How Dave Ramsey’s Mutual Funds Have Performed Since 1973
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"Harmony in Every Heartbeat
November 7, 2024
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To be successful in markets, traders should understand the crossover between asset classes & liquidity flow. I've come to realize that the secret to making a million relies on the bases of good investment. Angela Lynn Schilling focuses on Multi-asset trading, a single strategy to manage risk, profit, and the code or the actual decision-making across multi-asset classes. Her skills set is top notch.
In 2023, the Biggest lesson i learnt in the mutual funds market is that nobody knows what is going to happen next, so practice some humility and low a strategy with a long term edge.
You’ve not discussed how you performed after accounting for fees. Often these funds don’t outperform the market when accounting for the fees you’re paying.
Also, past performance does not guarantee future results. You cannot assume because they’ve performed well in the past that they will in the future.
I mean Dave knows about the expense ratios and the bs, and he probably knows this is bad advice for the average person who isn’t going to pick the best funds. But he’s old, and the whole parley used to work on active investing. In the world he would’ve come up in, corporate fundamentals were everything. I don’t think he recognizes that the markets don’t move on fundamentals anymore, passive investing has taken over (which I think it’s dangerous to the overall economy) and your last years profits don’t matter, if your in the sp500 does and fed printing does. To save having a fund manager probably seems like it adds an important element because of the period of history he comes from
S&P500 Index ETF's like Vanguard's VOO have expense ratios of 0.03% hence all these managed active funds are a rip off and Ramsey is probably getting massive finder's fees for marketing all these managed funds with much higher expense ratios. Plus the vast majority of funds underperform the market case in point a bet made by Warren Buffet and a top hedge fund where Buffet challenged them to beat the market consistently over a period of time. A few years into the bet the hedge fund gave up.
Bro expense ratio and all the hefty fee they charge. And I take the risk. If the index goes down, it’s armageddon. I don’t mind if everyone loses their money
I’ve been diligently working, saving and contributing towards financial freedom and early retirement, but the economy so far since the pandemic has eaten away most of my portfolio, what I want to know is this: Do I keep contributing to my portfolio in these unstable markets or do I look into alternative sectors.
Outstanding!! 👏👏👍
I am averaging 12- 15% every year following this plan!
He won’t tell us names because he has said over and over “you should not invest if you don’t understand, you should do your own research, and don’t just invest in something because some bonehead said to” so.. he wants us to research and pick for ourselves. It’s our money not his and if it doesn’t perform he doesn’t want everyone blaming him.. make your own choices based of the “how” he said to find a good one
Invest in mutual funds, mutual funds outperform your mothers will, mutual funds will conquer the moon in 1 month but you never mention the mutual funds names
I prefer to go with a few individual stocks combined with Vanguard index funds.
I'm 25, I have a Roth IRA, & a brokerage. I have QQQM in them both. I'm considering adding in VOO & SCHD. But also 1 mutual fund. I'm going to do research but if anyone knows the best one LONG TERM, drop it down in the comments.
Thank ya!
Expense ratio though.
Listen CAREFULLY when he touts his (unnamed) funds. They BARELY beat the SPY500 index but then factor in the funds admin fees etc. Bottom line: buying SPY is a very, very good choice for the basic investor without getting overly complicated. It’s what I typically recommend to my friends when they solicit suggestions. I based that on 32 year of stock investing experience and I am a multimillionaire thanks to my investing. KISS Keep It Simple Silly (ahem…).
All you need to do is click on the research tab see any set of history in performance. My experience is closer to 85% do not out perform their index.
Then look at the expense ratio of those funds.
So what are the funds?
Why don't you tell us WHAT those funs are? He never actually says the names of these funds. If they are so great, why not share them with us? Truth is, low cost index funds are the best investments any of us can make, and that's not my opinion, it's Warren Buffett's.
Hmmmm. I notice Dave doesn't tell me the funds so I contact a smartvester pro? Nice ad Dave.
Is that net of fees. Numbers from mutual funds are often not net of fees and the fees are substantial.
yea mutual funds instead of ETFs 🙄 Dave is such a boomer and doesn't understand anything. Like he's a stock market genius now with bubbles. Mutual funds do not out perform, Dave is an idiot.
Mutual funds are more expense because of the fees, which are actively managed. V.S. ETF which are passively managed, These has less fees.
The US Stock Market is the best. Never invest in International, Thats stupid what he's saying.
Personal Finance is Personal, There is no one size fits all. why? Because it's personal. Personal to you and you alone.
Just because all the Millionaires are doing it doesn't mean you should too.
we know that now one gets rich quick, Its and art that takes a long time. stay out of debt, live on then you make, have a good size cash pile in your saving, and invest.
Theres honestly nothing wrong with doing a sp 500 index, just make sure youre doing it ROTH after taking advantage of all the match you can get. Youll do fine over the long haul, but why not try to do better than fine with good mutual funds?
He never says which specific funds he chooses so we can't verify it has beat the Stock Market
There are a couple of sleights of hand here.
1) Survivorship bias. He quotes outperformance of current funds which existed 40 years ago. They still exist because they outperformed, while other funds at the time no longer exist as they underperformed. You are investing now, not 40 years ago, and you don't know which of the funds currently available we outperform and exist in 40 years.
2) This is reinforced when he looks at 20 and 10 year periods. The rate of outperforming the index drops like a stone, because the Survivorship Bias effect has less time to work.
3) He says his current portfolio has outperformed. But he doesnt talk in terms of the price he bought in at to now, just the overall 40 year performance. If he invested in a fund that had done well for 30 years, which then underperformed for 10, it could still have beaten the S&P over 40 years while giving him sub par returns.
It's amazing how even when showing the numbers, people won't believe you. Dave is right, there are SOME investment funds with open access that outperform the S&P index fund even with their expense ratios applied. Some of you just want to play smart and base your answers on beliefs and whatever others say, rather than doing your own complete research.
what a load of bullshit
Funny he doesnt go into detail about his funds like some other financial people.
Don’t be a sucker with this clown, buy the sp500 in an etf form, just saved you hundreds of thousands of dollars
Dave you forgot a key element here, out of the 1/3 mutual funds that beat the market, once you consider the fees that were charged, you would be left with less money. I’m sure out of the 1/3 that beat the market, once fees were considered, most of those left you with less money.
The reality is you should have a blend of growth index commodities and bonds.
There’s a clue in the title.
There are many ways to invest and many of them will get you to financial independence. However, the numbers don't lie, it is a fact, not an opinion that a plain vanilla index fund beat 98% of the high fee actively managed funds. Sorry Dave, your off on this one, but again, you will still do well with your advice, but why pay the high fees when you can get better results without them? If you want much better advice on investing, read the Simple Path to Wealth by J.L. Collins. He took over where John Bogle left off.
The "outperform" needs to be "outperform after management fees" – the thing that scares me about managed mutual funds is the "rake" of 1-3% a year – if a fund outperforms the S&P by 2%, and your management fee is 2%, you're tracking the S&P. If a fund outperforms an aggregate of 40% over 10 years, that's (1+r(mf))^10/(1+r(sp))^10 = 1.4 The S&P has given about 4.5% returns over the last 10 years, or an aggregate of 55% increase (longer time horizons give similar average results with some volatility) so for a 40% outperform over 10 years, we get an average annual rate of return of 8% a year from the mutual fund *before fees*. After fees of (say) 2% of the fund balance, you end up with an actual rate of return for the mutual fund of 6% – so your actual outperform over an index fund returning 4.5% is 15% over 10 years. Your break even (where it's worth your while paying that 2% management fee) is a 6.5% annualized return. And that's not taking into account that the 2% of fees isn't usually capped if your fund loses money in a bad year – you end up paying your capital in fees, in addition to booking the losses! How many of the mutual funds in the market outperform the S&P 500 well enough to out-pace the fee structure of the managed fund? I'm sure a sophisticated investor such as yourself can pick the diamonds in the rough – I, on the other hand, only know the math of it, and I do not have confidence in my ability to find a mutual fund that reliably returns 8% or more on investment.
If 2% cash back isn't going to make me rich, an extra 1% return compared to the index isn't going to either.
There is no guarantee that past performance is going to continue in these funds that beat the market. It amazes me that the 13% return in Dave's Mutual Funds vs the 12% in S and P 500 is Dave's rationalization that mutual funds are the better way to go. Way more risk to get that extra 1%. If the fund slips, switches to a dud manager, any other curveball, you've lost. I wouldn't rest easy thinking about it. S and P is guaranteed to give you your fair share of the market's returns. I'm more than happy to be "average" here.
It's also hypocritical that Dave's justification towards paying off your mortgage before investing in the market is due to the high risk of the stock market….. and mathematically, that difference is more like 5-6%! Complete contradiction when comparing the two issues.
Dave Ramsey is so full of S&&^! Under NO CIRCUMSTANCES can he outperform the SP500 over any extended period of time (say 10 years) and a taxable account. So here is my open challenge to Mr Ramsey. I will put $100K into SP500. He puts $100K into his loaded funds and ALL tax consequences and fees will be deducted from both accounts (assume an overall federal and state tax rate combined of 30%). Whoever has the most money after 10 years keeps BOTH pots of money. I will do this challenge with Mr. Ramsey anytime he wants.
Love Dave Ramsey, but an index fund still looks good to me, as a complete novice and wanting something as easy, cheap, and hands off, as possible.
Okay, so let’s say Dave convinces you to go to one of his “endorsed local providers” (ELPs) and then let’s say you’re lucky enough to pick from among the 1/3 (skeptical of that fraction, but let’s stipulate that it’s accurate) that he says beat the market… and let’s say that your fund gets that 11 or 12 percent average that he is claiming, as opposed to the 10% average or approximate amount that he says the S & P 500 index earns… if you’re coughing up the average amount of money in fees that all of those active funds charge, that’s completely countering whatever gain you had coming from beating the market. And of course if the law of averages catches up with you and at some point the fund(s) that you picked are in (or become among) the 2/3 of funds that DON’T beat the market, you’re screwed, because you still have to pay those high yearly fees. Jack Bogle was right: why on earth would you give so much of your hard earned wealth to the croupier? With a good quality index fund you pay PEANUTS in maintenance fees compared to what a group like American Funds would charge you.
So why take that chance? By promoting high fee active investment funds at the expense of low cost index funds, Dave is, in effect, encouraging his clients to go to the casino. It is irresponsible and goes TOTALLY against the stated philosophy / mission of his show, which is to show listeners ways in which they can increase their wealth. And of course Dave has done well with the funds he has… he supplements them with the money he receives from the ELPS that he promotes and endorses and gets his followers to choose from. It’s sly and subtle salesman-style tactics and it feels dishonest and sleazy.
The Growth Fund of America and The Investment Co of America. Those are the Funds he is taking about and yes that’s with the sales charge included and annual expense ratios.
Dave has a lot of great advice. I'm not exactly sure on this one though. I would be curious to see what his expense ratios are and what percentage he really makes in the end. I'm curious to know if they beat index funds at that point.
But he didnt say what the mutal funds where?
Does someone know what mutual funds he invests in specifically?
This whole speech is either a story of gross incompetence or a blatant lie.
The percentage of mutual funds out performing the S&P 500 that he quotes here IS NOT correcting for survivorship bias.
He only calculates the ratio of successful funds compared to non successful funds out of those who have survived the 25 years.
The simple reality is that most funds that fail don’t last 25 years before they are closed.
You’re right Dave it’s not rocket science – it’s basic finance that you’re getting wrong and your insulting your audience by thinking you can fool them with biased numbers.
I looked up two of the the exact funds he's talking about and compared them to the s&p500, over a 10y span the s&p out performed both of them.
13.04% would not include fees