Dave Ramsey against index funds?

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Esq123
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Dave Ramsey against index funds?

Post by Esq123 »

Hi all-

I have been listening to Dave Ramsey lately and noticed there is a theme: he is against investing in index funds and believes you can find funds that beat the market.

Well I’m a relatively young investor (30 years old) and predominantly invest in low cost index funds based on all the knowledge I gained through this site.

Curious as to your thoughts? What do you all think of Dave Ramsey here?

Thanks all.
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Pajamas
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Re: Dave Ramsey against index funds?

Post by Pajamas »

In a word, "controversial". Generally he's not well-respected here for his investing recommendations.

Some agree with his approaches to getting out of debt while others criticize his approaches for having psychological and behavioral aspects that are not rational such as advocating debt snowball instead of debt avalanche.

https://www.google.com/search?sitesearc ... ave+ramsey
cherijoh
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Re: Dave Ramsey against index funds?

Post by cherijoh »

Esq123 wrote: Thu Jun 28, 2018 7:09 pm Hi all-

I have been listening to Dave Ramsey lately and noticed there is a theme: he is against investing in index funds and believes you can find funds that beat the market.

Well I’m a relatively young investor (30 years old) and predominantly invest in low cost index funds based on all the knowledge I gained through this site.

Curious as to your thoughts? What do you all think of Dave Ramsey here?

Thanks all.
His investing advice is questionable at best and a rip-off if you start a relationship with one of his licensed advisors.
Jack FFR1846
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Re: Dave Ramsey against index funds?

Post by Jack FFR1846 »

Dave Ramsey wants you to hire is SmartVestorPro group and pay outrageous fees so they can play games and make you think that investing is this black art that only they can master. He needs the money that they pay him.

Dave is fine when you have no clue how to debt.

Once you've gotten on steady feet managing your daily money needs, stop listening to Dave.
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mhalley
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Re: Dave Ramsey against index funds?

Post by mhalley »

In sum,
DR has good get out of debt advice for the most part (I think a lot of bogleheads would not agree on passing up a company match in 401k) but lousy investment and retirement advice (100% stocks, excessive withdrawal rate, active management paying an advisor). I like to listen to his podcasts for the entertainment, but would never follow his investment advice.
He is also way too rigid, it is always follow the baby steps, no deviations permitted.
Bogleheads would probably also disagree with paying house off early that has a great interest rate, and would say that the responsible use of cc can add money in your pocket.
mortfree
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Re: Dave Ramsey against index funds?

Post by mortfree »

Dave Ramsey for debt.

Bogleheads for Investing.

[/mic drop]
bberris
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Re: Dave Ramsey against index funds?

Post by bberris »

Of course you can find funds that beat the market... after they've done it. There are thousands of funds, some will beat the average, and some will not. But the extra expense of management fees for active funds drags their performance down on average. All of these active funds trade against each other; one fund's loss is another fund's gain. (Trading performance is zero sum around the market average). The management fee is the fund manager's gain, and your loss.
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TheAccountant
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Re: Dave Ramsey against index funds?

Post by TheAccountant »

You can save like Dave, just don't invest like him.
Sasquatch
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Re: Dave Ramsey against index funds?

Post by Sasquatch »

Read any of Mr. Bogles books. They provide sound statistical evidence to support his claim. They also largely disprove Mr.Ramsey claim on a long term basis.
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willthrill81
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Re: Dave Ramsey against index funds?

Post by willthrill81 »

mortfree wrote: Thu Jun 28, 2018 7:27 pm Dave Ramsey for debt.

Bogleheads for Investing.

[/mic drop]
:thumbsup

Bingo.
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9-5 Suited
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Re: Dave Ramsey against index funds?

Post by 9-5 Suited »

I listen to Dave regularly because I think he’s an entertaining guy and they do a good job running a call-in based show. He’s also a really smart businessman/entrepreneur so I enjoy when he talks about that stuff as well.

But as far as investing ... well those calls I “hate listen” :) His advice is flawed in ways that he is too smart not to understand, so I have to assume it’s because of the financial incentives he has to pitch expensive active management and make you seem like a fool for DIYing and choosing to just “be average” with the index.
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Re: Dave Ramsey against index funds?

Post by MnD »

mortfree wrote: Thu Jun 28, 2018 7:27 pm Dave Ramsey for debt.

Bogleheads for Investing.

[/mic drop]
Dave Ramsey for stupid debt.
Bogleheads for investing.

i heard him encouraging a Dad of young children to deliver pizza at night to eliminate a very reasonable and very affordable debt based on the amount of debt and income. That's great advice being away from your young kids every night and maybe getting robbed or killed.
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Grt2bOutdoors
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Re: Dave Ramsey against index funds?

Post by Grt2bOutdoors »

To be fair, I don't think that's an accurate portrayal, if you listen closely enough you'll see he's recommended the S&P 500 index from Vanguard, many a time. In fact, he say's he owns an S&P 500 fund. That said, he does recommend the folks who call up his program to talk with SmartVestor Pro's, but all he says is to talk to them, I've never heard him say "you must buy mutual funds from them, nor does he make specific recommendations of which funds to invest in", all he says is pick up the phone and call the ones that are listed for your particular zip code.

I don't agree with the 12% returns he uses as an example, not saying those funds he owns did or did not produce those returns, they very well may have, but the average listener may think that past is prologue and that is where the disagreement comes, you can buy any fund you like, or as many as the four he recommends, but getting 12% returns going forward? You have to be very successful in picking the winning horse and continuing to hope that the horse you picked continues to win most of the time with performance that far exceeds the average. That is nearly impossible to do. Sometimes the winning horse enters a downturn and never recovers, then what? How long do you continue to hold it or do you performance chase by viewing past performance and enter a cycle of buying high and selling low? Buying an index assures you will earn the average return, buying an actively managed fund assures you that you will pay x% in expense ratio and that's about it, the rest is mostly a form of luck, good or bad. The index fund holder doesn't need to be lucky, he just needs to buy and hold and he will earn the average, relying on zero perceived skills that may or may not be there.

Henry Ford used to sell cars to folks, his shtick was you can have any color you like so long as it was black. Why? simply because it kept his costs down, profits up and if it works, why change it? Why is DR's program so successful in helping folks get out of debt? Because it works, it's simple and why change something if the goal is accomplished, when you start tinkering with his steps, the odds of not successfully getting out of debt goes up. I can understand why he remains steadfast in his approach, not saying I necessarily agree with only keeping $1,000 in your emergency fund but we are all entitled to an opinion.
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Re: Dave Ramsey against index funds?

Post by Nate79 »

Grt2bOutdoors wrote: Thu Jun 28, 2018 8:17 pm To be fair, I don't think that's an accurate portrayal, if you listen closely enough you'll see he's recommended the S&P 500 index from Vanguard, many a time. In fact, he say's he owns an S&P 500 fund. That said, he does recommend the folks who call up his program to talk with SmartVestor Pro's, but all he says is to talk to them, I've never heard him say "you must buy mutual funds from them, nor does he make specific recommendations of which funds to invest in", all he says is pick up the phone and call the ones that are listed for your particular zip code.

I don't agree with the 12% returns he uses as an example, not saying those funds he owns did or did not produce those returns, they very well may have, but the average listener may think that past is prologue and that is where the disagreement comes, you can buy any fund you like, or as many as the four he recommends, but getting 12% returns going forward? You have to be very successful in picking the winning horse and continuing to hope that the horse you picked continues to win most of the time with performance that far exceeds the average. That is nearly impossible to do. Sometimes the winning horse enters a downturn and never recovers, then what? How long do you continue to hold it or do you performance chase by viewing past performance and enter a cycle of buying high and selling low? Buying an index assures you will earn the average return, buying an actively managed fund assures you that you will pay x% in expense ratio and that's about it, the rest is mostly a form of luck, good or bad. The index fund holder doesn't need to be lucky, he just needs to buy and hold and he will earn the average, relying on zero perceived skills that may or may not be there.

Henry Ford used to sell cars to folks, his shtick was you can have any color you like so long as it was black. Why? simply because it kept his costs down, profits up and if it works, why change it? Why is DR's program so successful in helping folks get out of debt? Because it works, it's simple and why change something if the goal is accomplished, when you start tinkering with his steps, the odds of not successfully getting out of debt goes up. I can understand why he remains steadfast in his approach, not saying I necessarily agree with only keeping $1,000 in your emergency fund but we are all entitled to an opinion.
Correct, he is not against index funds.
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Re: Dave Ramsey against index funds?

Post by averagedude »

Sometimes i listen to Dave Ramsey and i think he has done alot of good by motivating people to get out of debt. It is hard for me to believe that a person can build an empire by just simply telling people to spend less than they earn. What a concept, why did i not think of that? With that being said, I believe he has huge conflicts of interest because of the kickbacks he gets by telling people to contact a endorsed local provider when it comes to investing. If you want to get great advice from someone that has no conflicts of interest, listen to the Clark Howard show. He is very knowlegeble, truly cares about your wallet instead of his, and is the nicest guy i have never met.
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Re: Dave Ramsey against index funds?

Post by venkman »

Grt2bOutdoors wrote: Thu Jun 28, 2018 8:17 pm I don't agree with the 12% returns he uses as an example, not saying those funds he owns did or did not produce those returns, they very well may have, but the average listener may think that past is prologue and that is where the disagreement comes, you can buy any fund you like, or as many as the four he recommends, but getting 12% returns going forward?
I think the 12% number he uses is technically true, but he glosses over the fact that those are average annual returns, as opposed to an actual useful metric, like CAGR.
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Re: Dave Ramsey against index funds?

Post by willthrill81 »

venkman wrote: Thu Jun 28, 2018 9:46 pm
Grt2bOutdoors wrote: Thu Jun 28, 2018 8:17 pm I don't agree with the 12% returns he uses as an example, not saying those funds he owns did or did not produce those returns, they very well may have, but the average listener may think that past is prologue and that is where the disagreement comes, you can buy any fund you like, or as many as the four he recommends, but getting 12% returns going forward?
I think the 12% number he uses is technically true, but he glosses over the fact that those are average annual returns, as opposed to an actual useful metric, like CAGR.
The typical DR listener isn't going to understand that the 12% number is not a useful metric to them in any way. It's very misleading.
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rgs92
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Re: Dave Ramsey against index funds?

Post by rgs92 »

He is totally against any kind of debt just on principle, even low interest debt for mortgages and cars.
He seems to look at all debt like it's a payday loan.
When you are younger especially, it may make sense to borrow at low rates for needed things and couple that with long term market investing (which of course should be in index funds with a sensible asset allocation).
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Re: Dave Ramsey against index funds?

Post by Chris K Jones »

I listen to him most days on my drive home. Almost all of my funds are invested in index funds. I think Dave is great for getting out of debt and does a great service in this regard. I think he is wrong about index funds.
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Re: Dave Ramsey against index funds?

Post by Nate79 »

rgs92 wrote: Thu Jun 28, 2018 10:02 pm He is totally against any kind of debt just on principle, even low interest debt for mortgages and cars.
He seems to look at all debt like it's a payday loan.
When you are younger especially, it may make sense to borrow at low rates for needed things and couple that with long term market investing (which of course should be in index funds with a sensible asset allocation).
He may be personally against all debt but he has no issue for people to get a mortgage.

But consume debt is stupid and reflective of living beyond your means. There is no need for consumer debt. People play the math nerd and interest rate game as an excuse to overspend on things they can't really afford.

You can get margin loans if you want to borrow and invest. I don't recommend it.
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Re: Dave Ramsey against index funds?

Post by Pajamas »

MnD wrote: Thu Jun 28, 2018 8:15 pm i heard him encouraging a Dad of young children to deliver pizza at night to eliminate a very reasonable and very affordable debt based on the amount of debt and income. That's great advice being away from your young kids every night and maybe getting robbed or killed.
I am not a fan of Dave Ramsey in the first place but it seems that every time I hear anything specific about him, it lowers my opinion of him further.

It's really hard to excuse some of the really bad advice that he gives just because some of the advice he gives is acceptable. Haven't heard any advice of his that is really good. Even the debt snowball advice just reinforces substandard financial knowledge, perspectives, and practices. About the best I could say of it is that it is better than nothing.
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Re: Dave Ramsey against index funds?

Post by mancich »

He quotes 12%, but I don't think this is net of fees. After subtracting out the high-expense ratios of his actively managed funds, as well as SmartVestor pro fees (let's assume 1% AUM per year), I doubt that beats TSM over time.
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Re: Dave Ramsey against index funds?

Post by Therapist Investor »

Bogleheads really are not Dave Ramsey's audience. He's talking to the millions of people who struggle with consumer debt. His Baby Steps are effective. I don't fault him at all for recommending the debt snowball. Yes it results in higher payments over time, but people aren't just coldly rational. Motivational factors are critical to achieving any longterm goal like paying down debt. Most of the research done on this suggests that debt snowball is more likely to lead to success for everyday people: https://www.forbes.com/sites/robertberg ... 24928c1454. I suppose for people devoid of any irrationality or emotions, the Debt Avalanche could be more effective. For the rest of us, the Debt Snowball is just fine.

However, Dave Ramsey's investing advice is atrocious. I recently heard him tell a woman in her mid-70s to shift her asset allocation to 100% stocks, including a tilt toward small caps/more aggressive growth so that she could live off of the 10-12% returns each year. He failed to mention volatility or the concept safe withdrawal rates. Sometimes I can't believe how irresponsible his investing advice is.
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Re: Dave Ramsey against index funds?

Post by bottlecap »

He’s wrong. His preferred endorsed providers don’t sell index funds, so he doesn’t beleive in them.

I’m not a Dave Ramsey hater, but he's smart enough to figure this out. Therefore I have to conclude that he knows which side his bread is buttered and he will never advocate index funds because he really, really likes that butter.

JT
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Re: Dave Ramsey against index funds?

Post by GoldStar »

He's paid by SmartVestor and other advertisers/endorsee's so he has to be against index funds.
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Re: Dave Ramsey against index funds?

Post by blastoff »

If you lose 100% of your money the first year and then make a 124 % return in the second year Dave says you made 12%/year. I say you have no money.

As an aside, and similar to the mathematical irrationality of the snowball method, sometimes I wonder if claiming 12% encourages people to save which might be a good thing.
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Re: Dave Ramsey against index funds?

Post by indexonlyplease »

mortfree wrote: Thu Jun 28, 2018 7:27 pm Dave Ramsey for debt.

Bogleheads for Investing.

[/mic drop]
+1

Dave's living debt free advice is great. I wish in his 7 step plan he would just add in a low cost Target Dated Fund for people to invest in (Vanguard). Then when someone learns about investing they could change. But by then they may realize the Target Dated Fund is all they need.
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Re: Dave Ramsey against index funds?

Post by lostdog »

Listen to Clark Howard instead.

I think you're a more informed American when it comes to debt and investing. You're maybe in the 5% of Americans who get it when it comes to personal finance.

Dave Ramsey is for the rest of America who don't get personal finance. This sounds harsh but most Americans are idiots with their money. Dave is the guy that slaps them across the head and wakes them up when they realize how messed up their finances are. American marketing tactics are designed to keep people in debt. Dave is the voice of reason for the idiots. If you've listened to Dave long enough, most of the time he'll talk down to them like they're children which is deserved. I've heard people call in with hundreds of thousands in school loan debt and act like it's nothing/normal.
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Re: Dave Ramsey against index funds?

Post by moehoward »

I'm not a Dave Ramsey fan. For financial idiots in debt, I'll agree he is good. I've noticed a couple of churches in my area advertising a Dave Ramsey night. It's probably one of his people but still his philosophy. He has got a nice religious crowd following him. That's a good way to make a lot of money.
student
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Re: Dave Ramsey against index funds?

Post by student »

moehoward wrote: Fri Jun 29, 2018 8:43 am I'm not a Dave Ramsey fan. For financial idiots in debt, I'll agree he is good.
I have the same opinion.
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Re: Dave Ramsey against index funds?

Post by Jordan4FI »

Really tired of people talking about this.. You are trying to compare 2 totally different peoples.. Dave's people are the major part of the population, not self educated with finance, poor money skills, debt debt debt, scared of the market..ect.. then some of them find the program and get it together, and the program works, people make $$$ with his program, but it is work till your 65 or later plan...

We are not on that plan, most of us do not plan to work that long.. so what we need to do is not the same as the general public, we are not the public, we are a sect that has figured out a quicker, better way to enjoy life.

And nothing wrong with managed funds, if your ER is low, and no add on fees, its about the same.. When I am done working, I am eyes some of Vanguards managed funds to take me till I die.. Some of them just are a better option for different scenarios, where Index alone does not cover desired outcomes.
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Re: Dave Ramsey against index funds?

Post by Nate79 »

Jordan4FI wrote: Fri Jun 29, 2018 9:45 am Really tired of people talking about this.. You are trying to compare 2 totally different peoples.. Dave's people are the major part of the population, not self educated with finance, poor money skills, debt debt debt, scared of the market..ect.. then some of them find the program and get it together, and the program works, people make $$$ with his program, but it is work till your 65 or later plan...

We are not on that plan, most of us do not plan to work that long.. so what we need to do is not the same as the general public, we are not the public, we are a sect that has figured out a quicker, better way to enjoy life.

And nothing wrong with managed funds, if your ER is low, and no add on fees, its about the same.. When I am done working, I am eyes some of Vanguards managed funds to take me till I die.. Some of them just are a better option for different scenarios, where Index alone does not cover desired outcomes.
This site needs a weekly rant on Dave Ramsey thread where BH posters can get it out of their system for the week. They post the same stuff over and over. Kind of like therapy maybe.

Nothing new here in this thread. Mostly exaggerations, false statements, or misunderstanding when ranting about Dave. But that's fine. He just trucks along as the most popular and successful financial personality helping millions of people get their financial life in order.
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Re: Dave Ramsey against index funds?

Post by willthrill81 »

Nate79 wrote: Fri Jun 29, 2018 10:33 amMostly exaggerations, false statements, or misunderstanding when ranting about Dave. But that's fine. He just trucks along as the most popular and successful financial personality helping millions of people get their financial life in order.
What false statements have been put forward in this thread? I'm curious.
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Re: Dave Ramsey against index funds?

Post by Mountain Doc »

Our brains are wired to look for patterns, and to assume those patterns will persist. When people begin to dabble in investing, it is totally natural to assume funds that have outperformed the market will continue to outperform the market. It seems logical, and virtually every investing rookie makes this assumption. However, loads of academic research have shown it is simply not true. Past performance really doesn't predict future results, but it can take a long time for individuals to actually believe and accept this truth. Dave Ramsey has not yet accepted it.

Once the academic truth really starts to sink in, it becomes comically obvious that past performance cannot predict future results. After all, virtually all new investors look at past performance of the funds in their lineup and pick the one with the best record. If it really was that simple, then everyone would be outperforming the market average (which, of course, is a statistical impossibility).
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Re: Dave Ramsey against index funds?

Post by Nate79 »

willthrill81 wrote: Fri Jun 29, 2018 10:48 am
Nate79 wrote: Fri Jun 29, 2018 10:33 amMostly exaggerations, false statements, or misunderstanding when ranting about Dave. But that's fine. He just trucks along as the most popular and successful financial personality helping millions of people get their financial life in order.
What false statements have been put forward in this thread? I'm curious.
I was referring to the very reason for this thread including the thread title is certainly false. Dave recommends and owns index funds (specifically S&P500 including Vanguard) for a specific purpose (taxable accounts). In fact he owns index funds in taxable account for a good reason (tax efficiency).

I did see you got your 12% rant in for the week. :mrgreen:
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willthrill81
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Re: Dave Ramsey against index funds?

Post by willthrill81 »

Nate79 wrote: Fri Jun 29, 2018 11:09 am
willthrill81 wrote: Fri Jun 29, 2018 10:48 am
Nate79 wrote: Fri Jun 29, 2018 10:33 amMostly exaggerations, false statements, or misunderstanding when ranting about Dave. But that's fine. He just trucks along as the most popular and successful financial personality helping millions of people get their financial life in order.
What false statements have been put forward in this thread? I'm curious.
I was referring to the very reason for this thread including the thread title is certainly false. Dave recommends and owns index funds (specifically S&P500 including Vanguard) for a specific purpose (taxable accounts). In fact he owns index funds in taxable account for a good reason (tax efficiency).
Fair enough.
Nate79 wrote: Fri Jun 29, 2018 11:09 amI did see you got your 12% rant in for the week. :mrgreen:
Because it's very misleading, essentially lying. And despite being shown repeatedly that it's false, DR refuses to change any of his recommendations.

So yes, as long as someone is misleading millions of people, I will continue to 'rant' about it. That's called standing up for the truth.
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Re: Dave Ramsey against index funds?

Post by Crisium »

Nate79 wrote: Fri Jun 29, 2018 11:09 am
willthrill81 wrote: Fri Jun 29, 2018 10:48 am
Nate79 wrote: Fri Jun 29, 2018 10:33 amMostly exaggerations, false statements, or misunderstanding when ranting about Dave. But that's fine. He just trucks along as the most popular and successful financial personality helping millions of people get their financial life in order.
What false statements have been put forward in this thread? I'm curious.
I was referring to the very reason for this thread including the thread title is certainly false. Dave recommends and owns index funds (specifically S&P500 including Vanguard) for a specific purpose (taxable accounts). In fact he owns index funds in taxable account for a good reason (tax efficiency).

I did see you got your 12% rant in for the week. :mrgreen:
And that forgives him recommending high fee, actively managed funds for retirement accounts? As others have said, Dave preaches to the average American. The majority of Americans and his listeners simply cannot max out 401k and an IRA, and have no stock outside of their retirement accounts. Therefore he is recommending most of his listeners to simply not own any Index funds at all and instead own high fee, load, active funds instead.

I've even heard him tell a TSP investor that the C fund (SP500 Index 0.04 ER) being an Index fund is a negative because a good mutual fund will beat it, but essentially he says it is good enough.
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Re: Dave Ramsey against index funds?

Post by Nate79 »

Crisium wrote: Fri Jun 29, 2018 11:18 am
Nate79 wrote: Fri Jun 29, 2018 11:09 am
willthrill81 wrote: Fri Jun 29, 2018 10:48 am
Nate79 wrote: Fri Jun 29, 2018 10:33 amMostly exaggerations, false statements, or misunderstanding when ranting about Dave. But that's fine. He just trucks along as the most popular and successful financial personality helping millions of people get their financial life in order.
What false statements have been put forward in this thread? I'm curious.
I was referring to the very reason for this thread including the thread title is certainly false. Dave recommends and owns index funds (specifically S&P500 including Vanguard) for a specific purpose (taxable accounts). In fact he owns index funds in taxable account for a good reason (tax efficiency).

I did see you got your 12% rant in for the week. :mrgreen:
And that forgives him recommending high fee, actively managed funds for retirement accounts? As others have said, Dave preaches to the average American. The majority of Americans and his listeners simply cannot max out 401k and an IRA, and have no stock outside of their retirement accounts. Therefore he is recommending most of his listeners to simply not own any Index funds at all and instead own high fee, load, active funds instead.

I've even heard him tell a TSP investor that the C fund (SP500 Index 0.04 ER) being an Index fund is a negative because a good mutual fund will beat it, but essentially he says it is good enough.
So to clarify I do not agree exactly with DR's investment advice concerning the need for an advisor and paying for funds that have a load. I am only stating what he talks about in his show and books. Note that taken out of context or a single example doesn't tell the entire story. I enjoy listening to the show hence why I post somewhat supporting DR as many of the rants on here about him are not the complete story.

Technically DR doesn't recommend any particular fund, though most know that his preference is for American funds which among the active funds is not bad and is a very well run group of funds that for active funds are on the lower cost range. Using active funds is not a sin and many BH regular posters have their favorite active fund for particular reasons. I personally own an international American funds mutual fund in my 401k vs an index fund. The ER of the American funds is <0.5%. I'm ok with that and it has done well vs the index. So to say he recommends high ER funds is not true.

He recommends paying loads vs AUM (which if you are going to have an advisor is probably the best of two bad options but good luck finding an advisor that works for free). Personally I'm not convinced that for the average person that this is horrible as the average person likely can use an advisor to keep them on track and will likely perform better than an average person DIY who panics in a downturn or backs off their savings rate (or decides to invest in bitcoin or some other stupidity).

He recommends buy and hold investing with a simple 4 fund portfolio. He doesn't believe in active stock investing, he doesn't' believe in trading in and out (like the advisors who do churning), etc. He rants against whole life and its ugly cousins as horrible horrible products.
selters
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Re: Dave Ramsey against index funds?

Post by selters »

TheAccountant wrote: You can save like Dave, just don't invest like him.
He's probably not lying when he says he uses active funds for tax sheltered accounts. But for his taxable mutual fund investments, he is 100% allocated to the Vanguard 500 Index Fund. He has most of his net worth in real estate, but if his net worth is in the hundreds of millions of dollars (which he has hinted at on his podcast/radio show) and 20-30% of his net worth is in mutual funds, he may actually have most of his mutual fund investsments in an index fund himself.
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Dtort
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Re: Dave Ramsey against index funds?

Post by Dtort »

Dave used to never talk about index funds, but I too have heard him refer to them the last few years. I think that he's one of those strong personalities that will not ever admit that he's wrong, but will subtly shift his behavior as a response to criticism.
And as for the average person being a financial idiot, BINGO! 75% of my neighbors had no insurance for their Harvey flooded homes, and when I tell them that the IRS amended the net-operating-loss rules in such a way that they can recover vast amounts of their income tax, I just hear "Well, we don't want to pay an accountant" or "My spouse always does our income tax" or some such. In short, my polite delivery of the good news doesn't work. Dave would instead smack them upside the head with something like "You're still living in a trailer in your driveway. You're really going to pass up tens of thousands of dollars of help because you're STUBBORN? REALLY?"
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Stinky
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Re: Dave Ramsey against index funds?

Post by Stinky »

lostdog wrote: Fri Jun 29, 2018 8:14 am
Dave Ramsey is for the rest of America who don't get personal finance. This sounds harsh but most Americans are idiots with their money. Dave is the guy that slaps them across the head and wakes them up when they realize how messed up their finances are. American marketing tactics are designed to keep people in debt. Dave is the voice of reason for the idiots. If you've listened to Dave long enough, most of the time he'll talk down to them like they're children which is deserved. I've heard people call in with hundreds of thousands in school loan debt and act like it's nothing/normal.
+1. Agree 100%. So many of Ramsey's callers are financial idiots. Credit card debt, student loan debt, living beyond their means. Ramsey does a good job of dressing them down, and he's pretty entertaining.

But when it comes to investing, I'll trust the collective Boglehead wisdom over Ramsey's.
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WanderingDoc
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Re: Dave Ramsey against index funds?

Post by WanderingDoc »

Wealthy people don't (and have never) listen to Dave Ramsey. They just don't. You cannot become wealthy following his advice. You cannot shrink your way to wealth. If you are earning $3500 per month and saving $0, giving up quality of life by putting cash into envelopes to save you $600 at the end of the month, won't make you rich. It will may you unhappy, and maybe in 40 years when you are old (or dead) you'll be rich. The poor and lower-middle class listen to Dave. And he makes boatloads of money off those people.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.
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Re: Dave Ramsey against index funds?

Post by lostdog »

WanderingDoc wrote: Fri Jun 29, 2018 1:52 pm Wealthy people don't (and have never) listen to Dave Ramsey. They just don't. You cannot become wealthy following his advice. You cannot shrink your way to wealth. If you are earning $3500 per month and saving $0, giving up quality of life by putting cash into envelopes to save you $600 at the end of the month, won't make you rich. It will may you unhappy, and maybe in 40 years when you are old (or dead) you'll be rich. The poor and lower-middle class listen to Dave. And he makes boatloads of money off those people.
That $600 will go towards getting out of debt. Not sure what you're saying here. Are you saying they'll be happier living paycheck to paycheck?
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Re: Dave Ramsey against index funds?

Post by livesoft »

Grt2bOutdoors wrote: Thu Jun 28, 2018 8:17 pmI don't agree with the 12% returns he uses as an example, not saying those funds he owns did or did not produce those returns, they very well may have, but the average listener may think that past is prologue and that is where the disagreement comes, you can buy any fund you like, or as many as the four he recommends, but getting 12% returns going forward?
Speaking of 12% and from that other thread, here is a screen capture of the 10-year personal performance from my Vanguard web page:
Image

For the above graphic I've only used index funds at Vanguard during this 10-year period.
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H-Town
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Re: Dave Ramsey against index funds?

Post by H-Town »

Esq123 wrote: Thu Jun 28, 2018 7:09 pm Hi all-

I have been listening to Dave Ramsey lately and noticed there is a theme: he is against investing in index funds and believes you can find funds that beat the market.

Well I’m a relatively young investor (30 years old) and predominantly invest in low cost index funds based on all the knowledge I gained through this site.

Curious as to your thoughts? What do you all think of Dave Ramsey here?

Thanks all.
Everyone has opinions.

What I don't like about Dave Ramsey is that he is ignorant. He refuses to learn and acknowledge that his audience should go elsewhere for investment advice. Of course, this is my opinion.
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Re: Dave Ramsey against index funds?

Post by Nate79 »

WanderingDoc wrote: Fri Jun 29, 2018 1:52 pm Wealthy people don't (and have never) listen to Dave Ramsey. They just don't. You cannot become wealthy following his advice. You cannot shrink your way to wealth. If you are earning $3500 per month and saving $0, giving up quality of life by putting cash into envelopes to save you $600 at the end of the month, won't make you rich. It will may you unhappy, and maybe in 40 years when you are old (or dead) you'll be rich. The poor and lower-middle class listen to Dave. And he makes boatloads of money off those people.
This is completely not true. You should become educated on the topic.
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Re: Dave Ramsey against index funds?

Post by Grt2bOutdoors »

livesoft wrote: Fri Jun 29, 2018 2:25 pm
Grt2bOutdoors wrote: Thu Jun 28, 2018 8:17 pmI don't agree with the 12% returns he uses as an example, not saying those funds he owns did or did not produce those returns, they very well may have, but the average listener may think that past is prologue and that is where the disagreement comes, you can buy any fund you like, or as many as the four he recommends, but getting 12% returns going forward?
Speaking of 12% and from that other thread, here is a screen capture of the 10-year personal performance from my Vanguard web page:
Image

For the above graphic I've only used index funds at Vanguard during this 10-year period.
Yes, but you’re also TLH’d and invested on RBD’s.
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Grt2bOutdoors
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Re: Dave Ramsey against index funds?

Post by Grt2bOutdoors »

WanderingDoc wrote: Fri Jun 29, 2018 1:52 pm Wealthy people don't (and have never) listen to Dave Ramsey. They just don't. You cannot become wealthy following his advice. You cannot shrink your way to wealth. If you are earning $3500 per month and saving $0, giving up quality of life by putting cash into envelopes to save you $600 at the end of the month, won't make you rich. It will may you unhappy, and maybe in 40 years when you are old (or dead) you'll be rich. The poor and lower-middle class listen to Dave. And he makes boatloads of money off those people.
Hmmm?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Dave Ramsey against index funds?

Post by TheAccountant »

thangngo wrote: Fri Jun 29, 2018 2:35 pm
Esq123 wrote: Thu Jun 28, 2018 7:09 pm Hi all-

I have been listening to Dave Ramsey lately and noticed there is a theme: he is against investing in index funds and believes you can find funds that beat the market.

Well I’m a relatively young investor (30 years old) and predominantly invest in low cost index funds based on all the knowledge I gained through this site.

Curious as to your thoughts? What do you all think of Dave Ramsey here?

Thanks all.
Everyone has opinions.

What I don't like about Dave Ramsey is that he is ignorant. He refuses to learn and acknowledge that his audience should go elsewhere for investment advice. Of course, this is my opinion.
He actually mentions that he is not an advisor and that you should take his investing advice with a grain of salt. People go to him because they are broke AF and have made horrible financial decisions and need advice. Investing is usually quite far away for most of his audience, since they're in so much consumer debt.
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Re: Dave Ramsey against index funds?

Post by selters »

WanderingDoc wrote: Fri Jun 29, 2018 1:52 pm Wealthy people don't (and have never) listen to Dave Ramsey. They just don't. You cannot become wealthy following his advice. You cannot shrink your way to wealth.
Are you talking about Bogleheads now, or Dave Ramsay? If you listen to Dave Ramsay, one of the things he spends the most time talking about is getting people to increase their income substanitally and not to focus so much on price. The Bogleheads wiki is mostly about cutting (investment) costs and managing what you have wisely. Very little content about increasing income,
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