Dave Ramsey says you shouldn't own bonds?

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kenner
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Re: Dave Ramsey says you shouldn't own bonds?

Post by kenner » Tue Feb 10, 2015 5:25 pm

kenner wrote:
tarnation wrote: Also long as the debt is due you can get late fees increased rates, actions, etc. also eliminating one simifies the mess to manage.
It would be great if you could fully explain your statement. Take your time. Thank you.

nobsinvestor
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Re: Dave Ramsey says you shouldn't own bonds?

Post by nobsinvestor » Tue Feb 10, 2015 5:27 pm

The guy is a clown.

I watched a random video of his on youtube for fun, skip to 3:30:

https://www.youtube.com/watch?v=zR64-Ea_r5U

Apparently, high-fee mutual funds in a 401k are just capitalists needing their well-earned fees, and anyone who questions that is a capitalist-hating liberal. (his words)

Then again near the end, he claims loaded funds can be cheaper than no-load funds over a long time period, and "return is your primary measure of how you pick a fund"

what?

kenner
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Re: Dave Ramsey says you shouldn't own bonds?

Post by kenner » Tue Feb 10, 2015 5:45 pm

Thanks, Nobsinvestor.

I think it would still be interesting to hear from this person.

mhalley
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Re: Dave Ramsey says you shouldn't own bonds?

Post by mhalley » Tue Feb 10, 2015 5:49 pm

I think what kenner was saying is that the sheer number of payments could lead to penalties due to an increased chance of a bill being overlooked (such as the recent post about the guy that went overseas and forgot that he charged something on a seldom-used cc, causing him to miss the payment for 3 months, thus adversely affecting his credit score). Even in this day where a lot of bill paying is done online, there is a small chance of something slipping through the cracks.
One thing that I would mention, is that if the bill you are paying is a credit card bill, then you are automatically "snowballing" as the bill is payed, unlike a fixed payment such as a mortgage or car loan, where the bill is constant until it is payed off.
Mike

mhalley
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Re: Dave Ramsey says you shouldn't own bonds?

Post by mhalley » Tue Feb 10, 2015 5:59 pm

I listened to the podcast where Dave got into it with the Motley Fool guy. While I had some sympathy for the Fool, I felt that he went up against Dave unprepared. He had to admit that he had NEVER read any of Daves books, he only had a year or two of experience in the financial field, he had a hugely adversarial title for his Fool article. They spent a lot of time arguing over what most lay people would not be able to understand. I am the first to admit that I think that Daves 12% claims are flimsy, but I think the Fool just didn't do a good job defending why.
Speaking of which, since Dave has the 4 different classes of Mutual funds, I wonder if he thinks that each of those classes are going to make the 12%? I don't think that the international portion has done that well has it? I am seeing what, 8.9% for the eafe since 1980. So does that mean the others need to make 13% to even it out? :greedy
Mike

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nisiprius
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Re: Dave Ramsey says you shouldn't own bonds?

Post by nisiprius » Tue Feb 10, 2015 6:19 pm

allroads wrote:...Dave's point is correct that the S&P has averaged (roughly) 12% - which is the number he always comments about. However he fails to explain to his listeners the difference between an average rate of return and a compound interest rate of return....
No, Dave Ramsey's point is incorrect.

It is no more correct to say that the S&P has "averaged" 12% than it would be for me to say IBM's latest-quarter earnings per share was 11.62 "dollars" per share--and then accuse people of being "nerds" for insisting that it be quoted in U.S. dollars.

Ramsey's claim of an 12% "average" return for the S&P uses an incorrect, inappropriate, and misleading "average."

My claim 11.62 "dollars" per share uses an incorrect, inappropriate, and misleading "dollar."

Both statements are wrong, even though "average" can mean arithmetic mean--and "dollar" can mean Barbados dollar.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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mickeyd
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Re: Dave Ramsey says you shouldn't own bonds?

Post by mickeyd » Tue Feb 10, 2015 6:55 pm

Unless I'm wrong, Dave is in business to make $$ for himself. He says he has been bankrupted a couple of times. Don't count on him going down a third time. 8-)
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SJCX
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Re: Dave Ramsey says you shouldn't own bonds?

Post by SJCX » Fri Feb 13, 2015 7:55 pm

I heard Ramsey say he has some Vanguard index funds. I'd love to know the % of his money is in the index funds with the low fees.

mhalley
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Re: Dave Ramsey says you shouldn't own bonds?

Post by mhalley » Fri Feb 13, 2015 10:13 pm

He never gives exact amounts, but has said on the air that he is a multi-millionaire, so I am sure he doesn't use money the way us poor schmucks do. The way I have heard him describe the way he uses the S&P 500 fund is that it is where he parks his money that he is going to use to buy real estate in the near future. Since he doesn't believe in bond funds, he is not going to put it into even a short term bond fund. I guess he is so rich that he figures hey, if the market goes down, I will have some losses to offset my capital gains. I think the only reason he uses the S&P is that it doesn't have a load. Just my guess anyway. He has said that it is ok to use the S&P in 401k plans as I recall, as the growth part of his 4 fund portfolio.
Mike

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Re: Dave Ramsey says you shouldn't own bonds?

Post by Bubbagump » Fri Feb 13, 2015 10:45 pm

I personally think Ramsey is a charlatan taking advantage of people's trust in religion to line his pockets with his network of advisors selling class A shares of front loaded stock funds. But that's me. And an actively managed bond fund probably IS risky with junk bonds and who knows what strategies. That not withstanding and my 2 cents, but I ignore everything the man says.

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Re: Dave Ramsey says you shouldn't own bonds?

Post by pkcrafter » Fri Feb 13, 2015 10:49 pm

What I learned quickly from Dave Ramsey is don't listen to Dave Ramsey on the subject of investing. A waste of time.


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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mickeyd
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Re: Dave Ramsey says you shouldn't own bonds?

Post by mickeyd » Sat Feb 14, 2015 3:00 pm

The way I have heard him describe the way he uses the S&P 500 fund is that it is where he parks his money that he is going to use to buy real estate in the near future.
What a crazy way to invest short term $. To each his own, I guess.
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stemikger
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Re: Dave Ramsey says you shouldn't own bonds?

Post by stemikger » Sat Feb 14, 2015 4:52 pm

I work midnights and I must admit I do listen to his show on my way to work. I do like listening to the people who call in. One thing I realized about Dave is that he always says how much he loves real estate. Whenever someone calls in about investing in rental properties, he always says how much he loves real estate but does warn them on the PITA factor.

He really does know what he is talking about when he goes into all the nuts and bolts describing what it takes to be a real estate investor. That is clearly where his passion is when it comes to investing. However, when someone asks about investing in mutual funds, that passion is not there and he gives the standard answer he gives in the Total Money Makeover followed with his ELP recommendations. Dave seems to be a type A personality type and I think that is part of the reason why he does not like investing in index funds. He wants to be pro active and do better. However, that is just an illusion he does not want to come to terms with.

I wish he would just admit that he was wrong about his investing advice and just tell his callers to invest in index funds using Vanguard. I would respect him so much more because his debt reduction advice is helpful. Common sense but helpful.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

FredL
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Re: Dave Ramsey says you shouldn't own bonds?

Post by FredL » Sat Feb 14, 2015 5:41 pm

If you like Dave Ramsey's recommendation follow it otherwise ignore it. Nobody is 100% correct. I don't think there is a perfect portfolio that guarantees you to get the highest return with lowest risk. You need to take responsibility for your own decision.

mhalley
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Re: Dave Ramsey says you shouldn't own bonds?

Post by mhalley » Sat Feb 14, 2015 9:14 pm

No one is 100% correct, for sure. Even here at bogleheads, there are many differences of opinion. Aside from low cost investing, once you get beyond that, it becomes much more of a hit and miss. Such simple things as, how much international, or international at all? Total stock market, or tilt to small? Or tilt to Value? or Total bond market, vs some other bond fund, since it maybe has too much of this or that in it? Maybe treasuries instead? International bonds? Many roads to Dublin.
Mike

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