This doesn’t include the extra expense ratios and load fees typically seen with something like the American funds he is know to tout. When you calculate those in a simple single fund portfolio of VTSAX/VTI will do equally well or better over a 30 - 50 year period and cost you virtually nothing to own.
In some of his literature, he says that growth & Income is like the S&P 500, the growth is like a mid cap index, aggressive growth is like a small cap index.
Thanks for the great video Rob. Dave's portfolio is tilted to small cap similar to Paul Merriman. The 4 fund of Paul's is 50% small value and blend. Lots of ways to slice and dice. Appreciate all your help!!
Interesting commentary. I'm interested in how the Dave Ramsey's portfolio performs against a single fund portfolio such as VOO (no global) or else VTI (no global). I'm very appreciative of Dave Ramsey's teachings. His financial teaching and encouragement helped my family tremendously.
Great video, Rob! I've been using a similar strategy, but with SCHD for the Growth and Income and I don't have International. And what I am finding is that I basically do exactly what the S&P 500 does. There may be a strategy to keeping the "Growth and Income" in your tax-exempt accounts, to avoid paying taxes on dividends and keeping the low dividend "growth" funds in the taxable accounts. But even then, I don't think there's much of a difference between that and just holding the S&P. Thanks again!
I have an unreasonable love affair with SCHD also. I was surprised my own tax advantaged portfolio is not that dissimilar to Dave’s but I don’t have international stocks there. That means I’ve outperformed his (comparing equities only, but I also have bonds) over the last two decades but I know the pendulum with international stocks can shift so I try to mitigate my lack of international stocks with a heavier tilt to ex-US on my other accounts.
Thanks Rob... great video, per usual! I appreciate the comparison to the Ramsey model vs Total Market ETF as I had the same thought, but glad to see the impact is negligible. IMHO the potential gains of 25% small cap isn't worth he wild ride and the makeup of a total market fund just makes more sense.
While I agree with Dave Ramsey's basic principles to get out of debt, save, and live with your means, I think he's made a lot of money off of those who had little. Somehow he's built a Brand by selling common sense, but I'll take my investment advice from you.
But that is the point. Dave has said for years he gives the same advice your grandma did ... But he will keep his teeth in. At the end of the day, Dave is a motivational speaker. The entire sell is that is is so easy anyone can do it.... And you can too. Warren Buffett doesn't need his advice.
@@patricksapp8034 I listened to his show on the radio before, still do sometimes when I'm driving. We even visited his studio when we were in Nashville. I think he helped motivate me to pay off my mortgage early. I just wouldn't buy anything from them.
He also prob makes money from royalties or some sort of pyt for on air referrals to DR approved RE agents and financial ‘advisors’ (who prob sell mutual funds and get commissions from fund cos.) He also owns a RE co that his SIL has exec role with. He works smarter not harder.
All of the advisors that Dave endorses are RIAs. They are not brokers and do not sell a certain brand of mutual funds. They are fee only advisors and do not work off of sells commissions.@@jmc8076
Rob, I mentioned this on another’s comment and I’ll say it here. At the end of the day, Dave will make more pushing actively managed funds and really doesn’t care if it makes more or less than an index funds it reflects since his Smart Vestor counterparts will give him a commission on every Dave follower which makes more for him. He is a shrewd businessman, not a financial advisor.
Dave Ramsey has specified that his investments are all mutual funds. I believe he stated that they are all 50+ years old and that they all have a track record of averaging over 12% over the fund's history. Some as high as 18% - 20%. I haven't seen anybody do a mock scenario like yours that comes close to Dave's claims, yet he makes the portfolio out to be a simple one to build. I think you did a great job of simulating his strategy with index funds! Do you think that there are mutual funds out there that could yield a consistently higher result? Thank you for your content!
Thanks Rob! I have been confused by Dave's 3 different growth funds and how that translates to actually picking funds. In at least one of his older books (or maybe it was in his Financial Peace University class), he used to say 25% each of small, medium, large, and international. I don't know when or why he changed.
Love you videos rob. I’d have to disagree on your opinion of what Dave means by “growth”. I think he means exactly that. He prefers growth funds over value funds. He believes values funds are too risky. As a former follower of Dave, I heard him explain this on his show a few years ago.
Rob. I like your style in these videos. Not a fan of DR. As mentioned in your previous videos I think DR uses these growth terms 3 different times to up badge his portfolio or sound smart.
Dave is more for the low hanging fruit crowd , heavily in debt , zero knowledge ...you on the other hand Rob, very informative , knowledgeable ,straight shooter....👍
Some actively managed funds in an IRA isn't the worst idea but you don't have to buy the American Funds DR is shilling, you can actually buy whatever you want. Tons of similar products out there.
Rob I was hoping you would have addressed Dave always projecting to get 12% from his mutual funds That would probably make it very good RUclips episode
This is exaclty what I needed. You deliver the information very well and helped to decipher some of the terms a little better. I am a big Dave Ramsey fan and usually people are bashing his approach which creates a disconnect but you just delivered an honest unbiased opinion that was easy to follow. I really like ETF's and was trying to figure out how to compare as you did in this video. Thanks and you have a new subscriber!
Thanks Rob. I think Dave strongly advocates for actively managed mutual funds that outperform the market. He suggests they are easy to find (I disagree, especially on 20+ year time horizons). Perhaps reach out to him to see if he can suggest some funds for comparison.
@@ZCAR355 only cow doesnt change mind... if its proven that 3 of over 300 actice funds managed to beat market year by year in 15 years it clearly means that rest DIDNT. I doubt it he put all his money into one of this 3. Ergo - he doesnt even follow his own strategy
Dave has to preach more aggressive investing because of his baby steps. if your focus is to pay down most debt and build an emergency fund, that takes time. Trying to pay off your house early also takes money away from investing, meaning you need a way to make up lost time.
I bet Dave makes it hard to tell which asset classes he has in mind to preserve the ability to be able to have plausibly deniability if they do poorly.
I enjoy your content. What category would you place an sp500 index within dave ramsey categories? I've implemented a similar plan in my 401k and use sp500 as larger piece.
Thanks Rob, good video. Can you do a video on VWELX (Vanguard Wellington)? It's a single 65/35 fund that's simple, cheap and seems to outperform everything else. Also, it's comforting to know it has a long track record of solid performance with low volatility.
The problem with these "optimal" portfolios is that people will get out when they perform worse than the market, then get in after they are performing better. These tend to be the worst times to switch.
he does, which there's no proof of. Especially since he advocates using active mutual funds, there's also high fees, which will definitely bring down the returns, so i highly doubt his 12% is true... I would suggest what Rob does using Index funds.
Large caps do all the work here, small caps are only good in limited environments. it’s lines on a graph and you can replicate return with lots of items. Dave shouldn’t give this, best just telling them to buy all us in 1 fund and avoid small caps or limit to 10 if you plan to hold long term and accept their swings.
I would be skeptical of any recommended investment portfolio that is hard to understand. If a tutorial is needed on just how to understand the portfolio allocations, just imagine the investments the so called smart pro would recommend. Ramsey portfolio sounds like a sales job
Dave is always talking about long term returns but you need a strong will and deep pockets to withstand the vol on pure equity but in the long term the results will bear out. I'm surprised he doesn't recommend them as a balanced approach to have balast in the portfolio to drip feed equity when markets dip
Ahhhh...but to get this investment service, you need to go to an "ELP" from the Ramsey organization (Endorsed Local Provider). ELP's meet with you, talk about how great Dave it (his Baby Steps are) and then gets you into the funds Dave and his team has found for investors. ELP's get you into funds that have a "fee" or "commission" of 4.5%. This is the EXPENSE RATIO of the any given investment vehicle you are buying. So...this "ELP" had better get you 4.5% over and above the funds that ROB is laying out for us!!!! Dave has great ideas, but his ELP financial advisors do not deliver value. These special "ELP" advisors get you is not going to beat a simple investment ratio like ROB is sharing.
This video is amazing. First time I've ever seen someone actually show all these steps including the funds to select.
Agreed!!!!
Thanks again, Rob! I never understood which investments Dave Ramsey was recommending until now. Seems more reasonable now.
Same for me... this now makes more sense lol
This doesn’t include the extra expense ratios and load fees typically seen with something like the American funds he is know to tout. When you calculate those in a simple single fund portfolio of VTSAX/VTI will do equally well or better over a 30 - 50 year period and cost you virtually nothing to own.
In some of his literature, he says that growth & Income is like the S&P 500, the growth is like a mid cap index, aggressive growth is like a small cap index.
Where?
Absolutely love the portfolio 'reviews' and walkthrough. Thanks Rob
Thanks for the great video Rob. Dave's portfolio is tilted to small cap similar to Paul Merriman. The 4 fund of Paul's is 50% small value and blend. Lots of ways to slice and dice. Appreciate all your help!!
Thanks for the recap. Best video I’ve seen on the Dave Ramsey asset class ❤
Interesting commentary. I'm interested in how the Dave Ramsey's portfolio performs against a single fund portfolio such as VOO (no global) or else VTI (no global). I'm very appreciative of Dave Ramsey's teachings. His financial teaching and encouragement helped my family tremendously.
Thank you...another great video.
Brilliant commentary. Your content is so straightforward and helpful. Really appreciate the value you bring.
Great video, Rob! I've been using a similar strategy, but with SCHD for the Growth and Income and I don't have International. And what I am finding is that I basically do exactly what the S&P 500 does. There may be a strategy to keeping the "Growth and Income" in your tax-exempt accounts, to avoid paying taxes on dividends and keeping the low dividend "growth" funds in the taxable accounts. But even then, I don't think there's much of a difference between that and just holding the S&P. Thanks again!
I have an unreasonable love affair with SCHD also. I was surprised my own tax advantaged portfolio is not that dissimilar to Dave’s but I don’t have international stocks there. That means I’ve outperformed his (comparing equities only, but I also have bonds) over the last two decades but I know the pendulum with international stocks can shift so I try to mitigate my lack of international stocks with a heavier tilt to ex-US on my other accounts.
Thanks Rob... great video, per usual! I appreciate the comparison to the Ramsey model vs Total Market ETF as I had the same thought, but glad to see the impact is negligible. IMHO the potential gains of 25% small cap isn't worth he wild ride and the makeup of a total market fund just makes more sense.
Thanks Rob. Good summary.
5:21 % allocation: 12.5% for mid and large cap growth for Ramsey's "Growth" category
Thank your for your work on this type of content! Love your channel!
That was great Thanks for taking the time to put this together Rob. I love the comment can you stick to it.
While I agree with Dave Ramsey's basic principles to get out of debt, save, and live with your means, I think he's made a lot of money off of those who had little. Somehow he's built a Brand by selling common sense, but I'll take my investment advice from you.
I agree with you 110%
But that is the point. Dave has said for years he gives the same advice your grandma did ... But he will keep his teeth in. At the end of the day, Dave is a motivational speaker. The entire sell is that is is so easy anyone can do it.... And you can too. Warren Buffett doesn't need his advice.
@@patricksapp8034 I listened to his show on the radio before, still do sometimes when I'm driving. We even visited his studio when we were in Nashville. I think he helped motivate me to pay off my mortgage early. I just wouldn't buy anything from them.
He also prob makes money from royalties or some sort of pyt for on air referrals to DR approved RE agents and financial ‘advisors’ (who prob sell mutual funds and get commissions from fund cos.) He also owns a RE co that his SIL has exec role with. He works smarter not harder.
All of the advisors that Dave endorses are RIAs. They are not brokers and do not sell a certain brand of mutual funds. They are fee only advisors and do not work off of sells commissions.@@jmc8076
That would be an interesting interview by Rob
Great video. Thank you.
I love the painting behind you.
Thanks Rob for sharing such great insight !
Rob, I mentioned this on another’s comment and I’ll say it here. At the end of the day, Dave will make more pushing actively managed funds and really doesn’t care if it makes more or less than an index funds it reflects since his Smart Vestor counterparts will give him a commission on every Dave follower which makes more for him. He is a shrewd businessman, not a financial advisor.
Thank Rob, I'm 20 in college currently setting up my retirement account. This video was very helpful thank you!
Hey Rob, you will make a fidelity alternative?
Thanks for the info. I learn a lot from watching your videos.
Dave Ramsey has specified that his investments are all mutual funds. I believe he stated that they are all 50+ years old and that they all have a track record of averaging over 12% over the fund's history. Some as high as 18% - 20%.
I haven't seen anybody do a mock scenario like yours that comes close to Dave's claims, yet he makes the portfolio out to be a simple one to build.
I think you did a great job of simulating his strategy with index funds! Do you think that there are mutual funds out there that could yield a consistently higher result?
Thank you for your content!
Interesting how closely that portfolio resembles the simple 2-fund portfolio! I'll stick with keeping it simple though! :)
Thanks Rob! I have been confused by Dave's 3 different growth funds and how that translates to actually picking funds. In at least one of his older books (or maybe it was in his Financial Peace University class), he used to say 25% each of small, medium, large, and international. I don't know when or why he changed.
I read sml cap (value) stocks since 1926 are one of the better ROI assets after bear markets.
Love you videos rob. I’d have to disagree on your opinion of what Dave means by “growth”. I think he means exactly that. He prefers growth funds over value funds. He believes values funds are too risky. As a former follower of Dave, I heard him explain this on his show a few years ago.
Rob. I like your style in these videos. Not a fan of DR. As mentioned in your previous videos I think DR uses these growth terms 3 different times to up badge his portfolio or sound smart.
I would love to see an analysis done with actively managed mutual funds he seems to favor
Dave is more for the low hanging fruit crowd , heavily in debt , zero knowledge ...you on the other hand Rob, very informative , knowledgeable ,straight shooter....👍
If you invest in a small cap growth index fund, would a small company that grows to large be sold out of it? Would you then miss out on further gains?
Some actively managed funds in an IRA isn't the worst idea but you don't have to buy the American Funds DR is shilling, you can actually buy whatever you want. Tons of similar products out there.
Rob I was hoping you would have addressed Dave always projecting to get 12% from his mutual funds
That would probably make it very good RUclips episode
@@merrymerkin good call. But I was more curious to the funds that DR has with his AF and the very high expense ratios that they have
@@merrymerkin - thats too long of timeframe. what if we look last 30-40 years
This is exaclty what I needed. You deliver the information very well and helped to decipher some of the terms a little better. I am a big Dave Ramsey fan and usually people are bashing his approach which creates a disconnect but you just delivered an honest unbiased opinion that was easy to follow. I really like ETF's and was trying to figure out how to compare as you did in this video. Thanks and you have a new subscriber!
Thanks Rob. I think Dave strongly advocates for actively managed mutual funds that outperform the market. He suggests they are easy to find (I disagree, especially on 20+ year time horizons). Perhaps reach out to him to see if he can suggest some funds for comparison.
He advocates them because that's what his "smart vestors" sells. That's the only reason he pushes actively managed funds.
He also owns the s&p 500
true... tragic long term advice... i dont know why he is so popular
@@bartz4439 Because he doesn’t change with the wind.
@@ZCAR355 only cow doesnt change mind... if its proven that 3 of over 300 actice funds managed to beat market year by year in 15 years it clearly means that rest DIDNT. I doubt it he put all his money into one of this 3. Ergo - he doesnt even follow his own strategy
Can you show us your current Vanguard portfolio in percentages and why. Thanks
Dave has to preach more aggressive investing because of his baby steps. if your focus is to pay down most debt and build an emergency fund, that takes time. Trying to pay off your house early also takes money away from investing, meaning you need a way to make up lost time.
90/10 TOTAL US STOCK + TOTAL US BOND outperformed the DR portfolio
I bet Dave makes it hard to tell which asset classes he has in mind to preserve the ability to be able to have plausibly deniability if they do poorly.
Exactly.
I enjoy your content. What category would you place an sp500 index within dave ramsey categories? I've implemented a similar plan in my 401k and use sp500 as larger piece.
Thanks Rob, good video. Can you do a video on VWELX (Vanguard Wellington)? It's a single 65/35 fund that's simple, cheap and seems to outperform everything else. Also, it's comforting to know it has a long track record of solid performance with low volatility.
I would enjoy seeing this as well. I've thought about moving towards it closer to retirement.
The problem with these "optimal" portfolios is that people will get out when they perform worse than the market, then get in after they are performing better. These tend to be the worst times to switch.
I think the growth and income fund is a large cap blended fund and not a large cap value
Rob, doesn't Dave claim 12% average annual returns whereas your CAGR was 10.x%? Also, isn't he using American funds?
he does, which there's no proof of. Especially since he advocates using active mutual funds, there's also high fees, which will definitely bring down the returns, so i highly doubt his 12% is true... I would suggest what Rob does using Index funds.
@@alanyoung159Yes, I have to wonder whether the 12% Dave states is after the fees/loads. That's kind of important!
Dump the international too..
Large caps do all the work here, small caps are only good in limited environments. it’s lines on a graph and you can replicate return with lots of items. Dave shouldn’t give this, best just telling them to buy all us in 1 fund and avoid small caps or limit to 10 if you plan to hold long term and accept their swings.
I would be skeptical of any recommended investment portfolio that is hard to understand. If a tutorial is needed on just how to understand the portfolio allocations, just imagine the investments the so called smart pro would recommend. Ramsey portfolio sounds like a sales job
I think Dave doesn't like bonds because he believes neither individuals or companies should have any debt.
I never thought about it from that perspective.
I bet it has to do with the low returns
Dave is always talking about long term returns but you need a strong will and deep pockets to withstand the vol on pure equity but in the long term the results will bear out. I'm surprised he doesn't recommend them as a balanced approach to have balast in the portfolio to drip feed equity when markets dip
@@epic594 he probably doesn't recommend bonds because his active stock mutual funds probably make him more money
Ahhhh...but to get this investment service, you need to go to an "ELP" from the Ramsey organization (Endorsed Local Provider). ELP's meet with you, talk about how great Dave it (his Baby Steps are) and then gets you into the funds Dave and his team has found for investors. ELP's get you into funds that have a "fee" or "commission" of 4.5%. This is the EXPENSE RATIO of the any given investment vehicle you are buying. So...this "ELP" had better get you 4.5% over and above the funds that ROB is laying out for us!!!! Dave has great ideas, but his ELP financial advisors do not deliver value. These special "ELP" advisors get you is not going to beat a simple investment ratio like ROB is sharing.