You Are Getting Bad Information About Mutual Funds
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- Опубліковано 21 вер 2024
- You Are Getting Bad Information About Mutual Funds
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At the end of the day though, whether you like index funds or mutual funds, just invest, and do it regularly. If you don’t invest at all, you’ll get nothing in return.
The Man exactly right bingo well said!! It is better to do something anything than to not do anything at all.
This has nothing to do with those who are NOT investing. Very few managers can outperformed the S&P 500 but only in the short term, in the long term however, the S&P 500 will outperform.Dave Ramsey clearly do not calculate the fees that the managers charge compounded overtime. Stick with the index fund total Stock market or s&p 500 with low expense ratio 0.03% or 0.04% avoid the fees by the active managers.
u know that index funds are mutual funds right
@@KotakaSRT semi true. Index are passively managed
@@Scarface_445 No, it’s 100% true. Index funds are mutual funds. Mutual funds can be actively managed or passively managed. Same with ETFs.
Classic case of survivor bias. He's not figuring in the THOUSANDS of mutual funds that under performed the S&P and have been dissolved. When it comes to investing, listen to Warren Buffett and Jack Bogle, not Dave Ramsey.
Yes sir, exactly. I'm pasting my response from above to some other person who caught that detail.
I'm glad someone picked up on that. Part of the problem with his analysis is he (and his researchers apparently) are limiting the pool to ONLY the ones that actually survived the time frame and duration he cares to reference. Then make a "success ratio" based off that pool. Well dear sir, you must account for ALL OF THE funds, including the ones that closed the doors.
He's also got to let us know the fund fees, 401k fees, front load, turnover %, and the financial advisor fees. Until that information is also released, his personal stats are in high question to beating the S&P.
Even if you ignore both your your very good points, he is still only saying that half outperformed and half under performed. It's easy to say which you should have chosen 40 years ago looking back, but not so easy looking forward. Silly logic Dave.
Bravo. Great point, I didn't consider that.
It's insane that people actually take this guy seriously
Vanguard S & P 500 index fund is best bet.
VOO!
T.rowe and fidelity too
Charles Schwab for the win! 🏆
You're guilty of selection bias. You're only considering funds that are still alive, so ignoring all the ones that have failed. Obviously, failed funds are going to be the worst performers. Problem is that nobody can predict reliably which funds are going to be good or bad performers.
Dave loves to talk up mutual funds, but never mentions any of the actual costs of his mutual funds which I am willing to guarantee are much much higher then the costs of an S&P 500 index. costs and expenses will eat away at your earnings fast, Think about it, you have to pay a front load of about 5.75% for mutual funds, plus adviser fees, with a much higher expense ratio. Or you could just put the money in a 500 index through Vanguard and pay no front load, no advisor fees, and very low expense ratios. For the record I enjoy Dave Ramsey's show and lots of his advice on getting out of debt is top notch, but his investing advice is not. The S&P 500 has earned about 20% YTD, I don't know about you but 20% with low fees sounds like a winner to me.
Good point but I wouldn't recommend investing in front loaded mutual funds
It really depends on the fund and the ETF. For example IVVPESO is one ETF of the S&P 500 and has 0.5% of expense ratio, and Wellington Admiral Shares is an actively managed fund with 0.16% of expense ratio.
The "after expenses" is important. 12% return when you're paying 2% in fees is not the same as a 12% return.
and inflation , and dividend reinvestment , and above all access , the top mutual fund are only accessed by billionaires
12% is actually 12% after fees. So really a 12% return with a 2% fee and a 12% return with a 1% gives the same money in your pocket.
That's the performance after fees. Before fees its higher. Index funds are also listed net of fees.
Colton Greenlaw Out of curiosity, how many five-star Large Growth Funds charge 2% on their expense ratios?
exactly
This is so wrong. You are not taking into account fees being compounded over the lifetime of the investor. So wrong on so many levels.
I have and will always only put money in index funds. The problem with mutual funds are that you need to constantly keep an eye out to see if the fund is outperforming the index. I have passion to grow money, but not interested in wasting time chasing mutual funds.
Vanguard is one of the best in class for a reason. Bogle disrupted the industry with index funds. Sorry Dave, not buying it.
I completely agree 👌🏼
I think this video is almost perfectly titled. I would just add, "You Are Getting Bad Information About Mutual Funds From Dave Ramsey."
Retirement example but applicable to any portfolio with management fees. Industry standard of +/-3% fees can end up taking a HUGE portion of your potential earnings in a lifetime! This is a conservative example and it's still shocking!
Common Example Used:
- 3 people invest 100,000 each
- identical funds
- 7.5% interest
- 30 years
- Only variable is 1% management fee vs 2% management fee vs 3% management fee
After 30 years these are the amounts you are left with:
1% - 649,673
2% - 481,979
3% - 357,482
I like Dave but he can manipulate information badly, Dave conveniently leaving our the important facts to prove his point! THE MAIN FACTOR IN NET EARNINGS ON INVESTMENTS OVER LONG PERIODS ARE FEES!
lol
@@pauljansen6650 - Your example is unrealistic. It presupposes each fund has the same return when Dave gave several examples of funds that outperform the market index. In other words, this is a straw man argument.
@@MikeThePike316 Incorrect. Although highly unlikely, my example is the only way to look at the variable I'm referring to which is fee percentage. You cannot deduct anything concrete by looking at outcomes with multiple variables affecting the outcome.
The exact same would apply for the funds that out perform the market index if they had relative fees of 1%,2% and 3% by different brokers of the same funds.
FYI...did you just learn the term straw man argument and were desperate to use it somewhere?
@@pauljansen6650 - Let me rephrase: the major flaw with your example is that it assumes an actively managed fund will have the same ROI as an index fund. Under those circumstances, it makes sense to go with a fund that charges a lower fee. However, there are actively managed funds that have a higher ROI than index funds. Even if these types of actively managed funds carried higher fees (up to a certain point), the ROI would be higher compared to an index fund. Under those circumstances, it would be better to go with an actively managed fund. Simply put, higher fees, but higher returns. Your fee schedule is also ridiculous bc you can find plenty of good actively managed funds under 1%. Going into the realm of 2 and 3% fees, believing that ROIs will be the same, and believing there's only one way to interpret the data is where the strawman comes into play.
Thanks for sharing your personal information of your 401k and studies Dave.
Now, for those of us dissenters, please show your funds prospectus fees? The front load, back load(if any), and also need to explain the ratio your local pro-vestor is taking out of your fund? Also need the 401k fund fee? If you're in any funds outside of your 401k could you share the turnover rate too?
If you explain those, and they end up at 2%-3%(or more) ratio like we all suspect... then you're not outperforming the S&P. That's just a fact by your own stats. If you still beat the S&P after all that(and I suspect you will not)---then great, you're one of the one who chose a 50/50 chance to do better than the market. No one's saying funds never beat the market, logically some have to beat the market---but over the long term as you showed... I'm not taking that chance.
My funds are all in Vanguard sitting at 16% right now, but I know it'll drop. And when mine drop like yours during a market correction and they're charging a 0.16%-0.30% annual fee while yours charge 2%-3% still.... you'll see our point. And yes, I know you have more money than me. I just disagree with your mutual fund advice. I'd come to you any day on buying real estate for an investment because you really know it well.
Thanks again for sharing, but we'd need more information to truly test your statistics.
droptozro my 12 month return is currently 21.46%, at one point in 2016 when China devalued the Yen inwas in the -0%
Agreed. Not saying it is not possible, but typically the fees will absorb and more than offset any increased gains
Vangaurd Primecap 30.1% return last year. No load fund, No 12b-1 fees.
Totally agree
A few points.
1) Past performance is not the same as future performance
2) How many of those funds failed completely?
3) How does the mutual funds compare to the index funds when you factor in the much higher annual fees compared to a 0.10% ETF?
To anyone reading. Dave is great if you are having trouble getting out of debt, but when you are looking for investment advice heed someone like Warren Buffets advice. For the vast majority of people, who don't have the time or interest to analyse the market, buying cheap index funds is the best choice. You should never have to pay +1% on your investments, if you are, you are being ripped off.
your #3 was spot on. i had asked that question the whole time.
if you listen to what buffet said is for most people just buy index, mural fund with long track record are also fine, what he did not want people to do is try to time the market or just buy one HOT stock.
ps if you like buffet just buy BRK-b that is his company STOCK
The problem with mutual funds is that the vast majority don't out perform a cheap index fund when you factor in the cost of owning the fund. But of course most mutual funds are much better than not investing at all.
Study after study has shown that loaded funds don't perform any better than no-load funds.
So if you have an investor advisor that is steering you to loaded funds,
you are being ripped off, big time.
Ask Me How I Know !!!
Dave is so wrong on this one it's scary. Listen to John Bogle and Warren Buffett, not Dave Ramsey. Buy the Little Book of Common Sense Investing by John Bogle and that is all you need to know.
stephen geraci I’ve read that when buffet suggested S&P. I’m thinking maybe he said that because it’s good enough and it’s a simple answer. Dave’s funds did outperform S&P but only by 1% and it takes a lil more explanation. Just my thoughts
You have a good point, but I believe managed funds are risker than index funds. With both investments you have to deal with market risk but with managed funds you also have another layer of risk which is manager risk. I also don't feel Dave is giving us the returns after fees. I rather play it safe and only deal with market risk and low fees.
@@joshuawebb3337 When you take in the extra expenses though he still ended up make less than the S&P 500 index fund.
Referring to his SmartVestors is like Dave asking a car salesman if buying a car is a good idea. Not buying it.
OikoEco Others trust Dave and will. Your choice could not be better than theirs.
Or thinking that a commissioned Real Estate salesperson represents the buyers best interests.
Yeah, seemed a little off when an ad for smartvestor popped up while he was saying how great they are
Brandon Dreher actually I don’t work at wall mart and I’m on track to have more than him when I’m his age soooo
Either way an argument from authority is a logical fallacy
Brandon Dreher oh and if you want to know where Dave’s logic was wrong simple he didn’t include fees.
Better save this video somewhere. I have a feeling it will disappear like an underperforming mutual fund. 😳
Tech Guy 😂😂😂
lo
It's still here bro
Even with his numbers its clear that index is better. How can he still defend mutual funds?
Yeah, even the best ratio he mentions is below 50%. He then goes on to talk about how his personal portfolio beat the index, yet he's invested in multiple funds which probably indicates that not even 50% of those outperform the index. I love DR for getting out of debt strategies, but he's a bit off on wealth building. I have yet to talk to a DR follower who has professed 12% returns, that actually has a portfolio performing at that level. I'm not saying it can't be done necessarily, but why gamble when you have a greater than 50% chance of being worse off.
glendayle is it not blatantly obvious to you he gets kickbacks from the mutual funds he advocates?
Eric Wahl ya I know that now but its really unethical for someone in his position to do so which is a bummer
becouse you have a 50 percent chance of be better off. here what you missing, say the s and p is 10 percent, and you also buy mutal fund, you might get 8 or 12, so you might be better off. some of them have long track recard of being better, that 2 percent could mean a lot of money over the years.
also the other big think is don't time the market just keep putting money in.
@@az21bob666 Here's what you are missing. Past returns are not indicative of future performance. If that were the case, all underperforming funds would die off and you would end up with everyone using one fund, the one with highest returns. After all, who would willingly put their money in an underperforming fund? That's not how it works. Some funds get lucky and other's don't. That's just statistics. If you buy into a "better" fund, you're just as likely to have bad returns as you are to have good returns relative to the market.
Listen to Dave Ramsey's _savings_ advice, NOT his investment advice.
Vanguard is the only mutual I trust.
@@Nolan.Gurule I was just finna ask
@@Nolan.Gurule if you have info please share I’m so lost in this whole stocks and real state thing
@@reallydoe2052 VOO for life.
@@jaygandhi11 ?
Charles Schwab is also good
There are still some good mutual funds out there that have low expense ratios and are comparable to index funds. But I don't think Dave has ever recommended no-load funds or funds with low expenses. He just said in another podcast that those don't matter as long as the returns are good. That's not the best advice for long-term investing IMO.
Sorry Dave. You don't know more than John Bogle, Burton Malkiel, Warren Buffet, & Paul Samuelson when it comes to mutual funds.
buffett talks them up but never never ever puts his money in, active or passive funds, but boy do the idiots make him some money, take apple he s been buying and they are buying back as apple rises the index funds have to buy more to keep its ratio of the index so they buy high and push the price up buffett buys in a price range not a ratio of the index
Warren Buffet says the Average person should be in a s&p. His company is a individual stock picking company and they do a lot of researching and have a proprietary system. The people at Berkshire have come out and said if you are not willing to learn about the individual stock-company, or the fund manager in a mutual fund then invest in an S&P.
Dave, I’m a long time viewer and with all due respect you always talk a big game with you picking these winning mutual funds. Please show us your 401k results.
He couldn't because he invested in S&P 500 index fund himself ....
Seriously. He says he has 4 mutual funds. Just post the exchange symbols for the 4 funds and move on, lol.
@Three Sixteen Do you understand what a mutual fund is? There are plenty of mutual funds that track SPY. You are missing the point.
@Three Sixteen Sure you do, bud.
Beating the SP500 is not that rare. I live in Canada and we have many Fund managers that beat the index (apples to apples) after fees. Why is everyone shocked?
Picking mutual funds is just one step removed from picking single stocks. Even if you pick the right one, eventually it will be bested by an S&P 500 ETF, especially after fees.
No
@@zachhawkins5005 yes
@@zachhawkins5005Yes
2:28 Survivor Bias. He's only looking at funds that survived 40 years. That's a population of (only) 84. How many failed? He needs to look at ALL the funds available 40 years ago, not just the survivors. Suddenly the percentage plunges.
Dave you are totally ignoring survivorship bias, fees, and most importantly past performance is not indicative of future results... This is a poor video.
You have a fair point concerning fees, but your criticism concerning past performance is applicable to any investment.
Survivorship bias matters though, the best mutual funds will survive long periods of time.
+Brandon Dreher
And you're ignoring that 80% of his $62 million is in real estate, not mutual funds by his own admission. Dave's ideal teaching ground is not mutual funds. Survivorship bias(which is a fallacy) and fund fees make his stats very questionable... and also show he is likely actually losing to the S&P. We're about facts here, not feelings. Math works.
It is entirely possible to enjoy Dave Ramsey's teachings on debt, housing and car affordability etc. While still disagreeing with him to some extent on investments. For example he tells people not to own bonds, but that is an overly simplistic approach to investing. Will it work for a lot of people? Sure, but that doesn't mean that everything he says is correct. There are funds that beat the market, no one questions that, but it is a hard thing to do. Ben Graham and Warren Buffet have a hard time beating the market and Bufffet is a multi-billionaire.
Dave specifically points out that index investing is endorsed by Warren Buffet; the third richest man in the world. If someone's success really makes that much of a difference to you, you should keep that in mind.
He States that the S and P 500 gets 12% and then goes on to say that 1 of his best mutual funds gets 12%. So why wouldn't you just invest in the S and P 500 and avoid the commissions and fees and taxes
Dude is just trying to peddle “smart investors” that give him cut of sales of the mutual fund
Wow, a guy trying to make money, who knew.
@@justinacase2623He is knowingly deceiving people for his own personal benefit. Dave Ramsey is the definition of a charlatan.
@@justinacase2623 brainwashed 🐑 with literally no smarts.
The fees will kill your account in the end... That's why the index funds are worth it , Vanguard Indexs funds are almost free at .003 %
Ok so an index fund then.
His percentage jumped from 20% to 50% by the end of the video.
so I should pay a guaranteed expense on a coin flip’s opportunity for greater returns?
Dave.. you’ll also pay 1% management fee to your smartvestor pro to handle that for you. Back that fee out, stick it all in the index fund, and you would have came out exactly the same with no work on your part.
Bingo
If you outperform the S&P by more than 1% (a good growth fund will outperform by 2-4%), the management fee doesn’t matter. If you find the mutual funds yourself (not hard to do) you make even more.
@@poopscoopproductions3177 the big question is "IF".. I dont understand why risk statistically an at best 50 : 50 to beat the s&p by 1 - 2%? Plus fees? I know overtime compounding, 1% can be a ton of money but it still comes with a large risk of underperforming the s&p and your still stuck with the fees.
Also s and p etfs give diveidens of 1.7 percent
@@Jenger420 You know 1% can be a ton of money, but you still cling to index funds based on a misconception? Index funds are not the market index. Rather, index funds track a market index. You run the risk of an index fund slightly underperforming the market index just as you would with an actively managed fund. If an actively managed fund outperforms an index fund on average, the higher return justifies higher fees.
I side with dave on almost everything except this. Dave tells us to listen to those who know their stuff, going with buffet and index funds, no manager is getting a commission off me
many of his views on debt and credit are equally ridiculous
After all of his ranting, he proves that the S&P 500 is a better performer most of the time.
And then when those other funds did beat the S&P 500, it was only by one percent or less.
FSCSX no load exp ratio .74 10 year return 17.67 after tax 15.46 s&p 10.53 life of fund return 15.74 inception 1985 s&p life 10.31 10k invested in 2010 would be 50k now What funds are a lot of you even looking at? And why not invest in both mutual and index if you’re worried about underperforming in the market. 🤷♂️
Agree with Dave 90% of the time but this reeks of pushing his listeners to commission advisers instead of self directed like Vanguard
Yep, he gets a commission from those Smartvestor advisors. When you buy funds through them.
So you recommend your competitions products or services? Hows that working out for you.
Dave’s smartvestor pros or Warren Buffett’s advice? Not a hard decision.
Dave, you always say that you'd rather listen to a millionaire explain to you how to make money than a broke person. In that avenue, I'll take Warren Buffet's advice over yours.
His Mutual fund statistics are so biased it's unreal. He uses the ones that are around today to avoid the issue of all of the mutual funds that have closed for poor performance, gone bankrupt and lost all of the investors money over the years etc. The title is so quite ironic isn't it 'You Are Getting Bad Information About Mutual Funds' - when he is literally giving terrible information about mutual funds. Are there mutual funds that beat the S&P 500 reliably and consistently out there? Yes. The issue is that the average person is not going to know which one that is when there are thousands of crap funds around charging extortionate fees and getting rich off of the investors money and laughing all the way to the bank.
Not sure if Daves returns he states on his own portfolio over the years are accurate or not but that is neither here nor there.
At best he has some sort of confirmation bias from his own performance, at worst he is a shill for mutual funds.
Just because they outperformed in the past doesn’t mean they will in the future.
But what about cost? You loose up to 2% or more in mutual fund fees.. That needs to factored in..
Just invest in VTSAX- All the mutual funds my broker had me in were trash!!!
Not for him they weren't!
@@justinacase2623 🤣
His GF has a new BMW! Your welcome!
He wants to send you to his ELP in your neighborhood. These are the guys who sell garbage loaded funds. He is simply being dishonest about this. Call out the symbols for all of your great funds Dave....don’t hold your breath.
The S&P has done very well. I own lots of SPY and it has low fees and no goofy mutual fund rules. I think I'll stick with what I already have.
The mutual fund manager of a work pension fund I used to be involved with came in one day to show us some information. He had preformance histories for a bunch of his funds on charts. I looked at the charts and noticed they all started in 2008. I asked him what about before 2008? His answer was ".....um uh uh uh I don't have those figures" so I ask him where are all the funds that were around before 2008? He explained that all those funds were discontinued and new funds were created after the crash. So they cherry pick the lows and highs and advertise that as the historical return. If there is a market decline they scrap the whole fund and re name it at the bottom of the dip. YOU CANT PICK AND CHOOSE LIKE THAT. I have nothing in mutual funds because of this deceptive fibbing about returns. If you average in the crashes you DO NOT get 12% returns. And Dave was looking at a 40 year historical average in this video. You CANT COMPARE A TIME WITH 18% interest rates with today's 1% interest rates Dave!!!! The average gains of mutual funds from 2000 to 2010 was 2%. That is the new normal. The market has been doing well since 2008. It's due for a correction. Average in the declines and you aren't getting 12% not even close.
Retirement example but applicable to any portfolio with management fees. Industry standard of +/-3% fees can end up taking a HUGE portion of your potential earnings in a lifetime! This is a conservative example and it's still shocking!
Common Example Used:
- 3 people invest 100,000 each
- identical funds
- 7.5% interest
- 30 years
- Only variable is 1% management fee vs 2% management fee vs 3% management fee
After 30 years these are the amounts you are left with:
1% - 649,673
2% - 481,979
3% - 357,482
I like Dave but he can manipulate information badly, Dave conveniently leaving our the important facts to prove his point! THE MAIN FACTOR IN NET EARNINGS ON INVESTMENTS OVER LONG PERIODS ARE FEES!
Index Funds are better! The Mutual Fund fees are garbage!!! 😁✌🏼👍🏼💰
This guy is so desperate to sell you to his smart investor program. What a crook. Profiting off of people's ignorance. Please don't give this guy or his associates any of your money.
Dave has great personal finance advice which has helped me to build wealth, but this is nonsense. He lost me when he said he disagrees with Warren Buffett.
Kinosis79 Ramsey is talking nonsense there are major flaws and oversights in what he said and I believe he is deceiving people intentionally.
The sue him! Bring your A game. Just remember he has made more millionaires than you have teeth!
@@justinacase2623Those implants you got look hideous. I would sue your doctor.
@@justinacase2623 brainwashed puppet
Dave is good at getting people out of debt, but i wouldn't listen to his investment advice. It's not how he made his money, his company made money by FPU, seminars, selling books, apps, and advertising.
If you want to learn kung fu, listen to Bruce Lee.
If you want to learn stock investing, listen to Warren Buffett
If you want to get out of debt, listen to Dave.
Always try to learn from the best of the best in their own fields.
Exactly!
So 50 percent of them out perform the Snp 500 index how about this Dave 100 percent of mutual funds have higher expenses!
Managed mutual funds have the same Apple and Microsoft as index mutual funds. No reason to believe the same stocks grow differently in different accounts.
True, but managed mutual funds don't have ALL stocks in them. They usually have only a few dozen to a few hundred. Just buy a Total US stock market fund, and you quite literally own a little piece of every company in America or buy a Total Global stock market fund, and then you own every company in the world. The trick is to own everything.
Yeah but what about the fees for mutual funds? It is very inexpensive to purchase an index fund because of the low fees. Plus, why spend more on fees and take on greater risk to have a 35-40% chance of doing better than the S&P 500? That doesn’t make any sense at all. He is way too committed to hyping up mutual funds.
Vanguard small cap value and total market. Reits, bonds, and a few gambles and im happy.
What Dave doesn’t tell you in this video, regarding his grift, is that he gets a kickback from his ELPs whenever they sign up new customers. Not only is he consigning his listeners then to reduced returns because of the active fees (instead of directing his listeners to low cost index funds), but even worse, he is personally profiting off of misdirecting his listeners. Jesus would not approve.
Dave is a charlatan, and Jesus is going to send him to the lake of fire 🔥 🙌
Good question. Why does he never mention the ticker symbols? There must be an ethics/legal barrier stopping him. SPYders makes 7.1%. I better stay there until I know more.
Be glad if you have anything, I know couples with degrees who are in thier 60s and have practicality no personal retirement.
We are in fact getting bad info, but from whom. Maybe we should not pick ONLY the finds that survived and try again?
The Little Common Book of Investing, by John ("Jack") Bogle, Chapter 10: Selecting Long Term Winners, goes back to 1970, 46 years, there were 355 equity funds that existed at the start of the period, "fully 281 of those funds-almost 80 percent-have gone out of business" (pg 112).
Way to pick ONLY the surviving funds to make your "success percentage" on beating the market.
To go on, same book as above stated: "281 of the equity funds that existed in 1970 are gone, mostly poor performers. Another 29 remain despite underperforming the S&P 500 by more than one percentafe point per year. Together, then, 310 funds-87% pf the funds among those ORIGINAL 355-have, one way or another, failed to distinguish themselves. Another 35 funds provided returns within 1%, plus or minus, of the return of the S&P 500. That Leaves just 10 mutual funds-only 1 fund out of every 35-that outpaced the market by more than 1%" (pg. 114-115)
Love Dave's show, but he has a vested financial interest in promoting actively managed funds. His "ELP'S" make their livings' through loaded funds.
And you work for free.... right?
@@justinacase2623Dave is actively deceiving his audience members. Most index funds that you get through a deep discount brokerage firm will have no front-end sales charge, and their annual expense ratios are extremely low. Why buy into a Dave recommended fund that charges a front-end sales load of 5.75% and an annual expense ratio of 0.65% or higher when you can just open up an account over at Charles Swhwab, Fidelity or Vanguard that don't have front end sales commissions and whose expense ratios are as low as 0.02% with some index funds.
Dave sounds like an insurance guy trying to sell whole life. Passive investing is simply a better strategy actively managed funds.
Even with just index funds though, you won’t do bad in an IRA/401k. It’s tax deferred, fees are almost nothing, it averages around 10%, and if you get a company match it’s free money.
I put in $7,000 in two years and at the end of two years I have $20,000. Not bad for just dropping it in a 401k. And that’s not even counting the tax deduction.
I'm not sold on mutual funds.
What about load fees! Management fees!
15 years or longer 91 percent of mutual funds perform less that the s and p 500!
Exactly, about 50% of them outperformed S&P. That’s at random level. Meaning Mutual Founds really don’t know what they are doing. Let’s talk math, if some of them are doing a good job, the ratio should be way higher than 50%. For example, assume only a small portion, say 30% of them really know market, they should all outperform the S&P. The rest of them know nothing about market, they should have a random chance at 50% beat or be beaten by S&P. That would make the total percentage of them outperformed S&P at 65%, not 50%. So the total ratio beating S&P at 50% truly mean they have no idea what they are doing, and they are taking service fee.
Well Warren Buffet says you might as well just buy index funds. If it's good enough for Warren Buffet it's good enough for me.
He is wrong about basically everything he says in this video. Mountains of evidence contradicting his statements. Amazing he has such a big following.
His followers are financially illiterate. He's literally a wolf in sheep's clothes, praying on the uninformed.
If Warren Buffet said "The AVERAGE person should buy index funds", I don't think that's wrong.
S&P 500 is the biggest 500 companies on the NYSE and Nasdaq, not just NYSE like Dave says.
dave love your show and advice. SPOT ON. your investor pro service is very off putting. you mentioned you feel slimey like salesperson. well that pretty much defines the smartvestor pro process. the minute i put in my info i was getting phone call after phone call of people trying to set me up with smartvestors. im sure you smartvestors r teachers but it doesnt feel like it.
Mwilson4040 yup they were blowing up my phone like no tomorrow
I got the wrong vibe, they not for me.
I think this is all BS salesmanship. I think you make more selling than investing.
Guess how much money Dave makes from people who invest in index funds?
ZERO! 🤣 Dave Ramsey has never gotten any of my money and never will. I will not buy any of his books nor utilize one of him "SmartVestor Pros" that will only sign you up for actively managed mutual funds that charge a very high front-end sales commission. Dave Ramsey is a charlatan.
I’m new to all this. I hear Dave’s point of view. I read the comments and see their point of view. But I gotta wonder how many people commenting are millionaires themselves? As a beginner, what should I do?
At this point, follow the millionaires. I think at the end of the day, there is a higher risk with mutual funds, but you could potentially make more money if you select the proper ones. Investing in index funds is low risk, and will almost guarantee you a return, but you will not out perform the market like mutual funds could potentially do.
The evidence is overwhelming. Index outperforms vast majority of managed funds. It's called 'The way it is'. And yes, there are lots of millionaires in index funds.
@@Sharingansandninja absolutely full of 💩 and brainwashed nonsense
So u outperformed the index by 1-2% and also paid that much in fees
I don't understand why so many people are missing his point. Do a little research and you will find mutual funds that outperform the S&P. Indexing is a great vehicle for retirement investing but you can find low fee funds with better returns.
Sure some can but Dave has a vested conflict of interest here with 'Smartvesters' or whatever it is...also as some of the top comments are saying he is completely ignoring funds that performed so badly they went under...
Dave sounds extremely bitter and jealous. He doesn't like the fact that people are finding out the evil truth about actively managed mutual funds and are flocking over to low cost index fund investing.
So, let me get this straight. Mutual funds DO BEAT the market. Nearly everytime. However, it doesn't matter because mutual funds have substantially higher fees as opposed to index funds. Therefore, experienced investors invest into index funds. I'm relatively new to investing. Am I correct here?
Don't listen to Dave's facts.. They are all false. Majority of mutual funds do not beat the market. He cherry picks data, only to make a show. Index funds are really a better option
@@jojohns9670Dave's "facts"... Dave Ramsey is the definition of a charleton.
Not only do you have to find these mutual funds that out perform the S&P500, but you also have to outperform even more to cover the expense ratios which can get pretty crazy. Either way, investing is better than not doing anything!
Do you think Mutual Funds are less risky than investing in Individual Stocks?
@tapangasoul6928 Yes. Infinitely less risky.
Ad for HIS services
Captain Obvious award goes to.......
@@justinacase2623 captain dumbass goes too…
All you've ever done is talk about mutual funds and never show anything that beats the s&p over "60 years" like you always say. Dave people are catching you on a lot of lies lol
Then sue him for false advertising. Bring your A game.
@@justinacase2623 sue your brainwashed brain
Your conning Dave. It doesn’t add up.
Watch the fund management. When the fund manager changes, reconsider because it's a new subject under a new manager.
Keep in mind that mutual funds have multiple classes, with the lowest expense ratio fund class often requiring hundreds of thousands of dollars if not more, for the initial investment. Vast majority of people that start small must buy into the fund class with highest management fees, simply due to a smaller economies of scale.
Not sure what you're talking about... Vanguard has really low index fund fees and the minimum for a dated fund is $1k, and for any other fund it's $3k. What's so hard about saving up that much?
Sorry, I meant specifically actively managed funds, which I think are the ones that Dave Ramsey is referring to. My point is to counter Dave Ramsey's argument of buying funds that try to beat benchmarks. And yes for most people there's no better choice than index funds/ETFs for a long-term investment horizon. I saw a Charles Schwab S&P 500 index fund having an operating expense ratio of 0.03%. Even index fund competition is fierce today.
@@acidbasesalthe actively managed funds that Dave Ramsey has in his account are from American Funds, which is part of Capital Group, and they only require a low 250 dollar minimum investment.
I find it odd that he did not mention fees or his returns net of all the fees because that is Extremely important to factor in also for the average Joe who does not know about frontloads backloads expense ratios maintenance fees stay away from mutual funds and go with an index so you don’t have to worry about that
Dave’s take on mutual funds kind of reminds me of a life insurance salesman’s take on whole life life insurance
How do you pick a Mutual Fund that outperform the SNP? All the funds that I can pick from for my work 401k are historically underperforming compare to SNP.
And what's the difference in fees between an active managed mutual fund compared to a passive managed mutual fund?
Over a 20 year period 96 percent of mutual funds can not beat the s and p 500 then add all the cost of mutual especially loaded ones like Dave recommends and almost zero percent. Love Dave but this is where he is 100 percent wrong and ge Tanya he says this he makes huge money off of his smart vester pros it’s a business I get it.
check out Betterment. it's Vanguard but you don't need the $3,000 minimum to start and there's an app
Spam Box I love Betterment! Making really good returns, Motif isn't bad either. I eventually want to move to Vanguard too.
Vanguard has an app also, and you can get into the ETFs with less than $3k and also the dated retirement fund start out at $1k minimum. I've done the dated retirement fund with them so far this year til I hit $3k in my Roth with them and I'm looking to start spreading it around a bit more now.
Dont forget the 2.5 % of management fees . Then taxes.
I always love Dave's magic "outperforming 10%+ gain" mutual funds that he harps on in all his videos, yet won't even mention what one of them are. Doesn't talk about fees, etc.
Dave your debt advice is usually spot on, but you're not so great with investment advice. I'll listen to Warren Buffet over you on investments everyday of the week.
AIVSX & AGTHX. read my post at the top to learn about what fees he's paying.
peter lynch didnt get that kind of performance. there is no 12% mutual fund.
Gary Sexton neither of those mutual funds outperformed the s and p.
I think a lot of rich people have chosen to go with actively managed fund. I saw a fund that has 17 investors only but the fund has $222,000,000. So that means the rich people don’t know what to do with their money and too lazy to do research and just left the money in those active managed fund manager. Ordinary people like us might have to do research ourself and buy into index funds.
Fees and taxes will gobble up those minuscule gains.
I'll stick with the total Stock market ETF that I own. Thank you.😊
When you look at the lines on the performance chart they always leave out the influence of fees.
Usually expenses are included, but front load fees are not there; however most of the actively managed mutual funds that I have found don't have that kind of fees.
im noob but i heard after mutual funds take that ~1% tax every year you do not outperform s&p
All my funds outperform the s&p except for international.
Tracker Funds have proven historically to out perform mutual funds. All information is known to the market, it's the annual charges that make the biggest thing over a long period of time.
Very interesting. I’d like to see all of this research. Is there any way we can, Dave?
AIVSX & AGTHX are the 2 funds.
Morningstar!
@@gsexton89 thx you what are his other 2 funds?
That’s gross return. After all fees are taken out it’s much less than the S&P
Dave has done a lot to help people absolutely ignorant about personal finances to reasonably ok in that area. However the misinformation he spouts stops them from advancing beyond that.
Iam sure all the smart investor pro charge a load of 5.75 that’s huge. Plus another 1.5 percent per year at least.
Is this sarcasm?
@@lilacreations6378Are you sarcasm?
and always keep some gunpowder dry...