My Problem With Dave Ramsey

Dave Ramsey has helped millions of people on their financial journey. However, his investing tips fall short…

If you have been in the money space for more than 1 day, you probably have heard of Dave Ramsey. He is one of (if not the most) famous financial coaches in the world. His Financial Peace University course has been taken by over 10 million people. Insane. He has helped millions of people get out of debt. But… that is where I think his good advice stops.

Let me explain…

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When asked about investing, Dave Ramsey LOVES to shout out the 12%+ annual return. Dave LOVES to say that his mutual funds average 12%+ every year. This is my issue.

I did some research & found two very interesting videos where Dave Ramsey boasts this 12% annual return. First off, during his show he claims that it is not that hard to beat the S&P 500 LOL…

Dave Ramsey claims in the video that it is “not really hard to beat the S&P 500”. All while saying his mutual funds average “most years over 13%”. So I did some more researching & found this video:

This is where I have my issue with Dave. In this old clip, he is claiming that if you would have just bought the same mutual fund he did 30 years ago, you also would have returned 13% per year on average. He compares it to the super bowl saying “most people don’t win the super bowl, but someone does. Which team do you want to pick?” (link to entire video: https://www.youtube.com/watch?v=OqAi61YrkBc&t=105s)

So here is my open letter to Dave:

Dear Dave,

While saying to someone “if you would have just picked the same mutual funds I did 30 years ago, you also would have gotten a 13% per year return” is not wrong, I don’t agree with it. You are telling listeners 2 things:

  1. You are teaching listeners to essentially stock pick. Had I (Decade Investor) bought Tesla 10 years ago, I also would have outperformed the S&P 500. However, that takes luck, conviction & stock picking to make it happen. That listener has to be lucky to pick the right mutual fund that will outperform the S&P 500 over the next 30 years… which by the way, majority of them don’t.

  2. You know you are getting a kickback for leading all these people to mutual funds so quit. You are great at getting people out of debt. Stick to that. Don’t lead people down the wrong path because you are making some money off of it. QUIT.

I think 90% of what Dave Ramsey is great for 95% of people. However, when it comes to investing related information, I do not like what Dave has to say. Maybe you agree with me, maybe you don’t. But for me, I will keep to my low cost ETF that tracks the S&P 500 & outperform majority of mutual fund investors over the long run 😉 

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My Buys This Week:

ETFs: $250 in VOO +

(x)Tweet of the Week:

Speaking of VOO… the dividend was announced!!!

Thank you so much for reading & I will see you next week! Until then, keep buying assets & stacking those dividends. 🙂 

- Decade Investor

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