The Dave Ramsey Portfolio Implemented With Low-Cost Index funds

Рет қаралды 37,891

Күн бұрын

Dave Ramsey has recommended same all stock portfolio for years. It consists of what he calls growth and income, growth, aggressive growth and international stock funds. In this video we attempt to decipher what Dave means by these terms, and then we test the portfolio's performance using both asset classes and specific index funds.
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While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom (amzn.to/3by10EE)
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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.
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Пікірлер: 120

@geoffgordon9569 Жыл бұрын

I have tried watching his videos. Each time I get a feeling Mr. Ramsey feels he's entitled to put down any objections to his views. He always has the right answer.

@dmoon9037 Жыл бұрын

Apt characterization. Look at it from DR’s perspective: objecting to everything but his own views is the Easy Button(tm). Easy money, easy empire building. On occasion, I find his material amusing, worth a few minutes of entertainment. Nothing grossly off, but also nothing appropriate to my circumstances. A mass market player.

@JosephDickson Жыл бұрын

I had to block recommendations from his channels. KZfaq keeps trying to shove DRS into my feed.

@Omar-et7sb Жыл бұрын

That’s a good characterization. He is very idiosyncratic and so are his hardcore followers. He is also flat out incorrect in some of his stated views about returns (he doesn’t use CAGR). All that said I still enjoy some of his shows

@Gary-ib8dz Жыл бұрын

And his answers are always the same. The specifics of someone's situation never really matters.

@dmoon9037 Жыл бұрын

@@Gary-ib8dz true. His answers to callers are never actually advice, as one cannot legally give advice on the basis of a 30 second call-in question, thus all the disclaimers and his referral to paid advisors. I imagine there are a flotilla of attorneys at DR enterprises who cover down on such advisory liabilities.

@larrytruslow6304 Жыл бұрын

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.

@critterdude311 Жыл бұрын

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.

@mlj_the_shield Жыл бұрын

This video is amazing. First time I've ever seen someone actually show all these steps including the funds to select.

@manubisbee1 4 ай бұрын

Agreed!!!!

@Crockerfeller Жыл бұрын

Thank your for your work on this type of content! Love your channel!

@gsrobertson Жыл бұрын

Absolutely love the portfolio 'reviews' and walkthrough. Thanks Rob

@jasonhobbs2405 Жыл бұрын

Thanks again, Rob! I never understood which investments Dave Ramsey was recommending until now. Seems more reasonable now.

@plastelina_ytb Жыл бұрын

Same for me... this now makes more sense lol

@dianediliberto1876 Жыл бұрын

Thank you...another great video.

@snort455 Жыл бұрын

Thanks for the info. I learn a lot from watching your videos.

@todd7114 Жыл бұрын

Brilliant commentary. Your content is so straightforward and helpful. Really appreciate the value you bring.

@joefloyd6606 Жыл бұрын

Thanks Rob for sharing such great insight !

@manubisbee1 4 ай бұрын

Thanks for the recap. Best video I’ve seen on the Dave Ramsey asset class ❤

@9rows Жыл бұрын

Thanks Rob. Good summary.

@jeannettedrown7687 Жыл бұрын

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.

@SVaya2018 Жыл бұрын

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!!

@chaseramos4865 Жыл бұрын

Thank Rob, I'm 20 in college currently setting up my retirement account. This video was very helpful thank you!

@WayneMarcy Жыл бұрын

That was great Thanks for taking the time to put this together Rob. I love the comment can you stick to it.

@bertsadventures9974 Жыл бұрын

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.

@jeffb.2469 Жыл бұрын

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.

@mtgwdefender Жыл бұрын

I agree with you 110%

@patricksapp8034 Жыл бұрын

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.

@jeffb.2469 Жыл бұрын

@@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.

@jmc8076 11 ай бұрын

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.

@ebowalker571 2 ай бұрын

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

@Quincyq15 Жыл бұрын

That would be an interesting interview by Rob

@RRAREBEAR Жыл бұрын

Great video. Thank you.

@eddiealfano Жыл бұрын

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!

@Omar-et7sb Жыл бұрын

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.

@acrobizer1238 Жыл бұрын

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.

@jimkaratassos Ай бұрын

I love the painting behind you.

@Gary-ib8dz Жыл бұрын

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.

@skbenwa Жыл бұрын

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.

@AUtiger1320 Жыл бұрын

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.

@HokieAlum08 Жыл бұрын

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.

@OnCashFlow Жыл бұрын

Interesting how closely that portfolio resembles the simple 2-fund portfolio! I'll stick with keeping it simple though! :)

@personalfinance7879 Жыл бұрын

5:21 % allocation: 12.5% for mid and large cap growth for Ramsey's "Growth" category

@stjackso17 11 ай бұрын

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!

@joshford7828 Жыл бұрын

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.

@lookatyou8782 Жыл бұрын

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.

@joshford7828 Жыл бұрын

I would enjoy seeing this as well. I've thought about moving towards it closer to retirement.

@alphamale2363 Жыл бұрын

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.

@missouri6014 Жыл бұрын

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 KZfaq episode

@missouri6014 Жыл бұрын

@@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

@pallavivj Жыл бұрын

@@merrymerkin - thats too long of timeframe. what if we look last 30-40 years

@jmc8076 10 ай бұрын

I read sml cap (value) stocks since 1926 are one of the better ROI assets after bear markets.

@AboundHomestead 6 ай бұрын

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!

@baileymclean8186 Жыл бұрын

Solid video, interesting companies as well that I will have to look into.. As a value investor, I am certainly using this time to double down on high quality, long-term value investments. Once in a blue moon type deal where we get these big blue chips on such steep discounts!. Also my $400,000 portfolio is down by approximately 35%, any recommendations to scale up my returns before will be highly appreciated.

@sebastianzhikov8842 Жыл бұрын

You have to get a Investment-Adviser/broker to aid you diversify your portfolios to include commodities, inflation-indexed bonds and stocks of companies with solid cash flows, as opposed to growth stocks where valuations were based on future potential earnings,

@lisaollie4594 Жыл бұрын

@@sebastianzhikov8842 Very true, I diversified my $120K portfolio across multiple market with the aid of an Investment Advisor & I have been able to generate over $450k in net profit across high dividend yield stocks, ETF and bonds in few months.

@baileymclean8186 Жыл бұрын

How can one find a verifiable Investment Adviser? I wouldn't mind looking up the pundit that helped you. I will be retiring in two years and I might need some management on my much larger portfolio. Don't want to take any chances.

@sebastianzhikov8842 Жыл бұрын

@@baileymclean8186 You can do your research and be on the lookout for one with intelligent strategies who'll help your portfolio maintain an unwavering and a progressive growth. Or you can lookup Theresa Mary Chamblee who is my Investment Advisor. She has the Flexibility & Expertise to Meet Your Needs. Verify her yourself doing your due diligence after which you can use her services if you want to.

@baileymclean8186 Жыл бұрын

@@sebastianzhikov8842 This recommendation literally came at the right time, I dipped by $11k in stocks this week alone.. its crazy! I just looked up Theresa online and researched her accreditation. She seem very proficient & I wrote her detailing my Fin-market goals and scheduled a call.

@smslasher9045 Жыл бұрын

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.

@bartz4439 Жыл бұрын

OFF TOPIC: I am searching and searching... does anyone have link to website with list of all VTI holdings? Yes, thats right :P Preferred tickers.

@tylerowens2192 Жыл бұрын

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?

@ronschuetz4566 Жыл бұрын

Can you show us your current Vanguard portfolio in percentages and why. Thanks

@0007tad 11 ай бұрын

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....👍

@Bananamaltastic Жыл бұрын

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.

@aaront936 Жыл бұрын

He advocates them because that's what his "smart vestors" sells. That's the only reason he pushes actively managed funds.

@Quincyq15 Жыл бұрын

He also owns the s&p 500

@bartz4439 Жыл бұрын

true... tragic long term advice... i dont know why he is so popular

@ZCAR355 Жыл бұрын

@@bartz4439 Because he doesn’t change with the wind.

@bartz4439 Жыл бұрын

@@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

@QuadTap 5 ай бұрын

90/10 TOTAL US STOCK + TOTAL US BOND outperformed the DR portfolio

@stephenblessed92 Ай бұрын

I love it that youtube FORCED me to disable my adblocker. Now I get to waste time watching ads for things that I have no interest in and am NEVER going to buy. SO MUCH BETTER!!

@tedtassos3224 Жыл бұрын

Great examination! I've always found Ramsey to be kind of an ass. But maybe I need to look past that and reconsider. Thanks!

@davidchi7279 Жыл бұрын

Reconsider his portfolio, sure...but not the is an ass

@kirkafur3 2 ай бұрын

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.

@DK-pr9ny Жыл бұрын

Dump the international too..

@frameofmind8800 Жыл бұрын

I think the growth and income fund is a large cap blended fund and not a large cap value

@bencarter7839 Жыл бұрын

Rob, doesn't Dave claim 12% average annual returns whereas your CAGR was 10.x%? Also, isn't he using American funds?

@alanyoung159 Жыл бұрын

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.

@bencarter7839 Жыл бұрын

@@alanyoung159Yes, I have to wonder whether the 12% Dave states is after the fees/loads. That's kind of important!

@Putseller100 Жыл бұрын

I hare the way Dave describes funds, he confuses beginners. It’s very simple break them into size, large cap, medium cap and small cap. Then one more breakdown of three more choices, growth, blend and value. This growth and income and aggressive growth is a bunch of crap. For instance the sp500 is a large cap blend, or his so called aggressive growth is simple a small cap blend or growth. I have no idea why Dave creates his own terms when there exist easy to understand terms

@borisgurevich3237 Жыл бұрын

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

@joeb1522 Жыл бұрын

I think Dave doesn't like bonds because he believes neither individuals or companies should have any debt.

@rob_berger Жыл бұрын

I never thought about it from that perspective.

@noreenn6976 Жыл бұрын

I bet it has to do with the low returns

@epic594 Жыл бұрын

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

@alanyoung159 Жыл бұрын

@@epic594 he probably doesn't recommend bonds because his active stock mutual funds probably make him more money

@billjosh12345 Жыл бұрын

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.

@coderider3022 29 күн бұрын

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.

@borisgurevich3237 Жыл бұрын

Anyone who does not believe in fixed income in a portfolio for everyone has no credibility.

@thynnus2422 Жыл бұрын

@@JaredHoutsma I think even his advice for getting out of debt is bad. He recommends paying off low interest debt over getting an employer match or contributing to a Roth IRA or HSA. The opportunity cost could be huge depending on how long people put off investing and how long they have until they need the money.

@ralphparker Жыл бұрын

For the US proportions, Use Half VTI and Half VB and get a the 1/3rd Large Cap, 1/3 Mid and 1/3 Small. Plus your expenses will be 0.04%. Non US market seems to drag the portfolio but it does help the std dev. You don't like more than 10% small cap but consider that I hope to use my portfolio for more than 30 years. However, as a Christian, I'm anticipating the Rapture this year too.

@pensacola321 Жыл бұрын

Indeed get out or debt, and invest. Other than that Ramsey is a grifter and should be avoided...

@jasonhobbs2405 Жыл бұрын

You say 10% to small cap is your limit, but didn’t you say VTI is 9%? That’s not much of a tilt. You would not like my portfolio. 20% domestic small cap value. 15% international small cap value.

@rob_berger Жыл бұрын

So by 10%, I mean in addition to any tilt my overall portfolio already has. So if I used a total market index, my overall small cap exposure would be greater than 10%.

@gieb6428 Жыл бұрын

I could not handle that 35% at any age

@alexkokay1732 7 ай бұрын

@rob_berger Which vanguard funds do you suggest?

@russellhunter8460 16 күн бұрын

Growth and income Jepq Growth Spmo Aggressive growth Xmmo International... How about no and do something safer Svol Reinvest all dividends. When ready to retire just move, dividends to bank account. Easy cheesy