For further information along these lines I highly recommend this: *The Stupidest Thing You Can Do With Your Money (Ep. 297)* freakonomics.com/podcast/stupidest-money/
Ben Felix Hey Ben, love the video. I have a question for you, or anyone else who would like to clear things up. I’m familiar with Dave Ramsey, and I was under the assumption that he suggested Roth 401k’s and tax-advantage programs given by employers. The book his company just came out with, Everyday Millionaires, showed that a lot of people build wealth using their company’s 401k plans and ones similar. Wouldn’t parking money in those be a good idea?
@@salmonteverde personal finance is personal. for most people, contributing the max to a regular 401k is better then a roth401k (in general, for most people)
This could have had a crazy click-bait title and could have been over-sensationalized to get more views. But instead Ben just tells it how it is. The more I watch his videos the more I realize that he values being honest and objective more than anything else. That's the main reason I love his videos and his podcast!
I do give him credit on personal savings / spending habits & getting ppl focus to get out of debt... then I usually zone out when he talks about investing.
I started listening to him exactly because of his take on spending habits. He had some good points there. But then I saw him go ballistic when someone said he was advised by his finance adviser that he should invest his money instead of paying of a debt at 3%. He had nothing rational to say so he went on personal attacks for a good 5 minutes. After that he calmed down a notch and said that the finance adviser was not taking into account the risks involved with having a debt... But, the thing is, Dave was not taking into account that he knew nothing of the financial stability of his caller and was not taking into account the opportunity costs of not investing. I stopped watching him after that.
I zone out when he tells the average guy to buy a house for cash. Maybe that works in his hillbilly towns in Tennessee, but not sure how many have a spare million or two to buy a house in Toronto, NY, San Fran etc. I also laugh when he tells people to buy a car for $1000 and go make $3000 a month delivering pizzas. I don't know what will last longer, that junky car or the pizza, and I'm sure the average pizza driver is wondering where that money is too.
@@Nepthu I'm not saying his advise is all bad as some of it is just common sense, and why people feel the need to call a radio host to ask for advise on some things is beyond me. Some of his advise is just wrong , in my opinion, especially regarding buying homes, some uses of credit, mutual funds and paying smallest to largest debts first instead of highest interest debt first. But, he serves a purpose I suppose for some people.
@@MKPolovanec The real brilliance of Dave R. is that he focusses on psychology, and not math, deliberately. And that is why his system works so incredibly well for everyday people. That's why I love his system. So, the debt snowball is mathematically stupid, but people smart. People smart is better than mathematically smart for the vast majority of people. That's his breakthrough, that's his paradigm shift, and it works like a charm! Shen he is on the radio, he is very rigid, because his system works, and often when people deviate from it it fails. But his coaches (I'm certified by his company, but don't work for his company), are way more flexible. We are talking with individuals, and I frankly deviate from pure Dave Ramsey all the time, as appropriate for a given individual, especially on investing. As for his investment advice and claims, well I agree it isn't awesome, it's not really his strength, but it really isn't that bad either: Oversimplified, it is to put 25% each into (a) large cap stocks, (b) mid-cap stocks, (c) small-cap stocks, (d) international stocks. Simple, but actually quite reasonable.
@@jerel42 he $hits on financial advisors all the time. He's a pompous a$$. He can coach people who spend money like crazy and racking up their credit cards but anything beyond that is rocket science for him.
@@MKPolovanec You are certainly entitled to your opinion about DR. As for financial advisors. Many are good, and if you get a good one the data show that most people will do better, even paying the 1% fee, than they would do by themselves. I know that. The problem is, and I also know this is true for a fact, is that lots of "financial advisors" are really just selling horrible products like annuities and universal life. They deserve to get shat upon. They truly suck.
@@jerel42 when caller asked him why financial advisor talked about the asset allocation mix, DR called him stupid and gave his recommendation as to where the caller should invest. Of course, DR does not understand what the KYC discovery is because he'll never have to explain to conservative investor why his/her portfolio dropped 30% and why you should not sell during market downturn. DR never talks about critial illness insurance and why is better to budget for those premiums rather than agressively repaying the 2% interest rate mortgage. As a matter of fact, he thinks that every single caller will remain healthy for the rest of the life. So many pitfalls in his so called "planning" and he has the audacity to call other people stupid? The guy is a joke.
Ben, you’re the real deal. I haven’t seen a video yet where a single claim went unsubstantiated with solid empirical evidence from experts. It’s the devotion to just calling things as they are that makes this so great, and it’s representative of what the world could always use more of: honesty.
This is more of a general comment on your videos: I really like how you briefly state your point at the beginning of the video. It makes your intent very clear from the start and it helps follow through the argumentation. I’m not an expert but I think that your reasoning always seems well-founded and you are able to articulate it clearly. Thanks a lot for your very helpful videos!! :-)
As a retired pastor I'm quite aware of Ramsey's work and contributions to not only the Christian community, but to all others. He provides tough medicine to those mired in debt, helping them to dig out and get on solid footing. Dave's remarks on investing puzzle me to the extreme. I've heard him ridicule index investing and passive investing. I concluded that while Dave has skills in personal debt management, he is a neophyte at investing. In fact, I was astonished at his ignorance and arrogance at the science of portfolio management. Dave simplifies everything and dismisses solid research. While not everything is "rocket science," as Dave puts it, sound investing does require science, and excellent research. From Burton Malkiel to Charle Ellis, the verdict is in. Expenses matter, and they matter big time. Dave needs to read a bit, and he also needs to publicly reveal the names of his recommended funds. Thank you Ben Felix for this balanced and insightful assessment of Ramsey's work.
He makes money on the investing part not the getting out of debt part. So it's about selling financial advice for future investors through associates. Passive investing advice doesn't get you a lot of commisions.
He won't reveal them due to laws in place if I remember right. People have done some fairly excellent guesses based on what he's said in the past and in reality he didn't beat the market, or barely did as a whole. I had one of his recommended SmartVestor's visit and try to put us into a 5.75% front load and an ER of around 0.90% that she claimed were the same funds Dave was invested in(American Funds). Then I asked her what her returns were over the past. She admitted 10% returns on average. I decided paying her another 1% for her fee wasn't worth that same return as I could get in the market on my own as I had just started researching index funds and going this alone. Dave has mainly moved towards having a resistance in your way now when the market dips is the reason for this Financial Advisor. They're to keep you on path when you freak out. I'd rather have a group of friends on the same path that all hold one another accountable to our plans for free than pay an advisor 1% AUM.
Great comment! Dave pushes listeners to his endorsed local providers (ELPs). I assume there is a transaction here that benefits Dave. Dave is a smart man and knowing what Ben said about actively managed funds, Dave pushing the ELPs and actively managed funds seems shady to me.
If you google the 401k retirement options @ Ramsey Solutions you will find 90% of the funds he provides his employees plan with are American Funds and that Ramsey Solutions has a 4% match.
The focus on research is excellent, and novel on RUclips. I'm an academic in math, and know how much effort it is to the bottom of the research, and draw good conclusions. Good on you, this is a valuable channel.
Ben - Absolutely love your well researched, data-driven, rational approach to this an all topics. I really appreciate your work. Know that you’re providing a great service to many of us.
Another great video. I love how you don't just spout your opinion like so many other investing channels, but cite the data and research from independent academic and industry sources. As John Adams said, "facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence". Thanks Ben!
Yet another great Vid, thank you Ben! In one of Dave's rants, I caught another MAJOR issue that I see occurring in the world of financial planning. Some folks including Dave are promoting rates of return that are far too high when building a financial plan. This high expected return not only lets people off the hook for the required savings rate but also pushes most people out on the risk curve that they can stand in the good times but never endure during the bad. 12 - 14% future returns perhaps but why not plan for 6%, save more, easily endure the worst the market has to offer and perhaps enjoy the excess if you do happen to achieve that 12%.
I think this is an incredibly important point. I've used a very conservative 5% real return for my investment planning. Not only does it have all the advantages that you mentioned, when my actual return, for the current year or over the entire life time of the portfolio, works out to higher than 5% annualized, I feel like I won the lottery and that helps me stick to my investment plan.
Good point! When I first started out, Dave was kind of the “gateway drug” into investing. I used his 12% example and did calculations and tried to see what I could do to contribute the minimum while still getting 12% to get my end goal. After more extensive research, I found out that such advice is just completely false.
@@PapaCharlie9 I follow Ben Felix from Germany. Though i never heard of Dave Ramsey - and assume i don't have to ;-) every dataset Ben Felix provided can easily be used against a n y active investment. And when you talked about your conservative 5% real (!) return - I just read a paper about the last 100 Years of Stockmarket Investment: real returns on average: 5% - so it seems to me your goals are not conservative, but realistic 😊 indexfundinvestor.eu/2019/07/18/simple-portfolio-for-european-investors/
I like the way you back up your statements with academic research and facts not just opinion. I live in the UK and the thing which made me switch from 50/50 active/passive to 100% passive index funds was what happened to Neil Woodford's fund. He is a classic example of a star active manager who has crashed and burned. Just glad I didn't have any of my pension invested in any of his funds. I now have 90% in Vanguard funds and don't have trouble sleeping at night.
Dave Ramsey is good for one thing: Getting people who are poor to terrible with money out of debt. Once you start moving beyond those parameters you will quickly find that Dave's advice is at best middling, and for most passive investors... quite substandard. Enjoyed this video and thank you for singling out Dave on his investment advice.
I'm always keeping my eye out for Canadian-based investing videos and I'm SO glad to have found yours. I'm currently going through your factor investing videos and trying to wrap my head around them. Just wanted to thank you so much for taking the time to create these!
Dave sell leads to his “investment advisers”...that is why he promote them...instead of just tell people to buy a low cost index fund and forget about it.
daniel tuitt Exactly, typical Dave Ramsey call goes like “I have 300k in debt and make 20k a year and I’m thinking about buying a brand new car with a car loan. Should I make the down payment?”
@@BenFelixCSI His advice seems best for those in financial trouble or those just starting out. I actually hope you do a video on Suzie Orman who I believe is a much better mentor for the average person and those struggling.
@J J Yes on the first and no on the second except for my credit card that is automatically paid each month on or before the due date. Why not get the cash back points and added safety? I make sure my monthly CC statement is at least covered by the money in the checking account it is automatically withdrawn from so I never pay interest or late fees. Own my house, cars, and personal property outright.
Dave tells his viewers to pay off debt first, not to use debt again (except for a 15 yr mortgage), then start investing. Your point is moot. Secondly, Dave only recommends long term investing, not short term investing.
@@jamesb8510 I'm sure you haven't watched Dave's channel. He focuses on behavioral changes. Cutting up credit cards and using cash to purchase items activates pain centers in the brain. You'd know this if you watched his channel. This is the first step in his process that has lead to millions of people getting out of debt. He became a millionaire with debt in his 20s, lost it to bankruptcy, now has made multi millions since then without debt and is helping millions of others do the same.
The problem with Dave when it comes to investing is that he doesn’t look at funds on a tax-adjusted, risk-adjusted, or fee-adjusted basis. Very important to take into account if he’s going to start comparing returns
Great video, Ben. It's brave of you to take on the Dave Ramsey Marketing Machine, and I'm sure he'll either ignore this or dismiss it as he dismisses all the fact-based rebuttals to his investing advice, but it's a video that needed to be made. Two thumbs up. (I like Dave Ramsey's stuff in general, I just skip the religion and investing portions).
I love Dave Ramsey's advice on spending and debt, but I LOVE your clear-headed analysis, which backs up everything I've been taught about active management vs passive since I was in college. Thank you
I listen to Dave for my day to day expenses. He made me save 50% of my income. With the other 50%, I follow guys like Ben Felix that favour index funds. I just have to thanks both for providing information on the matter.
Wow, Ben, you're a brave brave man taking on someone head-to-head, but what you have said is undeniable and backed by evidence. I hope more people can watch this video and benefit from it.
Amazing video. I watch Dave Ramsey for the financial telenovela I get when his listeners call for advice. And that's it. My financial heart is yours and I only take seriously this wonderful channel. ❤
Such a solid video, I think we all agree it’d be interesting to look under the hood at Dave’s holdings. I think we can all also agree it’d be even more interesting to see what’s under the hood it your holdings. Would love to see a video on it!
I think this is one of your most important videos, and I thank you for making it. You may receive blowback from Ramsey fans, many of whom are similar to cultists. When you talk about wishful thinking impacting Ramsey's opinion on actively managed funds, I can't help but note a similarity with the fact that Ramsey is also overtly religious, which creates a similar wishful thinking bias and a similar disregard of well-researched facts. What you're saying here is extremely important and I hope everyone realizes it. Thanks again.
Hi Ben, "this is not a commentary on Dave Ramsey's character", the trajectory from the title of the vid + mentioning Dave Ramsey + the comments= will drive at a different outcome. Thanks for sharing the sources and also the dedication on your part
I am a huge Dave Ramsey fan but in agree with you and appreciate the video. Most of Dave’s advice is spot on but I never really agreed to his investing strategies. No desire to touch a Mutual Fund.
Taking on Dave Ramsey head-on takes some guts...and knowledge. The backlash can be considerable. And that's why I am subscribed to your channel and not his.
Dave realizes if you steadfastly follow his advice on escaping debt, there will be a lot of saved money floating around. He then reasons..."I'm gonna get me some of that!". Thru his 'arrangements' w/ providers. It really is that simple. And totally legal. Yes, it will cost you considerable returns over longer time frames, but at least you are helping him on the way to his first billion. So there's that.
Nice work Ben ! I've brought this topic up to some of my clients, but Ramsey has such a following that any criticism is met with rejection. Heck, Ramsey isn't even a Registered Advisor, or not even an insurance agent.
He sure sounds convincing, especially to anyone without the knowledge to understand how little sense the things he says make. It's really a shame he doesn't recommend index funds.
@@BenFelixCSI Yeah I love Dave, and really wish he'd recommend index funds. But he is too stubborn to admit to himself that they are better, much less to admit to the world. Overall, though, his system works for the great majority of people that use it. I consider it absolutely brilliant. I love your work, too, and am working my way through all of your videos. Thanks for what you do. :)
People come to him after digging themselves in a hole. Seldom people who have made sound financial decisions and understand investing strategies seek his advice. As with everything I think people should listen to different points of view and form a strategy that best suits their situation. Blindly following anyone is dangerous!
Cool analysis, I like the calm rationale you use and it lent you my ear, and it makes me want to look more into your claims and the articles you sighted. I think some of your data is a bit misleading as well, like stating that the 5 year pre and post look of funds at the top that only 0.7% stayed at the top after the post year mark. If you are looking at a fund that's at the top and in post 5 years it's in the upper middle, I think that's still a winner (This is an example, not siting actual data, but showing the lens of your study you sighted could have potential misleading results). Then, when you show a study that correlates low fees to higher returns, would that not also be true if he tells someone to look at a higher return with a 10 year history of high or better than average returns, would that fund not have a lower fee based on the article you stated? If not, then why have people he has interviewed and the like, have made hundreds of thousands and even millions doing what he suggests whether is was from his advice or their own research? Reasons I think you painted him in an unfair light: (I know you are not attacking his character) First, he put great emphasis on investing in general, even if it's not what he suggests. he states repeatedly that those who don't invest are the ones with the most to lose. He shows sites research stating the biggest contributing factor to those who don't grow wealth is those who don't invest in anything in the first place. Second, he always says to invest in what you know and to learn what you don't know in investing. he is always talking to people who would rather hide their money in a sock drawer or people who are fresh out of debt. Obviously if they learn of Low Index funds and think it could perform better, I don't think he is against that in general. Third, he only gives his advice on what he thinks you ought to do. Like him stating not to shack up before marriage and that certain trends will lead to divorce among a couple. It's his advice. He doesn't even source any of his investing based on theory, just the main thrust is to invest, and invest in what is known to the investor. Also, he is a proponent of Real Estate and knows the game well. that you can't really argue with, considering the properties and wealth he owns in the market. I think your research is well founded, but is more analytical than it is practical for most people. if you took his advice and invested in those types of stocks you would show returns. He is not looking to make investment junkies or researchers out of common folk who just want to live and build some wealth. I may or may not be wrong and Dave could a total fool on investing, but I don't think he is broke, so obviously he is seeing his returns on investments seems to make him want to give certain advice. Maybe call in and ask some questions on his advice on Index Funds and that you see research that low index funds yield better results and are better for investing. who knows he might agree with you, but that he doesn't know the that market well enough and therefore doesn't want to invest. It would make for an interesting discussion. Leaving a thumbs up in good faith, and bc you seem to know more than me and give good arguments that give me the curiosity to learn more!. Thanks for the Video! Average Joe
Dude I absolutely love your videos! Plus, you’re the only investment advice guy I’m subscribed to who does NOT ask for “hitting the subscribe button and clicking the bell” .... !!! Thankyou!
I love Dave Ramsey's "Total Money Makeover" but I didn't even know about his mutual fund recommendation. I think the reason he is popular is more that his book and method are primarily to give people with bad discipline much better discipline. After seeing those clips, I really hope he can come around to recommending passive funds instead of active. Thanks for the informative video!
I got his "Total Money Makeover" package about 10 years ago. DVDs, CDs & books. It's very valuable for people who are struggling and need to get out of debt and turn their life around or young people just starting out. His recommendations are a calorie restricted crash diet. Lose the weight, approach or reach your goals, then gain more by drifting back to your old habits. Second his idea that credit is evil. Sometimes there is little choice, such as your house needs a big repair, you get sick and there is a large copay, or even that you need a car repair new or used car. Driving an unsafe wreck is false economy. Not to mention his investment "strategy".
Thanks Tony. Dave could be so much better for the world if he kept everything else the same but started recommending advisers that recommend low-cost index funds. As I understand it, the SmartVestor Pros sell actively managed mutual funds. Dave could even work with them to change their business model. Everyone wins in that situation.
@@BenFelixCSI I can't help thinking he has a conflict of interest with his "prefered providers" who sell managed mutual funds, and that is why he keeps recommending them.
I went through the "Financial Peach University". Dave's advice for getting out of debt and personal finances is generally really solid. His investment advice, apart from "do it", sucks. Like Felix says, it's wrong in almost every way. This is a consensus among financial academics as well.
Love the videos, Ben. It's great that you use references to the primary literature to help us make evidence-based investments. I'd like to dive into this a bit more, but I don't have time to read the lit myself. Can you recommend one or two books that rely on the current investment literature to gain a little more of this type of investment advice?
I agree, the things that Dave Ramsey teaches about investing and credit cards, aren't the best advice. I like some of the baby steps but i don't agree with that entire theory.
Yeah. A lot of it is very sound advice but some of it seems to be directed at debt-a-holics. Telling people that have.$20K of credit card debt it is OK to use cards responsibly would be a bit like telling a recovering alcoholic that it’s OK to drink responsibly sometimes.
Request (and like this comment if you agree): Could you please do a similar video on the statements and tactics of Phil Town, as he really likes stock picking to create, in his words, "a low risk portfolio", but with quick a high dispersion rate. Great Video, good analysis on the statements that people like Dave Ramsey make on RUclips.
I was an online poker pro when that market was booming, and played a fair bit of live poker too. I saw so many people who talk like this. Result Orientation, Survivor Bias, dismissal of luck and a strong belief, even a desire to believe, that success is always down to expertise. I saw a lot of people dismiss the rake just like DR dismisses fees, saying "that doesn't matter to winners" in the same way. And I saw regression to the mean catch up with most of them.
The only reason Dave Ramsey recommends Mutual funds is because he makes money out of it. That's the typical rich guy who has enough money to live off for the next 200 years or longer but he wants to get richer and richer. He is putting his own interest before people's interests.
Thanks so much Ben, as a bogle head, I’v been questioning Dave and others who have radio shows and books. One of Ric Edelman’s first books talks about how bad it is investing in index funds. I not sure how many people take Cramer seriously, but come on people. Can U do a video on folios? Thanks again.
Your channel is one of the more cientific i have seen. Evidence base opinions. In your opinion, what are de best index funds to invest in 2020. Thank you
@Ben Felix Hi Ben! Thanks for your videos, they have been essential in my investing learning process. I greatly appreciate your concise style, research focus and the practical usefulness of your videos. I recently read The Black Swan by Nassim Nicolas Taleb and was very surprised at the investment advice Taleb presents in his book since it seems to be at odds with what I have been learning so far. My skeptic spider-sense tells me that it's very unlikely that he's right and everyone else wrong, but I'm still too much of a beginner to reject either notion. Do you believe you'd ever dedicate a video to him and his arguments like you did for Dave in this one? Thanks again and best wishes! :)
The funny thing about Taleb is that, like you mentioned, it might be very unlikely that he is right. His point, though, is that *if* he is right, everyone else is screwed, so maybe it's worth preparing for that unlikely event. His skepticism of models is also a bit extreme for my taste. Models are not reality, but they are still useful in decision making.
Ben, good on you for presenting a factual, evidence based refutal of this gentleman's investment advice. I've never heard of him before, but I can immediately tell he is not qualified to be dispensing advice the way he does. His methods are more applicable to the 80's and early 90's style of investing, but he doesn't seem to realise the investment scene is now completely different.
I thought I was the only person who thought his investing advice seemed odd and counter-productive to yours and others. I might try to use leverage when I'm starting out just to get a head start.
No I thought the same, even though his advice on debt is great. But I've read several books on investing so I see how people with less knowledge could be fooled.
Great vid, thanks. I was actually on a Dave Ramsey video when I found your channel, about a year ago now? I couldn't be more thankful as I would have blundered stock picking or something like that I'm pretty sure. Dave's strength is on the psychological aspect of finances. If you're in big trouble and you need humbling advice on how to get back on your feet, then he's a great resource. Once you're there with extra income to spare on investments, then your approach is the way to go. You deal with people with $1M in assets, he deals with $1M in liabilities ;)
Hi Ben, I saw on this other channel "Pensioncraft" IIRC the presenter arguing that the small cap premium was actually a masked low liquidity premium rather than a risk premium, eg for stocks that are difficult to trade away when you need the money, any comment on the plausibility of that?
A liquidity premium is a risk premium. I suggest this paper (or its conclusions at the least) to understand why this is not necessarily a bad thing. www.aqr.com/Insights/Research/Journal-Article/Fact-Fiction-and-the-Size-Effect _More broadly, should an investor overweight small stocks to enhance returns? Again, the answer depends on how it is done. Simply generically tilting toward small stocks is unlikely to provide much of a premium. However, our evidence suggests that the success of some other factors, such as value, among small-cap equities implies being overweight those firms will enhance returns, assuming the higher transaction costs of such a strategy permit it. Our research also shows the importance of controlling for quality in identifying a conditional size premium, the practical implications of which we and the industry are still exploring. In sum, we endorse a more nuanced view of the size effect informed by the currently available evidence and recommend rethinking how the notion of size is used to answer academic and practical questions._
@@BenFelixCSI Thanks, I did read the article it was quite fascinating. I appreciate your channel very much. Cheap index funds are unfortunatly less available in Denmark and Danish tax structure does mediate against a pure index fund strategy, but I'm trying to use them partially to compensate for lack of diversification in my current portfolio as availability and tax structure allows.
Thank you so so much for this... It makes me start to rethink my profolio and actually replace some of the "active" index funds of higher fees with lower but more faithful ones.
Great video Ben. My gripe is that people tend to follow those “influencers” or “gurus” due to fame or popularity. This is fine if it were for entertainment but not for finance. For the latter, one should follow the maths, the empirical evidence and logic, irrespective of how famous or entertaining the person is. That’s why I like your channel - it’s not blogging about ideas in a general statement but arguments backed by evidence.👍
Great video, I called him out on this a while back, he was polite or his assistant typing responses to his videos certainly was, such a shame that Dave is well meaning but talking a lot of BS too.
Hi Ben, first, thanks for the videos. You are quite possibly the best investing RUclipsr out there, and I can't thank you enough for sharing all this for free. You talk a lot about small cap value, and how DFA is one of the best when it comes to implementing that strategy, yet it is quite in accessible to the average retail investor. I have came across a new company called Avantis Investors, and they are founded by ex-dfa people, and offer products very similar to DFA, but in ETF form. Although their funds are somewhat new (just a few months old), I ran a correlation matrix comparing them and DFA's funds, and found that they are very similar (for example, U.S. small cap value funds of the 2 companies has a 0.97 daily correlerations). Do ypu think they can be a DFA alternative? Or are we better off with something else, such as slyv, rzv, or xsvm. Thanks!
Episode 48 rationalreminder.ca/podcast/2019/5/31/episode-48-current-investment-topics-market-efficiency-grossman-stiglitz-paradox-and-the-home-ownership-debate Also discussed quite a bit here ruclips.net/video/w_aOERmUWdA/видео.html
Great video, very useful for common people starting of with investing their money. Question. What do you think about NTSX, WisdomTree 90/60 U.S. Balanced Fund? It will likely outperform 60/40, 80/20 or even 100% S&P 500 over a period of time. It has low expense ratio 0.2%, and is tax efficient.
What do you think of George Gammon's channel? I like his educational and theoretical part of his content but disagree with some of the analytical parts.
Even if DR were to see the light on index investing (maybe he already has), he's in way too deep with his "smartvestor" program where he sends his followers over to financial advisors in their local area who sell mutual funds, in which I'm sure Dave gets a nice cut. I wonder if this system prevents Dave from truly giving unbiased investing advice.
Thank you so much for this video! Most of the personal finance bloggers/authors that I respect agree with you, but this video consolidates all that info in a respectful but painfully clear way. Thanks!
@@BenFelixCSI Rocket science is really simple, Newton's third law of physics."For every action there is an equal but opposite reaction." Rocket surgery is a lot more complicated.
Loved this video. Maybe it's a bit out of your wheelhouse but I was hoping your critique of Dave Ramsey's advice would be broader to include things like his insistence that one be debt free; that one should pay of one's house first; that one should pay off the family home even if the mortgage is fixed at a low rate and one has money borrowed at a higher rate on an investment duplex or other income-earning real estate. So much of Ramsey's investment and financial advice is outside of just the stock or bond market.
For further information along these lines I highly recommend this: *The Stupidest Thing You Can Do With Your Money (Ep. 297)* freakonomics.com/podcast/stupidest-money/
Do a video about all smart betas
thanks
Greatly appreciated! Thank you
Ben Felix Hey Ben, love the video. I have a question for you, or anyone else who would like to clear things up. I’m familiar with Dave Ramsey, and I was under the assumption that he suggested Roth 401k’s and tax-advantage programs given by employers. The book his company just came out with, Everyday Millionaires, showed that a lot of people build wealth using their company’s 401k plans and ones similar. Wouldn’t parking money in those be a good idea?
@@salmonteverde personal finance is personal. for most people, contributing the max to a regular 401k is better then a roth401k (in general, for most people)
this is the most polite 12-minute burn the internet has ever witnessed
kage “sorry Dave” and damn, what a burn
being polite always burns more
Probably because Ben is Canadian....
@@bengamedev1872 Yeah. Just a final "I am sorry" would have been the final nail on the coffin.
A Canadian style roast
This could have had a crazy click-bait title and could have been over-sensationalized to get more views. But instead Ben just tells it how it is. The more I watch his videos the more I realize that he values being honest and objective more than anything else. That's the main reason I love his videos and his podcast!
Thanks Sean.
Wait podcast? Wow definitely need to check that out.
Ben is sympathetic, but fair and honest. It’s why we all watch his videos.
I do give him credit on personal savings / spending habits & getting ppl focus to get out of debt... then I usually zone out when he talks about investing.
I started listening to him exactly because of his take on spending habits. He had some good points there. But then I saw him go ballistic when someone said he was advised by his finance adviser that he should invest his money instead of paying of a debt at 3%. He had nothing rational to say so he went on personal attacks for a good 5 minutes.
After that he calmed down a notch and said that the finance adviser was not taking into account the risks involved with having a debt... But, the thing is, Dave was not taking into account that he knew nothing of the financial stability of his caller and was not taking into account the opportunity costs of not investing.
I stopped watching him after that.
I zone out when he tells the average guy to buy a house for cash. Maybe that works in his hillbilly towns in Tennessee, but not sure how many have a spare million or two to buy a house in Toronto, NY, San Fran etc. I also laugh when he tells people to buy a car for $1000 and go make $3000 a month delivering pizzas. I don't know what will last longer, that junky car or the pizza, and I'm sure the average pizza driver is wondering where that money is too.
@@HamiltonRb You may zone out, but many people call his show saying they are now debt free or millionaires by using his advice.
@@Nepthu I'm not saying his advise is all bad as some of it is just common sense, and why people feel the need to call a radio host to ask for advise on some things is beyond me. Some of his advise is just wrong , in my opinion, especially regarding buying homes, some uses of credit, mutual funds and paying smallest to largest debts first instead of highest interest debt first. But, he serves a purpose I suppose for some people.
I'm thinking you're right I definitely agree debt is bad no argument there but I'm cautious about investing.
I’ve always thought Dave was more useful as a get out of debt coach rather than an investing coach.
The problem is that he looks at 0% car loan and 19% credit card debt the same.
@@MKPolovanec The real brilliance of Dave R. is that he focusses on psychology, and not math, deliberately. And that is why his system works so incredibly well for everyday people. That's why I love his system.
So, the debt snowball is mathematically stupid, but people smart. People smart is better than mathematically smart for the vast majority of people. That's his breakthrough, that's his paradigm shift, and it works like a charm!
Shen he is on the radio, he is very rigid, because his system works, and often when people deviate from it it fails.
But his coaches (I'm certified by his company, but don't work for his company), are way more flexible. We are talking with individuals, and I frankly deviate from pure Dave Ramsey all the time, as appropriate for a given individual, especially on investing.
As for his investment advice and claims, well I agree it isn't awesome, it's not really his strength, but it really isn't that bad either:
Oversimplified, it is to put 25% each into (a) large cap stocks, (b) mid-cap stocks, (c) small-cap stocks, (d) international stocks. Simple, but actually quite reasonable.
@@jerel42 he $hits on financial advisors all the time. He's a pompous a$$. He can coach people who spend money like crazy and racking up their credit cards but anything beyond that is rocket science for him.
@@MKPolovanec You are certainly entitled to your opinion about DR.
As for financial advisors. Many are good, and if you get a good one the data show that most people will do better, even paying the 1% fee, than they would do by themselves. I know that.
The problem is, and I also know this is true for a fact, is that lots of "financial advisors" are really just selling horrible products like annuities and universal life. They deserve to get shat upon. They truly suck.
@@jerel42 when caller asked him why financial advisor talked about the asset allocation mix, DR called him stupid and gave his recommendation as to where the caller should invest. Of course, DR does not understand what the KYC discovery is because he'll never have to explain to conservative investor why his/her portfolio dropped 30% and why you should not sell during market downturn. DR never talks about critial illness insurance and why is better to budget for those premiums rather than agressively repaying the 2% interest rate mortgage. As a matter of fact, he thinks that every single caller will remain healthy for the rest of the life. So many pitfalls in his so called "planning" and he has the audacity to call other people stupid? The guy is a joke.
These videos are brilliant. No hyperbole, no exaggeration, no tacky sales pitches. Just data and rational interpretation.
Keep it up!
Thanks!
Ben, you’re the real deal. I haven’t seen a video yet where a single claim went unsubstantiated with solid empirical evidence from experts. It’s the devotion to just calling things as they are that makes this so great, and it’s representative of what the world could always use more of: honesty.
This is more of a general comment on your videos: I really like how you briefly state your point at the beginning of the video. It makes your intent very clear from the start and it helps follow through the argumentation. I’m not an expert but I think that your reasoning always seems well-founded and you are able to articulate it clearly. Thanks a lot for your very helpful videos!! :-)
As a retired pastor I'm quite aware of Ramsey's work and contributions to not only the Christian community, but to all others. He provides tough medicine to those mired in debt, helping them to dig out and get on solid footing. Dave's remarks on investing puzzle me to the extreme. I've heard him ridicule index investing and passive investing. I concluded that while Dave has skills in personal debt management, he is a neophyte at investing. In fact, I was astonished at his ignorance and arrogance at the science of portfolio management.
Dave simplifies everything and dismisses solid research. While not everything is "rocket science," as Dave puts it, sound investing does require science, and excellent research. From Burton Malkiel to Charle Ellis, the verdict is in. Expenses matter, and they matter big time. Dave needs to read a bit, and he also needs to publicly reveal the names of his recommended funds.
Thank you Ben Felix for this balanced and insightful assessment of Ramsey's work.
Thanks, Sam!
He makes money on the investing part not the getting out of debt part. So it's about selling financial advice for future investors through associates. Passive investing advice doesn't get you a lot of commisions.
He won't reveal them due to laws in place if I remember right. People have done some fairly excellent guesses based on what he's said in the past and in reality he didn't beat the market, or barely did as a whole. I had one of his recommended SmartVestor's visit and try to put us into a 5.75% front load and an ER of around 0.90% that she claimed were the same funds Dave was invested in(American Funds). Then I asked her what her returns were over the past. She admitted 10% returns on average. I decided paying her another 1% for her fee wasn't worth that same return as I could get in the market on my own as I had just started researching index funds and going this alone.
Dave has mainly moved towards having a resistance in your way now when the market dips is the reason for this Financial Advisor. They're to keep you on path when you freak out. I'd rather have a group of friends on the same path that all hold one another accountable to our plans for free than pay an advisor 1% AUM.
Great comment! Dave pushes listeners to his endorsed local providers (ELPs). I assume there is a transaction here that benefits Dave. Dave is a smart man and knowing what Ben said about actively managed funds, Dave pushing the ELPs and actively managed funds seems shady to me.
If you google the 401k retirement options @ Ramsey Solutions you will find 90% of the funds he provides his employees plan with are American Funds and that Ramsey Solutions has a 4% match.
"It's not rocket surgery as Dave might say"- an all time subtle dig A+
Or "rocket appliance" as Ricky might say.
I keep going back looking for where Dave said “rocket surgery” ... 4:40 (science) 4:59 (science)
I got it!
What could be better than waking up on a sunny Saturday and seeing Ben Felix posted a new video? Auto-like :)
Easy answer: Ben Felix posted two videos!
Brain surgery
@@paulpuretz1388 "Rocket surgery..." very clever Ben.
The focus on research is excellent, and novel on RUclips. I'm an academic in math, and know how much effort it is to the bottom of the research, and draw good conclusions. Good on you, this is a valuable channel.
Ben - Absolutely love your well researched, data-driven, rational approach to this an all topics. I really appreciate your work. Know that you’re providing a great service to many of us.
The bottom line: does Dave Ramsey get credit for giving good investment advice?
The answer: better than he deserves!
Underrated comment of the year
Another great video. I love how you don't just spout your opinion like so many other investing channels, but cite the data and research from independent academic and industry sources. As John Adams said, "facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence". Thanks Ben!
Thanks for watching and for the kind words, Michael!
Yet another great Vid, thank you Ben! In one of Dave's rants, I caught another MAJOR issue that I see occurring in the world of financial planning. Some folks including Dave are promoting rates of return that are far too high when building a financial plan. This high expected return not only lets people off the hook for the required savings rate but also pushes most people out on the risk curve that they can stand in the good times but never endure during the bad. 12 - 14% future returns perhaps but why not plan for 6%, save more, easily endure the worst the market has to offer and perhaps enjoy the excess if you do happen to achieve that 12%.
I think this is an incredibly important point. I've used a very conservative 5% real return for my investment planning. Not only does it have all the advantages that you mentioned, when my actual return, for the current year or over the entire life time of the portfolio, works out to higher than 5% annualized, I feel like I won the lottery and that helps me stick to my investment plan.
Good point! When I first started out, Dave was kind of the “gateway drug” into investing. I used his 12% example and did calculations and tried to see what I could do to contribute the minimum while still getting 12% to get my end goal. After more extensive research, I found out that such advice is just completely false.
@@PapaCharlie9 I follow Ben Felix from Germany. Though i never heard of Dave Ramsey - and assume i don't have to ;-) every dataset Ben Felix provided can easily be used against a n y active investment. And when you talked about your conservative 5% real (!) return - I just read a paper about the last 100 Years of Stockmarket Investment: real returns on average: 5% - so it seems to me your goals are not conservative, but realistic 😊 indexfundinvestor.eu/2019/07/18/simple-portfolio-for-european-investors/
I like the way you back up your statements with academic research and facts not just opinion. I live in the UK and the thing which made me switch from 50/50 active/passive to 100% passive index funds was what happened to Neil Woodford's fund. He is a classic example of a star active manager who has crashed and burned. Just glad I didn't have any of my pension invested in any of his funds. I now have 90% in Vanguard funds and don't have trouble sleeping at night.
What a story that was. We haven't had anything like that in Canada any time recently. Woodford will go down in history as an example.
If any UK active investors are reading this and don't know who Neil Woodford is check out what happened to his fund last year.
It's so refreshing to see a channel having the courage to call out bad advice on other channels! Well said, Ben!
Dave Ramsey is good for one thing: Getting people who are poor to terrible with money out of debt. Once you start moving beyond those parameters you will quickly find that Dave's advice is at best middling, and for most passive investors... quite substandard.
Enjoyed this video and thank you for singling out Dave on his investment advice.
The video is informative with factual evidences based on academic researches, rather than based on biased personal experience.
This is what I have felt for a long time about Ramsey. Thank you, Ben, for this bold segment.
I'm always keeping my eye out for Canadian-based investing videos and I'm SO glad to have found yours. I'm currently going through your factor investing videos and trying to wrap my head around them. Just wanted to thank you so much for taking the time to create these!
Dave sell leads to his “investment advisers”...that is why he promote them...instead of just tell people to buy a low cost index fund and forget about it.
Exactly. You are correct.
Exactly. He’s a marketer. Not a financial advisor.
Exactly! Unfortunately, I initially fell for it. After a while, I got mad about losing 5.75% on front load fees then I left them!
Yep, he's running a business. Tell me something new.
Bingo! Always trace the money!
Thank you Ben. I completely agree. The target audience are those that are are not financially literate and lack investments acronym and specification
Exactly - those least-equipped to understand how bad the information is.
daniel tuitt Exactly, typical Dave Ramsey call goes like “I have 300k in debt and make 20k a year and I’m thinking about buying a brand new car with a car loan. Should I make the down payment?”
@@personalfinancedeclutter5803 lmao true😂
@@BenFelixCSI His advice seems best for those in financial trouble or those just starting out. I actually hope you do a video on Suzie Orman who I believe is a much better mentor for the average person and those struggling.
@J J Yes on the first and no on the second except for my credit card that is automatically paid each month on or before the due date. Why not get the cash back points and added safety? I make sure my monthly CC statement is at least covered by the money in the checking account it is automatically withdrawn from so I never pay interest or late fees. Own my house, cars, and personal property outright.
you are doing such a great public service. Informing people with data, peer reviewed information is so POWERFUL.
He recommends 100% equity for people who can’t seem to stay out of credit card debt. Surely they’ll behave when stocks take a dip...
Another good point.
That is a damn good point!😂
Dave tells his viewers to pay off debt first, not to use debt again (except for a 15 yr mortgage), then start investing. Your point is moot. Secondly, Dave only recommends long term investing, not short term investing.
Jesse K You really think behavioural problems with debt are unrelated to behavioural problems with investments?
@@jamesb8510 I'm sure you haven't watched Dave's channel. He focuses on behavioral changes. Cutting up credit cards and using cash to purchase items activates pain centers in the brain. You'd know this if you watched his channel. This is the first step in his process that has lead to millions of people getting out of debt. He became a millionaire with debt in his 20s, lost it to bankruptcy, now has made multi millions since then without debt and is helping millions of others do the same.
Your clear, concise, and polite explanation earned my subscription. Thanks for the great content.
The problem with Dave when it comes to investing is that he doesn’t look at funds on a tax-adjusted, risk-adjusted, or fee-adjusted basis. Very important to take into account if he’s going to start comparing returns
Great video, Ben. It's brave of you to take on the Dave Ramsey Marketing Machine, and I'm sure he'll either ignore this or dismiss it as he dismisses all the fact-based rebuttals to his investing advice, but it's a video that needed to be made. Two thumbs up.
(I like Dave Ramsey's stuff in general, I just skip the religion and investing portions).
10/10 thanks Ben, I couldn’t agree more with what was stated here.
I love Dave Ramsey's advice on spending and debt, but I LOVE your clear-headed analysis, which backs up everything I've been taught about active management vs passive since I was in college. Thank you
Thanks!
Yah no thanks mr Ramsey. Control what you can my dudes-taxes and fees. Returns are speculative. Good grief.
Agreed!
I listen to Dave for my day to day expenses. He made me save 50% of my income. With the other 50%, I follow guys like Ben Felix that favour index funds.
I just have to thanks both for providing information on the matter.
Wow, Ben, you're a brave brave man taking on someone head-to-head, but what you have said is undeniable and backed by evidence. I hope more people can watch this video and benefit from it.
Amazing video. I watch Dave Ramsey for the financial telenovela I get when his listeners call for advice. And that's it. My financial heart is yours and I only take seriously this wonderful channel. ❤
Such a solid video, I think we all agree it’d be interesting to look under the hood at Dave’s holdings. I think we can all also agree it’d be even more interesting to see what’s under the hood it your holdings. Would love to see a video on it!
Always thought the same and wondered why people actively
Push mutual funds over index. Thanks Ben!
I think this is one of your most important videos, and I thank you for making it. You may receive blowback from Ramsey fans, many of whom are similar to cultists. When you talk about wishful thinking impacting Ramsey's opinion on actively managed funds, I can't help but note a similarity with the fact that Ramsey is also overtly religious, which creates a similar wishful thinking bias and a similar disregard of well-researched facts. What you're saying here is extremely important and I hope everyone realizes it. Thanks again.
Good points. Thanks!
Thanks for bringing transparency to the table and providing good quality financial advice. This stuff is gold.
Very interesting video - glad to see you share your breakdown of Dave.
Thanks!
Hi Ben, "this is not a commentary on Dave Ramsey's character", the trajectory from the title of the vid + mentioning Dave Ramsey + the comments= will drive at a different outcome. Thanks for sharing the sources and also the dedication on your part
I kind of like how Dave tells it how (he thinks) it is. It's just unfortunate that his remarks are so at odds with the data.
Soooo glad someone finally called out Dinosaur Dave and his caveman investing methods!
we need someone is wise to tell us the truth. Thank you for your hard work to educate us!!!!!!
Another very well researched and put together video. Big fan of your work!
Thank you!
I am a huge Dave Ramsey fan but in agree with you and appreciate the video. Most of Dave’s advice is spot on but I never really agreed to his investing strategies. No desire to touch a Mutual Fund.
Taking on Dave Ramsey head-on takes some guts...and knowledge. The backlash can be considerable. And that's why I am subscribed to your channel and not his.
I'm subbed to both. Different purposes, different value.
Actually Ramsey strategies are getting questioned all the time by serious professionals. That said - I love Ben :-)
Love your emphasis on peer reviewed studies as opposed to conventional wisdom, personal experience, or anecdotal evidence. Very rare to see.
Dave realizes if you steadfastly follow his advice on escaping debt, there will be a lot of saved money floating around. He then reasons..."I'm gonna get me some of that!". Thru his 'arrangements' w/ providers. It really is that simple. And totally legal. Yes, it will cost you considerable returns over longer time frames, but at least you are helping him on the way to his first billion. So there's that.
Nice work Ben ! I've brought this topic up to some of my clients, but Ramsey has such a following that any criticism is met with rejection. Heck, Ramsey isn't even a Registered Advisor, or not even an insurance agent.
He sure sounds convincing, especially to anyone without the knowledge to understand how little sense the things he says make. It's really a shame he doesn't recommend index funds.
@@BenFelixCSI Yeah I love Dave, and really wish he'd recommend index funds. But he is too stubborn to admit to himself that they are better, much less to admit to the world. Overall, though, his system works for the great majority of people that use it. I consider it absolutely brilliant.
I love your work, too, and am working my way through all of your videos. Thanks for what you do. :)
People come to him after digging themselves in a hole. Seldom people who have made sound financial decisions and understand investing strategies seek his advice. As with everything I think people should listen to different points of view and form a strategy that best suits their situation. Blindly following anyone is dangerous!
The best comment here.
Thanks Bro - I LOVE your straight forward, honest, fact-based videos.
'The last thing I look at is expenses' 😂😂😂
Just wish I were DR's financial advisor so I could teach him.
I just can't understand why you don't get more attention. Your arguments hit hard as rocks.
Thanks! Hopefully the message is getting across to the right people.
Fund investment is what I always have ignored when watching Dave's otherwise entertaining and useful show.
Thank you Ben . i was getting tired of fighting on Dave Ramsey's Comment section. Now i can just show them this.
Cool analysis, I like the calm rationale you use and it lent you my ear, and it makes me want to look more into your claims and the articles you sighted.
I think some of your data is a bit misleading as well, like stating that the 5 year pre and post look of funds at the top that only 0.7% stayed at the top after the post year mark. If you are looking at a fund that's at the top and in post 5 years it's in the upper middle, I think that's still a winner (This is an example, not siting actual data, but showing the lens of your study you sighted could have potential misleading results). Then, when you show a study that correlates low fees to higher returns, would that not also be true if he tells someone to look at a higher return with a 10 year history of high or better than average returns, would that fund not have a lower fee based on the article you stated? If not, then why have people he has interviewed and the like, have made hundreds of thousands and even millions doing what he suggests whether is was from his advice or their own research?
Reasons I think you painted him in an unfair light: (I know you are not attacking his character)
First, he put great emphasis on investing in general, even if it's not what he suggests. he states repeatedly that those who don't invest are the ones with the most to lose. He shows sites research stating the biggest contributing factor to those who don't grow wealth is those who don't invest in anything in the first place.
Second, he always says to invest in what you know and to learn what you don't know in investing. he is always talking to people who would rather hide their money in a sock drawer or people who are fresh out of debt. Obviously if they learn of Low Index funds and think it could perform better, I don't think he is against that in general.
Third, he only gives his advice on what he thinks you ought to do. Like him stating not to shack up before marriage and that certain trends will lead to divorce among a couple. It's his advice. He doesn't even source any of his investing based on theory, just the main thrust is to invest, and invest in what is known to the investor.
Also, he is a proponent of Real Estate and knows the game well. that you can't really argue with, considering the properties and wealth he owns in the market.
I think your research is well founded, but is more analytical than it is practical for most people. if you took his advice and invested in those types of stocks you would show returns. He is not looking to make investment junkies or researchers out of common folk who just want to live and build some wealth. I may or may not be wrong and Dave could a total fool on investing, but I don't think he is broke, so obviously he is seeing his returns on investments seems to make him want to give certain advice.
Maybe call in and ask some questions on his advice on Index Funds and that you see research that low index funds yield better results and are better for investing. who knows he might agree with you, but that he doesn't know the that market well enough and therefore doesn't want to invest. It would make for an interesting discussion.
Leaving a thumbs up in good faith, and bc you seem to know more than me and give good arguments that give me the curiosity to learn more!.
Thanks for the Video!
Average Joe
Dude I absolutely love your videos! Plus, you’re the only investment advice guy I’m subscribed to who does NOT ask for “hitting the subscribe button and clicking the bell” .... !!! Thankyou!
I love Dave Ramsey's "Total Money Makeover" but I didn't even know about his mutual fund recommendation. I think the reason he is popular is more that his book and method are primarily to give people with bad discipline much better discipline. After seeing those clips, I really hope he can come around to recommending passive funds instead of active. Thanks for the informative video!
I got his "Total Money Makeover" package about 10 years ago. DVDs, CDs & books. It's very valuable for people who are struggling and need to get out of debt and turn their life around or young people just starting out. His recommendations are a calorie restricted crash diet. Lose the weight, approach or reach your goals, then gain more by drifting back to your old habits. Second his idea that credit is evil. Sometimes there is little choice, such as your house needs a big repair, you get sick and there is a large copay, or even that you need a car repair new or used car. Driving an unsafe wreck is false economy. Not to mention his investment "strategy".
Thanks Tony. Dave could be so much better for the world if he kept everything else the same but started recommending advisers that recommend low-cost index funds. As I understand it, the SmartVestor Pros sell actively managed mutual funds. Dave could even work with them to change their business model. Everyone wins in that situation.
@@BenFelixCSI I can't help thinking he has a conflict of interest with his "prefered providers" who sell managed mutual funds, and that is why he keeps recommending them.
I went through the "Financial Peach University". Dave's advice for getting out of debt and personal finances is generally really solid.
His investment advice, apart from "do it", sucks. Like Felix says, it's wrong in almost every way. This is a consensus among financial academics as well.
@@thenextvinnie Are you still doing strict budgeting?
This is the best investing channel Ive fond
Ben, what is your take on the investment advice or theories proffered by the “Rich, Dad, Poor Dad” guy?
please cover this^^^^
This needs more upvotes to get their attention
I won't do another video like this one for that guy, but the short answer is that I don't agree with his investing advice.
@@BenFelixCSI Neither do I.
His name is Robert Kiyosaki and his claim to fame doesn't have anything to do with investing advice.
Thank you for a reasonable title and presentation!
Love the videos, Ben. It's great that you use references to the primary literature to help us make evidence-based investments. I'd like to dive into this a bit more, but I don't have time to read the lit myself. Can you recommend one or two books that rely on the current investment literature to gain a little more of this type of investment advice?
Anything from Larry Swedroe draws from similar research and is very well written.
Brilliant Ben Felix! Supporting his logic statements with researches with references.
I agree, the things that Dave Ramsey teaches about investing and credit cards, aren't the best advice. I like some of the baby steps but i don't agree with that entire theory.
Yeah. A lot of it is very sound advice but some of it seems to be directed at debt-a-holics. Telling people that have.$20K of credit card debt it is OK to use cards responsibly would be a bit like telling a recovering alcoholic that it’s OK to drink responsibly sometimes.
@@agusal4487 yes 100% agree
Thanks Ben. You confirmed what I thought about Dave Ramsey’s advice. I am glad I found your channel..
Request (and like this comment if you agree): Could you please do a similar video on the statements and tactics of Phil Town, as he really likes stock picking to create, in his words, "a low risk portfolio", but with quick a high dispersion rate.
Great Video, good analysis on the statements that people like Dave Ramsey make on RUclips.
Thanks! I probably won't do another video like this (talking about another person's advice) for a while, but Phil could be up next when/if I do.
Ben Felix that would be great! 👍🏼
@@BenFelixCSI DO IT!!!! Phil! PHIL!
I was an online poker pro when that market was booming, and played a fair bit of live poker too. I saw so many people who talk like this. Result Orientation, Survivor Bias, dismissal of luck and a strong belief, even a desire to believe, that success is always down to expertise. I saw a lot of people dismiss the rake just like DR dismisses fees, saying "that doesn't matter to winners" in the same way. And I saw regression to the mean catch up with most of them.
The only reason Dave Ramsey recommends Mutual funds is because he makes money out of it. That's the typical rich guy who has enough money to live off for the next 200 years or longer but he wants to get richer and richer. He is putting his own interest before people's interests.
My takeaway, low cost, index funds, are best for most people. Ben is the bomb!
Thanks so much Ben, as a bogle head, I’v been questioning Dave and others who have radio shows and books. One of Ric Edelman’s first books talks about how bad it is investing in index funds. I not sure how many people take Cramer seriously, but come on people. Can U do a video on folios? Thanks again.
"Give a man a fish, he eats for a day. Teach a man to trade stocks and he can afford to buy his fish at Whole Foods" - Jim Cramer
This content is phenomenal. Well done. This data is represented highly in the popular financial book, Random Walk Down Wall Street.
Ramsey is great for people with a negative net worth. Once it is positive, though, get your advice from an expert like Felix, not a talk show host.
The channel is really well done congrats. No-nonsense info backed by research.
👏
"past performance is not a reliable indicator of future performance"
Great content and argument! Great visualization! Great Channel overall! Keep it up Ben!
“Rocket surgery” - Ben Felix 2020
Sheamus Addy
“Rocket surgery” - Scott Manley in most of his videos
The first “Ben Felix Mistake”
Your channel is one of the more cientific i have seen. Evidence base opinions. In your opinion, what are de best index funds to invest in 2020. Thank you
@Ben Felix Hi Ben! Thanks for your videos, they have been essential in my investing learning process. I greatly appreciate your concise style, research focus and the practical usefulness of your videos. I recently read The Black Swan by Nassim Nicolas Taleb and was very surprised at the investment advice Taleb presents in his book since it seems to be at odds with what I have been learning so far. My skeptic spider-sense tells me that it's very unlikely that he's right and everyone else wrong, but I'm still too much of a beginner to reject either notion. Do you believe you'd ever dedicate a video to him and his arguments like you did for Dave in this one? Thanks again and best wishes! :)
The funny thing about Taleb is that, like you mentioned, it might be very unlikely that he is right. His point, though, is that *if* he is right, everyone else is screwed, so maybe it's worth preparing for that unlikely event. His skepticism of models is also a bit extreme for my taste. Models are not reality, but they are still useful in decision making.
I AM SO GRATEFUL FOR THIS VIDEO.
Ben, good on you for presenting a factual, evidence based refutal of this gentleman's investment advice. I've never heard of him before, but I can immediately tell he is not qualified to be dispensing advice the way he does. His methods are more applicable to the 80's and early 90's style of investing, but he doesn't seem to realise the investment scene is now completely different.
I thought I was the only person who thought his investing advice seemed odd and counter-productive to yours and others. I might try to use leverage when I'm starting out just to get a head start.
No I thought the same, even though his advice on debt is great. But I've read several books on investing so I see how people with less knowledge could be fooled.
Ah, so thankful for this. I totally agree. His advice on investing is absolutely unhelpful.
I first know about Dave Ramsey from Graham Stephen and now im hearing him from you hahah
Great vid, thanks. I was actually on a Dave Ramsey video when I found your channel, about a year ago now? I couldn't be more thankful as I would have blundered stock picking or something like that I'm pretty sure. Dave's strength is on the psychological aspect of finances. If you're in big trouble and you need humbling advice on how to get back on your feet, then he's a great resource. Once you're there with extra income to spare on investments, then your approach is the way to go.
You deal with people with $1M in assets, he deals with $1M in liabilities ;)
Hi Ben, I saw on this other channel "Pensioncraft" IIRC the presenter arguing that the small cap premium was actually a masked low liquidity premium rather than a risk premium, eg for stocks that are difficult to trade away when you need the money, any comment on the plausibility of that?
A liquidity premium is a risk premium. I suggest this paper (or its conclusions at the least) to understand why this is not necessarily a bad thing. www.aqr.com/Insights/Research/Journal-Article/Fact-Fiction-and-the-Size-Effect
_More broadly, should an investor overweight small stocks to enhance returns? Again, the answer depends on how it is done. Simply generically tilting toward small stocks is unlikely to provide much of a premium. However, our evidence suggests that the success of some other factors, such as value, among small-cap equities implies being overweight those firms will enhance returns, assuming the higher transaction costs of such a strategy permit it. Our research also shows the importance of controlling for quality in identifying a conditional size premium, the practical implications of which we and the industry are still exploring. In sum, we endorse a more nuanced view of the size effect informed by the currently available evidence and recommend rethinking how the notion of size is used to answer academic and practical questions._
@@BenFelixCSI Thanks, I did read the article it was quite fascinating.
I appreciate your channel very much. Cheap index funds are unfortunatly less available in Denmark and Danish tax structure does mediate against a pure index fund strategy, but I'm trying to use them partially to compensate for lack of diversification in my current portfolio as availability and tax structure allows.
Thank you so so much for this... It makes me start to rethink my profolio and actually replace some of the "active" index funds of higher fees with lower but more faithful ones.
That's great! You are welcome.
Can you do a video on multi factor Indexes like the msci world dmf or others?
Eventually yes.
@@BenFelixCSI Just because I can't get any dimensional funds and also am from Europe, which means I have even less ETFs to pick from:(
@@BenFelixCSI I love your vids♥️
Yeah i am invested too in the Ishares Msci World diversified Multifactor ETF would be nice to hear your opinion on that Ben!
@@Crunscher German? Dein Name hört sich deutsch an😅
Great video Ben. My gripe is that people tend to follow those “influencers” or “gurus” due to fame or popularity. This is fine if it were for entertainment but not for finance. For the latter, one should follow the maths, the empirical evidence and logic, irrespective of how famous or entertaining the person is. That’s why I like your channel - it’s not blogging about ideas in a general statement but arguments backed by evidence.👍
Thank you!
Great video, I called him out on this a while back, he was polite or his assistant typing responses to his videos certainly was, such a shame that Dave is well meaning but talking a lot of BS too.
Hi Ben, first, thanks for the videos. You are quite possibly the best investing RUclipsr out there, and I can't thank you enough for sharing all this for free. You talk a lot about small cap value, and how DFA is one of the best when it comes to implementing that strategy, yet it is quite in accessible to the average retail investor. I have came across a new company called Avantis Investors, and they are founded by ex-dfa people, and offer products very similar to DFA, but in ETF form. Although their funds are somewhat new (just a few months old), I ran a correlation matrix comparing them and DFA's funds, and found that they are very similar (for example, U.S. small cap value funds of the 2 companies has a 0.97 daily correlerations). Do ypu think they can be a DFA alternative? Or are we better off with something else, such as slyv, rzv, or xsvm. Thanks!
What do you think about the cape shiller ratio as an indicator of future performance?
Flame Phoenix Ben speaks to cape as an indicator in his Rational Reminder podcast. Tl;dr it’s not a great indicator.
@@robhetmanski8523
Which episode?
Episode 48 rationalreminder.ca/podcast/2019/5/31/episode-48-current-investment-topics-market-efficiency-grossman-stiglitz-paradox-and-the-home-ownership-debate
Also discussed quite a bit here ruclips.net/video/w_aOERmUWdA/видео.html
Great video, very useful for common people starting of with investing their money. Question. What do you think about NTSX, WisdomTree 90/60 U.S. Balanced Fund?
It will likely outperform 60/40, 80/20 or even 100% S&P 500 over a period of time.
It has low expense ratio 0.2%, and is tax efficient.
What do you think of George Gammon's channel? I like his educational and theoretical part of his content but disagree with some of the analytical parts.
I'd never heard of him. If his videos have as many CAPITAL LETTERS as his About page I don't know if I'd be into it.
Thank you...i never knew about the 4% rule...but i always knew people should live with in their means...
Dave has great anti-stupid advice, but terrible smart advice
Right. He tells you how not to make bad decisions, but he doesn't get you to making really smart calls.
Another AMAZING video Ben, best on RUclips.
Even if DR were to see the light on index investing (maybe he already has), he's in way too deep with his "smartvestor" program where he sends his followers over to financial advisors in their local area who sell mutual funds, in which I'm sure Dave gets a nice cut. I wonder if this system prevents Dave from truly giving unbiased investing advice.
Thank you so much for this video! Most of the personal finance bloggers/authors that I respect agree with you, but this video consolidates all that info in a respectful but painfully clear way. Thanks!
That's great! I'm glad it was helpful.
Ben, what is rocket surgery?
You'll have to ask Dave.
@@BenFelixCSI Rocket science is really simple, Newton's third law of physics."For every action there is an equal but opposite reaction." Rocket surgery is a lot more complicated.
Loved this video. Maybe it's a bit out of your wheelhouse but I was hoping your critique of Dave Ramsey's advice would be broader to include things like his insistence that one be debt free; that one should pay of one's house first; that one should pay off the family home even if the mortgage is fixed at a low rate and one has money borrowed at a higher rate on an investment duplex or other income-earning real estate. So much of Ramsey's investment and financial advice is outside of just the stock or bond market.