so you can have something for your future......how is that wrong.
kenpo1203 5 to 6 million? Did you forget there’s a cap to Roth contributions?
Even if you’re half wrong, you would still need a starting principal of $50k + maxing out the Roth every year for 40 years break 2 mil at age 67.
Idk any 27 year old with a spare $50k and an extra $500/month...
@@barefoothippielibtard9691 you should address Dave Ramsey because that is what he tells his audience.
Caleb Buchta young nurses have that kind of money. I work with a girl below 30 years old who put 30% down from her own savings on a 350K house and bought her 40K Lexus cash. She only spends 1 paycheck a month and saves the other. She has 6 digits in savings + puts 18%:month in 4O1K. Of course she has no kids. Anyway, my point is there are 24 year old savers out there.
@@JoyofRVing That Lexus purchase was stupid though and the house isn't much better.
everyone's an expert when the markets rises
Invest in a low cost S&P index fund and you will not lose over a 10-year period.
Right! I notice a lot of “new” finance channels popping out of no where this year.
@@Jesseg-rj6xf Doesn't make this advice any less valid. It is good, conservative, long-term investing advice.
Market is crashing lol
I team Buffett/Munger, by the way. Listen to billionaires. They are smarter than millionaires. Index all day.
So the richer you are the smarter you are?
What a terrific video for a newbie like me. That was extremely informative and it was exactly the complement or supplement that I needed to the Dave Ramsey information! 👍🏻👍🏻👍🏻
Dave is a huge contributor in my ability to pay off my Lowes grill in 1 month instead of 3. I was able to do a Weber 310 debt free scream because of that man, and for that....I'll always be grateful.
utseay I am a DR girl but I have a big respect on on Dustin as well. Dave is giving away advice for free on how to manage your money get out of debt and Dustin does manage investment so its ok to like both of them haha
I absolutely loved this breakdown. I hate figuring out investments, but always felt Ramsey's numbers were a bit high. At least it's not TOO far off.
Dave has always said 8-12%! Atleast that’s what I’ve always heard the man say!!
He says live on 8 and keep 4 for inflation....
1.) Are they guaranteed to continue to out perform? The managers have got to closing in on retirement.
2.) So how did the funds early adopters choose the funds at inception. You know, the ones who really got to experience the growth?
You cherry picked the best and got maybe 1-2% extra ... not 12%
If I have to choose between survivor's bias or an average return with lower risk . . . I'll choose the later.
no they're not guaranteed to outperform.
But neither are indexes guaranteed to represent market averages. None other than Jack Bogle predicted indexes could lose their advantage if they came to dominate the market. Michael Burry, Carl Icahn, Jeff Gunslach and Robert Shiller (among others) have raised possible red flags about passive indexing
@@harrisonwintergreen1147 not when the percent of trades from index funds is only 5% of market volume. Indexers don’t set prices yet, not even close, because 95% of prices are determined by active traders. I also believe humans are opportunistic in trying to find mispricings which will squash market inefficiencies.
I found all what Dave recommended without no problem honestly
Same here. Not sure what his beef with Dave is.
@@DennisRay99 Class A load funds were acceptable in the 80s. Now that's throwing money away.
@@travis1240 Correct
I dont care which one Is better. AS LONG AS I INVEST AND I CAN MAKE COMPOUNDED INTEREST from it
Im all in. Many people benefit from various types of investing
Where did you get that data set from and what software are you using? Wonderful video, thanks!
Looks like he is not sharing his secrets. 😉
I'm with you on only picking no load funds..earned that from Clark howard
How do i find the actual names of the funds & how do i go about investing in them ???
Morningstar research free at your public library.
Vanguard Total stock market index fund. All you need to start. However do a little research and find out what mutual funds are and what you can expect by investing in them.
Pick an aggressive fund that roughly tracks the S&P 500 but is a lot more volatile. Invest periodically, putting more in when the fund is down below the S&P 500. Put less in when it’s performing above The S&P 500. Do that over a long period of many years.
I was going to thumbs down this video and I watched him go through multiple examples. I give you a thumbs up.
obviously if you pick the 5% best performing funds over the last 20yrs in any group the numbers look good, best as they love telling us past performance may not be an indicator of future performance
Doesn't this analysis fall short because of survivor ship bias and look ahead bias? You filtered out funds based on performance, but the top performing funds of the past 20 years won't necessarily be the top performing funds over the next 20.
+...And Jam Tracks For All
Maybe WW3 will start tomorrow but that does not mean you cannot achieve 12% maybe it will only be 10% but then again it does not mean you cannot achieve 12%.
Been awhile since anyone commented, but I think it’s easy to see how Dave had gotten the return he did. The high growth mutual funds consistently perform better coming out of a recession or downturn...... Invest more of your money in the downturns, and you can hit Ramsey’s 12% number or higher.
He does say his mutual funds produced x. You can be in the same mutual funds as someone else and have different returns if you are doubling down at the right times.
I’m clueless about investing but I’m found Ramsey, and in turn found you. Great video!
I think his message is more about getting out of debt. His 4 fund advice is for simple strategies, and I haven't found anyone else that gives strategies as simple as he does.
Well done! I think the big message Dave is trying to put out there is Save People!!
This was an absolutely amazing presentation. You were brilliant just like Mr. Ramsey. God bless you
I’ll give you a like just for the Bruce Williams mention.
2 problems:
1. How do you choose the "best performing funds" ahead of time?
2. Those funds seem to have made much of their money during the really quite extraordinary last few years. What evidence is there that this level of return (thanks in no small part to government influence coupled to low inflation) will continue for the next 20 years and not just revert to mean?
It amazes me that Dave gets so many other things right and yet gets mutual funds so wrong.
Great video and information. I think Dave Ramsey is very common sense minded and I have done all of his baby steps in the past 5 years. IT WORKS! Your data share was very helpful. Thank you.
What people dont think about dave Ramsey is that he gives you the tools to get out of debts to max retiremet and kids collegue funds ..most people these days are in debt and cant max their retirement accounts. But ETF's aso work ..if you know how to choose them.
I appreciate how you research & approach putting info out to us. And also appreciate that you are respectful of others while having a good time running the numbers!
What you said about invest for your goals is similar to Dave teaching not to invest in anything you don’t understand regardless of who suggested it including him. I liked the video. I have learned a ton from Dave. His teachings have allowed me to look at other sources and think for myself so I will continue to listen. I like that he doesn’t tell which funds he is in as it compels me to learn for myself and not just follow. Also it takes away the ability to blame him for results one way or another. People will still blame but lose legitimacy in doing so. Thanks for the video
What program or website did you use to pull up all the mutal funds?
Please let me know, thanks
It's all available on Morningstar. It's not on the 1st page, you have to look for Investor Screener
I’ve got a Vanguard 3 fund portfolio in my Roth IRA and I am quite happy with it. Minimum costs mean that money goes into my pocket, and not a broker’s.
Great in depth look thanks for the hard work guys!!
Why not look at these funds, AIVSX(Investment Company of America) 1/1/1934 Inception date, Avg for almost 86 years 12.1% ; AGTHX(Growth Fund of America) 12/1/1973 Inception date; avg. 13.35% ; ANCFX(Fundamental Investors) 8/1/'1978 Inception date, Avg 12.38% ; and there are other funds in the American Funds lineup that have had significant performances over the S&P 500 over its life time. I don't know that you missed anything, you just did not see some items that have hads great performances.
Good video. Dave has mentioned American funds several times that it's this one fund that's been returning 12% since the 1930s, most point to AIVSX as the fund he's referring too. I am curious with international funds being stagnant for the past 15yrs I wonder what would happen if you re-ran without international? Ramsey has lamented about possibly not recommending international funds but ultimately concluded to stay the course.
Also of interest, this is directly from his website "When Dave says you can expect to make a 12% return on your investments, he’s using a real number that’s based on the historical average annual return of the S&P 500." And I have to call BS on that...when Dave talks about 12% he always mentions picking funds with long track records that consistently beat the market aka not index funds.
I thought Dave stated 12% on average, meaning that sometimes it is higher and sometimes it is lower annually.
I like Ramsey's work, but also feel that he is overdoing it the 12% thing. Now is 9-10% close enough to 12%? Not in my world, especially when one could assume that taking 8% annually from portfolio for retirement is ok (bad advice IMO). But I still like the rest of what he is teaching.
I think the other investments to compare or outearn this setup would be an awesome and interesting video
The only common things that I can think of that might outperform this set up are real estate (which depends upon how good you are at buying and managing it) and picking individual stocks (probably much riskier than the mutual funds, and again depends upon your personal ability to pick them well)
Therefore, it would be very hard to compare those two things. Anyone can buy an S&P fund, or follow Dave's fairly simple advice and hold them (or keep buying them) for decades. It does not take personal skill or diligence.
@@jamisojo the people he has helped are the simple minded ones. Everything he says I was already doing on my own . Because it made sense. Expect for paying smallest to highest account when it comes to debt. I always pay highest to lowest.
At the end of the day, do not delay and get your money working for you.
20 years of fees will chew up your returns ,go with a low fee index funds a mix of them .
Love the video.....one thing we don’t know is how many funds Ramsey has, the frequency at which he buys, or exactly how he comes up with his 12%. He’s also stated about funds beating the market on AVERAGE, not every singe year. One thing I’ve gathered in a few years watching Dave, he doesn’t give all the clues required to solve his puzzle!
If he did give all the clues he would not be able to send his followers to his "endorsed local providers"...
Womderful analysis. The weak point appears to be the assumption that someone 20 years ago could pick the funds that would be top performers out of tens of thousands of “also ran” funds. That is a little bit like saying that picking Tesla, Apple, Facebook etc 20 years ago would have made you rich by now. It implies precognition which none of us have. If I had picked the right horse at the track every week, I would be rich now too. No one is likely to pick a fund today that will be the top performer 20 years from now.
Suggestion: Can you run the analysis with the average of the funds since this is what the average return will be? I.e. a more typical return scenario.
The YCharts screener you are using does not evaluate a point in time decision. You are selecting from current funds that are still in existence after multiple decades. Therefore, all of the ones that were previously closed or merged are missing. They were part of the opportunity set 20 + years ago, and many were top performers until their style came out of favor, assets bled out, and the fund closed. This happened all throughout the tech bubble, and more often than people think.
It's always interesting to look at the SPIVA persistence dashboard in addition to the standard scorecard. It allows you to see the changes in fund leadership. So, are the funds that are top performers in one period top performers in 3 and 5 years? The data is emphatically no. they also give information as to how many funds fail and merge.
Besides that, I really appreciate the format walking people through some illustrations I get them thinking about how to reality check some of the mass-produced advice put out by the industry.
Not a fan of mutual funds. I'd rather buy low fee ETFs.
Fees will destroy your investing returns over the long run!
ETFs (many of them) have a problem of not actually having the amount of stock on hand for the amounts invested (per customer). If you take the advice from many of the top investors (Buffet, Munger, Bogle, etc.) they have all advised against ETF investment for a few reasons including the one that I have laid out above. In the end, the difference of outcome between funds, is not simply fees.
Vanguard and I shares.
Sometimes you get what you pay for, other times you don't. That's really what it comes down to. Is the fund going to overcome its fees?
Jamir Campbell you can check this from the etf info. So sell if the disparity grows.
Ridiculous statement, I pay fees into mutual funds, have made a bunch of money on them. Never seen a few make a significant impact on my savings.
Dave has really sparked my interest in the whole concept of financial literacy and I have to give him credit for that- I first got turned onto him when I searched on UA-cam “401k loan” after an in law said she was going to take our a 401k loan to pay off a car loan- I was pretty sure that was a poor idea but figured I’d do some research to be sure. Needless to say I stumbled on a video of Dave screaming how dumb that was and I’ve been hooked ever since. In the last 2.5 years I’ve listened to every Dave Ramsey podcast for the last 4 year time period, every episode of Stacking Benjamins and every episode of Paula Pant’s “Afford Anything”. My takeaway is that the average investor who is savvy and well educated on investing would probably be well served in putting 100% of their money in VTSAX or SP500, or maybe 70% in VTSAX and 30% in a total world stock market ex US. And anyone who has studied passive indexing and geeked out to Bogle speeches for hours would likely think I’m not terribly far off one way or the other. We can argue over the merits of international vs US allocation, equities vs bond allocation, mitigating sequence of return risk, ideal emergency fund amount, safe withdrawal rate, pay off mortgage or invest, etc etc but for the most part it’s splitting hairs.
If nothing I wrote makes a lick of sense to you or you’ve fallen asleep while reading it then just get a smartvestor and save as much money as you can after paying off debt- you’ll do just fine.
I'm going for 8% with a little less risk. But Dave does a good job of increasing awareness and financial education.
Dave's advice is time proven and true. Because of his advice I had extra money laid back at a time when I desperately needed it. I also have a great financial advisor. Her view on investing is not really different than Dave's.
Uhh yeah the numbers don’t lie Dave’s investing advice is flat out wrong. He wins you over by getting out of debt and that’s great but investing wise the facts are the facts
if "what-ifs" were easy and worth a damn, everyone would be rich.
My opinion its all about attitude behavior.. i use a professional and check on it monthly and yearly... wish i found you sooner jazz wealth my favorite financial advisors always honest advice
Good work! Your result matches what matches what makes sense. I've always thought Dave's advice was good for pre-retirement investors where volatility is second to ease of investment.
Ramsey tells all investors to invest this way, even the retired.
@@thomasreedy4751 and it’s definitely wrong
I do like Dave Ramsey but I like index funds. I agree with Dave about bond funds. I disagree with him on the SBA loans during this crisis. He said don’t take the money but I don’t think he understands the PPP payment protection. your company uses the money to keep workers in place for ten weeks the loan is forgiven. Over all Dave does a good job.
Well I invest through my job (which is a state job so I'm in my state's investment system) and have limited options in investing. But I do follow Dave's advice. 25% in low, mid and high cap, then 25% in international. Right now my rate of return is around 25%. Now that's just 2 years in but I'm happy with the results so far.
joeskis how is that fund now? I imagine down with market 20% or so?
Lol
People don't criticize Dave because he says 12% is possible.They criticize him because he teaches that past performance IS a predictor of future returns and it's super easy to pick them.
Let's travel 30 years back in time and look at every fund in existence and their return over the previous 30 years.
Fund A : 11%
Fund B : 4%
Fund C : 0%
Fund D : -5%
With Dave's approach you simply pick Fund A because it had 15% over the last 30 years so it's likely to continue. Now, today, 30 years later let's look at the results:
Fund A: No longer exists. Bankrupt.
Fund B: 5%
Fund C: No longer exists. Bankrupt.
Fund D: 11.9%
Now, the day you did this video you search all possible funds in existence and you get 2 results:
Fund B: 8%
Fund D: 19%
Your conclusion: "See, it's possible to get 11.9% so Dave Ramsey is close enough. Had you picked D you would have got 11.9% over the last 30 years."
The problem is no one would have picked it 30 years ago and the results are flawed by survivorship bias. You results of 65k funds does not include the thousands that went bankrupt. Plenty of research has been done to prove it's virtually impossible for funds to beat the market over a long period of time. It's something like 1% and as John Bogle says "Don't try to find the needle in the haystack, just buy the haystack."
I would like to point out that when Ramsey refers to 12% return, he is referring to an average return, not an annualized return. You can find that in a footnote on his website somewhere. So his target annualized returns are probably about in line with the market or slightly better. I think most of these fund mixes would meet what he is striving for.
Wow. What a nice constructive comment.
Lots of funds use average rather than annualized returns. Look at fidelity. FSCSX has averaged 19% over the last decade and FBGRX has averaged 15%. Why is Ramsey the whipping boy for repeating data from all the big investing firms?
That's like saying it isn't wrong to say someone is six feet tall rather than five-feet-ten-inches, because the person measuring decided to use his own literal feet, which happened to be of a certain size.
What a great breakdown! Couldn’t see what the funds were though. Any chance in sharing them in the video notes or in a response on the comments on what they were?
Doesn't Dave Ramsey also suggest using an ELP? If so, then wouldn't it be prudent to include the ELPs fees on top of the portfolio returns? Wouldn't that show true returns after ALL fees vs market returns?
One suggestion would be to balance the distribution on a regular basis -vs- buy and hold the entire time, keeping the value of each category roughly 25% throughout the holding period.
He's said before that he invests in one that is over 80 years old, how many are that old? I invest in one that's 85+ so I kinda assumed it's the same one
VWELX 1929
Awesome video. Would be nice to know how or where to filter all these mutual funds. I'm trying with TD Ameritrade but feels impossible.
Everytime he mentions 12% return m. fund in videos I've seen, I comment: Which one? Name one!
No one has an answer.
Thank you sir, that was very much appreciated.👍🏻
@@passive101 which is?
@@passive101 which one is it? *cricket* *cricket*
EPGFX and EPIVX are both good funds and have already gone up 35%+ year to date and 11% year to date
AGTHX (13.42% for the life) and AIVSX (11.99% for the life). Both are American Funds and front loaded.
Like the scanner you're using! What's the name of it?
Most people have no idea, all you have to do is look, there are plenty of funds that beat the s&p. its only a hand full. everyone jumped on the low fee wagon scared to pay a fee but there are funds that earn well above 12% over 30yrs after taxes and fees, many of those funds are closed to new investors or have a 6 or 7 figure minimum investment. many new investors with $1000, end up getting a index lol. those funds with low fees only earn 5 or 6% after fees and taxes. thats too conservative if you're 30yrs old. if you're 60 now, you have no business in aggressive growth funds. lol
Thank you. I totally agree your analysis. You did well‼️
I use a couch potato investment strategy. 50% in the total bond market and 50% in the total stock. I use vanguard index funds. I enjoy the smooth ride that bonds give. I can sleep well at night and get a big enough return. I first learned about this strategy from Scott Burns in Dallas.
Just to add. During these times. No Debt. Thanks Dave.
I am a little torn, I agree..he does a great service and has helped millions of people.
But, laughing off a shortfall of 1.2 - 1.8% per annum is not a small issue. Type in 12 v 10.5% in to a compounding calculator for 30 years. When you do so, someone is going to end up with 30% less money (not under 10% like the one year rate of return might hint) at the end of the rainbow. Taking his irrational expectations of the market could fool someone in to thinking they could plan on working less years than required to save.