Dave Ramsey says 30 years Roth IRA to 1.3 million?

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by nisiprius » Mon Dec 02, 2019 2:21 pm

wolf359 wrote:
Mon Dec 02, 2019 1:39 pm
This is a direct link to the Dave Ramsey blog. https://www.daveramsey.com/blog/how-to- ... etirement/

Here's the quote:
How Can You Make Sure Your Retirement Funds Last?
As long as you didn’t take the ready-fire-aim approach to retirement planning, you should already know how to make retirement last. But, here’s a refresher:
You’re going to keep your nest egg invested and averaging 12% growth. We’re estimating inflation at 4%. So, to maintain your nest egg and break even with inflation, you will live on 8% income from your nest egg. That means if you have a nest egg of $625,000, you will live on $50,000 per year: $625,000 x 8% (.08) = $50,000.
I'm not sure how that is misquoted.

Edit: I just saw someone else also already pointed to Dave's blog and this same quote.
Wow. That's even more than the 7% Peter Lynch suggested in 1995--before the first SWR studies showed that 7% was unrealistic.
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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by willthrill81 » Mon Dec 02, 2019 3:35 pm

nisiprius wrote:
Mon Dec 02, 2019 2:21 pm
wolf359 wrote:
Mon Dec 02, 2019 1:39 pm
This is a direct link to the Dave Ramsey blog. https://www.daveramsey.com/blog/how-to- ... etirement/

Here's the quote:
How Can You Make Sure Your Retirement Funds Last?
As long as you didn’t take the ready-fire-aim approach to retirement planning, you should already know how to make retirement last. But, here’s a refresher:
You’re going to keep your nest egg invested and averaging 12% growth. We’re estimating inflation at 4%. So, to maintain your nest egg and break even with inflation, you will live on 8% income from your nest egg. That means if you have a nest egg of $625,000, you will live on $50,000 per year: $625,000 x 8% (.08) = $50,000.
I'm not sure how that is misquoted.

Edit: I just saw someone else also already pointed to Dave's blog and this same quote.
Wow. That's even more than the 7% Peter Lynch suggested in 1995--before the first SWR studies showed that 7% was unrealistic.
And yet we're being told that Dave isn't actually recommending 8% withdrawals and that he's saying that retiree should 'maintain their nest egg'. At any rate, Dave certainly doesn't get any points for clarity. But if this is true, does this mean that if a retiree's inflation-adjusted portfolio value ever falls before its starting point that the retiree can no longer make any withdrawals from it?
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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by pharmermummles » Mon Dec 02, 2019 6:14 pm

willthrill81 wrote:
Mon Dec 02, 2019 3:35 pm
nisiprius wrote:
Mon Dec 02, 2019 2:21 pm
wolf359 wrote:
Mon Dec 02, 2019 1:39 pm
This is a direct link to the Dave Ramsey blog. https://www.daveramsey.com/blog/how-to- ... etirement/

Here's the quote:
How Can You Make Sure Your Retirement Funds Last?
As long as you didn’t take the ready-fire-aim approach to retirement planning, you should already know how to make retirement last. But, here’s a refresher:
You’re going to keep your nest egg invested and averaging 12% growth. We’re estimating inflation at 4%. So, to maintain your nest egg and break even with inflation, you will live on 8% income from your nest egg. That means if you have a nest egg of $625,000, you will live on $50,000 per year: $625,000 x 8% (.08) = $50,000.
I'm not sure how that is misquoted.

Edit: I just saw someone else also already pointed to Dave's blog and this same quote.
Wow. That's even more than the 7% Peter Lynch suggested in 1995--before the first SWR studies showed that 7% was unrealistic.
And yet we're being told that Dave isn't actually recommending 8% withdrawals and that he's saying that retiree should 'maintain their nest egg'. At any rate, Dave certainly doesn't get any points for clarity. But if this is true, does this mean that if a retiree's inflation-adjusted portfolio value ever falls before its starting point that the retiree can no longer make any withdrawals from it?
Right. Someone pointed that out earlier. It's like he doesn't acknowledge that stocks can go down, too. Rice and beans, I guess.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by wolf359 » Tue Dec 03, 2019 9:04 am

Nate79 wrote:
Mon Dec 02, 2019 1:56 pm
wolf359 wrote:
Mon Dec 02, 2019 1:39 pm
Nate79 wrote:
Thu Nov 28, 2019 10:46 pm

Often misquoted is that Dave recommends a specific withdrawal rate. This is not true. He doesn't recommend an 8% withdrawal rate. What he almost always says is he recommends to always leave the goose and only take the egg - only take gains (or preferably less than the gains) for the year and NEVER touch the principle.
This is a direct link to the Dave Ramsey blog. https://www.daveramsey.com/blog/how-to- ... etirement/

Here's the quote:
How Can You Make Sure Your Retirement Funds Last?
As long as you didn’t take the ready-fire-aim approach to retirement planning, you should already know how to make retirement last. But, here’s a refresher:
You’re going to keep your nest egg invested and averaging 12% growth. We’re estimating inflation at 4%. So, to maintain your nest egg and break even with inflation, you will live on 8% income from your nest egg. That means if you have a nest egg of $625,000, you will live on $50,000 per year: $625,000 x 8% (.08) = $50,000.
I'm not sure how that is misquoted.

Edit: I just saw someone else also already pointed to Dave's blog and this same quote.
As your link says, he says his strategy is to maintain the nest egg. This means, as he explains, only take the gains, keep the nest egg intact. He has repeated this hundreds of times on his show. That is why he says "maintain your nest egg".

(Again, I do not agree with this strategy, just explaining what he has repeatedly said).
But, he explicitly says that living on 8% from your nest egg will accomplish both maintaining the nest egg and keeping up with inflation.

I can also interpret this as saying to use a 4% withdrawal rate, and add 4% for inflation. So he's really advocating a 4% inflation-adjusted withdrawal rate, which is more prudent. But by throwing out the 8%, he gets everybody to anchor onto that number. His audience isn't that financially sophisticated, and will take out 8% regardless of what inflation does.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by JoeRetire » Tue Dec 03, 2019 9:08 am

willthrill81 wrote:
Mon Dec 02, 2019 1:10 pm
Make no mistake, Dave's work to help people get out of debt has been top notch, and he is to be commended for that.
Agreed.

I suspect he could equally effective in that regard without the lying.
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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by Quirkz » Tue Dec 03, 2019 1:10 pm

1210sda wrote:
Fri Nov 29, 2019 7:54 pm
For instance:
1. An individual invests $6,000 per year for 30 years at 12%. The future value of this is $1,448,000.
2. This same individual believes he will be able to withdraw 8% from his portfolio in 30 years or $115,840. ($1,448,000 times 8%)
...
$22,670 is a lot less than $115,840.

By using 12% and 8%, he under invests each year by $24,658. ($30,658 vs $6,000)
I think one thing that's being missed is this "$6k for 30 years" is an example of compounding investments, and not his general advice for investing. His "Baby Step 5" calls for setting aside 15% of income for retirement. Nobody who's actually listening to him will be targeting exactly $6k/year, unless their income is $40k. Someone who's making $80k would be putting twice that amount away.

By Bogleheads standards, 15% may be low, but for most people it'll probably get them in the right ballpark 30-odd years later, even using more realistic returns.

Yes, I still hate that he uses an unrealistic example, but that example shouldn't be confused with his more general investing advice.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by willthrill81 » Tue Dec 03, 2019 1:15 pm

Quirkz wrote:
Tue Dec 03, 2019 1:10 pm
By Bogleheads standards, 15% may be low, but for most people it'll probably get them in the right ballpark 30-odd years later, even using more realistic returns.
Part of the problem with the 15% savings rate recommendation is that by the time that many come to Dave for advice, they are already well into their 30s, 40s, or older. Saving 15% for 20 years, for instance, seems unlikely to be adequate in such a situation. If you are late to start saving, you need a higher savings rate to compensate.

A lot of it also depends as well on how much of the person's/household's expenses will be covered by SS benefits. Saving 15% for 30 years might be fine for someone spending $35k annually since SS benefits will provide a big chunk of that. It's probably less likely to work out well for someone spending $150k annually.

Blanket recommendations are rarely very appropriate.
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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by H-Town » Tue Dec 03, 2019 1:22 pm

willthrill81 wrote:
Tue Dec 03, 2019 1:15 pm
Quirkz wrote:
Tue Dec 03, 2019 1:10 pm
By Bogleheads standards, 15% may be low, but for most people it'll probably get them in the right ballpark 30-odd years later, even using more realistic returns.
Part of the problem with the 15% savings rate recommendation is that by the time that many come to Dave for advice, they are already well into their 30s, 40s, or older. Saving 15% for 20 years, for instance, seems unlikely to be adequate in such a situation. If you are late to start saving, you need a higher savings rate to compensate.

A lot of it also depends as well on how much of the person's/household's expenses will be covered by SS benefits. Saving 15% for 30 years might be fine for someone spending $35k annually since SS benefits will provide a big chunk of that. It's probably less likely to work out well for someone spending $150k annually.

Blanket recommendations are rarely very appropriate.
Well said.

If you focus on savings, and not just 15% saving rate, it would give you 10-20 years in early retirement. Plus, you can work on your own terms and not be afraid of layoffs in your 50s.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by TropikThunder » Tue Dec 03, 2019 2:12 pm

Quirkz wrote:
Tue Dec 03, 2019 1:10 pm
Nobody who's actually listening to him will be targeting exactly $6k/year, unless their income is $40k. Someone who's making $80k would be putting twice that amount away.
If you look at the paragraph I quoted above from his blog, he is recommending exactly that: $6,000, no more no less, into a Roth IRA. That’s all you need to do to get >$1.3M.

We keep quoting what he says on his blog (and it’s recent, not from years past given the $6,000 IRA contribution level only took effect this year) but the response is “that’s not what he means”. DR’s defenders somehow figure his target audience is so naive and unsophisticated that any advice he gives is better than nothing but somehow at the same time they are sophisticated enough to be able to recognize hyperbole and oversimplification and glean what he “meant” vs what he quite literally said.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by Nate79 » Tue Dec 03, 2019 2:18 pm

willthrill81 wrote:
Tue Dec 03, 2019 1:15 pm
Quirkz wrote:
Tue Dec 03, 2019 1:10 pm
By Bogleheads standards, 15% may be low, but for most people it'll probably get them in the right ballpark 30-odd years later, even using more realistic returns.
Part of the problem with the 15% savings rate recommendation is that by the time that many come to Dave for advice, they are already well into their 30s, 40s, or older. Saving 15% for 20 years, for instance, seems unlikely to be adequate in such a situation. If you are late to start saving, you need a higher savings rate to compensate.

A lot of it also depends as well on how much of the person's/household's expenses will be covered by SS benefits. Saving 15% for 30 years might be fine for someone spending $35k annually since SS benefits will provide a big chunk of that. It's probably less likely to work out well for someone spending $150k annually.

Blanket recommendations are rarely very appropriate.

Saving only 15% would definately be anti-Dave Ramsey advice. It is too low. That's only until out of debt then he recommends to save as much as possible. If you count the mortgage payments as "savings" which is sometimes controversial then his recommended savings rate once out of consumer debt would always be more than 15% and once mortgage is gone should be much higher.

Saving even 15% would put the average American far far ahead of most of the population.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by aerosurfer » Tue Dec 03, 2019 3:36 pm

Nate79 wrote:
Tue Dec 03, 2019 2:18 pm
willthrill81 wrote:
Tue Dec 03, 2019 1:15 pm
Quirkz wrote:
Tue Dec 03, 2019 1:10 pm
By Bogleheads standards, 15% may be low, but for most people it'll probably get them in the right ballpark 30-odd years later, even using more realistic returns.
Part of the problem with the 15% savings rate recommendation is that by the time that many come to Dave for advice, they are already well into their 30s, 40s, or older. Saving 15% for 20 years, for instance, seems unlikely to be adequate in such a situation. If you are late to start saving, you need a higher savings rate to compensate.

A lot of it also depends as well on how much of the person's/household's expenses will be covered by SS benefits. Saving 15% for 30 years might be fine for someone spending $35k annually since SS benefits will provide a big chunk of that. It's probably less likely to work out well for someone spending $150k annually.

Blanket recommendations are rarely very appropriate.

Saving only 15% would definately be anti-Dave Ramsey advice. It is too low. That's only until out of debt then he recommends to save as much as possible. If you count the mortgage payments as "savings" which is sometimes controversial then his recommended savings rate once out of consumer debt would always be more than 15% and once mortgage is gone should be much higher.

Saving even 15% would put the average American far far ahead of most of the population.
He definitely says to halt all savings until out of Non-mortgage debt

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by Nate79 » Tue Dec 03, 2019 3:47 pm

aerosurfer wrote:
Tue Dec 03, 2019 3:36 pm
Nate79 wrote:
Tue Dec 03, 2019 2:18 pm
willthrill81 wrote:
Tue Dec 03, 2019 1:15 pm
Quirkz wrote:
Tue Dec 03, 2019 1:10 pm
By Bogleheads standards, 15% may be low, but for most people it'll probably get them in the right ballpark 30-odd years later, even using more realistic returns.
Part of the problem with the 15% savings rate recommendation is that by the time that many come to Dave for advice, they are already well into their 30s, 40s, or older. Saving 15% for 20 years, for instance, seems unlikely to be adequate in such a situation. If you are late to start saving, you need a higher savings rate to compensate.

A lot of it also depends as well on how much of the person's/household's expenses will be covered by SS benefits. Saving 15% for 30 years might be fine for someone spending $35k annually since SS benefits will provide a big chunk of that. It's probably less likely to work out well for someone spending $150k annually.

Blanket recommendations are rarely very appropriate.

Saving only 15% would definately be anti-Dave Ramsey advice. It is too low. That's only until out of debt then he recommends to save as much as possible. If you count the mortgage payments as "savings" which is sometimes controversial then his recommended savings rate once out of consumer debt would always be more than 15% and once mortgage is gone should be much higher.

Saving even 15% would put the average American far far ahead of most of the population.
He definitely says to halt all savings until out of Non-mortgage debt
Correct. He's all about getting out and staying out of debt. As I said his recommendation is save 15% after getting out of consumer debt (ie all non mortgage debt), put all extra on the mortgage and once mortgage is paid off then save as much as possible. Definately target much more than 15% if possible.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by Quirkz » Tue Dec 03, 2019 4:09 pm

TropikThunder wrote:
Tue Dec 03, 2019 2:12 pm
If you look at the paragraph I quoted above from his blog, he is recommending exactly that: $6,000, no more no less, into a Roth IRA. That’s all you need to do to get >$1.3M.

We keep quoting what he says on his blog (and it’s recent, not from years past given the $6,000 IRA contribution level only took effect this year) but the response is “that’s not what he means”.
Like I said, this is what he's giving as an example. I agree it's a highly unrealistic one.

It is NOT his Baby Step 5 retirement recommendation, which is 15%.

Pointing out the difference between the two isn't some kind of creative apologetic interpretation, and I'm really confused why that seems to be a sticking point. Nowhere in the article does it say you should only use a Roth, or that the Roth will be your full retirement savings. In fact, it explicitly says, right after the example, "Those numbers can change depending on how much you invest, how long you have until retirement, and what you expect your annual return to be."

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by sergeant » Tue Dec 03, 2019 4:57 pm

willthrill81 wrote:
Mon Dec 02, 2019 3:35 pm
nisiprius wrote:
Mon Dec 02, 2019 2:21 pm
wolf359 wrote:
Mon Dec 02, 2019 1:39 pm
This is a direct link to the Dave Ramsey blog. https://www.daveramsey.com/blog/how-to- ... etirement/

Here's the quote:
How Can You Make Sure Your Retirement Funds Last?
As long as you didn’t take the ready-fire-aim approach to retirement planning, you should already know how to make retirement last. But, here’s a refresher:
You’re going to keep your nest egg invested and averaging 12% growth. We’re estimating inflation at 4%. So, to maintain your nest egg and break even with inflation, you will live on 8% income from your nest egg. That means if you have a nest egg of $625,000, you will live on $50,000 per year: $625,000 x 8% (.08) = $50,000.
I'm not sure how that is misquoted.

Edit: I just saw someone else also already pointed to Dave's blog and this same quote.
Wow. That's even more than the 7% Peter Lynch suggested in 1995--before the first SWR studies showed that 7% was unrealistic.
And yet we're being told that Dave isn't actually recommending 8% withdrawals and that he's saying that retiree should 'maintain their nest egg'. At any rate, Dave certainly doesn't get any points for clarity. But if this is true, does this mean that if a retiree's inflation-adjusted portfolio value ever falls before its starting point that the retiree can no longer make any withdrawals from it?
I was just now in my garage gym working out and listening to his podcast on this subject. He did state that one should protect the nest egg and cut back on withdrawals when the market has down years. He repeated that if you get 12% than withdrawal 8%. He said if you get 8% take 4%. He said if the market is down don't take more than 4%.

I'm with the majority here that his investing advice is no where near optimal. I think his debt advice is solid for his intended audience. I believe he has helped thousands of families have a better financial future. We have friends that eliminated 300k of consumer debt, send in 15% towards their retirement, and are in a much better marriage shape due to Dave's teachings. They bought in due to the religious angle, they wouldn't have made it through one paragraph of the Bogleheads wiki.
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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by CyclingDuo » Wed Dec 04, 2019 9:34 am

willthrill81 wrote:
Mon Dec 02, 2019 1:10 pm
CyclingDuo wrote:
Mon Dec 02, 2019 10:40 am
Wow! Coming off the weekend of giving thanks, we find oodles of Dave Ramsey bashing along with Financial Samurai (Sam Dogen) bashing after he announced his early retirement "failure" and his decision go go back to work at age 42 after 7 years of early retirement. There was a hint of Suze Orman distaste mentioned upthread as well. Have we missed anyone else? :shock:
Make no mistake, Dave's work to help people get out of debt has been top notch, and he is to be commended for that.

But it's already been shown in this thread with simple math that his investment recommendations (i.e. go with an FA that will put you into front-loaded mutual funds with high expense ratios) is an order of magnitude worse than just telling people to put their savings into a target date fund from a low cost provider like Vanguard or Schwab. And he has demonstrated a complete unwillingness to correct obvious mistakes, presumably because what he's doing now is making him money hand over fist. We justly berate FAs who rake their clients over the coals for their own benefit, and I don't see what Dave is doing with regard to his investment advice as being any different. Yes, investing as he recommends is better than doing nothing, but that's hardly a good argument in favor of his advice.

I simply mentioned that Dave and Suze seem to be cut out of similar molds. I haven't said anything about Sam and don't know enough about his work to make an informed judgment about it.
We are all in agreement on the subject of avoiding load funds and keeping costs low with what is available for investors today compared to what was available two, three and four decades ago. Do we know - or does anybody on this forum know - what the sales pitch is through his SmartVestor pros? Is it different than walking into an Edward Jones, or Morgan Stanley, Ameriprise, or insert your favorite financial broker here:_________________? Are the suggested SmartVestor Pros hourly fee only? AUM fee only? Are they only placing their clients in front end load mutual funds? Are there not low cost index funds available for their clients? I have no idea, I'm just asking. Perhaps somebody has been through a consultation or has been a client and can report back with their experience(s). I'm sure it has already been done, but if we post up a list of the 4 type of funds that DR suggests, I'm sure the tracking record of a 100% equity position over a long period will show what it shows.

Fortunately for most on these forums who have taken the time to educate themselves with matters financial, one likes to think they have learned to be able to see the forest through the trees. Perhaps this raises the level of response in the posts with comments regarding whichever "brand" guru it is: Ramsey, Orman, Edelman, Samurai, etc... . So it is good this particular thread has put into question some of the things DR has written or says.

CNBC has teamed up with Acorns to help young investors learn about investing and lay the groundwork for their education. Suze Orman, David Bach, Ric Edelman - all financial guru "brands" - are three of the many that were invited by CNBC/Acorns to provide content.

If we take a look at another financial guru such as David Bach (who assumes market returns similar to what DR and Suze Orman do since they all use nominal returns), we could find yet an additional "brand" in the realm of providing advice via his books, podcasts, former radio shows, appearances, etc... that has helped individuals improve their financial health over the years. No matter which pop culture "brand" guru/book author/radio show host is touting their advice, keeping it simple seems to be a key message they center around. Are any of them that much different in terms of the sales push for their books, appearances, speaking engagements, podcasts, advertisers?

I don't want to get banned from this site, but we could also consider the Boglehead books and non-profit "brand" with the continual posts comparing the MarketWatch.com's tracking of 8 Lazy Portfolios with the Second Grader leading the pack for most of the measuring sticks. However, we know that in that particular tracking the Second Grader (Three Fund Portfolio) has an asset allocation of 90% equity, 10% bond which is not an apples to apples comparison with the other portfolios in that list of 8 being tracked.

Here are the AA's of those particular Lazy Portfolios being tracked at MarketWatch.com:

90/10: Second Grader/Three Fund Portfolio
75/25: Dr. Bernstein's No Brainer (75% equity/25% bonds)
70/30: Aronson Family
67/33: Margaritaville
60/40: Ultimate Buy & Hold
55/40/5: Dr. Bernstein's Smart Money (55% equity/40% bonds/5% REITS)
50/30/20: Yale U's Unconventional (50% equity/30% bonds/20% REITS)
50/40/10: Coffeehouse (50% equity/40% bonds/10% REITS)

Is it any different in pushing the "brand" as any other guru? No question that you have on many occasions pointed out to Taylor the asset allocation of the Three Fund Portfolio being tracked at MarketWatch, and that it is disingenuous to compare due to the asset allocation being different than the other 7 on the list. Yet, the post is made time and time again in spite of it correctly being pointed out to him. In fact, there was a new post in the past 24 hours regarding the Second Grader Starter Portfolio and how it is leading the pack at MarketWatch.com. Point being, critical questions regarding whatever guru, or "brand", or "marketing" are worth doing. Whether the "brand" is a for profit or non-profit organization. So kudos, Willthrill81 and others on the pursuit. I would, however, caution that we look for the good nuggets or simple message lying underneath the overall marketing package and "brand" in spite of what might resonate as the asterisk or two * ** (Marketing 101). 8-)

Back to another guru "brand"...

Bach uses the formula of saving the equivalent of one hour's wage per day. If you are salaried, divide your salary by 2080 (2080 hours = 40 hours a week x 52 weeks) and save that amount each and every day (365 days per year) which equates to 17.5% of your gross income. Not a bad place to start and pretty simple to figure out for an individual or a household's combined income from salary. Not a huge difference than the oft used financial planner's industry advice of saving 15-20% of your income each and every year, but Bach's is "packaged" and "marketed" in his version.

He also touts his formula of saving $50 a day for 20 years (his 50/20 formula for the 20 years) for those who want to retire early. As you see in the video below where he throws out nest egg amount figures after 20 years and after 30 years, the amount of money in the accumulated hypothetical nest eggs to retire early are based on averaging a return of 10% per year (nominal). Simple Marketing 101 to use nominal returns when it comes to the industry. The $50 a day formula - when he came up with it - was more or less the equivalent of maxing out your 401k for those under age 50. Again, not that different than the financial planner's industry advice of maxing out one's 401k each year. Just a new "brand" way of saying it, or rather Bach's version. Bach may have to up his formula from $50 a day to $53-55 a day to keep pace with the rising 401k contribution limits since he originally came up with that formula. Regardless, his formula is not a bad place to start and pretty simple to figure out.

https://www.cnbc.com/2019/05/13/wealth- ... years.html
https://davidbach.com/biggest-money-lesson/

Concerned about these "brands" like Ramsey, Orman, Bach, etc.... that use nominal figures of average annual returns being 9.x%, 10.x%, 12.x%? Or the MarketWatch.com's tracking of the 90/10 AA Three Fund Portfolio being used to tout it as being "better" than others....

Even the AARP's website calculator page talks about rates of return before retirement (nominal, of course)...

https://www.aarp.org/work/retirement-pl ... alculator/

The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2018, had an annual compounded rate of return of 12.1%, including reinvestment of dividends. From January 1, 1970 to December 31st 2018, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.2% (source: www.standardandpoors.com).

Fortunately, the calculator itself at AARP allows you to type in the rate of inflation.

In spite of some of the odors we may all smell when we pull the cover off the lid from the financial guru "brands" and seeking to point out any flaws, misguidance, marketing 101, etc.... - getting people going with the actionable part of saving and investing is the important simple message that most of them are centered around. As I mentioned above, it is good this particular thread has put into question some of the things a guru has written or said.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by deltaneutral83 » Wed Dec 04, 2019 10:34 am

willthrill81 wrote:
Tue Dec 03, 2019 1:15 pm
Quirkz wrote:
Tue Dec 03, 2019 1:10 pm
By Bogleheads standards, 15% may be low, but for most people it'll probably get them in the right ballpark 30-odd years later, even using more realistic returns.
Part of the problem with the 15% savings rate recommendation is that by the time that many come to Dave for advice, they are already well into their 30s, 40s, or older. Saving 15% for 20 years, for instance, seems unlikely to be adequate in such a situation. If you are late to start saving, you need a higher savings rate to compensate.

A lot of it also depends as well on how much of the person's/household's expenses will be covered by SS benefits. Saving 15% for 30 years might be fine for someone spending $35k annually since SS benefits will provide a big chunk of that. It's probably less likely to work out well for someone spending $150k annually.

Blanket recommendations are rarely very appropriate.
Depends on how many people are covered by said "blanket." Median income is $58k, so let's just go ahead and say $50k annually take home. I agree about SS. With $2-$3k with spouse combined a month plus putting 15% away for 20 years, most won't become a statistic we so frequently read about and probably get close to the $4k/month they were making in the working world and hopefully close to paying off the mortgage by 60 (Maybe not living the high life, but out of the gutter). I like the odds of a blanket statement if it covers 75% of the population. His debt advice is probably good for closer to 80-85% of the population. I like those "blanket" odds. No one can give financial advice pertinent to 100% of the population can they?

Giving an example of someone who has $150k in annual expenses probably necessitates a household income of $220k (obviously a lot of factors but I'm just using this #). In 2018 the census bureau stated 7.7% of households had income over $200k. I do not believe there is any need for a national audience to have retirement advice tailored to incomes above $200k.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by willthrill81 » Wed Dec 04, 2019 10:58 am

CyclingDuo wrote:
Wed Dec 04, 2019 9:34 am
Concerned about these "brands" like Ramsey, Orman, Bach, etc.... that use nominal figures of average annual returns being 9.x%, 10.x%, 12.x%? Or the MarketWatch.com's tracking of the 90/10 AA Three Fund Portfolio being used to tout it as being "better" than others....
Your point is a good one. I have a strong distaste for blatantly false and/or misleading information, no matter whom it comes from, even a fellow Boglehead, and I feel a strong duty to expose it when I see it.
CyclingDuo wrote:
Wed Dec 04, 2019 9:34 am
In spite of some of the odors we may all smell when we pull the cover off the lid from the financial guru "brands" and seeking to point out any flaws, misguidance, marketing 101, etc.... - getting people going with the actionable part of saving and investing is the important simple message that most of them are centered around. As I mentioned above, it is good this particular thread has put into question some of the things a guru has written or said.
I don't believe that it's necessary to spread false and/or misleading information about investing in order to get people on board with it. I can think of several people who've done a great job building their 'brand' on solid information (e.g. Jim Dahle of the White Coat Investor, Rob Berger of the Dough Roller Money podcast, David Stein of the Money for the Rest of Us podcast, Bill Bernstein).
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by willthrill81 » Wed Dec 04, 2019 11:04 am

deltaneutral83 wrote:
Wed Dec 04, 2019 10:34 am
No one can give financial advice pertinent to 100% of the population can they?
Probably not in sound bites. But it doesn't take too many more words to at least point people to an online calculator where they input things like how much they want to spend in retirement, how many years they have left until their planned retirement, etc. to get a good estimate of how much they need to save. And that exercise is useful to 100% of the population.

Suggesting that someone save at least 15% over their entire career is probably not bad advice, but as I noted above, it needs to be made clear as well that if someone isn't starting saving until they are well into their career and/or they earn a relatively high income, they need to save more.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by Bir48die » Wed Dec 04, 2019 11:10 am

sergeant wrote:
Tue Dec 03, 2019 4:57 pm
willthrill81 wrote:
Mon Dec 02, 2019 3:35 pm
nisiprius wrote:
Mon Dec 02, 2019 2:21 pm
wolf359 wrote:
Mon Dec 02, 2019 1:39 pm
This is a direct link to the Dave Ramsey blog. https://www.daveramsey.com/blog/how-to- ... etirement/

Here's the quote:
How Can You Make Sure Your Retirement Funds Last?
As long as you didn’t take the ready-fire-aim approach to retirement planning, you should already know how to make retirement last. But, here’s a refresher:
You’re going to keep your nest egg invested and averaging 12% growth. We’re estimating inflation at 4%. So, to maintain your nest egg and break even with inflation, you will live on 8% income from your nest egg. That means if you have a nest egg of $625,000, you will live on $50,000 per year: $625,000 x 8% (.08) = $50,000.
I'm not sure how that is misquoted.

Edit: I just saw someone else also already pointed to Dave's blog and this same quote.
Wow. That's even more than the 7% Peter Lynch suggested in 1995--before the first SWR studies showed that 7% was unrealistic.
And yet we're being told that Dave isn't actually recommending 8% withdrawals and that he's saying that retiree should 'maintain their nest egg'. At any rate, Dave certainly doesn't get any points for clarity. But if this is true, does this mean that if a retiree's inflation-adjusted portfolio value ever falls before its starting point that the retiree can no longer make any withdrawals from it?
I was just now in my garage gym working out and listening to his podcast on this subject. He did state that one should protect the nest egg and cut back on withdrawals when the market has down years. He repeated that if you get 12% than withdrawal 8%. He said if you get 8% take 4%. He said if the market is down don't take more than 4%.

I'm with the majority here that his investing advice is no where near optimal. I think his debt advice is solid for his intended audience. I believe he has helped thousands of families have a better financial future. We have friends that eliminated 300k of consumer debt, send in 15% towards their retirement, and are in a much better marriage shape due to Dave's teachings. They bought in due to the religious angle, they wouldn't have made it through one paragraph of the Bogleheads wiki.
+1

I agree that you can pick apart his investing piece all you want. However, if you listen to his program you get an idea of how screwed up many people are financially. So, he has a formula and it needs to be consistent or he'll lose the message. He's a salesman too promoting his business but who doesn't.

The idea is to stretch on saving and the million dollar mark is a great incentive. There has to be a an incentive for you to commit to a long term goal. Getting out of debt and saving for retirement is a foreign concept to many.

I had all the financial practices long before Dave had a show. That is from my father and having a knack for numbers. The concept of compounding and investing in the market is key to success. Sure you need to let people know the market corrects. But you also let them know that over time it rebounds and brings you excellent returns.

Most people are not as savvy as BH's so I just appreciate his message. Bought his books for both my boys because they were a financial mess in their 20's and they needed guidance along we me hounding them.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by CyclingDuo » Wed Dec 04, 2019 12:22 pm

willthrill81 wrote:
Wed Dec 04, 2019 10:58 am
CyclingDuo wrote:
Wed Dec 04, 2019 9:34 am
Concerned about these "brands" like Ramsey, Orman, Bach, etc.... that use nominal figures of average annual returns being 9.x%, 10.x%, 12.x%? Or the MarketWatch.com's tracking of the 90/10 AA Three Fund Portfolio being used to tout it as being "better" than others....
Your point is a good one. I have a strong distaste for blatantly false and/or misleading information, no matter whom it comes from, even a fellow Boglehead, and I feel a strong duty to expose it when I see it.
CyclingDuo wrote:
Wed Dec 04, 2019 9:34 am
In spite of some of the odors we may all smell when we pull the cover off the lid from the financial guru "brands" and seeking to point out any flaws, misguidance, marketing 101, etc.... - getting people going with the actionable part of saving and investing is the important simple message that most of them are centered around. As I mentioned above, it is good this particular thread has put into question some of the things a guru has written or said.
I don't believe that it's necessary to spread false and/or misleading information about investing in order to get people on board with it. I can think of several people who've done a great job building their 'brand' on solid information (e.g. Jim Dahle of the White Coat Investor, Rob Berger of the Dough Roller Money podcast, David Stein of the Money for the Rest of Us podcast, Bill Bernstein).
Yes, good additional sources. I would add one of my favorites as well, Jonathan Clements and his blog The Humble Dollar. Jonathan has appeared at a couple of the more recent Bogleheads Conferences on the experts panel.

I do agree that false or misleading information should not be used to get people on board with it, however it certainly exists and is used. The entire financial industry is well known for using nominal returns as a marketing "hook" to lure people in, so unwinding that may be a difficult roadblock to eradicate. Those that make a living in sales and marketing seem to operate under a different guise, so kudos for seeking the truth and pointing out misleading information.

I know that you have brought it up before with Taylor, but even when it is mentioned to him about not being misleading with regard to the returns of the 90/10 Three Fund Portfolio, the answers in return from Taylor meander around that particular misleading information. From today...

viewtopic.php?f=10&t=296501
It is true that Mr. Roth's 3-Fund Portfolio has the highest stock/bond ratio but it does not detract from the fact that investors in Mr. Roth's 3-Fund Portfolio are very pleased that they have been leading seven other well-known professional investors for over 10 years. - T.L.

We know they are pleased, but had the 7 other well-known professional investors also chosen a 90/10 asset allocation the results for the 10 years would be very similar - and everyone would be pleased.

We could easily say Dave Ramsey and his financial advice (with all of the misleading comments, suggestions, and ideas), that investors in DR's 4 fund mutual fund portfolio of Growth, Growth & Income, Aggressive Growth, and International are pleased with their returns compared to other well-known professional investors for over 10 years. Who is not pleased with the past 10 years returns of a 100% or 90/10 portfolio, right? :wink:

Keeping inline with this thread....

https://www.thebalance.com/why-dave-ram ... ds-2466582
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by Nate79 » Wed Dec 04, 2019 6:05 pm

willthrill81 wrote:
Wed Dec 04, 2019 11:04 am
deltaneutral83 wrote:
Wed Dec 04, 2019 10:34 am
No one can give financial advice pertinent to 100% of the population can they?
Probably not in sound bites. But it doesn't take too many more words to at least point people to an online calculator where they input things like how much they want to spend in retirement, how many years they have left until their planned retirement, etc. to get a good estimate of how much they need to save. And that exercise is useful to 100% of the population.

Suggesting that someone save at least 15% over their entire career is probably not bad advice, but as I noted above, it needs to be made clear as well that if someone isn't starting saving until they are well into their career and/or they earn a relatively high income, they need to save more.
Dave actually does have a calculator (had been posted on BH some time back). Its definitely not great, very simpe...... And he all the time points his listeners to it. But it is only a tool to use to see where you are at and if your savings rate is enough after you have paid off your home and are ready to increase above 15%.

DR is by far the most popular and succesful financial media person because his baby steps are simple, easy to follow, by anyone with zero customization. The second you are trying to customize the message you immediately start losing people. His success at changing people's financial lives by far more than anyone else in the media space is precisely due to his simple message (it's like AA for alcoholics). The second it becomes even a little more complicated it will fail. In fact sometimes I have to wonder at the stupidity of the callers because anyone who has listened to even a few shows can answer most questions. Yet even 7 baby steps is almost too complicated for the average American.

It would be ludicrous for him to come up with a complex set of rules like well save 15% but go to this calculator and if it says save more then do this but if it says that do this then blah blah blah but only during this step......

No one will do it because these calculators and complex plans already exist and we know they don't work for the masses. Look at the average American savings rate and you can see what these calculators have given us. The media blasts us with articles on saving more, savings calculators blah blah blah and Americans just don't care or don't get it.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by gblack » Thu Dec 05, 2019 12:21 am

A lot of the scorn heaped on Ramsey on these posts mischaracterize the overall shape of his plan. His projected returns are optimistic - but he's been closer to right over the past 10 years on stock returns than the boglehead community (I'm guessing). That is not to say he will be right going forward, but worth pointing out. I am saying this as a pessimist myself and someone more inclined toward indexing and the boglehead philosophy, but if you want to criticize Ramsey, you should analyze the full picture of what he advocates.

An enormous piece of the Ramsey pie is that he advocates putting 15% toward retirement and the rest to paying off the mortgage ASAP.

Example: hypothetical couple with an income of 100K and a net worth of 500K and a house worth 250K. Say yearly expenses are 85K and savings 15K.

Ramsey would advocate the following:
30K emergency fund
250K - paid off house
220K - all stocks in mutual funds

A boglehead would advocate something like this instead:
40K emergency fund
50K - house equity (200K mortgage)
287K - total stock index
123K - bond index

You see what Ramsey has done, right? He's lowered the monthly nut by eliminating the mortgage AND he's pocketing the mortgage interest instead of collecting bond income. It's really not THAT stupid. Maybe a little less flexibility, but certainly not egregiously dumb. Further, his plan would result in more money going toward investing in the future as you are not paying mortgage payments (all else being equal of course). His plan has a pretty good chance of coming out ahead in the long run, I think.

The 12% numbers he uses are based upon the PERFORMANCE RETURNS of the mutual funds he owns. He is not pulling them out of thin air. I own Fidelity Blue Chip Growth and the fund return since 1987 is 11.87%. I don't think it will do that going forward all the time, but that's a pretty long and strong track record.

I'm a fan of indexing, but around 2003 I left a job and rolled over two funds to an IRA: Fidelity Blue Chip Growth (ER .8) and Fidelity Total Market Index (ER .015 -- wasn't always this low). In 2010, I turned them into ROTHS, but I have not touched the money in either for 16 years. Blue Chip Growth is up 294% and Total Market Index is up 212% -- according to Fidelity tracking. I'll take both, but it's not crazy to think that strong actively managed funds will work for some folks better than indexes. I imagine it will be hard for the index to ever catch the Growth fund.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by z0r » Thu Dec 05, 2019 1:46 am

gblack wrote:
Thu Dec 05, 2019 12:21 am
The 12% numbers he uses are based upon the PERFORMANCE RETURNS of the mutual funds he owns. He is not pulling them out of thin air. I own Fidelity Blue Chip Growth and the fund return since 1987 is 11.87%. I don't think it will do that going forward all the time, but that's a pretty long and strong track record.
he recommends a few different funds:
"growth", "growth and income", "aggressive growth" and "international". Did all of these categories earn 12% since 1987? If they didn't, how would someone know which of the four was the one that would earn 12% ahead of time? Don't you see that he's gotten you with a tiny version of the same old fund survivor trick we see in shoddy advisor advice everywhere?

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by gblack » Thu Dec 05, 2019 2:05 am

i get it and you're 100% right, but recognize he's selling the idea, not number crunching. also, recognize the mutual fund aspect he's selling is part of a larger overall strategy that i'd argue isn't that bad (without the caveat of calling his listeners financial illiterates). plus...diversifying into those 4 funds is a better idea than performance chasing growth. your point bolsters ramsey's pitch!

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by willthrill81 » Thu Dec 05, 2019 10:25 am

Nate79 wrote:
Wed Dec 04, 2019 6:05 pm
willthrill81 wrote:
Wed Dec 04, 2019 11:04 am
deltaneutral83 wrote:
Wed Dec 04, 2019 10:34 am
No one can give financial advice pertinent to 100% of the population can they?
Probably not in sound bites. But it doesn't take too many more words to at least point people to an online calculator where they input things like how much they want to spend in retirement, how many years they have left until their planned retirement, etc. to get a good estimate of how much they need to save. And that exercise is useful to 100% of the population.

Suggesting that someone save at least 15% over their entire career is probably not bad advice, but as I noted above, it needs to be made clear as well that if someone isn't starting saving until they are well into their career and/or they earn a relatively high income, they need to save more.
Dave actually does have a calculator (had been posted on BH some time back). Its definitely not great, very simpe...... And he all the time points his listeners to it. But it is only a tool to use to see where you are at and if your savings rate is enough after you have paid off your home and are ready to increase above 15%.

DR is by far the most popular and succesful financial media person because his baby steps are simple, easy to follow, by anyone with zero customization. The second you are trying to customize the message you immediately start losing people. His success at changing people's financial lives by far more than anyone else in the media space is precisely due to his simple message (it's like AA for alcoholics). The second it becomes even a little more complicated it will fail. In fact sometimes I have to wonder at the stupidity of the callers because anyone who has listened to even a few shows can answer most questions. Yet even 7 baby steps is almost too complicated for the average American.

It would be ludicrous for him to come up with a complex set of rules like well save 15% but go to this calculator and if it says save more then do this but if it says that do this then blah blah blah but only during this step......

No one will do it because these calculators and complex plans already exist and we know they don't work for the masses. Look at the average American savings rate and you can see what these calculators have given us. The media blasts us with articles on saving more, savings calculators blah blah blah and Americans just don't care or don't get it.
You're probably right. Human beings, on the whole, seem to crave simplicity and eschew nuance. I find that quite saddening as it negatively impacts so many aspects of life. Most appear to want factoids rather than subtle, multi-faceted explanations that are certainly much nearer the truth.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by willthrill81 » Thu Dec 05, 2019 10:28 am

gblack wrote:
Thu Dec 05, 2019 12:21 am
His projected returns are optimistic - but he's been closer to right over the past 10 years on stock returns than the boglehead community (I'm guessing).
And the 10 years prior to that, when stocks had negative real returns, his projections were off by an order of magnitude.
gblack wrote:
Thu Dec 05, 2019 12:21 am
The 12% numbers he uses are based upon the PERFORMANCE RETURNS of the mutual funds he owns. He is not pulling them out of thin air.
It's already been shown in this thread that he has explicitly said on his web site that the S&P 500 historically returned 12%. That is highly misleading as it references the arithmetic returns of the market and not the lower compounded annual growth rate that the SEC mandates funds report and literally everyone else uses.
gblack wrote:
Thu Dec 05, 2019 2:05 am
i get it and you're 100% right, but recognize he's selling the idea, not number crunching.
Details are definitely not Dave's strength. That's not necessarily a problem, but being unwilling to change one's clearly faulty supposed 'facts' after many have shown them to be false does not improve his credibility.
Last edited by willthrill81 on Thu Dec 05, 2019 11:59 pm, edited 1 time in total.
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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by gblack » Thu Dec 05, 2019 1:00 pm

A couple points:

1) That we've been in a bull market for 10 years might explain some of Ramsey's popularity. Had returns been lower, his sales pitch on mutual funds would not be going over as well.

2) He often makes the broader point that life is a film strip and not a snapshot. Using either Compound Annual Returns or Average Annual Returns for projections is going to be flawed when applied to an individual situation. Saving for retirement isn't linear. Compound Annual Returns would be useful if you started with a big chunk of money and wanted to see how big it would grow. But when saving you have a chunk of money, future income that could vary (possibly by a lot), and a future savings rate that could also vary by a lot. You don't know exactly how much money you're going to be able to put into the market nor how that market will perform after you put it in. In 20 years, some company could cure cancer or find endless energy on mars and economic growth could be incredible OR we could have ww3 OR we could have 2% growth. I guess my main point is for projection purposes 10% or 12% isn't a major difference because a) neither will be accurate in an individual situation and b) it should not affect the behavior of the individual investor.

3) Last thought: Maybe the disagreement boils down to Ramsey's main audience being in the early accumulation stage and a lot of bogleheads are looking at decumulation and wealth preservation. That would naturally suggest bogleheads would be more conservative because the cost of being wrong is greater. In early stages, you need energy, enthusiasm, and incentives to save.

I dunno...I think what he preaches is pretty solid overall advice. Not perfect, maybe too optimistic, but certainly not harmful.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by wiredaces80 » Fri Dec 06, 2019 12:19 am

gblack wrote:
Thu Dec 05, 2019 1:00 pm
A couple points:

1) That we've been in a bull market for 10 years might explain some of Ramsey's popularity. Had returns been lower, his sales pitch on mutual funds would not be going over as well.
You may well be right, though that isn't the case for me. I had started listening to Dave back in ~2009. He had people calling his show, complaining about his advice because of the crash. His advice to them was, "stocks are on sale". He was quite popular back then (though maybe not as much as now), and still stood by his investment advice. Honestly, I thought of moving all my 401K money to cash, but listening to him helped persuade me otherwise. I'm a conservative, and on the other end of my ear in the radio was Glenn Beck saying "God Bless you if you own any stocks; sell and buy gold"! Heh

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by wiredaces80 » Fri Dec 06, 2019 1:07 am

It seems that some of the issue taken with the notion that 30 years can yield a 12% return is the time period that investing begins for any given individual. I really wish PortfolioVisualizer went back further than 1972, but for what it's worth, here are the annual returns (CAGR) from each 30 year period since then. This is for the Total Stock Market, as well as a value tilted portfolio (25/25/25/25 in LCB,LCV,SCB,SCV; I know that isn't the portfolio Dave recommends necessarily, but it's one that many on Bogleheads recommend (specifically some value or SCV tilt). So, going with that. Also, remember Dave NEVER recommends bonds, so I am not including any bonds. And, I doubt that any portfolio containing bonds would outperform any of these in a 30 year period.

....So with that....here are the numbers. Worst 30 year period was just under 10%, from 1981 to 2011. The average return for each respective portfolio is 11.0% and and 12.6%, respectively. And, I know this is another topic - but TSM has never outperformed a value tilt, at least in these 18 periods:

Min Max TSM ValueTilt
1972 2002 10.46% 12.86%
1973 2003 10.85% 13.51%
1974 2004 12.00% 14.96%
1975 2005 13.39% 16.22%
1976 2006 12.75% 15.41%
1977 2007 12.09% 14.18%
1978 2008 10.55% 12.41%
1979 2009 11.16% 12.88%
1980 2010 10.95% 12.61%
1981 2011 9.97% 11.58%
1982 2012 10.65% 12.03%
1983 2013 11.01% 12.21%
1984 2014 10.70% 11.64%
1985 2015 10.64% 11.40%
1986 2016 10.09% 10.94%
1987 2017 10.28% 10.98%
1988 2018 10.00% 10.71%
1989 2019 10.31% 10.77%

These numbers seem fairly straighforward to me. Is ~12% really so out of line? I get that 12% is more on the optimistic side, and is not realistic for most Boglehead recommended portfolios which consist of an ample percentage of bonds, but Dave is very adamant about no bonds. So with that...What am I missing? This is how he is ruining lives? :confused ....btw, I would have done this with Dave's portfolio (AIVSX, AGTHX etc) but PF only goes back to 1985 for mutual funds.

I know that is a little bit of snark here. But if I'm honest, Dave has done more for me personally than anyone on this forum has, so I take issue with the idea that he gives "bad" advice, even though I admit I don't agree with everything he says (and, I realize opinions are relatively ambiguous and that doesn't go for all here). Dave laid a foundation for me, then Bogleheads (including the book) expanded upon it, at least on the topic of investing (I had since left my FA, and gone mostly to index funds).

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by z0r » Fri Dec 06, 2019 1:51 am

wiredaces80 wrote:
Fri Dec 06, 2019 1:07 am
What am I missing?
inflation for your date range (after 91 we get more or less "modern era"-type inflation)
1991 5.65%
1990 5.20%
1989 4.67%
1988 4.05%
1987 1.46%
1986 3.89%
1985 3.53%
1984 4.19%
1983 3.71%
1982 8.39%
1981 11.83%
1980 13.91%
1979 9.28%
1978 6.84%
1977 5.22%
1976 6.72%
1975 11.80%
1974 9.39%
1973 3.65%
1972 3.27%

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by wiredaces80 » Fri Dec 06, 2019 2:15 am

z0r wrote:
Fri Dec 06, 2019 1:51 am
wiredaces80 wrote:
Fri Dec 06, 2019 1:07 am
What am I missing?
inflation for your date range (after 91 we get more or less "modern era"-type inflation)
1991 5.65%
1990 5.20%
1989 4.67%
1988 4.05%
1987 1.46%
1986 3.89%
1985 3.53%
1984 4.19%
1983 3.71%
1982 8.39%
1981 11.83%
1980 13.91%
1979 9.28%
1978 6.84%
1977 5.22%
1976 6.72%
1975 11.80%
1974 9.39%
1973 3.65%
1972 3.27%
I agree it doesn't take into account inflation. But this seems like a bit of a straw man. When did Dave claim that 12% took inflation into account? He actually indicates an avg 8% growth rate when inflation is in the picture (which is contestable of course, but I suspect it isn't too far off). Either way. I also don't think anyone in this thread who has opposed the 12% metric has done so on the basis of the idea that it doesn't take into account inflation. Rather, it was more on the calculation itself (a straight average versus CAGR)

Also, I don't think any of those numbers correspond to the date ranges I posted. You post 3.27% in 1972 for example, but the CAGR I posted was from the range of 1972 to 2002; so, not really comparing apples and oranges.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by willthrill81 » Fri Dec 06, 2019 10:54 am

wiredaces80 wrote:
Fri Dec 06, 2019 2:15 am
z0r wrote:
Fri Dec 06, 2019 1:51 am
wiredaces80 wrote:
Fri Dec 06, 2019 1:07 am
What am I missing?
inflation for your date range (after 91 we get more or less "modern era"-type inflation)
1991 5.65%
1990 5.20%
1989 4.67%
1988 4.05%
1987 1.46%
1986 3.89%
1985 3.53%
1984 4.19%
1983 3.71%
1982 8.39%
1981 11.83%
1980 13.91%
1979 9.28%
1978 6.84%
1977 5.22%
1976 6.72%
1975 11.80%
1974 9.39%
1973 3.65%
1972 3.27%
I agree it doesn't take into account inflation. But this seems like a bit of a straw man. When did Dave claim that 12% took inflation into account? He actually indicates an avg 8% growth rate when inflation is in the picture (which is contestable of course, but I suspect it isn't too far off). Either way. I also don't think anyone in this thread who has opposed the 12% metric has done so on the basis of the idea that it doesn't take into account inflation. Rather, it was more on the calculation itself (a straight average versus CAGR)

Also, I don't think any of those numbers correspond to the date ranges I posted. You post 3.27% in 1972 for example, but the CAGR I posted was from the range of 1972 to 2002; so, not really comparing apples and oranges.
Nominal returns (i.e. returns that are not inflation-adjusted) are irrelevant. A 10% portfolio gain accompanied by 10% inflation doesn't leave an investor any better off (worse actually because they will be taxed on the 10% gain, an issue referred to as 'taxflation').

For the longest reliable stock market returns data we have, the inflation-adjusted compounded annual return has been about 7%. That's far less than 12%.
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Re: Dave Ramsey says 30 years Roth Ira to 1.3 million?

Post by MichCPA » Fri Dec 06, 2019 11:12 am

1789 wrote:
Thu Nov 28, 2019 7:29 am
He makes up some numbers like 12% annual return. There is no such return even before taxes/inflation/distributions considered.
That 12% isn't even a true average (geometric mean). It is bad logic and bad math.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by Nate79 » Fri Dec 06, 2019 11:31 am

willthrill81 wrote:
Fri Dec 06, 2019 10:54 am
wiredaces80 wrote:
Fri Dec 06, 2019 2:15 am
z0r wrote:
Fri Dec 06, 2019 1:51 am
wiredaces80 wrote:
Fri Dec 06, 2019 1:07 am
What am I missing?
inflation for your date range (after 91 we get more or less "modern era"-type inflation)
1991 5.65%
1990 5.20%
1989 4.67%
1988 4.05%
1987 1.46%
1986 3.89%
1985 3.53%
1984 4.19%
1983 3.71%
1982 8.39%
1981 11.83%
1980 13.91%
1979 9.28%
1978 6.84%
1977 5.22%
1976 6.72%
1975 11.80%
1974 9.39%
1973 3.65%
1972 3.27%
I agree it doesn't take into account inflation. But this seems like a bit of a straw man. When did Dave claim that 12% took inflation into account? He actually indicates an avg 8% growth rate when inflation is in the picture (which is contestable of course, but I suspect it isn't too far off). Either way. I also don't think anyone in this thread who has opposed the 12% metric has done so on the basis of the idea that it doesn't take into account inflation. Rather, it was more on the calculation itself (a straight average versus CAGR)

Also, I don't think any of those numbers correspond to the date ranges I posted. You post 3.27% in 1972 for example, but the CAGR I posted was from the range of 1972 to 2002; so, not really comparing apples and oranges.
Nominal returns (i.e. returns that are not inflation-adjusted) are irrelevant. A 10% portfolio gain accompanied by 10% inflation doesn't leave an investor any better off (worse actually because they will be taxed on the 10% gain, an issue referred to as 'taxflation').

For the longest reliable stock market returns data we have, the inflation-adjusted compounded annual return has been about 7%. That's far less than 12%.
Your argument is baseless. People are free to report returns as nominal or inflation adjusted and they are equally valid. Reporting in inflation adjusted numbers can call into all sorts of biases and questionable tactics. All official return values are always reported as nominal.

And of course 7% is less than 12%. That's what happen when you subtract inflation, it's not rocket science. Most of the population thinks in nominal percentages for their daily life and rightly so most people report returns as nominal.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by H-Town » Fri Dec 06, 2019 11:36 am

gblack wrote:
Thu Dec 05, 2019 1:00 pm
A couple points:

1) That we've been in a bull market for 10 years might explain some of Ramsey's popularity. Had returns been lower, his sales pitch on mutual funds would not be going over as well.

2) He often makes the broader point that life is a film strip and not a snapshot. Using either Compound Annual Returns or Average Annual Returns for projections is going to be flawed when applied to an individual situation. Saving for retirement isn't linear. Compound Annual Returns would be useful if you started with a big chunk of money and wanted to see how big it would grow. But when saving you have a chunk of money, future income that could vary (possibly by a lot), and a future savings rate that could also vary by a lot. You don't know exactly how much money you're going to be able to put into the market nor how that market will perform after you put it in. In 20 years, some company could cure cancer or find endless energy on mars and economic growth could be incredible OR we could have ww3 OR we could have 2% growth. I guess my main point is for projection purposes 10% or 12% isn't a major difference because a) neither will be accurate in an individual situation and b) it should not affect the behavior of the individual investor.

3) Last thought: Maybe the disagreement boils down to Ramsey's main audience being in the early accumulation stage and a lot of bogleheads are looking at decumulation and wealth preservation. That would naturally suggest bogleheads would be more conservative because the cost of being wrong is greater. In early stages, you need energy, enthusiasm, and incentives to save.

I dunno...I think what he preaches is pretty solid overall advice. Not perfect, maybe too optimistic, but certainly not harmful.
It's definitely harmful if people would use 10% or 12% growth rate as the basis for their savings and retirement planning. They are facing the risk of under-saving. It's very real. And when they realize they have been undersaving in their 50s. It's too late and there is not much you could do.

I'm not here to argue the market rate of return. My argument is that you should use conservative rate of return for financial plannings. If it turns out that you have more money than you need, it would be more preferable than you don't have enough money. A great financial planning should set you up so that no matter what the market return (-40%, 4%, 10%, 25%, etc.) in a given year, your life won't be affected by the market. And that comes from either 1) born rich, 2) married well, or 3) diligent saving.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by willthrill81 » Fri Dec 06, 2019 1:01 pm

Nate79 wrote:
Fri Dec 06, 2019 11:31 am
willthrill81 wrote:
Fri Dec 06, 2019 10:54 am
wiredaces80 wrote:
Fri Dec 06, 2019 2:15 am
z0r wrote:
Fri Dec 06, 2019 1:51 am
wiredaces80 wrote:
Fri Dec 06, 2019 1:07 am
What am I missing?
inflation for your date range (after 91 we get more or less "modern era"-type inflation)
1991 5.65%
1990 5.20%
1989 4.67%
1988 4.05%
1987 1.46%
1986 3.89%
1985 3.53%
1984 4.19%
1983 3.71%
1982 8.39%
1981 11.83%
1980 13.91%
1979 9.28%
1978 6.84%
1977 5.22%
1976 6.72%
1975 11.80%
1974 9.39%
1973 3.65%
1972 3.27%
I agree it doesn't take into account inflation. But this seems like a bit of a straw man. When did Dave claim that 12% took inflation into account? He actually indicates an avg 8% growth rate when inflation is in the picture (which is contestable of course, but I suspect it isn't too far off). Either way. I also don't think anyone in this thread who has opposed the 12% metric has done so on the basis of the idea that it doesn't take into account inflation. Rather, it was more on the calculation itself (a straight average versus CAGR)

Also, I don't think any of those numbers correspond to the date ranges I posted. You post 3.27% in 1972 for example, but the CAGR I posted was from the range of 1972 to 2002; so, not really comparing apples and oranges.
Nominal returns (i.e. returns that are not inflation-adjusted) are irrelevant. A 10% portfolio gain accompanied by 10% inflation doesn't leave an investor any better off (worse actually because they will be taxed on the 10% gain, an issue referred to as 'taxflation').

For the longest reliable stock market returns data we have, the inflation-adjusted compounded annual return has been about 7%. That's far less than 12%.
Your argument is baseless. People are free to report returns as nominal or inflation adjusted and they are equally valid. Reporting in inflation adjusted numbers can call into all sorts of biases and questionable tactics. All official return values are always reported as nominal.

And of course 7% is less than 12%. That's what happen when you subtract inflation, it's not rocket science. Most of the population thinks in nominal percentages for their daily life and rightly so most people report returns as nominal.
Yes, people are free to report returns as being nominal or real as long as they specify which they are using. And if nominal returns are used for forward return estimates, it's important for people using them to also account for the impact of inflation on their anticipated future expenses. For this reason, we almost universally refer to real returns on this forum with regard to future planning because it's simpler.
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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by guillemot » Fri Dec 06, 2019 2:21 pm

Insane returns such as those Dave proposes (of 12% and more) are real but they come with insane risk. A tenet of the Bogleheads investing philosophy is not to take on too much risk. I'm not exactly sure what that means, but these kinds of strategies, that involve leverage, are probably too much risk for most people. His comments on non-real estate investing are therefore irresponsible. Anything Dave says about non-real estate investing can safely be ignored.

Dave does not talk about real estate investing on his program I think because it is not a topic his audience cares about, even though it is a subject he knows a lot about.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by Hydromod » Fri Dec 06, 2019 2:26 pm

Actually, he does respond to questions about real estate fairly frequently. He doesn't bring up the subject himself though.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by CyclingDuo » Sat Dec 07, 2019 10:42 am

H-Town wrote:
Fri Dec 06, 2019 11:36 am
It's definitely harmful if people would use 10% or 12% growth rate as the basis for their savings and retirement planning. They are facing the risk of under-saving. It's very real. And when they realize they have been undersaving in their 50s. It's too late and there is not much you could do.
I would argue that a household can make up a lot of ground during their 50's thanks to catch up rules in 401k/403/457/Roth IRA/tIRA plans for the 50+ crowd, plus utilizing taxable account investing and taking advantage of peak or near peak household income(s), and the lower household expenses of the empty nest. In fact, it is a good time to embrace the strategies of the FIRE movement during your 50's to make up any ground or feeling of things being "too late". The strategies used by the FIRE crowd can be employed at any age during the accumulation years (even if one is using target ages like 59-63 as their version of "retiring early". If anyone has yet to see the Playing With Fire Documentary, it is currently being offered to view for free until December 11th due to a sponsorship by Ally Bank. The strategies employed by the younger people depicted throughout the documentary can also be employed by those in their 50's who are still working. In other words, it is not too late and there is much one can do in their 50's.

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H-Town wrote:
Fri Dec 06, 2019 11:36 am
I'm not here to argue the market rate of return. My argument is that you should use conservative rate of return for financial plannings. If it turns out that you have more money than you need, it would be more preferable than you don't have enough money. A great financial planning should set you up so that no matter what the market return (-40%, 4%, 10%, 25%, etc.) in a given year, your life won't be affected by the market. And that comes from either 1) born rich, 2) married well, or 3) diligent saving.
Agree that planning is important. Not so sure that #1 & #2 are what fuels households with a decent net worth. It also comes from a dual income household with dual retirement plans, a pension plan, diversity of income via rental income, dividend income, SS, small business, and utilizing strategies to lower their household expenses. Obviously, DR's focus and speciality on avoiding non-mortgage debt and getting out of debt for those who are in debt help with all of the household's financial planning in a major way.

There is a lot of surprising data presented in Thomas Stanley's The Millionaire Next Door as well as Chris Hogan's Everyday Millionaires that mention that the thoughts of born rich and married well are not factors for the majority.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by Hydromod » Sat Dec 07, 2019 11:09 am

CyclingDuo wrote:
Sat Dec 07, 2019 10:42 am
H-Town wrote:
Fri Dec 06, 2019 11:36 am
I'm not here to argue the market rate of return. My argument is that you should use conservative rate of return for financial plannings. If it turns out that you have more money than you need, it would be more preferable than you don't have enough money. A great financial planning should set you up so that no matter what the market return (-40%, 4%, 10%, 25%, etc.) in a given year, your life won't be affected by the market. And that comes from either 1) born rich, 2) married well, or 3) diligent saving.
Agree that planning is important. Not so sure that #1 & #2 are what fuels households with a decent net worth. It also comes from a dual income household with dual retirement plans, a pension plan, diversity of income via rental income, dividend income, SS, small business, and utilizing strategies to lower their household expenses. Obviously, DR's focus and speciality on avoiding non-mortgage debt and getting out of debt for those who are in debt help with all of the household's financial planning in a major way.

There is a lot of surprising data presented in Thomas Stanley's The Millionaire Next Door as well as Chris Hogan's Everyday Millionaires that mention that the thoughts of born rich and married well are not factors for the majority.
I do believe that you both are in total and absolute agreement...

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by schooner » Sat Dec 07, 2019 12:13 pm

Puzzle me this: Dave Ramsey has a radio show with 12 million daily listeners, he's a top selling author, and owns his own media company. And he has been at the top of his game for decades. Yet according to an article in Money Magazine, he is worth $55 million.

That sounds like a lot of money but if you can make $1.3 million by just investing $6,000 a year for only 30 years, what is Ramsey doing with all of his money? We've had a 10 year bull market where he must have been pulling in millions in income every year. He either isn't saving that much or he hasn't made anywhere close to a 12% compounded return on his own investments :oops:

#simplemath

Source: https://money.com/money/longform/dave-r ... debt-free/

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by JAZZISCOOL » Sat Dec 07, 2019 5:38 pm

H-Town wrote:
Tue Dec 03, 2019 1:22 pm
willthrill81 wrote:
Tue Dec 03, 2019 1:15 pm
Quirkz wrote:
Tue Dec 03, 2019 1:10 pm
By Bogleheads standards, 15% may be low, but for most people it'll probably get them in the right ballpark 30-odd years later, even using more realistic returns.
Part of the problem with the 15% savings rate recommendation is that by the time that many come to Dave for advice, they are already well into their 30s, 40s, or older. Saving 15% for 20 years, for instance, seems unlikely to be adequate in such a situation. If you are late to start saving, you need a higher savings rate to compensate.

A lot of it also depends as well on how much of the person's/household's expenses will be covered by SS benefits. Saving 15% for 30 years might be fine for someone spending $35k annually since SS benefits will provide a big chunk of that. It's probably less likely to work out well for someone spending $150k annually.

Blanket recommendations are rarely very appropriate.
Well said.

If you focus on savings, and not just 15% saving rate, it would give you 10-20 years in early retirement. Plus, you can work on your own terms and not be afraid of layoffs in your 50s.
Agree. Needs to be customized. Every person/couple will have different financial "levers" they can pull, e.g. SS, etc.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by JAZZISCOOL » Sat Dec 07, 2019 5:41 pm

schooner wrote:
Sat Dec 07, 2019 12:13 pm
Puzzle me this: Dave Ramsey has a radio show with 12 million daily listeners, he's a top selling author, and owns his own media company. And he has been at the top of his game for decades. Yet according to an article in Money Magazine, he is worth $55 million.

That sounds like a lot of money but if you can make $1.3 million by just investing $6,000 a year for only 30 years, what is Ramsey doing with all of his money? We've had a 10 year bull market where he must have been pulling in millions in income every year. He either isn't saving that much or he hasn't made anywhere close to a 12% compounded return on his own investments :oops:

#simplemath

Source: https://money.com/money/longform/dave-r ... debt-free/
Hmmmm. $200 mm net worth now:

https://www.thestreet.com/lifestyle/dav ... h-15141963

:shock:

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by Brianmcg321 » Sat Dec 07, 2019 6:55 pm

schooner wrote:
Sat Dec 07, 2019 12:13 pm
Puzzle me this: Dave Ramsey has a radio show with 12 million daily listeners, he's a top selling author, and owns his own media company. And he has been at the top of his game for decades. Yet according to an article in Money Magazine, he is worth $55 million.

That sounds like a lot of money but if you can make $1.3 million by just investing $6,000 a year for only 30 years, what is Ramsey doing with all of his money? We've had a 10 year bull market where he must have been pulling in millions in income every year. He either isn't saving that much or he hasn't made anywhere close to a 12% compounded return on his own investments :oops:

#simplemath

Source: https://money.com/money/longform/dave-r ... debt-free/
1. Dave Ramsey started his radio show in the early 1990s. He probably wasn't making millions until mid/late 2000s.
2. I think your over-estimating how much people make in radio, and selling books.
Last edited by Brianmcg321 on Sat Dec 07, 2019 7:25 pm, edited 1 time in total.
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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by Cheez-It Guy » Sat Dec 07, 2019 7:00 pm

Dave Ramsey seems like a condescending jackass.

"Better than I deserve! . . ."

Get a new catchphrase.

He's like the Dr. Phil of personal finance.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by DB2 » Sat Dec 07, 2019 7:16 pm

I agree with the sentiment of the thread regarding Ramsey. I've also noticed Ramsey always downplays fund fees in the few Youtubes I've seen him discuss mutual funds. It's pretty evident he has some kind of personal motive not to recommend indexing.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by LilyFleur » Sat Dec 07, 2019 7:28 pm

He receives advertising revenue from financial planners who apply to be "smartvestors" on his site and who will be recommended to folks on his website. He has a big disclaimer:
SmartVestor™ is an advertising service for investing professionals. Advertising fees paid by the SmartVestor Pros are not connected to any commission, portfolio, service, product or other service offered or rendered by any SmartVestor Pros. SmartVestor Pros are subject to initial vetting by Ramsey Solutions, and they affirm a Code of Conduct. SmartVestor Pros are not employees or agents of Ramsey Solutions. Neither Ramsey Solutions nor its affiliates are engaged in rendering investing or other professional advice. Ramsey Solutions does not receive, control, access or monitor client funds, accounts, or portfolios. Ramsey Solutions does not warrant any services of SmartVestor Pros and makes no claim or promise of any result or success of retaining a SmartVestor Pro. Your use of SmartVestor, including the decision to retain the services of any SmartVestor Pro, is at your sole discretion and risk. Any services rendered by SmartVestor Pros you contact are solely that of the SmartVestor Pro. The contact links provided connect to third-party sites. Ramsey Solutions and its affiliates are not responsible for
Nowhere in the "Code of Conduct" for his "Smartvestors" does it mention that they are CFPs nor fiduciaries. Considering that his clients are rather naive, this seems like Dave Ramsey is making money off sheep possibly jumping off a cliff. I think it would be better for these folks to pay a fee to a Schwab advisor with lots of initials after their name, including being a fiduciary.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by willthrill81 » Sat Dec 07, 2019 7:43 pm

LilyFleur wrote:
Sat Dec 07, 2019 7:28 pm
He receives advertising revenue from financial planners who apply to be "smartvestors" on his site and who will be recommended to folks on his website. He has a big disclaimer:
SmartVestor™ is an advertising service for investing professionals. Advertising fees paid by the SmartVestor Pros are not connected to any commission, portfolio, service, product or other service offered or rendered by any SmartVestor Pros. SmartVestor Pros are subject to initial vetting by Ramsey Solutions, and they affirm a Code of Conduct. SmartVestor Pros are not employees or agents of Ramsey Solutions. Neither Ramsey Solutions nor its affiliates are engaged in rendering investing or other professional advice. Ramsey Solutions does not receive, control, access or monitor client funds, accounts, or portfolios. Ramsey Solutions does not warrant any services of SmartVestor Pros and makes no claim or promise of any result or success of retaining a SmartVestor Pro. Your use of SmartVestor, including the decision to retain the services of any SmartVestor Pro, is at your sole discretion and risk. Any services rendered by SmartVestor Pros you contact are solely that of the SmartVestor Pro. The contact links provided connect to third-party sites. Ramsey Solutions and its affiliates are not responsible for
Nowhere in the "Code of Conduct" for his "Smartvestors" does it mention that they are CFPs nor fiduciaries. Considering that his clients are rather naive, this seems like Dave Ramsey is making money off sheep possibly jumping off a cliff. I think it would be better for these folks to pay a fee to a Schwab advisor with lots of initials after their name, including being a fiduciary.
Buying a target date fund from Vanguard or Schwab would be even simpler and cheaper. And it would likely be at least as effective.
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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by Turkishcoffee » Sat Dec 07, 2019 7:57 pm

I agree 100% the sentiment Ramsey does a disservice regarding his fees and actively managed funds. I also think his allocation is crazy aggressive.

Having said all that, and assuming estimates of his wealth are remotely accurate, why doesn’t anyone get razzed about the money Charles Schwab or fidelity has made over the years, with far less “free” advice for people on the radio I might add.

His investment advice isnt good IMHO, but at least he tells people to save and invest. As for his other advice, especially regarding debt, it’s pretty spot on.

I can only wonder if he is held to a different standard for reasons beyond investment advice.

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Re: Dave Ramsey says 30 years Roth IRA to 1.3 million?

Post by LilyFleur » Sat Dec 07, 2019 8:06 pm

willthrill81 wrote:
Sat Dec 07, 2019 7:43 pm
LilyFleur wrote:
Sat Dec 07, 2019 7:28 pm
He receives advertising revenue from financial planners who apply to be "smartvestors" on his site and who will be recommended to folks on his website. He has a big disclaimer:
SmartVestor™ is an advertising service for investing professionals. Advertising fees paid by the SmartVestor Pros are not connected to any commission, portfolio, service, product or other service offered or rendered by any SmartVestor Pros. SmartVestor Pros are subject to initial vetting by Ramsey Solutions, and they affirm a Code of Conduct. SmartVestor Pros are not employees or agents of Ramsey Solutions. Neither Ramsey Solutions nor its affiliates are engaged in rendering investing or other professional advice. Ramsey Solutions does not receive, control, access or monitor client funds, accounts, or portfolios. Ramsey Solutions does not warrant any services of SmartVestor Pros and makes no claim or promise of any result or success of retaining a SmartVestor Pro. Your use of SmartVestor, including the decision to retain the services of any SmartVestor Pro, is at your sole discretion and risk. Any services rendered by SmartVestor Pros you contact are solely that of the SmartVestor Pro. The contact links provided connect to third-party sites. Ramsey Solutions and its affiliates are not responsible for
Nowhere in the "Code of Conduct" for his "Smartvestors" does it mention that they are CFPs nor fiduciaries. Considering that his clients are rather naive, this seems like Dave Ramsey is making money off sheep possibly jumping off a cliff. I think it would be better for these folks to pay a fee to a Schwab advisor with lots of initials after their name, including being a fiduciary.
Buying a target date fund from Vanguard or Schwab would be even simpler and cheaper. And it would likely be at least as effective.
Folks that have trouble with credit card debt and being able to save for retirement might not ever be successful at developing an appropriate asset allocation and sticking to it and managing their own portfolio with low-cost funds. Most Bogleheads (although of course there are exceptions) have not had to go to Dave Ramsey to turn their financial lives around. BHs are a very unique group among the general population. According to CNBC, the median American household has only $11,700 in savings. That is very far from the median BH.

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