In this video from two months ago: https://youtu.be/JsTyabPW_eU
Dave has long been challenged for projecting a 12% ROI on mutual funds. 1st, I don't think this is near as insane of a claim as most people do once you realize he is talking about LONG TERM investing in STOCKS and EQUITIES and is NOT accounting for INFLATION. The S&P has averaged about that amount pre-inflation since inception.
My issue with Dave Ramsey's investing advice has been that he pushes people into Mutual Funds instead of low cost Index Funds like SWTSX or VTSAX. Why? Because the funds he recommends through his SmartVestors are front loaded and he recommends people have a money manager that will cost 1% or so.
Dave openly admits that you have to work to do research to pick which mutual funds will outperform the S&P index funds, but that you can find them. He states about 45%-50% of the mutual funds do so. I would challenge that most people are not going to do the research and even if they do (or their advisor does) the research shoes us people cannot predict which are going to beat the S&P Index Funds.
EVEN IF you picked all mutual funds that averaged his 12% pre-inflation return, after 1-1.5% front load and management fees, you are down to around a 10-11% return, which is probably LESS than the S&P 500 index fund will have gotten you.
Dave. You are telling people to invest in mutual funds which are more complicated and telling them to trust predatory money managers to get a lower return than if they just stuck their money in a index fund and left it alone. You're doing it for the money you get in kickbacks from your smart vestors. That is fine. But quit acting like it's better than index fund investing for average people, which is who your advice is targeted to. It isn't.
Submitted March 14, 2018 at 03:52PM by BankruptcyLawGuy http://ift.tt/2tNj3pp
