At the end of the day though, whether you like index funds or mutual funds, just invest, and do it regularly. If you don’t invest at all, you’ll get nothing in return.

You're guilty of selection bias. You're only considering funds that are still alive, so ignoring all the ones that have failed. Obviously, failed funds are going to be the worst performers. Problem is that nobody can predict reliably which funds are going to be good or bad performers.

Vanguard S & P 500 index fund is best bet.

Dave loves to talk up mutual funds, but never mentions any of the actual costs of his mutual funds which I am willing to guarantee are much much higher then the costs of an S&P 500 index. costs and expenses will eat away at your earnings fast, Think about it, you have to pay a front load of about 5.75% for mutual funds, plus adviser fees, with a much higher expense ratio. Or you could just put the money in a 500 index through Vanguard and pay no front load, no advisor fees, and very low expense ratios. For the record I enjoy Dave Ramsey's show and lots of his advice on getting out of debt is top notch, but his investing advice is not. The S&P 500 has earned about 20% YTD, I don't know about you but 20% with low fees sounds like a winner to me.

I have and will always only put money in index funds. The problem with mutual funds are that you need to constantly keep an eye out to see if the fund is outperforming the index. I have passion to grow money, but not interested in wasting time chasing mutual funds. Vanguard is one of the best in class for a reason. Bogle disrupted the industry with index funds. Sorry Dave, not buying it.

Vanguard is the only mutual I trust.

Even with his numbers its clear that index is better. How can he still defend mutual funds?

Referring to his SmartVestors is like Dave asking a car salesman if buying a car is a good idea. Not buying it.

There are still some good mutual funds out there that have low expense ratios and are comparable to index funds. But I don't think Dave has ever recommended no-load funds or funds with low expenses. He just said in another podcast that those don't matter as long as the returns are good. That's not the best advice for long-term investing IMO.

The "after expenses" is important. 12% return when you're paying 2% in fees is not the same as a 12% return.

Thanks for sharing your personal information of your 401k and studies Dave. Now, for those of us dissenters, please show your funds prospectus fees? The front load, back load(if any), and also need to explain the ratio your local pro-vestor is taking out of your fund? Also need the 401k fund fee? If you're in any funds outside of your 401k could you share the turnover rate too? If you explain those, and they end up at 2%-3%(or more) ratio like we all suspect... then you're not outperforming the S&P. That's just a fact by your own stats. If you still beat the S&P after all that(and I suspect you will not)---then great, you're one of the one who chose a 50/50 chance to do better than the market. No one's saying funds never beat the market, logically some have to beat the market---but over the long term as you showed... I'm not taking that chance. My funds are all in Vanguard sitting at 16% right now, but I know it'll drop. And when mine drop like yours during a market correction and they're charging a 0.16%-0.30% annual fee while yours charge 2%-3% still.... you'll see our point. And yes, I know you have more money than me. I just disagree with your mutual fund advice. I'd come to you any day on buying real estate for an investment because you really know it well. Thanks again for sharing, but we'd need more information to truly test your statistics.

Dave is so wrong on this one it's scary. Listen to John Bogle and Warren Buffett, not Dave Ramsey. Buy the Little Book of Common Sense Investing by John Bogle and that is all you need to know.

Classic case of survivor bias. He's not figuring in the THOUSANDS of mutual funds that under performed the S&P and have been dissolved. When it comes to investing, listen to Warren Buffett and Jack Bogle, not Dave Ramsey.

Better save this video somewhere. I have a feeling it will disappear like an underperforming mutual fund. 😳

2:28 Survivor Bias. He's only looking at funds that survived 40 years. That's a population of (only) 84. How many failed? He needs to look at ALL the funds available 40 years ago, not just the survivors. Suddenly the percentage plunges.

This is so wrong. You are not taking into account fees being compounded over the lifetime of the investor. So wrong on so many levels.

Sorry Dave. You don't know more than John Bogle, Burton Malkiel, Warren Buffet, & Paul Samuelson when it comes to mutual funds.

I side with dave on almost everything except this. Dave tells us to listen to those who know their stuff, going with buffet and index funds, no manager is getting a commission off me

Picking mutual funds is just one step removed from picking single stocks. Even if you pick the right one, eventually it will be bested by an S&P 500 ETF, especially after fees.

But what about cost? You loose up to 2% or more in mutual fund fees.. That needs to factored in..

Dave, I’m a long time viewer and with all due respect you always talk a big game with you picking these winning mutual funds. Please show us your 401k results.

Dave.. you’ll also pay 1% management fee to your smartvestor pro to handle that for you. Back that fee out, stick it all in the index fund, and you would have came out exactly the same with no work on your part.

A few points. 1) Past performance is not the same as future performance 2) How many of those funds failed completely? 3) How does the mutual funds compare to the index funds when you factor in the much higher annual fees compared to a 0.10% ETF? To anyone reading. Dave is great if you are having trouble getting out of debt, but when you are looking for investment advice heed someone like Warren Buffets advice. For the vast majority of people, who don't have the time or interest to analyse the market, buying cheap index funds is the best choice. You should never have to pay +1% on your investments, if you are, you are being ripped off.

so I should pay a guaranteed expense on a coin flip’s opportunity for greater returns?

His percentage jumped from 20% to 50% by the end of the video.

Be glad if you have anything, I know couples with degrees who are in thier 60s and have practicality no personal retirement.

He States that the S and P 500 gets 12% and then goes on to say that 1 of his best mutual funds gets 12%. So why wouldn't you just invest in the S and P 500 and avoid the commissions and fees and taxes

The fees will kill your account in the end... That's why the index funds are worth it , Vanguard Indexs funds are almost free at .003 %

He wants to send you to his ELP in your neighborhood. These are the guys who sell garbage loaded funds. He is simply being dishonest about this. Call out the symbols for all of your great funds Dave....don’t hold your breath.

Dave sounds like an insurance guy trying to sell whole life. Passive investing is simply a better strategy actively managed funds.

Vanguard small cap value and total market. Reits, bonds, and a few gambles and im happy.

Love Dave's show, but he has a vested financial interest in promoting actively managed funds. His "ELP'S" make their livings' through loaded funds.

Good question. Why does he never mention the ticker symbols? There must be an ethics/legal barrier stopping him. SPYders makes 7.1%. I better stay there until I know more.

When you look at the lines on the performance chart they always leave out the influence of fees.

So 50 percent of them out perform the Snp 500 index how about this Dave 100 percent of mutual funds have higher expenses!

15 years or longer 91 percent of mutual funds perform less that the s and p 500!

Very interesting. I’d like to see all of this research. Is there any way we can, Dave?

Agree with Dave 90% of the time but this reeks of pushing his listeners to commission advisers instead of self directed like Vanguard

over what period of time is the research based on? (1 year, 3 years 10 years)

The S&P has done very well. I own lots of SPY and it has low fees and no goofy mutual fund rules. I think I'll stick with what I already have.

Dave should read up on survivorship bias.

FSCSX no load exp ratio .74 10 year return 17.67 after tax 15.46 s&p 10.53 life of fund return 15.74 inception 1985 s&p life 10.31 10k invested in 2010 would be 50k now What funds are a lot of you even looking at? And why not invest in both mutual and index if you’re worried about underperforming in the market. 🤷‍♂️

The mutual fund manager of a work pension fund I used to be involved with came in one day to show us some information. He had preformance histories for a bunch of his funds on charts. I looked at the charts and noticed they all started in 2008. I asked him what about before 2008? His answer was ".....um uh uh uh I don't have those figures" so I ask him where are all the funds that were around before 2008? He explained that all those funds were discontinued and new funds were created after the crash. So they cherry pick the lows and highs and advertise that as the historical return. If there is a market decline they scrap the whole fund and re name it at the bottom of the dip. YOU CANT PICK AND CHOOSE LIKE THAT. I have nothing in mutual funds because of this deceptive fibbing about returns. If you average in the crashes you DO NOT get 12% returns. And Dave was looking at a 40 year historical average in this video. You CANT COMPARE A TIME WITH 18% interest rates with today's 1% interest rates Dave!!!! The average gains of mutual funds from 2000 to 2010 was 2%. That is the new normal. The market has been doing well since 2008. It's due for a correction. Average in the declines and you aren't getting 12% not even close.

Watch the fund management. When the fund manager changes, reconsider because it's a new subject under a new manager.

Yeah but what about the fees for mutual funds? It is very inexpensive to purchase an index fund because of the low fees. Plus, why spend more on fees and take on greater risk to have a 35-40% chance of doing better than the S&P 500? That doesn’t make any sense at all. He is way too committed to hyping up mutual funds.

All my funds outperform the s&p except for international.

Just invest in VTSAX- All the mutual funds my broker had me in were trash!!!

Dave you are totally ignoring survivorship bias, fees, and most importantly past performance is not indicative of future results... This is a poor video.

Managed mutual funds have the same Apple and Microsoft as index mutual funds. No reason to believe the same stocks grow differently in different accounts.

I am (almost) totally ignorant about different kids of funds. I have a question about this point you made about mutual funds outperform index funds. Would investment in index funds be easier for the everyday Joe trying something one will never be an expert in? And another thing. Maybe some mutual funds outperform index funds but maybe they do it by a small percentage and the ones that dont outperform do really poor and instead of 12 %, you might get only 4 ou even less? As I said I dont understand much (anything) about this, but was just trying to make some sense out of all the info out there. Cheers and thanks for your videos. I am 2 months away from being totally debt free (mortgage will also be paid) and planning to start investing. Yout videos have been a good help.

Dave has great personal finance advice which has helped me to build wealth, but this is nonsense. He lost me when he said he disagrees with Warren Buffett.

Even with just index funds though, you won’t do bad in an IRA/401k. It’s tax deferred, fees are almost nothing, it averages around 10%, and if you get a company match it’s free money. I put in $7,000 in two years and at the end of two years I have $20,000. Not bad for just dropping it in a 401k. And that’s not even counting the tax deduction.

I'm not sold on mutual funds.

I think this video is almost perfectly titled. I would just add, "You Are Getting Bad Information About Mutual Funds From Dave Ramsey."

So u outperformed the index by 1-2% and also paid that much in fees

S&P 500 is the biggest 500 companies on the NYSE and Nasdaq, not just NYSE like Dave says.

We are in fact getting bad info, but from whom. Maybe we should not pick ONLY the finds that survived and try again? The Little Common Book of Investing, by John ("Jack") Bogle, Chapter 10: Selecting Long Term Winners, goes back to 1970, 46 years, there were 355 equity funds that existed at the start of the period, "fully 281 of those funds-almost 80 percent-have gone out of business" (pg 112). Way to pick ONLY the surviving funds to make your "success percentage" on beating the market. To go on, same book as above stated: "281 of the equity funds that existed in 1970 are gone, mostly poor performers. Another 29 remain despite underperforming the S&P 500 by more than one percentafe point per year. Together, then, 310 funds-87% pf the funds among those ORIGINAL 355-have, one way or another, failed to distinguish themselves. Another 35 funds provided returns within 1%, plus or minus, of the return of the S&P 500. That Leaves just 10 mutual funds-only 1 fund out of every 35-that outpaced the market by more than 1%" (pg. 114-115)

All I know is my 401k doesn’t have a single fund that outperforms the s&p. I could expand options but then I’d have to pay brokerage fees.

But Dave I learned about S&P index from you🤦🏿‍♂️🤦🏿‍♂️

Ok, but where can I find these mutual funds?

How do you pick a Mutual Fund that outperform the SNP? All the funds that I can pick from for my work 401k are historically underperforming compare to SNP.

This guy is so desperate to sell you to his smart investor program. What a crook. Profiting off of people's ignorance. Please don't give this guy or his associates any of your money.

Not only do you have to find these mutual funds that out perform the S&P500, but you also have to outperform even more to cover the expense ratios which can get pretty crazy. Either way, investing is better than not doing anything!

check out Betterment. it's Vanguard but you don't need the $3,000 minimum to start and there's an app

im noob but i heard after mutual funds take that ~1% tax every year you do not outperform s&p

Keep in mind that mutual funds have multiple classes, with the lowest expense ratio fund class often requiring hundreds of thousands of dollars if not more, for the initial investment. Vast majority of people that start small must buy into the fund class with highest management fees, simply due to a smaller economies of scale.

Dave’s smartvestor pros or Warren Buffett’s advice? Not a hard decision.

Index Funds are better! The Mutual Fund fees are garbage!!! 😁✌🏼👍🏼💰

Do you have to outperform the SAP to be a successful investor? You can do worse and still succeed?

What about load fees! Management fees!

Tracker Funds have proven historically to out perform mutual funds. All information is known to the market, it's the annual charges that make the biggest thing over a long period of time.

dave love your show and advice. SPOT ON. your investor pro service is very off putting. you mentioned you feel slimey like salesperson. well that pretty much defines the smartvestor pro process. the minute i put in my info i was getting phone call after phone call of people trying to set me up with smartvestors. im sure you smartvestors r teachers but it doesnt feel like it.

Exactly, about 50% of them outperformed S&P. That’s at random level. Meaning Mutual Founds really don’t know what they are doing. Let’s talk math, if some of them are doing a good job, the ratio should be way higher than 50%. For example, assume only a small portion, say 30% of them really know market, they should all outperform the S&P. The rest of them know nothing about market, they should have a random chance at 50% beat or be beaten by S&P. That would make the total percentage of them outperformed S&P at 65%, not 50%. So the total ratio beating S&P at 50% truly mean they have no idea what they are doing, and they are taking service fee.

Guess how much money Dave makes from people who invest in index funds?

Just because they outperformed in the past doesn’t mean they will in the future.

What would be the difference is fees though? Your funds did outperform but I would like to know your fees

Iam sure all the smart investor pro charge a load of 5.75 that’s huge. Plus another 1.5 percent per year at least.

I find it odd that he did not mention fees or his returns net of all the fees because that is Extremely important to factor in also for the average Joe who does not know about frontloads backloads expense ratios maintenance fees stay away from mutual funds and go with an index so you don’t have to worry about that

and always keep some gunpowder dry...

That’s gross return. After all fees are taken out it’s much less than the S&P

Dave has done a lot to help people absolutely ignorant about personal finances to reasonably ok in that area. However the misinformation he spouts stops them from advancing beyond that.

Half the time..... of you can invest in the s&p. This is a sales ad

Ok, I need help with something. Should I invest in an index fund that averages 6-8% return with .15 fee or a mutual fund that averages 10-12% return with a .45 fee. I’m confused with the math.

After all of his ranting, he proves that the S&P 500 is a better performer most of the time. And then when those other funds did beat the S&P 500, it was only by one percent or less.

Ok so an index fund then.

So I can accept that mutual funds have a better hit ratio than we've been led to believe. What I don't understand is why someone going that way should expect to outperform the S and P when they only do so 35% of the time.

Are these investments out-preforming the rate of inflation? For example, if my money were to double in my investment over 20 years and inflation quadruples, it really only potentially lowers the impact of inflation on your savings while coming at a risk. It's something to consider.

I think the most valuable investment advice I've ever heard from Mr Ramsey's so far is (quote mined in assumed bad faith) from this video: There is no sense in trying to outperform the S&P 500 because it can't be done. TM!

I’m new to all this. I hear Dave’s point of view. I read the comments and see their point of view. But I gotta wonder how many people commenting are millionaires themselves? As a beginner, what should I do?

Dude is just trying to peddle “smart investors” that give him cut of sales of the mutual fund

Dave’s take on mutual funds kind of reminds me of a life insurance salesman’s take on whole life life insurance

I don’t get any advice. My Roth IRA is self directed. I just invest it in tech mutual funds and hope for the best.

If he is putting his money is certain types of funds targeted towards specific categories with a different profile from the s&p 500 he can’t compare the performances of those funds to the s&p 500 in the way he has. That is like putting your money in small cap stocks and saying people are idiots because you beat the overall market over 30 years but of course small caps will beat the overall market given such a long time. The pertinent question is how many mutual funds beat the benchmark indexes they set out to beat based on the category they were in, the statistics he quoted also suffer from survivorship bias.

Ia it true you never have reviewed your mutual fund picks?

I'll stick with the total Stock market ETF that I own. Thank you.😊

I don’t always agree with Dave, or know what he’s talking about there’s lots tidbits that get me thinking and researching

Buying active funds makes sense only for diversification sake. Other than that, index funds are the way to go.

I don't understand why so many people are missing his point. Do a little research and you will find mutual funds that outperform the S&P. Indexing is a great vehicle for retirement investing but you can find low fee funds with better returns.

So, let me get this straight. Mutual funds DO BEAT the market. Nearly everytime. However, it doesn't matter because mutual funds have substantially higher fees as opposed to index funds. Therefore, experienced investors invest into index funds. I'm relatively new to investing. Am I correct here?

And what's the difference in fees between an active managed mutual fund compared to a passive managed mutual fund?