Posted on 03/11/2025 12:17:41 PM PDT by CaptainPhilFan
Ok so I paid a Vanity tax to ask this stupid question.
Don't come at me with "Oh you shouldn't ask strangers on the internet for advice". Is there a better and more trustworthy brain trust than FReepers? I don't think so.
This is just an intro, I know I'll have more questions. I called one of Dave Ramsey's money guys, and we've had 2 meetings so far. Kinda weird.
I'm not a huge Ramsey fan but figured it was a place to start. I get the feeling they are on a script and don't deviate. Plug in $$ and Age and work off that.
Money markets are the only option he's set out for me, whereas I would take more risk. They are not earning a lot, are they?
And, I haven't been told what they charge for service, just a vague "we charge everyone the same percent".
So, questions.... ???
1 - Anyone work with one of these Ramsey guys?
2 - Would you put all your eggs in one basket?
3 - Why hasn't FR had an Investor's Club before? :) e But really, honest opines about the Ramsey guys and their plans. I'm so damn cynical I don't trust anyone if they sneeze funny.
Thanks Brain Trust!
Hi Bob :) I understand the risk and weighted. I answered a Risk Assessment “something” questionnaire and got a 73 out of 100. Ramsy Guy offered 1 choice that was around 50% risk for my small 401, and for my smaller savings account 5%. I was not impressed.
For example … he seems to place no value on important financial concepts like liquidity and diversification.
I use Edward Jones and have done well. Don’t be afraid of owning a few stocks. But recommend blue chip stocks that pay dividends that you direct to be immediately reinvested, and when you retire those dividends can be your “paycheck” while preserving your principle.
If it's a 401K/403B/457 (or Roth counterparts, which is almost always preferrable), set it and forget it. If it's in a Roth IRA or tax deferred IRA or plain ol' taxable account, then each month when you invest, put your investment for that month into whichever mutual fund has the lowest balance (buy low). (SEP IRA's in my opinion are great for gig workers, but treat them like a 401K in that it's difficult to change the investment options each month when you invest form your budget. So in a way, treat a SEP IRA like a 401K in which you just set up the investment percentages of your portfolio once and just use that each time you dump money into it.)
Later when you retire, when you withdraw (no more than 4% per year), withdraw from the funds that have the highest balance (sell high).
The above is exactly how I manage 3 generations of my family's investments. Almost all of them we direct into Roth IRA's/Roth 401Ks while working (tax breaks later when withdrawing during retirement) with excess beyond the limits going into plain ol' taxable accounts. A couple of very high income gig workers, so they go into SEP IRA's with excess going into plain taxable accounts. For those workers, when they have a low income year (low tax bracket) we convert part of their SEP IRA money to Roth IRA (a taxable event, but they're in a low tax bracket that year) and the money from then on grows tax free.
I have never worked with Ramsey. I’ve listened to him a fair amount, not purposefully, but because his radio show comes on when my radio is on and I just leave it.
I would call his investment and money approaches to be very, very conservative and I have no reason to distrust them/it.
I think you could do a lot worse. It’s hard to argue with his overall idea of retiring with a paid off house, no debt, and a big pile of savings.
Everything he advocates is well founded and well explained.
There are two things I disagree with him about:
1: He hates, detests credit cards, refuses to have one. He likes debit cards. I think that is a mistake, because credit cards generally have MUCH better fraud protection than debit cards. He advocates the way he does because he is talking to a great unwashed audience who generally do not pay off credit cards and lose control of their credit and get into hot water with their spending, which CC’s encourage.
2: He believes that you do not buy a house until you can buy the thing with a mortgage that eats no more than 25% of your monthly net income on a FIFTEEN year mortgage. For most people, that is not feasible. But, I understand why he thinks and advocates that way.
In terms of your investment(s), a great deal depends upon your age. Most investors (myself included) cannot conceive of the power of very long term investing and the power of compound interest. There is no intellectual tricksterism than beats those two factors, and there is zero requirement to think about them, they happen on their own. Just the way it is.
I don’t think you’ll go wrong with Ramsey, in any way.
If you don’t have much background in investing (as you say) then Ramsey is probably even better for you than a random financial advisor whom you do not have the tools nor understanding to evaluate properly.
one word: plastics ...
seriously though, investing depends upon your retirement horizon, risk adverseness, and amount of money you can afford to lock-up and/or lose ...
retirement long way off: capital gains matter more than dividends ...
retirement eminent: reduce risk and shift to dividend yielding stocks ...
defer as much taxable income as long as possible via 401K/403B/IRA, so always match maximum amount of any corporate contributions to 401K/403B/IRA ... in general, best to self-manage 401K/403B/IRA accounts whenever possible and usually avoid plans that require investing in company’s stock unless company is a blue chip and pretty much guaranteed to be a growth type of company
always invest in ETFs rather than mutual funds because of horrific tax complications of mutual funds, excepting that doesn’t matter in 401K/403B/IRA accounts
never put your funds in the hands of an investment “manager”, which means you’re going to have to bite the bullet and educate yourself about investing, the markets, the economy, and the various economic sectors like tech, petroleum, natural resources, food production, manufacturing, etc., etc. ... for long term, market index ETF funds aren’t a bad way to go unless/until you’re VERY savy about investing ...
for self-managed investment accounts, your best bet is to use schwab.com ...
live below your means: smaller home, fewer toys, and buy name-brand pre-owned cars from honda, toyota, et. al., and drive until the wheels fall off ... learn to cook, avoid eating out excessively ... do your own lawn work and learn how to do as many of your own repairs as you feel confident in doing ... youtube videos are a fantastic source on how to repair specific items ... amazon and others are great sources for parts as long as you can avoid the worst of the chinese crap ...
avoid debt except for a house and a car; never build up credit card debt: use credit cards for convenience only and autopay them off every month ...
[that’s all i can think of right now off the top of my head]
Thanks for that honest assessment.
I agree with you about Dave, PLUS - he really advocates for going to get your own place as early as possible. Even tells struggling young families to go get their own place instead of living with grandparents, while also paying paying off huge debt. AND young Mama should go to work without even asking what childcare would cost in relation to salary.
That makes zero sense to me and I blame it on his own real estate heavy portfolio. I believe multi-generational living can be an absolute blessing and babies need their mothers at home.
I think Dave has gotten too worldly over the last 7 or 8 years. His new co-hosts are often incredulous that a new mother is raising her own baby.
Aside from that, I do not disagree with your opinions. I may need a bigger risk to increase what I have.
Thank you very much :)
6 years went by and TSET did absolutely NOTHING and I owed $14,000 at that point. I found out they did nothing when I contacted the time share resort myself and they said they never heard from those shysters. So I ended up negotiating a settlement myself and got out of the contract for $2,000.
Time Share Exit did not honor their money back guarantee and I'm sure that's one reason for the suit.
Ramsey can kiss my ass.
Agree. Ramseys advice would be seen as idiotic for those who have their personal finances out perform flat returns after inflation compared to his. Mine have.
“2 - Would you put all your eggs in one basket?”
Well that’s a definite no. :-) You want diversification and thoughtful asset allocation.
Investing is like anything else. Take some time learning about it and most of it begins to make sense.
A key learning early on for me was to diversify and invest in baskets of stocks and bonds, e.g. index funds. Index funds and the broad stock market have generally outperformed many professional investors.
I like “lazy investing” which is dollar cost averaging into a basket of index stock and bond funds. When you are young you can be more aggressive with equity levels as you won’t need the money for a long time so you can deal with downturns. I was into equities 80% or more for many years and then cut back as I neared retirement.
Let the funds sit there and multiply for decades. It certainly worked for me as I was able to retire reasonably early.
Of course this only works well if you save a good chunk of money in the first place, e.g. 20% or more of your paycheck. Some have trouble with this, think they are smarter than pro’s and look for get rich schemes.
Get lots of input and make up your own mind as you will have to live with the consequences. It is great that you are seeking advice. Never stop learning.
https://www.bogleheads.org/wiki/Main_Page
1. I invest on a monthly basis into a group of mutual funds, using a dollar cost averaging strategy.
2. I don’t rebalance my mix of funds by selling winners and buying losers. Instead, I just make small adjustments every six months to the amount I invest in each fund.
3. I DO NOT reinvest the dividends and capital gains within each fund. Instead, I accumulate them as distributions into the cash account that is the source of the new monthly investments.
One advantage to #3 is that it helps keep your mutual fund allocation from getting too far out of balance when the dividends and capital gains are distributed. Another advantage is that it ensures you have enough cash on hand to pay the taxes on the dividends and capital gains without selling off any part of the portfolio.
Regarding you using dividends as cash to pay taxes dividends and capital gains, that of course is very relevant if the mutual funds are in plain taxable accounts. But if they're in an IRA, Roth IRA, or 401K Roth 401K, then the tax rules for those accounts trump the rules for capital gains on dividends. None of my dividends in my funds in my Roth IRA are taxable. So I set my dividends in my Roth IRA to reinvest into more shares of the fund.
I’m quite conversant with Ramsey and many other personal finance peoples. The constant bashing of Dave Ramsey is unwarranted, the reason I say this is because his teaching about how to think about money is correct. It is true that he doesn’t go deep into investing, however, he shines when it comes to getting rid of debt.
Currently the stock market is down and many people are starting to panic. My spouse and I put $4500 per month into our investments and we are not in a panic. Why? Because we have no debt, an 8 month emergency fund and a paid for home. We have this because we took Dave Ramsey’s advice and got rid of our debt. If the market went to zeros and I lost my job, my home is paid for and I have money saved. Buy low, sell high.
Anyway, others have mentioned the bogleheads. This is good advice. There are several books by the bogleheads good reading. They talk about Vanguard but if you have a 401K that is a great place to start. Mine is with Fidelity so I have a good mirror of the bogleheads 3 fund portfolio in low cost index funds. A little bit of reading to get an understanding of how this is done is well worth the time.
Happy saving and investing!
My nest egg is diversified... Scary to think this is where diversity is good.
Current market looks like shxt but I’m guessing a year from now I’ll be ok considering as bad as it is today we’re still up 2800 over a year ago.
You say bashing, I say difference of opinion :)
That said, we have no debt except the mortgage. Lots of Dave’s advice is good and sound but we were very frugal before we discovered him. In my whole marriage I’ve never had a new couch. :)
Life has not been kind and we’ve wound up behind the 8 Ball too many times. Just haven’t had a chance to catch up and it’s a miracle we’re not in debt. We live like cr@p.
BUT, THAT said, I’m glad things are going well for you. I’ll look into Boggleheads a bit later when I have time to digest this all.
Cheers!
I think we’ve got to be headed up, too. Good luck!
- I would just watch what Warren Buffet does, then do that -
Not a bad idea. I hear Pelosi is an investing genius, too :)
- Is this one of the “Smartvestor” affiliates? They are supposed to be teachers, so they should be overloading you with information on “who/what/when/where/why/how” -
Yes, he is, and no, not yet anyway. At least, nothing that seems like that. More “getting to know you” stuff.
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