Did anyone see this piece from CNN Money? Here's a summary of it:
Here's my take:
- People love Dave. he has 7.7 million weekly listeners, packs arenas, and is at the top of the list when people are asked who they want financial advice from. (Plus he hangs out with really cool people). :)
- Money likes most of his advice -- the stuff centered on staying out of debt, saving, and planning for the long-term.
- Money doesn't like Dave's investing advice. At all. And neither do many financial advisors.
- Dave recommends investing completely in stocks.
- He claims that doing so will earn listeners a 12% return.
- He has partnerships with financial planners that he recommends and they push expensive mutual funds with high loads.
Here's my take:
- I like Dave Ramsey. Yes, he can be brash at times, but let's face it, he's helped MILLIONS of people get out of debt and turn their lives around. That is a huge accomplishment in and of itself. And of all the financial "experts" out there, he's the first one I'd send 95% of them to.
- I personally don't mind the "all in stocks" advice for those who are young. I've spent most of my lifetime 80% or more in stocks and it's done quite well for me. (I still have a high percent in stocks and I'm not young any longer.) Yes, the financial crash was a tough time, but I kept investing all the way through and I've come out quite nicely on the other end.
- The 12% isn't realistic in my opinion. Even if it was close to reality, I don't think you can bank on it. It gives people a false sense of security (thinking they can save less because they can make their goals if their money earns 12%, which it won't.) I prefer to estimate conservatively as follows: I plan as if I'll only get a 6% return. I think I can actually get an 8% return. And if things go well, I might earn 10%. So I bank on, plan for, and save as if I'm only going to get 6%. Everything else is gravy. This forces me to save more money and invest for longer -- the two ingredients in investing that you can control and which make the biggest difference in long-term performance.
- I personally wouldn't invest with an advisor charging me a load (fee) on my investment. On the other hand, investing with a load is better than not investing at all (a spin on Dave's point-of-view, he says most people need advisors when they invest and advisors need to be paid), so I can see both sides of the argument. Personally I would say that no one cares as much about your money as you do. So take some time, learn the basics, and invest for yourself. They you don't need to rely on anyone else or pay their high fees when you want to invest your money.